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Nuclear Regulatory Commission.
Direct final rule; confirmation of effective date.
The U.S. Nuclear Regulatory Commission (NRC) is confirming the effective date of July 3, 2024, for the direct final rule that was published in the
Please refer to Docket ID NRC-2023-0220 when contacting the NRC about the availability of information for this action. You may obtain publicly available information related to this action by any of the following methods:
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•
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George Tartal, Office of Nuclear Material Safety and Safeguards, telephone: 301-415-0016, email:
On April 19, 2024 (89 FR 28572), the NRC published a direct final rule amending its regulations in part 72 of title 10 of the
In the direct final rule, the NRC stated that if no significant adverse comments were received, the direct final rule would become effective on July 3, 2024. The NRC did not receive any comments on the direct final rule. Therefore, this direct final rule will become effective as scheduled.
For the Nuclear Regulatory Commission.
Commodity Futures Trading Commission.
Final rule.
The Commodity Futures Trading Commission (“Commission” or “CFTC”) is amending certain regulations setting forth large trader position reporting requirements for futures and options. The amendments, among other things, remove the 80-character submission standard and delegate authority to the Director of the Office of Data and Technology to designate a modern submission standard for reports required to be submitted, and replace certain data fields previously with an appendix specifying and adding certain applicable data elements.
Owen Kopon, Associate Chief Counsel, at (202) 418-5360 or
Part 17 of the Commission's regulations governs large trader position reporting for futures and options. Section 17.00(a) requires reporting firms to report daily position information for “special accounts”
Accordingly, on June 27, 2023, the Commission published in the
The public comment period for the Proposal ended August 28, 2023,
Sections 4a, 4c(b), 4g, and 4i of the Commodity Exchange Act (“CEA”) provide the Commission with authority to promulgate large trader position reporting regulations. Section 4a of the CEA permits the Commission to set and approve exchange-set limits and enforce speculative position limits.
The Commission has set out reporting requirements for futures and options in Parts 15, 16, 17, 18, 19, and 21 of the Commission's regulations. Part 16 requires contract markets to submit certain information to the Commission; Parts 17 and 21 require reporting firms to submit certain information to the Commission; and Parts 18 and 19 require individual traders to submit certain data to the Commission.
Within this framework, part 17 requires the submission of large trader position reports and certain account identifying information for accounts of large traders. Section 17.00(a) requires reporting firms to submit daily reports to the Commission providing positions in open contracts for “special accounts”—that is, futures and options trader accounts that exceed Commission-set reporting levels.
Section 17.00(g) provides the data submission standard and data elements for the reportable positions by special accounts in the form of an 80-character record format.
Currently, the § 17.00(g) record format contains an 80-character, Cobol-based
To address these shortcomings, the Commission proposed amendments to §§ 17.00(g), 17.00(h), and 17.03(d). The Commission proposed to remove the 80-character record format from § 17.00(g), and to instead provide in that regulation that § 17.00(a) reports be submitted in the form and manner published by the Commission or its designee pursuant to § 17.03. Section 17.03 addresses, among other things, the delegation of certain authority to the Director of the Office of Data and Technology. The Commission proposed to revise § 17.03(d), which currently delegates the authority to the Director of the Office of Data and Technology to approve a format and coding structure other than that set forth in § 17.00(g), to provide instead that authority be delegated to the Director of the Office of Data and Technology to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in appendix C to part 17 and to determine whether to permit or require one or more particular data standards. These amendments would delegate authority to the Director of the Office of Data and Technology to designate a data submission standard for § 17.00(a) reports in a Guidebook.
Contemporaneously with the publication of the Proposal, the Commission published the Proposed Part 17 Guidebook, which designated FIXML as the data submission standard for § 17.00(a) reports. The Proposed Part 17 Guidebook would permit reporting firms to either submit § 17.00(a) reports in FIXML through a secure file transfer protocol (“FTP”) data feed, or through the CFTC Portal, which would in turn convert those reports into FIXML. The Commission believes that providing those two methods for submitting § 17.00(a) reports will accommodate varied technological capabilities of reporting firms.
The Commission also proposed non-substantive edits to § 17.00(h), concerning correction of errors and omissions. Current § 17.00(h) provides that corrections of errors or omissions in § 17.00(a) reports be filed “on series '01 forms” or “in the format, coding structure and data transmission
In this final rule, the Commission is adopting the amendments to §§ 17.00(g), 17.00(h), and 17.03(d) as proposed.
The Commission solicited comment concerning the advantages and disadvantages of designating a FIXML data submission standard for § 17.00(a) reports, the proposal to permit reporting firms to submit § 17.00(a) reports through the CFTC Portal in addition to submission by secure FTP, and the advantages and disadvantages of correcting errors in § 17.00(a) reports in the manner set forth in the Part 17 Guidebook. The Commission also requested comments on all aspects of the changes to the data submission standard described in the Proposal.
The Commission received ten comments that related to changes to the data submission standard for § 17.00(a) reports. Those comments generally concerned the appropriateness of a FIXML data submission standard, the scope of the delegation of authority in § 17.03(d), the process for updating the Part 17 Guidebook, and the process for correcting errors in § 17.00(a) data.
The Proposal sought comment on whether the Part 17 Guidebook should designate FIXML as the data submission standard for § 17.00(a) large trader position reports. Commenters were generally supportive of, and did not oppose, a FIXML data submission standard, with the option to submit § 17.00(a) reports manually through the CFTC Portal. FIA stated that it supported the Commission's efforts to modernize the large trader reporting process and transition from the current § 17.00(g) record format to a FIXML data submission standard.
The Commission also received several comments concerning the proposed revisions to § 17.03(d) to delegate authority to the Director of the Office of Data and Technology to designate a data submission standard and the process by which Commission staff might update the designated data submission standard in the Part 17 Guidebook in the future. FIA stated that it supported delegating authority to the Director of the Office of Data and Technology to set out data submission standards in the Part 17 Guidebook,
Certain commenters suggested revisions to the Proposal providing that if, in the future, the Director of the Office of Data and Technology changed the designated data submission standard in some way, reporting firms be consulted or given advance notice.
The Commission has determined to adopt the changes to § 17.03(d) as proposed. The Commission believes the revisions described in the comments may unduly constrain the Commission's ability to adjust the process by which it receives information. The Commission has considered similar comments in other reporting contexts and declined to specify in regulations particular implementation timelines applicable to possible future changes in exercises of delegated authority.
The Commission intends for staff to consult with reporting firms with respect to appropriate data submission standards in order to ensure that any changes in the designated data submission standards or standards for § 17.00(a) reports will be effective and suitable. As explained in the Proposal, the purpose of delegating the authority to designate a data submission standard or standards is to enable the Commission and Commission staff to quickly respond to changing market and technological conditions and to remain consistent with industry best practices.
As discussed, the Proposal requested comments on allowing reporting firms to submit § 17.00(a) reports either in the FIXML data submission standard designated in the Part 17 Guidebook, or through the CFTC Portal.
As discussed below, in the final rule, the Commission is extending the compliance date to a date two years following publication of a final rule in the
With respect to the features FIA has described, the Commission expects that some of these features will be available in the CFTC Portal. For example, the Commission expects the CFTC Portal will include functionality for identifying specific reports,
Currently, § 17.00(h) provides that, unless otherwise approved by the Commission or its designee, corrections of errors and omissions in data required to be reported under § 17.00(a) shall be filed on series '01 forms or in the format, coding structure and data transmission procedures approved in writing by the Commission or its designee.
The Commission received several comments concerning error corrections. First, NGFA voiced support for automating the process for notifying reporting firms of errors.
The Commission also received comments from FIA concerning the filing of change updates to account for “certain late claimed give-ups and transfers.”
Specifically, FIA requested the Commission provide “guidance” that “change updates, corrections, or amendments to reports would not be required to account for certain “late claimed give-up” or certain transfer activity.
The Commission did not propose to revise regulations that govern the time by which a position must be reported under § 17.00(a) or to revise the requirement that a reporting firm correct any errors in a position report. With respect to the activity to which FIA refers, the Commission would not expect the Proposal to affect whether reporting of positions impacted by give-up and transfer activity complies with the Commission's regulations. Therefore, FIA's request for guidance concerning “change updates, corrections, or amendments” relating to “certain late claimed give-ups and transfers” is outside the scope of this rulemaking.
The hypotheticals in FIA's letter do address a scenario where trades have been executed on a given day, but “have
As discussed, with respect to the Proposal's changes related to the data submission standard for § 17.00(a) reports, the Commission is adopting the Proposal as proposed.
Because the current § 17.00(g) record format contained the data elements for § 17.00(a) reports and provided the form and manner for reporting those data elements, removal of that record format necessitates replacing those data elements in the regulations. The Proposal relocated the data elements for § 17.00(a) reports to appendix C to part 17, and delegated authority to the Director of the Office of Data and Technology to publish the form and manner for submitting those data elements in a Part 17 Guidebook. The Proposal also included several data elements not previously incorporated into the § 17.00(g) record format.
Organizing the data elements applicable to § 17.00(a) reports in an appendix to part 17 is consistent with the treatment of data elements required to be reported in other Commission reporting regimes.
The Proposal organized the data elements in appendix C into four categories. First, proposed appendix C retained certain data elements that have been required to be reported under the current § 17.00(g) record format—for example, under the Proposal, a § 17.00(a) report would continue to require reporting long positions and short positions in options and futures contracts, delivery notices stopped and issued, and other information fundamental to a position report.
In this final rule, the Commission is adopting the amendments to §§ 17.00(g) and 17.03(d) as proposed. The Commission is also adopting appendix C to part 17 (the final appendix C to part 17 is referred to, herein, as “appendix C”), largely as proposed, but with non-substantive changes to the descriptions of certain data elements for clarity. In addition, the Office of Data and Technology has made corresponding non-substantive changes to the Proposed Part 17 Guidebook for clarity, and corresponding changes to the Part 17 Guidebook to remove certain data
The Commission solicited comment concerning any additional data elements not included in appendix C that may be necessary to obtain a complete and accurate picture of positions held by large traders, any transactions that would effect changes in positions that are not accounted for by the data elements in appendix C, and any data elements in appendix C that may not be necessary to obtain a complete and accurate picture of positions held by large traders. The Commission also requested comments on all aspects of the changes to data elements described in the Proposal.
The Commission received nine comments concerning changes to the data elements for § 17.00(a) reports. Those comments generally consisted of requests for clarification regarding certain data elements, comments stating that certain product-related data elements should be obtained from DCMs, comments concerning the special account legal entity identifier (“LEI”) data element, and comments concerning use of certain data submission standards for certain data elements. In particular, FIA provided an appendix to their comment letter containing comments on 23 of the data elements in appendix C.
As discussed above, appendix C incorporates the data elements included in the current § 17.00(g) record format. That 80-character record format contains data elements that capture information necessary to process data,
No commenter objected to continuing to report the data elements contained in the current § 17.00(g) record format. The appendix to FIA's comment letter does provide comment on several of these data elements. The Commission discusses those comments and data elements below in connection with new data elements to which those data elements correspond.
Appendix C contains certain new data elements to facilitate processing of data.
First, FIA requested clarification concerning the “Total Message Count,” “Report ID,” and “Record Type (Action)” data elements.
Second, FIA requested clarification concerning the “Sender ID” data element.
Appendix C also contains certain new data elements to identify and characterize the product in which the special account holds a position. The current § 17.00(g) record format requires reporting an “Exchange Code,” an exchange-assigned “Commodity Code” for the contract, an exchange-assigned “Commodity Code” for the instrument that the contract exercises into, the “Expiration Date” for the contract and for the instrument that the contract exercises into, and a “Strike Price,” where applicable.
FIA's comments concerning data elements related to product identification fall into two categories. First, FIA seeks clarification regarding certain data elements. Second, FIA proposes that the Commission eliminate certain data elements from appendix C that it deems to contain “static” product information—that is, data elements that seek information for which the value of the data element will not vary across position reports submitted to the Commission—on the grounds that it would be more efficient for the Commission to obtain such information directly from the DCMs that list such products.
FIA seeks clarification concerning the “Commodity Clearing Code,” “Product Type,” “Ticker Symbol,” and “Underlying Contract ID” data elements.
With respect to “Commodity Clearing Code,” FIA requests that the Commission use different terminology—simply, “Clearing Code”—as this is “industry standard terminology.”
With respect to “Product Type,” FIA seeks “further specificity” regarding the terms “Commodity Swap” and “Options on Combos,” which are included as valid values in the Part 17 Guidebook.
With respect to “Ticker Symbol,” FIA stated that “Ticker Symbol” is “not self-explanatory.”
With respect to “Underlying Contract ID,” FIA commented a 20-character limitation set out in the Part 17 Guidebook could limit the ability of this data element to accommodate options that exercise into multiple futures contracts, such as a “crush option.”
As discussed above, in addition to comments requesting clarification with respect to specific data elements, FIA also commented concerning the reporting of product-related data elements for which the value of the data element generally does not vary across § 17.00(a) reports.
FIA requests that the Commission not require reporting firms to submit these data elements, but instead obtain this information from the DCMs listing products to which the data elements are applicable.
Certain entities which operate DCMs, specifically, CME and CBOE, also commented that “static” data elements would be best obtained from the DCMs that are the original source of the data.
As noted by CME,
In addition to improving the quality of futures and options transaction data reported by DCMs under § 16.02, the Commission believes that the PRF Guidebook may also facilitate a simplified means of reporting product-related data in § 17.00(a) reports. If the Commission receives product reference data from a DCM and such data can be adequately linked to a § 17.00(a) report for a position in the relevant contract, then it would only be necessary for the reporting firm to include in that § 17.00(a) report information sufficient to link that position report to the relevant product reference data.
In order for the Commission to link product-related data in a product reference file to a § 17.00(a) report for a particular contract, reporting firms will need to provide, as part of each § 17.00(a) report, a code identifying the relevant product entry in a DCM's product reference file. The PRF Guidebook allows for DCMs to identify product references files with such codes, called “Unique Instrument Codes,” to particular futures and options contracts.
In light of the above, the Commission has revised the final Part 17 Guidebook to provide flexibility in the form and manner for submitting product-specific data elements. As provided in the Proposed Part 17 Guidebook, reporting firms may submit all of the data elements enumerated in appendix C. But, the Part 17 Guidebook also provides that reporting firms may submit certain product-specific data elements in appendix C by providing a “Unique Instrument Code” associated with a DCM's product reference file. Receiving a “Unique Instrument Code” will allow the Commission to obtain the related product-specific data from a DCM's product reference file. To effectuate this option, the Commission has revised the Part 17 Guidebook to indicate that certain data elements are not required to be populated in a § 17.00(a) report if a “Unique Instrument Code” is provided.
Based on the comments received, the Commission expects that providing a “Unique Instrument Code” rather than certain product-related data elements required by appendix C will reduce the burden on reporting firms, reduce the risk of error in reporting, and simplify the reconciliation or error correction process for reporting firms and the Commission.
Certain commenters identified several specific data elements that they believe are “static” and best obtained directly from DCMs.
Appendix C includes a “Special Account Controller” data element. As discussed in the Proposal, an LEI is a unique code assigned to an entity in accordance with the standards set by the Global Legal Identifier System.
The Commission received comments from FIA, ICE, GLEIF, and ISO concerning the “Special Account Controller LEI” data element. No commenters opposed including “Special Account Controller LEI” as a data element, but some commenters opposed requiring LEI where a special account controller has not provided an LEI to the reporting firm, regardless of whether that special account controller is eligible to receive an LEI.
GLEIF and ISO each support using LEI to identify Special Account Controllers. GLEIF notes that other regulators have recently discussed or proposed rules to include LEI for different reporting regimes, and LEI adoption creates “a comprehensive and consistent identification scheme” across regulators.
FIA, however, does not believe that special account controller “eligibility” for an LEI is “the appropriate standard.”
The Commission has determined to adopt the “Special Account Controller LEI” data element and to clarify that reporting the “Special Account Controller LEI” data element is conditional on the special account controller obtaining an LEI. Therefore, under the final rule, reporting firms must report an LEI if the special account controller is eligible to receive and has obtained an LEI. Reporting firms will not need to request that their LEI-eligible customers who have not obtained LEIs do so. But, reporting firms may need to request that customers who have obtained LEIs provide those LEIs, just as those customers provide various other identifying information that is required in regulatory reporting, such as their names and addresses. A reporting firm satisfies its obligation to report the Special Account Controller LEI data element by asking a customer if it has obtained an LEI and, if so, to provide that LEI to the reporting firm. If an LEI is provided by the customer, the reporting firm then reports the provided LEI.
However, receiving § 17.00(a) reports that do not identify eligible special account controllers with an LEI hinders the Commission's fulfillment of its regulatory mandates. The Commission understands FIA's concern that, in the absence of an express requirement that eligible special account controllers obtain an LEI, reporting firms might be faced with a choice between requiring their LEI-eligible customers to provide LEIs and declining to carry futures and options positions for such customers. The Commission will continue to evaluate whether to adopt an express requirement that certain special accounts eligible for an LEI be required to obtain an LEI. To the extent future Commission action introduces such a requirement, the Commission expects that reporting firms responsible for large trader reporting will report an LEI for all special account controllers.
Appendix C includes data elements
Understanding the nature and quantity of transactions that resulted in day-to-day changes in positions of special accounts will provide Commission staff with additional information for surveillance purposes, and will allow Commission staff to link position data reported at the special account level pursuant to § 17.00(a) with transaction data reported at the trading account level under § 16.02.
The Commission did not receive any comments objecting to the addition of these data elements. FIA, however, sought clarification with respect to the “Long Transfers Sent,” “Long Transfers Received,” “Short Transfers Sent,” and “Short Transfers Received” data elements.
The Commission sought comment on all aspects of the proposed Part 17
The Commission will adopt this proposal and “FIGI” has been added to the Part 17 Guidebook as an alternative identifier for underlying contracts, alongside CUSIP, SEDOL, QUIK, ISIN, and Bloomberg Symbol. FIGI is a free, open source identifier available to all market participants and accepted as a U.S. national standard by the Accredited Standards Committee X9 Inc.
As explained in the Proposal, certain of the product-related data elements in appendix C will only apply to reporting positions in certain types of contracts.
FIA requested that the Part 17 Guidebook contain “written guidance . . . that certain fields only apply to specific markets.”
The Commission declines to enumerate in the Part 17 Guidebook the applicability of data elements by “specific market.” Given FIA's reference to “event markets,” the Commission believes that FIA is using the term “market” to refer to a DCM, rather than to refer to the market for a particular contract. The Commission does not believe that it would be appropriate to categorically enumerate in the Part 17 Guidebook those exchanges to which certain conditional data elements apply. DCMs may list a variety of contracts, and some DCMs may list some contracts to which conditional appendix C data elements apply and some contracts to which conditional appendix C data elements do not apply. Alternatively, if FIA's reference to “market” is a reference to particular contracts, it is not practical for Commission staff to enumerate in the Part 17 Guidebook every contract to which each conditional appendix C data element applies. Among other things, such a practice could require constant updates of the Part 17 Guidebook to reflect the listing of new contracts.
In connection with establishing appendix C, the Commission proposed revising § 17.00(g) to state that § 17.00(a) reports shall be submitted in the form and manner published by the Commission or its designee pursuant to § 17.03 and revised § 17.03(d) to state that authority shall be designated to the Director of the Office of Data and Technology to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in appendix C. Thus, rather than specifying the form and manner for reporting the § 17.00(a) data elements in the regulation, as done in current § 17.00(g)(2), the form and manner for reporting a particular data element will be set out in the Part 17 Guidebook.
As discussed in the Proposal, specifying the form and manner for reporting through a Part 17 Guidebook will bring the § 17.00(a) reports in line with various other Commission reporting streams, for which, rather than embedding technical reporting details into regulation text, the Commission has delegated authority to staff to set the form and manner for reporting through a published technical specification or guidebook.
The Commission received two comments that relate to the delegation of authority to determine the form and manner for reporting data elements in appendix C.
The Commission believes that § 17.03(d) is clear as proposed. That provision delegates to the Office of Data and Technology the authority to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in appendix C. Section 17.03(d) does not set forth substantive reporting requirements or delegate authority to the Director of the Office of Data and Technology to set forth substantive reporting requirements. Rather, § 17.00(a) and appendix C set out the substantive reporting requirement, including specifying the data elements to be reported. The Part 17 Guidebook, in turn, sets out the form, manner, coding structure, and electronic data transmission procedures for reporting those data elements enumerated in appendix C. The basis for FIA and ICE's concern that the Office of Data and Technology might “change the data elements to be reported” is not clear from their comments.
As discussed, the Commission is adopting the Proposal largely as proposed, with non-substantive revisions to descriptions of certain data elements in appendix C. The Commission has incorporated into the Part 17 Guidebook instructions to enable reporting firms to submit certain of the product-related data elements enumerated in appendix C using a “Unique Instrument Code.” The Commission has also made certain conforming changes to the Part 17 Guidebook, which has been published on the Commission's website contemporaneously with this final rule.
In the Proposal, the Commission included a compliance date 365 days following publication of a final rule in the
The Commission sought comment on whether 365 days after publication of this final rule is a sufficient implementation period. The Commission received five comments concerning the proposed 365-day compliance date.
The Commission recognizes that reporting firms will require significant time to implement the changes set out in the Proposal. After considering the comments received, the Commission believes that a compliance date of June 3, 2026 is appropriate. Specifically, the
In recognition of the importance of providing reporting firms with sufficient opportunity to test their reporting systems in advance of the compliance date, the Commission expects the updated CFTC Portal to become available for testing approximately six months after publication of this final rule. After the CFTC Portal becomes available, reporting firms should therefore have approximately 18 months to test submitting files in the format required by the final rule. After 24 months, all reporting firms will be required to submit files in compliance with the requirements of this final rule. For reporting firms that demonstrate the ability to submit § 17.00(a) reports compliant with the final rule before the compliance date, the Director of the Office of Data and Technology may approve the use of that revised format and permit such reporting firms to cease submitting files in the current § 17.00(g) record format.
Although the Proposal did not discuss timing of the COT Report, the NGFA requested that the Commission publish the COT report on a daily basis.
Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA.
The data required to be reported under § 17.00(a) comprise core data used by many divisions within the Commission, including the Division of Market Oversight (“DMO”), the Office of the Chief Economist (“OCE”), and the Division of Enforcement (“DOE”). In addition, § 17.00(a) submissions are collated to produce the database from which public COT reports are created. COT reports are used by news media, researchers, academics, and industry professionals to describe current trends in futures trading, conduct analysis of past trading patterns, and inform current market strategies. The current § 17.00(g) record format, which instructs reporting firms to submit data in an 80-character, Cobol-based format, has been in effect since 1986 and was last revised in 2004. This current format limits the amount of descriptive data that can be included in any given field. This limits the Commission's ability to capture the economic characteristics of certain products in § 17.00(a) reports and, in some instances, prevents the Commission from distinguishing a position in one contract from a position in another contract. In addition, the current reporting fields do not allow for the granular reporting of EDRPs, of certain futures and options contracts, and for complete information reflecting day-to-day changes in position.
The Commission requested comment on a variety of cost and benefit metrics in the Proposal. As a general matter, the Commission requested that commenters provide data and any other information to assist or otherwise inform the Commission's ability to quantify or qualitatively describe the costs and benefits of the proposed amendments; and substantiating data, statistics, and any other information to support positions posited by commenters with respect to the Commission's discussion.
The costs and benefits considered herein use as a baseline the reporting provided by reporting firms under current part 17 regulations. In particular, reporting firms are currently required to report positions for special accounts by 9 a.m. on the business day
The Commission also notes that the discussion of Cost-Benefit Considerations set forth herein is based on its understanding that the derivatives market regulated by the Commission functions internationally with: (1) transactions that involve U.S. entities occurring across different international jurisdictions; (2) some entities organized outside of the United States that are registered with the Commission; and (3) some entities that typically operate both within and outside the United States and that follow substantially similar business practices wherever located. Where the Commission does not specifically refer to matters of location, the discussion of costs and benefits below refers to the effects of the regulations on all relevant derivatives activity, whether based on their actual occurrence in the United States or on their connection with activities in, or effect on, U.S. commerce.
The Commission is promulgating two categories of amendments to part 17. First, the Commission is removing current § 17.00(g)'s 80-character record format and amending § 17.03(d) to delegate authority to the Director of the Office of Data and Technology to designate a data submission standard for reports required under § 17.00(a). That data submission standard will be published in a Part 17 Guidebook, to be published on the Commission's website. The Part 17 Guidebook designates a modern XML submission standard for submitting reports required under § 17.00(a). Second, the Commission is adding an appendix C to part 17 enumerating data elements to be included in § 17.00(a) reports. The data elements consist of (1) certain data elements currently required to be reported under § 17.00(g), (2) certain data elements to facilitate processing files submitted in XML, (3) certain data elements necessary to represent innovative contracts that cannot currently be represented using the § 17.00(g) format, and (4) data elements necessary to understand the transactions that resulted in day-to-day changes in positions of large traders. The form and manner for reporting these data elements in appendix C will be provided in the Part 17 Guidebook.
Currently, reporting firms submit § 17.00(a) reports using § 17.00(g)'s 80-character record format. These amendments require such reports to be submitted using a new submission standard, which will be designated in a Part 17 Guidebook published by the Office of Data and Technology on the Commission's website. The Part 17 Guidebook requires such submissions to be made using an XML format similar to that used in other reporting required by the Commission, including Trade Capture Reports submitted pursuant to § 16.02 and swap data reports submitted to swap data repositories pursuant to part 43 and 45. In order to collect and transmit these reports to the Commission, reporting firms must modify the systems they currently use to report part 17 data. The Commission estimates there are currently over 300 reporting firms submitting § 17.00(a) reports. Reporting firms are divided between DCMs, FCMs, clearing members, and foreign brokers, including some firms that are registered under multiple categories. Over a 30-day period in early 2023 there were 310 reporting firms submitting § 17.00(a) reports. The Commission estimates that approximately 74 of these reporting firms automate the creation of § 17.00(a) reports and 236 of these firms create and submit § 17.00(a) reports manually. The Commission believes that reporting firms that currently automate the creation of § 17.00(a) reports will continue to do so and will submit such reports formatted pursuant to FIXML standards in the Part 17 Guidebook by secure FTP, and that reporting firms that currently manually create § 17.00(a) reports will continue these practices rather than modifying their systems to facilitate reporting by secure FTP. Firms that currently manually create § 17.00(a) reports may need to update systems used to manually generate those reports. In addition, the Commission estimates that there are nine Derivatives Clearing Organizations (“DCOs”) that will need to update their systems to receive part 17 reporting data.
The amendments concerning the data submission standard will facilitate more rapid data ingestion for the Commission and increased automation in ingesting data required to be reported under § 17.00(a), which will reduce staff time devoted to data ingestion. The amendments concerning the data submission standard should also enhance data quality. First, a modern data submission standard should be less error-prone than the current § 17.00(g) record format. Second, a modern data submission standard should facilitate automated, real-time error correction notifications, which will reduce the amount of manual staff intervention in the error correction process and should provide reporting firms with more efficient timelines for correcting errors. By improving data quality and enabling more rapid corrections of errors, the amendments concerning the data submission standard should ensure the timeliness of COT reports. The amendments concerning the data submission standard should simplify the error correction process for reporting firms by automating and accelerating feedback concerning errors. The amendments concerning the data submission standard should additionally enhance DMO's ability to monitor the markets, support the Commission's Surveillance Program, and facilitate OCE research projects.
The Commission believes that the changes to part 17 necessitate reporting firms modifying their systems to collect and submit data using the new data submission standard. The cost of such modifications is likely to vary from entity to entity. Under the Part 17 Guidebook, reporting firms will submit reports required under § 17.00(a) using an XML submission standard. The Commission expects more sophisticated reporting firms that submit a substantial number of daily reports, such as FCMs, will build systems to report using the XML submission standard designated in the Part 17 Guidebook, and will arrange to automate daily submissions using a secure FTP data feed. The Commission estimates that 74 entities will submit reports in this manner. The Commission estimates those entities would incur a one-time initial cost of approximately $65,200 for each entity (400 hours × $163/hour) to modify and test their systems, or an estimated aggregate dollar cost of $4,824,800 (74 entities × $65,200).
In addition to information collection-related costs incurred by reporting firms, one commenter noted that DCOs will also need to update their systems in order to receive reports, and conduct daily surveillance.
As detailed above, the current 80-character § 17.00(g) format does not allow for flexibility in the reporting of certain types of futures, such as bounded futures, and certain types of options, such as capped or barrier options. The amendments will enable these products to be identified in § 17.00(a) reports, and therefore capture additional information reflecting changes in position, including reporting concerning numbers of transfers, reporting of numbers of expirations of contracts, and more granular reporting of EDRPs, including specifying the type of related product (physical, swap, or option). Additionally, the expanded reporting regime instills flexibility such that the Part 17 Guidebook can facilitate reporting of positions in products with innovative features.
The additional fields necessary to identify certain contracts will facilitate collection of more robust market information for the Commission, including allowing the Commission to distinguish between positions in different contracts that may not currently be distinguishable. The additional fields necessary to identify changes in positions, including more granular information concerning types of EDRPs, will also allow the Commission to collect better market information. Additionally, obtaining accurate, granular information concerning daily changes in position should improve data quality. These data elements will enable reporting firms to perform an internal consistency check to confirm the accuracy of data, which should reduce reporting errors.
The amendments will require reporting firms to report certain additional data elements to the Commission beyond those elements required by the current § 17.00(g) record format. CFTC staff experienced in designing data reporting, ingestion, and validation systems, estimate that for the 74 reporting firms that automate reporting through a secure file transfer protocol, the process of upgrading and testing systems to collect and report new fields will require them to incur on average 800 hours to update, test, and implement the additional data elements required by appendix C, for a total of 59,200 hours across all FTP filers at an hourly wage rate of $163. This would amount to total capital and start-up costs of $9,649,600 across all FTP filers (800 hours × 74 FTP filers × $163 = $9,649,600). In addition, the Commission estimates that these firms may each incur one-time costs of up to $1,000 for equipment modifications associated with these changes. The Commission estimates that the 236 reporting firms that manually input data required to be reported under § 17.00(a) into the CFTC Portal will incur on average 40 hours to implement
CEA section 15(a) requires the Commission to consider the costs and benefits of the amendments to part 17 with respect to the following factors: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. A discussion of these amendments in light of the CEA section 15(a) factors is set out immediately below.
The Commission expects that the changes to part 17 reporting will lead to improvements in the Commission's ability to collect data on large traders. The Commission expects better validation of data at ingest, leading to more efficient error corrections compared to the old reporting format. The Commission expects these enhancements will occur without sacrificing the Commission's ability to perform comprehensive oversight of the market.
Additionally, reducing the risk of errors and delays in the publication of the COT report will benefit the public by providing more accurate data on positions held by large traders. Furthermore, higher-quality and more granular position data from large traders will improve the Commission's oversight and surveillance capabilities and, in turn, will aid the Commission in protecting markets, participants, and the public in general.
The Commission believes the amendments will improve the accuracy and completeness of futures and options position data available to the Commission by improving data quality and providing Commission staff with a more complete understanding of the products comprising certain positions. In particular, the rules will allow for more complete reporting of EDRPs and complex futures and options positions. Access to more accurate and complete data will in turn assist the Commission with, among other things, evaluating if certain traders are in violation of position limits, monitoring concentrations of risk exposures, and preventing fraud and market manipulation. In addition, as described above, the amendments are expected to improve the efficiency of data reporting and analysis by reducing the number of reporting errors and automating data validation and error corrections processes.
The Commission does not believe the rules will have a significant impact on price discovery.
The Commission believes the rule changes will improve the data quality associated with futures and options position reporting required under § 17.00(a). The additional data elements will capture more complete product information for certain positions and more complete information concerning changes in position will provide the Commission with an expanded view of the marketplace that will enable the Commission to more effectively identify disruptive or manipulative trading activity. These improvements in the reporting will allow the Commission to evaluate risk throughout the futures and related markets. The Commission does not believe that the costs arising from the rules will threaten the ability of market participants to manage risks.
The Commission believes that the increased reliability and detail resulting from improvements to data reporting will further other public interest considerations, including transparency in the futures market to the public and detection of fraud or manipulation. Additionally, the reporting structure will provide additional flexibility to collect information on new products developed by exchanges, thereby allowing for those exchanges to innovate and respond to the demands of the marketplace while still providing traders' positions to the Commission.
Certain commenters suggested alternatives to rule changes proposed in the Proposal for purposes of minimizing costs to market participants. In particular, as discussed above in section II(B)(2)(c), several commenters suggested that the Commission remove from appendix C data elements requiring certain product-specific data—so-called “static” data elements for which the values will not vary across § 17.00(a) reports reflecting positions for the same product—and obtain this information directly from DCMs rather than from reporting firms.
To remove data elements from § 17.00(a) reports—and thus potentially reduce costs to reporting firms—without diminishing or compromising the dataset as set out in the Proposal, the Commission requires a method for linking each § 17.00(a) report to a product reference file for the contract in which the reportable position is held. The product reference file contains data elements for each contract that do not vary by reporting firm. Such a link can be achieved through a Unique Instrument Code—an exchange-assigned code that serves as a primary key to a product reference file for a particular instrument or contract. The Part 17 Guidebook published concurrently with the final rules permits reporting firms to provide the relevant Unique Instrument Code as an alternative to providing certain product-related data elements. Those product-related data elements are required to be included in a § 17.00(a) report if a Unique Instrument Code is not reported. However, if a reporting firm provides a Unique Instrument Code, it need not provide these product-related data elements in a § 17.00(a) report.
In providing this alternative method for reporting certain product-related data elements, the Commission intends to enable reporting firms to select the most efficient method for preparing their § 17.00(a) reports. As noted in the Proposal and discussed previously, one of the reasons the Commission has introduced additional data elements to § 17.00(a) reports is that the current § 17.00(g) format is incapable of distinguishing between certain products.
The Regulatory Flexibility Act (“RFA”) requires that agencies, in proposing rules, consider the impact of those rules on small business or, in the statute's parlance, “small entities.”
The final rules modify the data submission standard and content of daily large trader position reports for futures and options required to be submitted to the Commission by FCMs, clearing members, foreign brokers, and certain reporting markets. The Commission has previously determined that FCMs, clearing members, foreign brokers, and reporting markets are not considered small entities for purposes of the RFA.
The Paperwork Reduction Act of 1995 (“PRA”) imposes certain requirements on federal agencies, including the Commission, in connection with conducting or sponsoring any “collection of information,” as defined by the PRA.
This final rulemaking modifies a collection of information previously approved by the OMB for which the Commission has received a control number: OMB control number 3038-0009, Large Trader Reports (“OMB Collection 3038-0009).
The Commission did not receive any comments regarding the PRA burden analysis contained in the Proposal. The Commission did, however, receive comments on certain aspects of the Cost-Benefit Considerations analysis. Certain of those comments relate to potential capital and start-up costs that may be incurred as a result of the changes proposed in the Proposal. Based on these comments, the Commission has modified its estimates of the capital and start-up and operations and maintenance costs reporting firms may incur as a result of the changes adopted in these final rules. These comments and the Commission's response are discussed in further detail in the analysis of Cost-Benefit Considerations above.
This final rulemaking modifies the existing annual burden estimates for complying with certain requirements of part 17. Specifically, the Commission is amending §§ 17.00(a), (g), (h), and 17.03(d), which set out (1) the data submission standard and (2) the data elements for large trader reports required to be filed under § 17.00(a), among other things.
As discussed in the Proposal, the Commission has previously estimated that the reporting requirements associated with § 17.00 of the Commission's regulations entail an estimated 17,160 burden hours for all reporting firms.
The Commission expects that requiring reporting pursuant to a modern data standard will not require reporting firms to submit substantially more information than is currently required. Accordingly, as discussed in the Proposal, the Commission is retaining its previous estimated numbers of reports, burden hours per report, and average burden hour cost. Based on review of recent data from 2023, the Commission is reducing its estimate of the number of respondents from 330 to 310. Accordingly, the Commission is reducing its estimate from the previous 17,160 burden hours for all reporting firms
The aggregate annual estimate for the reporting burden associated with part 17, as amended by the final rules,
In addition, the Commission anticipates that the final rules will result in annual capital and start-up costs as well as operating and maintenance costs, consisting of (1) start-up costs to implement the rule changes, (2) operating and maintenance costs to implement the rule changes, and (3) costs to modify equipment as necessary to comply with the rule changes. As previously discussed, the Commission estimates that some respondents may report by secure FTP (“FTP filers”) and some firms may report manually (“manual filers”), and that the total capital and start-up costs will vary based on whether a respondent is an FTP filer or a manual filer.
The Commission estimates that FTP filers would comprise 74 respondents. The Commission estimates that these respondents would incur one-time initial costs associated with (1) modifying systems to adopt a new data standard, (2) updating and testing systems to implement new data elements, and (3) modifying equipment to implement new data elements. First, the Commission estimates that such firms would incur a one-time initial burden of 400 hours per entity to modify their systems to adopt changes to the data submission standard described in this final rulemaking, for a total estimated 29,600 total hours. Second, the Commission estimates that FTP filers will incur total capital and start-up costs associated with updating, testing, and implementing new data elements of 800 hours, for a total estimated 59,200 hours. Third, the Commission also estimates that FTP filers would incur one-time costs of $1,000 to modify equipment to implement new data elements. This would amount to $14,548,400 (((400 + 800 hours) × 74 FTP filers × $163
In addition, the Commission estimates that as a result of implementing that new data submission standard, these 74 FTP filers may incur additional operating and maintenance costs of 48 hours per year, for 3,552 total hours, resulting in costs of $578,976 (48 hours × 74 FTP filers × $163
The Commission estimates that manual filers would comprise 236 reporting firms. The Commission estimates that these respondents would incur one-time initial costs associated with (1) modifying systems to adopt a new data standard and (2) updating and testing systems to implement new data elements. First, the Commission estimates such respondents would incur a one-time initial burden of 20 hours to modify their systems to implement a new data standard, for a total estimated 4,720 total hours. Second, the Commission estimates that manual filers will incur an average one-time cost of 40 hours to implement additional data elements required by new appendix C, for a total estimated 9,440 total hours. This would amount to aggregate one-time initial costs of $1,968,240 ((20 hours + 40 hours) × 236 manual filers × $139
In addition, the Commission estimates that as a result of implementing that new data submission standard, these 236 manual filers may incur additional operating and maintenance costs of 24 hours per year, for 5,664 total hours, for an associated cost of $787,296 (24 hours × 236 manual filers × $139
Accordingly, the total estimated capital and start-up costs across all 310 reporting firms is $16,516,640 ($14,548,400 + $1,968,240 = $16,516,640). Based on five-year, straight line depreciation, this amounts to annualized total capital and start-up costs for all reporting firms of $3,303,328. Based on five-year, straight line depreciation, the total estimated annual operating and maintenance costs across all entities is $2,732,544 ($1,157,952 for FTP filers + $1,574,592 for manual filers = $2,732,544). The Commission estimates that total annual capital and start-up costs and operation and maintenance costs for all reporting firms would be $6,035,872 ($3,303,328 + $2,732,544 = $6,035,872).
CEA section 15(b) requires the Commission to take into consideration the public interest to be protected by the antitrust laws and endeavor to take the least anticompetitive means of achieving the objectives of the CEA in issuing any order or adopting any Commission rule or regulation.
The Commission does not anticipate that the changes to part 17 contained in these final rules would result in anticompetitive behavior. The Commission did not receive any comments on antitrust considerations.
Brokers, Commodity futures, Reporting and recordkeeping requirements, Swaps.
For the reasons stated in the preamble, the Commodity Futures Trading Commission amends 17 CFR part 17 to read as follows:
7 U.S.C. 2, 6a, 6c, 6d, 6f, 6g, 6i, 6t, 7, 7a, and 12a.
(a) * * *
(1) Each futures commission merchant, clearing member and foreign broker shall submit a report to the Commission for each business day with respect to all special accounts carried by the futures commission merchant, clearing member or foreign broker, except for accounts carried on the books of another futures commission merchant or clearing member on a fully-disclosed basis. Except as otherwise authorized by the Commission or its designee, such report shall be made pursuant to paragraph (g) of this section. The report shall show each futures position, separately for each reporting market and for each future, and each put and call options position separately for each reporting market, expiration and strike price in each special account as of the close of market on the day covered by the report and, in addition, the number of futures and options contracts bought and sold, the quantity of exchanges of futures or options for commodities or for derivatives positions, the number of delivery notices issued for each such account by the clearing organization of a reporting market and the number stopped by the account, the number of long and short options expired and exercised, the number of long and short futures assigned, and the number of long and short transfers sent and received. The report shall also show all positions in all contract months and option expirations of that same commodity on the same reporting market for which the special account is reportable.
(g)
(h)
(a) Pursuant to § 17.00(a) and (h), the authority shall be designated to the Director of the Office of Data and Technology to determine whether futures commission merchants, clearing members, and foreign brokers may report the information required under § 17.00(a) and (h) using some format other than that required under § 17.00(g) upon a determination that such person is unable to report the information using the format, coding structure, or electronic data transmission procedures otherwise required.
(d) Pursuant to § 17.00(a), (g), and (h), the authority shall be designated to the Director of the Office of Data and Technology to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in appendix C to this part and to determine whether to permit or require one or more particular data standards.
The following appendices will not appear in the Code of Federal Regulations.
On this matter, Chairman Behnam and Commissioners Johnson, Goldsmith Romero, and Mersinger voted in the affirmative. Commissioner Pham voted in the negative.
I support the final rules to amend the Commission's large trader reporting regulations for futures and options. The rules modernize large trader data reporting under part 17 of the Commission's regulations, and create a path for efficient future modernization. In addition, the amendments align part 17 data and reporting with the reporting structure in other Commission regulations.
The large trader reports that result from this data are used for surveillance (detection and prevention of price manipulation) and enforcement of speculative limits. This particular data set can be crucial when it comes to exercising our enforcement authority in the cash markets. CFTC economists and analysts monitor the commodity markets on a daily, real-time basis, and can view the derivatives positions of large traders on a next-day basis. Large trader reports also provide the basis for the Commission's weekly Commitments of Traders report, which is used by a wide range of market participants. Modernizing and aligning these rules promotes transparency and efficiency as we carry out our regulatory and enforcement functions.
These final rules add one more segment to the Commission's data arc that now spans well over a decade since Congress set forth a new, more ambitious vision for how data could address some of the underlying causes of the 2008 financial crisis and instill greater resilience in the decades to come. I have prioritized the Commission's data and analytics capabilities—adjusting, harmonizing, prioritizing standardization without abandoning mission-critical functions, and generally keeping pace with the markets. We are still moving forward, bringing the arc full circle toward full cloud integration, zero-trust architecture, and data cataloging, as well as Commission-wide upskilling focused on enhanced analytics and integration and use of artificial intelligence.
I thank the staff for their hard work in producing these important rules, and I am proud to support them.
Today, the Commodity Futures Trading Commission (Commission or CFTC) adopts amendments to large trader reports. Ensuring the integrity and transparency of these reports fosters sound derivatives markets by providing the Commission with critical information concerning the largest positional exposures in futures and options markets. I support adopting the final rule, which amends certain provisions of the Large Trader Reporting Requirements for futures and options under Commission Regulation 17.00(a) and (g) (Final Rule).
Sections 4a, 4c(b), 4g, and 4i of the Commodity Exchange Act (CEA) establish the Commission's authority to create regulation imposing large trader reporting and recordkeeping requirements on registrants. Part 17 sets out the obligations for reports that markets, futures commission merchants, clearing members, and foreign brokers must provide to the Commission.
CFTC Regulation 17.00(a) requires reporting firms to report daily position information for special accounts—futures and options trader accounts that exceed certain Commission-prescribed levels—to the Commission, in accordance with the record format and data elements set forth in CFTC Regulation 17.00(g).
The Commission is adopting the Final Rule to modernize certain technical aspects of the reporting requirements and clarify aspects of the reporting requirements and instructions. The Final Rule will transition reporting format to the Financial Information eXchange Markup Language (FIXML). Additionally, the Commission is updating the data elements to be reported and delegating authority to the Director of the Division of Data to designate a data submission standard. Contemporaneously, the Commission will publish an updated Part 17 Guidebook.
The Commission issued a notice of proposed rulemaking on June 27, 2023 and received twelve substantive comment letters. The Final Rule is responsive to many of the comments received and reflects thoughtful engagement with market participants—an essential aspect of the notice-and-comment rulemaking process.
Access to more fulsome and reliable data will improve the Commission's understanding of how traders employ futures and options, enable the Commission to surveil for market integrity in a single market or across markets, and facilitate the Commission's detection and enforcement of abusive trading practices.
As I have previously stated:
Appropriately-tailored regulatory disclosure is a powerful tool in identifying vulnerabilities and trends in our markets, mitigating systemic risk, and addressing financial stability concerns. Disclosure of financial information to market regulators is critical to the regulatory oversight of our financial markets, particularly when such disclosure is accurate, timely, robust, and usable.
Today's Final Rule supports position reporting that meets these characteristics. Though facilitating effective supervision can engender costs, the important data reported to the Commission plays a crucial role in stemming broader market disruptions.
I commend the work of the staff of the Division of Market Oversight, including Owen Kopon, Paul Chaffin, Chase Lindsey, and Jason Smith, on the Final Rule.
I respectfully dissent from the Large Trader Reporting Rule primarily because it raises fair notice and due process issues for future regulatory changes. The Commission is also delegating its authority to a non-existent office, which I believe is not only impermissible, but makes no sense.
I would like to thank Owen Kopon, Paul Chaffin, Chase Lindsay, Jason Smith, Nora Flood, and Vince McGonagle in the Division of Market Oversight, as well as James Fay in the Division of Data and Daniel Prager in the Office of the Chief Economist, for their work on the Large Trader Reporting Rule. I appreciate the staff working with me to make revisions to address my concerns. While the revisions to the rulemaking preamble are intended to alleviate the fair notice concerns, they ultimately do not provide sufficient due process protections as required under the law because there were no associated revisions to the rule text.
Overall, I continue to support most of the rule amendments that would update the outdated large trader reporting submission standards in the part 17 regulations.
However, I have two significant concerns. First, the Commission will make a new delegation of authority to the Director of the Office of Data and Technology (ODT) in Regulation 17.03(d) to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in part 17, appendix C and to determine whether to permit or require one or more particular data standards. I find it deeply troubling and against all common sense that the Commission is making a new delegation of authority to an office that no longer exists at the CFTC.
I find it insincere, or incongruous at best, for the Commission to state that it is dedicated to providing certainty to market participants—or even clarity, which the Final Rule asserts seven times—when the Commission is delegating authority to a ghost office to make decisions that may cost firms millions of dollars to implement.
Second, multiple commenters requested that the Commission include a notice standard under Regulation 17.03(d) if the ODT Director changes these standards in the future.
Considering the CFTC's aggressive enforcement posture towards pursuing reporting violations with a strict liability standard and no materiality threshold, resulting in seven-figure penalties for anything less than 100% perfection,
Accordingly, while I support most of the revisions to the Large Trader Reporting Final Rule, my outstanding concerns outweigh that support.
In rule document 2024-10879, beginning on page 46682 in the issue of Wednesday, May 29, 2024, make the following correction:
On page 46733, in the second column, in amendatory instruction 11. c., on the second line, “paragraph I” should read “paragraph (e)”.
Railroad Retirement Board.
Direct final rule; request for comments.
The Railroad Retirement Board (RRB) amends its regulations to update who may qualify as an adopted child to be included in the computation of a railroad employee's annuity amount under section 3(f)(2) of the Railroad Retirement Act. The current regulation requires that a child adopted after the employee begins receiving an annuity must both live with the employee and receive one-half support from the employee. The amendment would eliminate this requirement for legally adopted children if the adoption proceedings commenced prior to the child attaining age 18. For adoptions commenced after the child attains age 18, the amendment would require only one of the above criteria to be met. This amendment is necessary to harmonize the RRB's regulations with the requirements of section 202(d)(8)(D) of the Social Security Act and section 3(f)(2) of the Railroad Retirement Act.
This rule becomes effective September 3, 2024 without further action unless adverse comment is received by July 3, 2024. If adverse comment is received, the Railroad Retirement Board will publish a timely withdrawal of the rule in the
You may submit comments, identified by RIN 3320-AB79, through any of the following methods:
1. Internet—Send inquiries via email to
2. Fax—(312) 751-7102.
3. Mail—Secretary to the Board, Railroad Retirement Board, 844 N Rush Street, Chicago, Illinois 60611-1275.
Do not submit the same comment multiple times or by more than one method. Regardless of which method you choose, please indicate that your comments refer to RIN number 3320-AB79.
Peter J. Orlowicz, Senior Counsel, Railroad Retirement Board, 844 North Rush Street, Chicago, IL 60611-1275, (312) 751-4922.
The Railroad Retirement Act (RRA) provides monthly annuities for railroad employees based on age and years of service in the railroad industry. The RRA does not directly provide annuities for dependent children of living railroad employees. However, section 3(f)(2) of the RRA [45 U.S.C. 231b(f)(2)] guarantees that the annuity payable to an employee shall never be less than the amount which would have been payable to the employee under the Social Security Act (SS Act) if the employee's service was entirely covered by the SS Act. Because the SS Act does provide for annuities to dependent children of a wage earner under the SS Act, a railroad employee's annuity may be increased under section 3(f)(2) of the RRA when the employee has a dependent child who meets the definition of a child contained in section 216(e) of the SS Act [42 U.S.C. 416(e)]. The definition of “child” under section 216(e) of the SS Act includes adopted children and stepchildren of an individual, subject to certain limiting criteria.
Section 202(d)(1) of the SS Act [42 U.S.C. 402(d)(1)] provides that every child, as defined in section 216(e) of the SS Act, of an individual entitled to old-age or disability insurance benefits shall be entitled to a child's insurance benefit if the child was dependent upon the individual, the child has filed an application for child's insurance benefits, and at the time of application the child was unmarried and either had not attained the age of 18 (age 19 if a full-time elementary or secondary school student) or was under a disability which began before the child attained age 22. Prior to December 19, 1989, a child had to both live with and receive one-half support from an individual to qualify as a dependent child. The current version of the RRB's regulations at 20 CFR 222.53 and 222.54 reflect this dual requirement.
On December 19, 1989, section 10301 of the Miscellaneous and Technical Social Security Act Amendments of 1989 [Pub. L. 101-239, title X, section 10301] amended section 202(d)(8)(D) of the SS Act [42 U.S.C. 402(d)(8)(D)] to allow legally adopted children to be deemed dependent on an individual receiving old-age or disability insurance benefits, regardless of residence or support, if the adoption was decreed by a court of competent jurisdiction within the United States and the adoption proceeding was commenced prior to the child attaining age 18. In the case of a child whose adoption was commenced after the child attained age 18, section 202(d)(8)(D) was amended to state the child shall be considered dependent if the child was either living with or receiving at least one-half of the child's support from the individual. Current regulations of the Social Security Administration at 20 CFR 404.362(b) are consistent with this amended requirement.
We are amending §§ 222.53 and 222.54 of the RRB's regulations to reflect the statutory elimination of the residency and support requirements for children legally adopted prior to attaining age 18 to qualify for increases in the employee's annuity amount under section 3(f)(2) of the RRA, and to remove provisions that treat grandchildren or stepgrandchildren adopted as the children of an annuitant differently than other adopted children. Because a child legally adopted prior to attaining age 18 is considered a dependent child and is eligible for child's insurance benefits under section 202(d)(8)(D) and section 216(e) of the SS Act, section 3(f)(2) of the RRA requires that an employee's annuity must be increased accordingly when an employee has adopted a child prior to that child attaining age 18. Furthermore, a child whose adoption was not commenced until after the child attained age 18 may still be considered dependent on an individual and qualify for child's insurance benefits if the child either lives with the individual or receives one-half support from the individual; the child need not meet both criteria. Accordingly, section 3(f)(2) of the RRA also requires that an employee's annuity must be increased when an employee has adopted a child after the child attains age 18 if the employee lives with the child or provides one-half of the child's support.
Prior to the Miscellaneous and Technical Social Security Act Amendments of 1989, the time period necessary for an adopted child to be dependent on an individual was different if the adopted child was also a grandchild or stepgrandchild of the individual than if the adopted child was not a grandchild or stepgrandchild of the individual. This distinction was eliminated in the Miscellaneous and Technical Social Security Act Amendments of 1989 because all adopted children whose adoptions were commenced prior to attaining age 18 were deemed dependent on the adoptive parents. Therefore, we are revising § 222.53 to reflect the absence of a residency or support requirement for children adopted prior to attaining age 18, to include a requirement of either residency or one-half support when a child's adoption proceedings were commenced after the child attained age 18 and removing § 222.54 entirely because we no longer have different rules for dependency when an adopted child is also a grandchild or stepgrandchild.
The RRB, with the Office of Management and Budget, has determined that this is not a significant regulatory action under Executive Order 12866, as supplemented by Executive Order 13563. Therefore, no regulatory impact analysis is required.
The RRB certifies that this direct final rule will not have a significant economic impact on a substantial number of small entities because it only concerns benefit eligibility for individuals and does not regulate or impose burdens on small entities as defined by the Regulatory Flexibility Act.
This direct final rule imposes no reporting or recordkeeping requirements subject to Office of Management and Budget clearance.
Claims, Railroad retirement, Social security.
For the reasons set out in the preamble, the Railroad Retirement Board amends 20 CFR part 222 as follows:
45 U.S.C. 231f.
A child who is not the employee's natural child or stepchild, and who is adopted by the employee after the employee could become entitled to an old age or disability benefit under the Social Security Act (treating his or her railroad compensation as wages under that Act), is considered dependent on the employee during the employee's lifetime only if—
(a) The child had not attained age 18 when adoption proceedings were commenced, and the child's adoption was issued by a court of competent jurisdiction within the United States; or
(b) The child had attained age 18 before adoption proceedings were commenced, the child's adoption was issued by a court of competent jurisdiction within the United States, and the child was living with or receiving at least one-half of the child's support from the employee for the year immediately preceding the month in which the adoption was issued.
By Authority of the Board.
Railroad Retirement Board.
Direct final rule; request for comments.
The Railroad Retirement Board amends its regulations to add additional statutory conditions under which the Railroad Retirement Board will pay benefits certified to it by the Commissioner of Social Security. These updates are necessary to reflect the amendments to section 205(i) of the Social Security Act enacted by section 103(i)(3) of the Railroad Retirement and Survivors' Improvement Act of 2001 and section 843 of the Bipartisan Budget Act of 2015.
This rule becomes effective September 3, 2024 without further action, unless adverse comment is received by July 3, 2024. If adverse comment is received, the Railroad Retirement Board will publish a timely withdrawal of the rule in the
You may submit comments, identified by RIN 3320-AB78, through any of the following methods:
1. Internet—Send inquiries via email to
2. Fax—(312) 751-7102.
3. Mail—Secretary to the Board, Railroad Retirement Board, 844 N Rush Street, Chicago, Illinois 60611-1275.
Do not submit the same comment multiple times or by more than one method. Regardless of which method you choose, please indicate that your comments refer to RIN number 3320-AB78.
Peter J. Orlowicz, Senior Counsel, Railroad Retirement Board, 844 North Rush Street, Chicago, IL 60611-1275, (312) 751-4922.
Section 205(i) of the Social Security Act directs the Commissioner of Social Security, upon final decision of the Commissioner or upon final judgment of any court of competent jurisdiction that any person is entitled to payments under title II of the Social Security Act, to certify the name and address of the person entitled to payment, the amount of the payment, and the time at which payment should be made to the Managing Trustee of the Board of Trustees for the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund. The Managing Trustee is then directed to make the payments as certified by the Commissioner. 42 U.S.C. 405(i). However, for certain individuals defined in section 205(i), the Commissioner is instead directed to certify the payments to the Railroad Retirement Board, which shall provide for such payments to those individuals on behalf of the Managing Trustee in accordance with the provisions of the Railroad Retirement Act of 1974.
In the Railroad Retirement and Survivors' Improvement Act of 2001, Congress amended the Railroad Retirement Act to allow individuals with less than ten years of railroad service to qualify for annuities under the Act if they had at least five years of railroad service, all of which accrued after December 31, 1995. Public Law 107-90 (Dec. 21, 2001). Section 103(i) of the Railroad Retirement and Survivors' Improvement Act of 2001 was a conforming amendment to section 205(i) of the Social Security Act, directing the Commissioner of Social Security to certify title II benefit payments to the Railroad Retirement Board for payment with respect to individuals who had five or more years of railroad service, all of which accrued after December 31, 1995. Accordingly, the Railroad Retirement Board is amending its regulations at 20 CFR 235.3 to reflect the Board's statutory obligation to pay title II benefits for railroad employees with at least 60 months of railroad service after December 31, 1995, the wife or husband of such an employee, a survivor of such an employee, and any other person entitled to title II benefits based on the social security wages of the railroad employee except survivors where the employee lacked a current connection with the railroad industry at the time of the employee's death.
Congress amended section 205(i) of the Social Security Act again in section 843 of the Bipartisan Budget Act of 2015, Public Law 114-74 (Nov. 2, 2015). Before these amendments, the Commissioner would certify (and the Board would pay) title II benefits to a divorced wife or husband of a railroad employee only if the divorced wife or husband claimed social security benefits based on the railroad employee's social security wages. Section 843 of the Bipartisan Budget Act of 2015 amended section 205(i) to provide that all divorced spouses of railroad workers with at least ten years of railroad service (or five years of service after December 31, 1995) would have their social security benefits certified to the Board for payment. Accordingly, the Railroad Retirement Board is amending its regulations at 20 CFR 235.3 to reflect the Board's statutory obligation to pay title II benefits for divorced wives and husbands of railroad employees if the railroad employee has at least 120 months of railroad service (or 60 months of railroad service after December 31, 1995).
Finally, the authority citation for part 235 does not currently reflect that the statutory authority for the Board to pay benefits certified by the Commissioner flows from section 205(i) of the Social Security Act. Accordingly, the Railroad Retirement Board is amending the authority for part 235 to include 42 U.S.C. 405(i).
This direct final rule is being issued without prior public notice or opportunity for public comments. The Board does not anticipate this rule will generate adverse comment, and the effective date of the rule is conditional on the non-receipt of adverse comments. If the Board receives significant adverse comments prior to the effective date of this direct final rule, the Board will publish a timely notice in the
The Board, with the Office of Management and Budget, has determined that this is not a significant regulatory action under Executive Order 12866, as supplemented by Executive Order 13563. Therefore, no regulatory impact analysis is required.
The Board certifies that this direct final rule would not have a significant economic impact on a substantial number of small entities because it affects only a change in the disbursing agent for already-existing benefits.
This direct final rule imposes no reporting or recordkeeping requirements subject to Office of Management and Budget clearance.
Railroad retirement, Social security.
For the reasons set out in the preamble, the Railroad Retirement Board amends 20 CFR part 235 as follows:
42 U.S.C. 405(i), 45 U.S.C. 231f.
The following individuals, if entitled to social security benefits, are paid such benefits by the Board:
(a) A railroad employee who has been credited with at least 120 months of railroad service (or at least 60 months of railroad service, all of which accrue after December 31, 1995);
(b) A wife or husband of a railroad employee who has been credited with at least 120 months of railroad service (or at least 60 months of railroad service, all of which accrue after December 31, 1995);
(c) A divorced wife or husband of a railroad employee who has been credited with at least 120 months of railroad service (or at least 60 months of railroad service, all of which accrue after December 31, 1995);
(d) A survivor of a railroad employee, including a surviving divorced spouse, remarried widow(er), surviving divorced mother or father, who is entitled, or upon application would be entitled, to an annuity under the Railroad Retirement Act; and
(e) Any other person entitled to benefits under title II of the Social Security Act based on the social security wages of a railroad employee who has been credited with at least 120 months of railroad service (or at least 60 months of railroad service, all of which accrue after December 31, 1995), except survivors of a railroad employee when the Social Security Administration has jurisdiction for survivor benefits. See part 221 of this chapter.
By Authority of the Board.
Food and Drug Administration, HHS.
Notification.
The Food and Drug Administration (FDA or we) has determined that there is sufficient laboratory capacity in the Laboratory Accreditation for Analyses of Foods (LAAF) program for the import-related food testing covered by the LAAF regulation for mycotoxins. As sufficient capacity is reached for additional analytes covered under the import-related food testing provisions of the LAAF regulation, those specific analytes and compliance dates will be posted on the LAAF Dashboard. Owners and consignees of imported food subject to the LAAF regulation must use a LAAF-accredited laboratory to conduct covered import-related food testing starting on the applicable compliance date, which is 6 months from the date a specific analyte is listed on a public registry, based on FDA's determination that sufficient laboratory capacity has been achieved for such analyte. FDA has not yet made a capacity determination for the other food testing circumstances covered by the LAAF regulation.
Stacie Hammack, Chemist, Food and Feed Laboratory Operations, Office of Regulatory Affairs, Food and Drug Administration, 60 8th St. NE, Atlanta, GA 30309, 301-796-5817;
In the
The LAAF regulation defines food testing and testing of food to mean the analysis of food product samples or environmental samples (§ 1.1102). At § 1.1107(a), the LAAF regulation details five food testing circumstances in which owners and consignees must use a LAAF-accredited laboratory. This document relates to a determination of sufficient laboratory capacity for two of those circumstances related to import testing: in support of admission of an article of food under section 801(a) of the FD&C Act (§ 1.1107(a)(4)); and to support removal from an import alert through successful consecutive testing (§ 1.1107(a)(5)), for specific analyte(s) as listed on the LAAF Dashboard. For example, aflatoxin is a specific analyte within the analyte group of mycotoxins for which we have determined sufficient laboratory capacity has been met for the testing circumstances in this document.
In those testing circumstances covered by the LAAF regulation for which FDA has determined sufficient laboratory capacity has been met, persons with an ownership or consignment interest in the food product or environment that is the subject of the testing (owners and consignees) must use a laboratory that is LAAF-accredited for an analytical method for the appropriate analyte to conduct such testing. LAAF-accredited laboratories must comply with all applicable LAAF requirements, including the submission of results directly to FDA, in accordance with § 1.1152(b). FDA maintains on its website the LAAF Dashboard (
We explained in the LAAF final rule that implementation of the LAAF program will necessarily occur in a stepwise fashion. The first step was recognizing a sufficient number of accreditation bodies; we announced the completion of that step on July 12, 2022 (
FDA has determined that the LAAF program has attained sufficient laboratory capacity for the food testing described in § 1.1107(a)(4) and (5) for the analyte group of mycotoxins and its specific analytes, including aflatoxin. In § 1.1107(a)(4), the LAAF regulation covers food testing in support of admission of an article of food under section 801(a) of the FD&C Act (21 U.S.C. 381(a)). Section 801(a) of the FD&C Act authorizes FDA to detain food at the border because it is, or appears to be, in violation of the FD&C Act or its implementing regulations. If FDA detains a food product imported or offered for import under section 801(a) of the FD&C Act, but FDA has not yet refused admission, the owner or consignee may introduce testimonial evidence that the food is admissible. Owners and consignees often engage laboratories to test the food and submit to FDA the results of the testing, as testimony to support admission of the food. If FDA determines that the food testing results are valid and that they overcome the appearance of a violation of the FD&C Act, then FDA will release the food from detention and allow it to proceed for entry into the United States. The testing of detained product at the direction of such owners and consignees is covered by the LAAF regulation at § 1.1107(a)(4).
Section 1.1107(a)(5) of the LAAF regulation also relates to detained food offered for import; it states that testing to support removal from an import alert through successful consecutive testing is covered by the LAAF regulation. An import alert informs FDA staff and the public that we have enough evidence to detain, without first physically examining (sampling), products offered for import that appear to violate the FD&C Act. Often, individual import alerts include specific information regarding removal from the import alert. Many current import alerts indicate that it would be helpful for owners or consignees to present to FDA evidence of at least five consecutive shipments to the United States that have been found to not be in violation. Owners and consignees often engage laboratories and submit to FDA the results of the testing as testimony to support removal from import alert; such testing is covered by the LAAF regulation at § 1.1107(a)(5).
Owners and consignees will be required to use a LAAF-accredited laboratory starting 6 months from the date a specific analyte is posted on the LAAF Dashboard. LAAF-accredited laboratories must comply with all applicable LAAF requirements, including the submission of results directly to FDA, in accordance with § 1.1152(b). The LAAF Dashboard includes a table of analyte groups and specific analytes with sufficient capacity and the compliance date for those analyses, in addition to the list of LAAF-accredited laboratories, their location, contact details, and the list of LAAF-accredited analytes and methods. As capacity for additional analytes is reached, those will be added to the LAAF Dashboard with a compliance date of 6 months after posting to the LAAF Dashboard. The LAAF Dashboard may be viewed at (
We will continue stepwise implementation of the LAAF program for other food testing circumstances in which owners and consignees are required to use a LAAF-accredited laboratory. FDA has not yet made a capacity determination for the other food testing circumstances covered by the LAAF regulation. We will publish one or more additional notices in the
Coast Guard, DHS.
Final rule.
The Coast Guard is amending the regulations establishing safety zones for annual fireworks displays in the Captain of the Port Zone Columbia River. This action updates 12 existing safety zones, adding 2 safety zones for fireworks displays that were previously published under temporary regulations, and reordering the table alphabetically.
This rule is effective July 3, 2024.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions about this rule, call or email Lieutenant Carlie Gilligan, Sector Columbia River Waterways Management Division, U.S. Coast Guard; telephone 503-240-9319, email
On April 12, 2024, the Coast Guard published a notice of proposed rulemaking (NPRM) titled Safety Zone; Annual Fireworks Displays Within the Columbia River Captain of the Port Zone (89 FR 25835). There we stated why we issued the NPRM and invited comments on our proposed regulatory action related to this fireworks display. During the comment period that ended May 13, 2024, we received 1 comment.
The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034. The Captain of the Port Sector Columbia River has determined that fireworks displays create hazardous conditions for the maritime public because of the large number of vessels near the displays, as well as the noise, falling debris, and explosions that occur during the events. Because firework discharge sites pose a potential hazard to the maritime public, these safety zones are necessary to restrict vessel movement and reduce vessel congregation near firework discharge sites.
As noted above, we received 1 comment on our NPRM published April 12, 2024. However, the concerns were unrelated to the proposed revisions and outside of the scope of Coast Guard authority. There are no changes in the regulatory text of this rule from the proposed rule in the NPRM.
This rule revises the safety zone regulations designated in the table in 33 CFR 165.1315(a). Specifically, this rule alphabetizes the events, makes minor updates to the names of 10 events, updates the location of 1 event (Newport 4th of July), updates the typical date of 1 event (The 4th of July at Pekin Ferry), and adds two events (Umatilla Landing Days and City of Richland Lighted Boat Parade Festival).
The Umatilla Landing Days safety zone was previously issued as a temporary final rule (88 FR 32966, May 23, 2023), and after conferring with the event sponsor, the Coast Guard has learned it will be a recurring fireworks display. This safety zone covers all navigable waters within a 400-foot radius of the fireworks launch site in Umatilla, OR, located at 45°55′37″ N, 119°19′47″ W.
On November 29, 2023, the Coast Guard issued a rulemaking creating a temporary safety zone for all navigable waters within a 600-foot radius of a fireworks display on the Columbia River for the City of Richland Christmas Fireworks display in Richland, WA. A copy of the rulemaking that ended December 2, 2023 is available in the Docket USCG-2024-0253, which can be found using instructions in the
Finally, the Coast Guard is revising twelve existing fireworks display safety zones. These revisions include updating the date for 4th of July at Pekin Ferry to more precisely describe when the fireworks display will occur, updating the location for Newport 4th of July, and making minor name updates to the following events: Brookings, OR July 4th Celebration; Port of Cascade Locks 4th of July Fireworks; Bald Eagle Days; City of Coos Bay July 4th Celebration/Fireworks Over the Bay; The Dalles Area Fourth of July; Ilwaco July 4th Committee Fireworks/Independence Day at the Port; Tri-City Chamber of Commerce Fireworks/Kennewick River of Fire Festival; City of Rainier/Rainier Days; City of St. Helens 4th of July Fireworks; and Cedco Inc./The Mill Casino Independence Day. These updates are intended to eliminate confusion caused by the fireworks display safety zones listed in the 33 CFR 165.1315 table and any subsequently issued temporary safety zones resulting from changes to the dates or locations of the events. The regulatory text appears at the end of this document.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This rule has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB).
This regulatory action determination is based on the size, location, duration, and time-of day of the events. Moreover, the Coast Guard will issue a Broadcast Notice to Mariners via VHF-FM and the rule allow vessels to seek permission to enter the zone.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969(42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves safety zones lasting various times that will prohibit entry within defined areas. Normally such actions are categorically excluded from further review under paragraph L60(a) of appendix A, table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the
Harbors, Marine Safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
46 U.S.C. 70034, 70051, 70124; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 00170.1, Revision No. 01.3.
(a)
Coast Guard, DHS.
Notification of enforcement of regulation.
The Coast Guard will enforce a Safety Zone for the Boldt Castle 4th of July Fireworks on July 4th, 2024, to provide for the safety of life on navigable waterways during this event. Our regulation for marine events within the Ninth Coast Guard District identifies the regulated area for this event in Alexandria Bay, NY. During the enforcement periods, the operator of any vessel in the regulated area must comply with directions from the Patrol Commander or any Official Patrol displaying a Coast Guard ensign.
The regulations in 33 CFR 165.939 will be enforced for the Boldt Castle 4th of July Fireworks regulated area listed in item b.13 in the table to § 165.939 from 9 p.m. through 10:30 p.m. on July 4, 2024.
If you have questions about this notification of enforcement, call or email Marine Safety Unit Thousand Islands Marine Event Permit Coordinator, U.S. Coast Guard MSU Thousand Islands; telephone 315-774-8724, email
The Coast Guard will enforce a safety zone in 33 CFR 165.939 for the Boldt Castle 4th of July Fireworks regulated area from 9 p.m. through 10:30 p.m. on July 4, 2024. This action is being taken to provide for the safety of life on navigable waterways during this event. Our regulation for marine events within the Ninth Coast Guard District, § 165.939, specifies the location of the regulated area for the Boldt Castle 4th of July Fireworks which encompasses portions of the St. Lawrence River. During the enforcement period as reflected in § 165.939, if you are the operator of a vessel in the regulated area you must comply with directions from the Patrol Commander or any Official Patrol displaying a Coast Guard ensign.
In addition to this notification of enforcement in the
National Archives and Records Administration (NARA).
Direct final rule; correction.
NARA is correcting a direct final rule that appeared in the
Effective July 30, 2024.
Edward Germino, Strategy and Performance Division, by email at
In FR Doc. 2024-09396, appearing on page 35007 in the
1. On page 35007, in the first column, the
2. On page 35007, in the first column, the DATES caption is corrected to read
Environmental Protection Agency (EPA).
Final rule.
The Commonwealth of Kentucky, through the Kentucky Energy and Environment Cabinet (Cabinet), Kentucky Division for Air Quality (KDAQ), submitted a revision to the Kentucky State Implementation Plan (SIP) on November 29, 2022. The SIP revision updates, as of June 9, 2022, the geographical boundary description and attainment status designation for the Henderson-Webster SO
This rule is effective July 3, 2024.
Josue Ortiz Borrero, Air Regulatory Management Section, Air Planning and Implementation Branch, Air and Radiation Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW, Atlanta, Georgia 30303-8960. Mr. Ortiz can be reached via phone number (404) 562-8085 or via electronic mail at
On November 29, 2022, the Cabinet submitted a SIP revision containing changes to 401 Kentucky Administrative Regulation (KAR) 51:010,
Through a notice of proposed rulemaking (NPRM), published on April 11, 2024 (89 FR 25555), EPA proposed to approve the November 29, 2022, revision which amends the attainment status designations for the Henderson-Webster SO
In this document, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, and as discussed in Section I of this preamble, EPA is finalizing the incorporation by reference of Kentucky regulation 401 KAR 51:010,
EPA is finalizing approval of Kentucky's November 29, 2022, SIP revision, which updates regulation 401 KAR 51:010 to amend the attainment status designation for the Henderson-Webster SO
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations.
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 14094 (88 FR 21879, April 11, 2023);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it approves a State program;
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and
• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA.
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Executive Order 12898 (Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”
The Cabinet did not evaluate EJ considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. EPA did not perform an EJ analysis and did not consider EJ in this action. Due to the nature of the action being taken here, this action is expected to have a neutral to positive impact on the air quality of the affected area. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goal of E.O. 12898 of achieving EJ for people of color, low-income populations, and Indigenous peoples.
This action is subject to the Congressional Review Act, and EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 2, 2024. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides.
For the reasons stated in the preamble, EPA amends 40 CFR part 52 as follows:
42 U.S.C. 7401
(c) * * *
Cybersecurity and Infrastructure Security Agency, DHS.
Proposed rule; correction.
On April 4, 2024, the Cybersecurity and Infrastructure Security Agency (CISA) published, in the
Comments to the NPRM published at 89 FR 23644 on April 4, 2024, and related material must be submitted on or before July 3, 2024.
You may send comments, identified by docket number CISA-2022-0010, through the Federal eRulemaking Portal available at
Todd Klessman, CIRCIA Rulemaking Team Lead, Cybersecurity and Infrastructure Security Agency,
On April 4, 2024, CISA published a NPRM, “Cyber Incident Reporting for Critical Infrastructure Act Reporting Requirements,” 89 FR 23644, that was required by the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA).
In proposed 6 CFR 226.2, Applicability, CISA proposed a list of entities that would be required to report under the proposed regulation.
As stated in the CIRCIA NPRM, CISA's intent is to align CIRCIA requirements applicable to aviation and surface transportation entities with TSA's requirements to support reduction of duplication and to avoid unintended gaps in cyber incident reporting. As such, CISA proposed applicability criteria describing covered entities in 6 CFR 226.2(b)(14) that include entities that are currently required, or will be required, to report
For the surface transportation sector, TSA currently requires reporting of cyber incidents to CISA by owner/operators of certain freight railroads, passenger railroads, rail transit systems, and hazardous and natural gas pipeline facilities and systems pursuant to Security Directives issued under the authority of 49 U.S.C. 114(
To address the concern regarding cross-referencing a regulatory section that does not currently exist, CISA is issuing this correction to remove the reference to that specific regulatory section and, instead, propose criterion to make clear that CIRCIA's description of a covered entity for pipeline facilities or systems includes any entity that is currently required by TSA to report cyber incidents under a Security Directive or is otherwise identified as required to report under TSA's final regulations. For owner/operators of pipeline facilities or systems not currently subject to reporting requirements under TSA's Security Directives, it is CISA's understanding, through consultation with TSA, that TSA intends to continue using a risk-based approach in determining entities subject to its regulations, similar to its Security Directive approach and that applicability of cyber incident reporting requirements beyond the existing Security Directives will not be substantially expanded. TSA's Security Directives indicate that approximately 100 pipeline systems are considered the most critical.
As mentioned in the CIRCIA NPRM, CISA believes that aligning CIRCIA's Applicability section with the population of entities from which TSA requires cyber incident reporting or at which TSA requires the implementation of enhanced cybersecurity measures is appropriate for CIRCIA and consistent with the factors contained in 6 U.S.C. 681b(c)(1). CISA will continue to coordinate with TSA throughout the rulemaking process to harmonize CIRCIA's Applicability section with TSA, to the maximum extent practicable.
Comments on the NPRM and related material must be submitted on or before July 3, 2024.
(b) * * *
(14) * * *
(iv) A pipeline facility or system owner or operator required to report cyber incidents by the Transportation Security Administration;
Coast Guard, DHS.
Notice of proposed rulemaking.
The Coast Guard is proposing to establish a temporary safety zone for certain waters of Umatilla Marina. This action is necessary to provide for the safety of life on these navigable waters near Irrigon, OR, during a fireworks display on July 27, 2024. This proposed rulemaking would prohibit persons and vessels from entering the safety zone unless authorized by the Captain of the Port Columbia River or a designated representative. We invite your comments on this proposed rulemaking.
Comments and related material must be received by the Coast Guard on or before July 3, 2024.
You may submit comments identified by docket number USCG-2024-0449 using the Federal Decision-Making Portal at
If you have questions about this proposed rulemaking, call or email Lieutenant Carlie Gilligan, Waterways Management Division, Marine Safety Unit Portland, Coast Guard; telephone 503-240-9319, email
On March 6, 2024, Western Display Fireworks, LTD notified the Coast Guard that it will be conducting a fireworks display from 9:30 to 11:00 p.m. on July 27, 2024. The fireworks are to be launched from a site on land at Marina Park in Irrigon, OR. Hazards from firework displays include accidental discharge of fireworks, dangerous projectiles, and falling hot embers or other debris. The Captain of the Port Columbia River (COTP) has determined that potential hazards associated with the fireworks would be a safety concern for anyone within a 550-foot radius of the launch site before, during, or after the fireworks display.
The purpose of this rulemaking is to ensure the safety of vessels and the navigable waters within a 550-foot radius of the fireworks discharge site before, during, and after the scheduled event. The Coast Guard is proposing this rulemaking under authority in 46 U.S.C. 70034.
The COTP is proposing to establish a safety zone from 9:30 to 11:00 p.m. on July 27, 2024. The safety zone would cover all navigable waters within 550 feet of the launch site located at approximately 45°54′3.72″ N 119°29′15.36″ W at Marina Park in Irrigon, Oregon. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled 9:30 to 11:00 p.m. fireworks display. No vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The regulatory text we are proposing appears at the end of this document.
We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This NPRM has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB).
This regulatory action determination is based on the size, location, and duration of the safety zone. The safety zone created by this proposed rule is designed to minimize its impact on navigable waters. The safety zone would impact approximately a 550-foot area of Marina Park and is not anticipated to exceed 1.5 hours in duration. Thus, restrictions on vessel movement within that particular area are expected to be minimal. Moreover, under certain conditions vessels may still transit through the safety zone when permitted by the COTP. The Coast Guard would issue a Notice to Mariners about the zone, and the rule would allow vessels to seek permission to enter the zone.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section IV.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.
If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this proposed rule would have a significant economic impact on it, please submit a comment (see
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the
This proposed rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132 (Federalism), if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this proposed rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments) because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please call or email the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the potential effects of this proposed rule elsewhere in this preamble.
We have analyzed this proposed rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the
We view public participation as essential to effective rulemaking and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
We review all comments received, but we will only post comments that address the topic of the proposed rule. We may choose not to post off-topic, inappropriate, or duplicate comments that we receive.
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard is proposing to amend 33 CFR part 165 as follows:
46 U.S.C. 70034, 70051, 70124; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 00170.1, Revision No. 01.3.
(a)
(b)
(c)
(2) To seek permission to enter, contact the COTP or the COTP's representative by calling (503) 247-4038 or the Sector Columbia River Command Center on Channel 16 VHF-FM. Those in the safety zone must comply with all lawful orders or directions given to them by the COTP or the COTP's designated representative.
(3) The COTP will provide notice of the regulated area through advanced notice via broadcast notice to mariners and by on-scene designated representatives.
(d)
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve state implementation plan (SIP) revisions submitted by the District of Columbia (the District), State of Maryland (MD), and Commonwealth of Virginia (VA). The revisions update the
Written comments must be received on or before July 3, 2024.
Submit your comments, identified by Docket ID No. EPA-R03-OAR-2024-0162 at
Gregory Becoat, Planning & Implementation Branch (3AD30), Air & Radiation Division, U.S. Environmental Protection Agency, Region III, 1600 John F Kennedy Boulevard, Philadelphia, Pennsylvania 19103. The telephone number is (215) 814-2053. Mr. Becoat can also be reached via electronic mail at
On November 14, 2023, September 6, 2023, and October 11, 2023, the District, Maryland, and Virginia, respectively, formally submitted requests to update the 2008 8-Hour Ozone national ambient air quality standard (NAAQS) maintenance plan for the Washington DC-MD-VA 2008 8-Hour Ozone NAAQS Maintenance Area (hereafter “the Washington Area” or “the Area”). These revisions update the Area's maintenance plan to include revised onroad and nonroad MVEBs for VOCs and NO
On April 15, 2019 (84 FR 15108), EPA approved Maryland and Virginia's requests to redesignate to attainment their portions of the Washington Area from marginal nonattainment to attainment of the 2008 8-Hour Ozone NAAQS, as well as the VOC and NO
Motor vehicle budgets are the projected levels of controlled emissions from the transportation sector (mobile sources) that are estimated in the SIP to provide for maintenance of the ozone standard. The transportation conformity rule (40 CFR part 93, subpart A) allows States to update existing SIP-approved MVEBs from older emissions models (
The current SIP-approved MVEBs for the Area were developed using the Highway Mobile Source Emission Factor Model (MOVES2014a) to generate onroad estimates and projections. On January 7, 2021 (86 FR 1106), EPA published an updated MOVES3 model, which became mandatory for use in transportation conformity analyses effective January 10, 2023.
EPA's MOVES3 guidance document describes how and when to use the latest version of the MOVES emissions model for SIP development, transportation conformity determinations, general conformity determinations, and other purposes.
If a state revises an existing SIP with MOVES3, it must show that the SIP continues to meet applicable requirements with the new level of motor vehicle emissions calculated by the new model. EPA's MOVES3 Policy Guidance provides the following description on how to meet the applicable requirements for existing SIPs that are revised with MOVES3, including ideas for how to streamline these revisions whenever possible: (1) use of latest planning assumptions: the motor vehicle emissions inventories for base year, milestone year and attainment/maintenance year will need to be recalculated with the latest available planning assumptions; (2) states will need to consider and evaluate whether growth and control strategy assumptions for non-motor vehicle sources (
Areas may be able to revise their motor vehicle emissions inventories and budgets using MOVES3 without revising the entire SIP or completing additional modeling if: (1) the SIP meets applicable requirements when the previous motor vehicle emissions inventories are replaced with MOVES3 inventories; and (2) the state can document that the growth and control strategy assumptions
The Area did not meet both required criteria for nonroad model source emissions. Consequently, the SIP revision included information addressing the recommendations described in the MOVES3 Policy Guidance. The SIP revision includes the following: (1) a demonstration that the 2008 8-Hour Ozone NAAQS maintenance plan continues to meet applicable requirements with the revised motor vehicle emissions inventories, as calculated by the MOVES3.0.4 model; (2) a review of the point, nonpoint (area), and marine, airport, and railroad (MAR) source missions inventories for the interim and maintenance years to determine if growth and control strategy assumptions have changed; and (3) an assessment to confirm that excess emissions exist and the quantification of these excess emissions for use in the safety margin applied to the MVEBs.
The Area's maintenance demonstration must show that emissions of VOC and NO
The Area also compared the nonroad mobile emissions using MOVES3.0.4 and MOVES2014a. This comparative analysis showed that the MOVES3.0.4 nonroad model emissions were much lower compared to MOVES2014a nonroad model emissions for 2025 and 2030. Tables 1 and 2 in this document, show that even with the estimated lower 2014 MOVES3.0.4 nonroad model emissions, total VOC and NO
EPA requires areas to demonstrate how the area will remain in compliance with the 8-Hour Ozone NAAQS for the 10-year period following the effective date of redesignation. One method that areas use to demonstrate that the area will maintain the 8-Hour Ozone NAAQS is to identify the level of ozone precursor emissions in the area which is sufficient to attain the NAAQS (attainment year 2014 inventory) and to show that future emissions of ozone precursors will not exceed the attainment levels. The comparison of
The District, the State of Maryland, and the Commonwealth of Virginia, separately reviewed their point source emission inventories, growth assumptions, and control assumptions, as well as emissions inventory data from more current actual inventories. The Area retained the 2025 and 2030 emissions inventories for point and nonpoint sources based on analyses of more current emissions inventory data as well as the latest growth rates for economic indicators.
The District's analysis of the point source emissions inventory for the 2014 attainment year for VOC and NO
The State of Maryland's analysis of the point source emissions inventory for the 2014 attainment year for VOC and NO
The
The 2014, 2025, and 2030 emission estimates for point sources, as well as the reported VOC and NO
The Area compared growth factors used to project nonpoint and MAR emissions from 2014 to 2025 and 2030 in the 2017 plan with current estimates from its' Cooperative Forecasts Round 9.2 and the Constrained Element of the Long-Range Transportation Plan (CE LRTP).
The Area updated the projection inventories for NO
Based on the onroad mobile emissions trend shown in this SIP revision and the most recent air quality conformity analysis for the Area, onroad mobile source emissions are decreasing due to the implementation of the National Low Emission Vehicle Program (NLEV), the Heavy-Duty Engine and Vehicle Standards (HDDV), Tier 3, and Safer Affordable Fuel Efficient (SAFE) Vehicles and Corporate Average Fuel Economy (CAFE) rules, Stage II, and Maryland's LEV/ZEV (Low Emission Vehicle/Zero Emission Vehicle) programs. These emission reductions occur even as VMT estimates continue to grow. This trend and onroad mobile source emission reductions ensures continued maintenance of the 2008 8-Hour Ozone NAAQS.
The Area's maintenance plan includes NO
This rulemaking revises the budgets for mobile sources in the Washington Area. The maintenance plan is designed to provide for future growth while still maintaining the 2008 ozone NAAQS. Growth in industries, population, and traffic is offset by reductions from cleaner cars and other emission reduction programs. Through the
The Area updated the 2025 and 2030 MVEBs, for NO
The 2017 plan demonstrated that the Area attained the 2008 8-Hour Ozone NAAQS and could therefore emit up to the attainment year 2014 emission level. Table 7 in this document, gives detailed information on the safety margin for the Area. Table 7 in this document, shows the differences in total emissions for VOC and NO
The Area has requested a partial allocation of the safety margin to the onroad mobile emissions inventory projections for VOC and NO
The Area has demonstrated that it will continue to maintain the 2008 8-Hour Ozone NAAQS, even after updating the onroad emissions estimates using the MOVES3.0.4 model. For this reason, EPA finds that the updated MVEBs and the allocation of the safety margins to the 2025 and 2030 budgets for the Area, meet the requirements of the transportation conformity regulations at 40 CFR part 93 and are approvable.
EPA is proposing to approve the Washington Area's SIP revision updating the MVEBs and the onroad and nonroad (except for marine, airport, and railroad) mobile emissions for VOC and NO
In 1995, Virginia adopted legislation that provides, subject to certain conditions, for an environmental assessment (audit) “privilege” for voluntary compliance evaluations performed by a regulated entity. The legislation further addresses the relative burden of proof for parties either asserting the privilege or seeking disclosure of documents for which the privilege is claimed. Virginia's legislation also provides, subject to certain conditions, for a penalty waiver for violations of environmental laws when a regulated entity discovers such violations pursuant to a voluntary compliance evaluation and voluntarily discloses such violations to the Commonwealth and takes prompt and appropriate measures to remedy the violations. Virginia's Voluntary Environmental Assessment Privilege Law, Va. Code Sec. 10.1198, provides a privilege that protects from disclosure documents and information about the content of those documents that are the product of a voluntary environmental assessment. The Privilege Law does not extend to documents or information that: (1) are generated or developed before the commencement of a voluntary environmental assessment; (2) are prepared independently of the assessment process; (3) demonstrate a clear, imminent, and substantial danger to the public health or environment; or (4) are required by law.
On January 12, 1998, the Commonwealth of Virginia Office of the Attorney General provided a legal opinion that states that the Privilege Law, Va. Code Sec. 10.1-1198, precludes granting a privilege to documents and information “required by law,” including documents and information “required by Federal law to maintain program delegation, authorization or approval,” since Virginia must “enforce Federally authorized environmental programs in a manner that is no less stringent than their Federal counterparts. . . .” The opinion concludes that “[r]egarding § 10.1-1198, therefore, documents or other information needed for civil or criminal enforcement under one of these programs could not be privileged because such documents and information are essential to pursuing enforcement in a manner required by Federal law to maintain program delegation, authorization or approval.”
Virginia's Immunity Law, Va. Code Sec. 10.1-1199, provides that “[t]o the extent consistent with requirements imposed by Federal law,” any person making a voluntary disclosure of information to a state agency regarding a violation of an environmental statute, regulation, permit, or administrative order is granted immunity from administrative or civil penalty. The Attorney General's January 12, 1998 opinion states that the quoted language renders this statute inapplicable to enforcement of any Federally authorized programs, since “no immunity could be afforded from administrative, civil, or criminal penalties because granting such immunity would not be consistent with Federal law, which is one of the criteria for immunity.”
Therefore, the EPA has determined that Virginia's Privilege and Immunity statutes will not preclude the Commonwealth from enforcing its program consistent with the Federal requirements. In any event, because the EPA has also determined that a state audit privilege and immunity law can affect only state enforcement and cannot have any impact on Federal enforcement authorities, the EPA may at any time invoke its authority under the CAA, including, for example, sections 113, 167, 205, 211 or 213, to enforce the requirements or prohibitions of the state plan, independently of any state enforcement effort. In addition, citizen enforcement under section 304 of the CAA is likewise unaffected by this, or any, state audit privilege or immunity law.
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act;
This action does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because this action is not approved to apply in Indian country located in the Commonwealth of Virginia, State of Maryland, or District of Columbia, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.
Executive Order 12898 (Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. The EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” The EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”
The District of Columbia, State of Maryland, and Commonwealth of Virginia did not evaluate environmental justice considerations as part of the SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. The EPA did not perform an EJ analysis and did not consider EJ in this action. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goal of E.O. 12898 of achieving environmental justice for people of color, low-income populations, and Indigenous peoples.
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve a regional haze State Implementation Plan (SIP) revision submitted by the Georgia Department of Natural Resources, Environmental Protection Division (GA EPD), dated August 11, 2022 (“Haze Plan” or “2022 Plan”), as satisfying applicable requirements under the Clean Air Act (CAA or Act) and EPA's Regional Haze Rule (RHR) for the regional haze program's second planning period. Georgia's SIP submission addresses the requirement that States must periodically revise their long-term strategies for making reasonable progress toward the national goal of preventing any future, and remedying any existing, anthropogenic impairment of visibility, including regional haze, in mandatory Class I Federal areas. The SIP submission also addresses other applicable requirements for the second planning period of the regional haze program. EPA is taking this action pursuant to sections 110 and 169A of the Act.
Written comments must be received on or before July 3, 2024.
Submit your comments, identified by Docket ID No. EPA-R04-OAR-2023-0220, at
Estelle Bae, Air Permits Section, Air Planning and Implementation Branch, Air and Radiation Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW, Atlanta, Georgia 30303-8960. Ms. Bae can be reached via telephone at (404) 562-9143 or electronic mail at
On August 11, 2022, GA EPD submitted a revision to its SIP to address regional haze for the second planning period.
In the 1977 CAA Amendments, Congress created a program for protecting visibility in the nation's mandatory Class I Federal areas, which include certain national parks and wilderness areas.
Regional haze is visibility impairment that is produced by a multitude of anthropogenic sources and activities which are located across a broad geographic area and that emit pollutants that impair visibility. Visibility impairing pollutants include fine and coarse particulate matter (PM) (
To address regional haze visibility impairment, the 1999 RHR established an iterative planning process that requires both States in which Class I areas are located and States “the emissions from which may reasonably be anticipated to cause or contribute to any impairment of visibility” in a Class I area to periodically submit SIP revisions to address such impairment.
Much of the focus in the first planning period of the regional haze program, which ran from 2007 through 2018, was on satisfying States' BART obligations. First planning period SIPs were additionally required to contain LTSs for making reasonable progress toward the national visibility goal, of which BART is one component. The core required elements for the first planning period SIPs (other than BART) are laid out in 40 CFR 51.308(d). Those provisions require that States containing Class I areas establish “reasonable progress goals” (“RPGs”) that are measured in deciviews and reflect the anticipated visibility conditions at the end of the planning period including from implementation of States' LTSs. The first planning period RPGs were required to provide for an improvement in visibility for the most impaired days over the period of the implementation plan and ensure no degradation in visibility for the least impaired days over the same period. In establishing the RPGs for any Class I area in a State, the State was required to consider four statutory factors (also referenced herein as “the four factors”): the costs of compliance, the time necessary for compliance, the energy and non-air quality environmental impacts of compliance, and the remaining useful life of any potentially affected sources.
States were also required to calculate baseline (using the five year period of 2000-2004) and natural visibility conditions (
On January 10, 2017, EPA promulgated revisions to the RHR (82 FR 3078) that apply for the second and subsequent planning periods. The 2017 rulemaking made several changes to the requirements for regional haze SIPs to clarify States' obligations and streamline certain regional haze requirements. The revisions to the regional haze program for the second and subsequent planning periods focused on the requirement that States' implementation plans contain LTSs for making reasonable progress toward the national visibility goal. The reasonable progress requirements as revised in the 2017 rulemaking (referred to here as the 2017 RHR Revisions) are codified at 40 CFR 51.308(f). Among other changes, the 2017 RHR Revisions adjusted the deadline for States to submit their second planning period SIPs from July 31, 2018, to July 31, 2021, clarified the order of analysis and the relationship between RPGs and the LTSs, and focused on making visibility improvements on the days with the most
EPA provided guidance to the States for their second planning period SIP submissions in the preamble to the 2017 RHR Revisions as well as in subsequent stand-alone guidance documents. In August 2019, EPA issued its 2019 Guidance.
As previously explained in the 2021 Clarifications Memo, EPA intends the second planning period of the regional
Because the air pollutants affecting visibility in Class I areas can be transported over long distances, successful implementation of the regional haze program requires long-term, regional coordination among multiple jurisdictions and agencies that have responsibility for Class I areas and the emissions that impact visibility in those areas. In order to address regional haze, States need to develop strategies in coordination with one another, considering the effect of emissions from one jurisdiction on the air quality in another. Five regional planning organizations (RPOs),
The Southeastern States Air Resource Managers, Inc. (SESARM), one of the five RPOs described above, is a collaborative effort of State and local agencies and Tribal governments established to initiate and coordinate activities associated with the management of regional haze, visibility, and other air quality issues in the Southeast. SESARM's coalition to conduct regional haze work is referred to as Visibility Improvement State and Tribal Association of the Southeast (VISTAS).
Under the CAA and EPA's regulations, all 50 States, the District of Columbia, and the U.S. Virgin Islands are required to submit regional haze SIPs satisfying the applicable requirements for the second planning period of the regional haze program by July 31, 2021. Each State's implementation plan must contain a LTS for making reasonable progress toward meeting the national goal of remedying any existing and preventing any future anthropogenic visibility impairment in Class I areas.
Broadly speaking, a State first must identify the Class I areas within the State and determine the Class I areas outside the State in which visibility may be affected by emissions from the State. These are the Class I areas that must be addressed in the State's LTS.
Additionally, as further explained below, the RHR at 40 CFR 51.3108(f)(2)(iv) separately provides five “additional factors”
In addition to satisfying the requirements at 40 CFR 51.308(f) related to reasonable progress, the regional haze SIP revisions for the second planning period must address the requirements in 40 CFR 51.308(g)(1) through (5) pertaining to periodic reports describing progress toward the RPGs, 40 CFR 51.308(f)(5), as well as requirements for FLM consultation that apply to all visibility protection SIPs and SIP revisions.
A State must submit its regional haze SIP and subsequent SIP revisions to EPA according to the requirements applicable to all SIP revisions under the CAA and EPA's regulations.
The first step in developing a regional haze SIP is for a State to determine which Class I areas, in addition to those within its borders, “may be affected” by emissions from within the State. In the 1999 RHR, EPA determined that all States contribute to visibility impairment in at least one Class I area, 64 FR at 35720-22, and explained that the statute and regulations lay out an “extremely low triggering threshold” for determining “whether States should be required to engage in air quality planning and analysis as a prerequisite to determining the need for control of emissions from sources within their State.”
A State must determine which Class I areas must be addressed by its SIP by evaluating the total emissions of visibility impairing pollutants from all sources within the State. While the RHR does not require this evaluation to be conducted in any particular manner, EPA's 2019 Guidance provides recommendations for how such an assessment might be accomplished, including by, where appropriate, using the determinations previously made for the first planning period. 2019 Guidance at 8-9. In addition, the determination of which Class I areas may be affected by a State's emissions is subject to the requirement in 40 CFR 51.308(f)(2)(iii) to “document the technical basis, including modeling, monitoring, cost, engineering, and emissions information, on which the State is relying to determine the emission reduction measures that are necessary to make reasonable progress in each mandatory Class I Federal area it affects.”
As part of assessing whether a SIP submission for the second planning period is providing for reasonable progress toward the national visibility goal, the RHR contains requirements in 40 CFR 51.308(f)(1) related to tracking visibility improvement over time. The requirements of this subsection apply only to States having Class I areas within their borders; the required calculations must be made for each such Class I area. EPA's 2018 Visibility Tracking Guidance
The RHR requires tracking of visibility conditions on two sets of days: the clearest and the most impaired days. Visibility conditions for both sets of days are expressed as the average deciview index for the relevant five-year period (the period representing baseline or current visibility conditions).
Using the data for the set of most impaired days only, States must plot a line between visibility conditions in the baseline period and natural visibility conditions for each Class I area to determine the URP—the amount of visibility improvement, measured in deciviews, that would need to be achieved during each planning period to achieve natural visibility conditions by the end of 2064. The URP is used in later steps of the reasonable progress analysis for informational purposes and to provide a non-enforceable benchmark against which to assess a Class I area's rate of visibility improvement.
EPA's 2018 Visibility Tracking Guidance can be used to help satisfy the 40 CFR 51.308(f)(1) requirements, including in developing information on baseline, current, and natural visibility conditions, and in making optional adjustments to the URP. In addition, the 2020 Data Completeness Memo provides recommendations on the data completeness language referenced in 40 CFR 51.308(f)(1)(i) and provides updated natural conditions estimates for each Class I area.
The core component of a regional haze SIP submission is a LTS that addresses regional haze in each Class I area within a State's borders and each Class I area that may be affected by emissions from the State. The LTS “must include the enforceable emissions limitations, compliance schedules, and other measures that are necessary to make reasonable progress, as determined pursuant to (f)(2)(i) through (iv).”
Section 51.308(f)(2)(i) provides the requirements for the FFA. The first step of this analysis entails selecting the sources to be evaluated for emission reduction measures; to this end, States should consider “major and minor stationary sources or groups of sources, mobile sources, and area sources” of visibility impairing pollutants for potential control analysis (
While States have the option to analyze
EPA explained in the 2021 Clarifications Memo that each State has an obligation to submit a LTS that addresses the regional haze visibility impairment that results from emissions from within that State. Thus, source selection should focus on the in-State contribution to visibility impairment and be designed to capture a meaningful portion of the State's total contribution to visibility impairment in Class I areas. A State should not decline to select its largest in-state sources on the basis that there are even larger out-of-state contributors.
Thus, while States have discretion to choose any source selection methodology that is reasonable, whatever choices they make should be reasonably explained. To this end, 40 CFR 51.308(f)(2)(i) requires that a State's implementation plan submission include “a description of the criteria it used to determine which sources or groups of sources it evaluated.” The technical basis for source selection, which may include methods for quantifying potential visibility impacts such as emissions divided by distance metrics, trajectory analyses, residence time analyses, and/or photochemical modeling, must also be appropriately documented, as required by 40 CFR 51.308(f)(2)(iii).
Once a State has selected the set of sources, the next step is to determine the emissions reduction measures for those sources that are necessary to make reasonable progress for the second planning period.
EPA's 2021 Clarifications Memo provides further guidance on what constitutes a reasonable set of control options for consideration: “A reasonable four-factor analysis will consider the full range of potentially reasonable options for reducing emissions.”
After identifying a reasonable set of potential control options for the sources it has selected, a State then collects information on the four factors with regard to each option identified. EPA has also explained that, in addition to the four statutory factors, States have flexibility under the CAA and RHR to reasonably consider visibility benefits as an additional factor alongside the four statutory factors.
As explained above, section 51.308(f)(2)(i) requires States to determine the emission reduction measures for sources that are necessary to make reasonable progress by considering the four factors. Pursuant to section 51.308(f)(2), measures that are necessary to make reasonable progress toward the national visibility goal must be included in a State's LTS and in its SIP.
As with source selection, the characterization of information on each of the factors is also subject to the documentation requirement in section 51.308(f)(2)(iii). The reasonable progress analysis, including source selection, information gathering, characterization of the four statutory factors (and potentially visibility), balancing of the four factors, and selection of the emission reduction measures that represent reasonable progress, is a technically complex exercise, but also a flexible one that provides States with bounded discretion to design and implement approaches appropriate to their circumstances. Given this flexibility, section 51.308(f)(2)(iii) plays an important function in requiring a State to document the technical basis for its decision making so that the public and EPA can comprehend and evaluate the information and analysis the State relied upon to determine what emission reduction measures must be in place to make reasonable progress. The technical documentation must include the modeling, monitoring, cost, engineering, and emissions information on which the State relied to determine the measures necessary to make reasonable progress.
The four statutory factors (and potentially visibility) are used to determine what emission reduction measures for selected sources must be included in a State's LTS for making reasonable progress. Additionally, the RHR at 40 CFR 51.3108(f)(2)(iv) separately provides five “additional factors”
Because the air pollution that causes regional haze crosses State boundaries, 40 CFR 51.308(f)(2)(ii) requires a State to consult with other States that also have emissions that are reasonably anticipated to contribute to visibility impairment in a given Class I area. Consultation allows for each State that impacts visibility in an area to share whatever technical information, analyses, and control determinations may be necessary to develop coordinated emission management strategies. This coordination may be managed through inter- and intra-RPO consultation and the development of regional emissions strategies; additional consultations between States outside of RPO processes may also occur. If a State, pursuant to consultation, agrees that certain measures (
RPGs “measure the progress that is projected to be achieved by the control measures States have determined are necessary to make reasonable progress based on a four-factor analysis.”
For the second planning period, the RPGs are set for 2028. RPGs are not enforceable targets, 40 CFR 51.308(f)(3)(iii); rather, they “provide a way for the States to check the projected outcome of the [long-term strategy] against the goals for visibility improvement.” 2019 Guidance at 46. While States are not legally obligated to achieve the visibility conditions described in their RPGs, section 51.308(f)(3)(i) requires that “[t]he long-
So that RPGs may also serve as a metric for assessing the amount of progress a State is making toward the national visibility goal, the RHR requires States with Class I areas to compare the 2028 RPG for the most impaired days to the corresponding point on the URP line (representing visibility conditions in 2028 if visibility were to improve at a linear rate from conditions in the baseline period of 2000-2004 to natural visibility conditions in 2064). If the most impaired days RPG in 2028 is above the URP (
The 2017 RHR, 2019 Guidance, and 2021 Clarifications Memo also explain that projecting an RPG that is on or below the URP based on only on-the-books and/or on-the-way control measures (
Section 51.308(f)(6) requires States to have certain strategies and elements in place for assessing and reporting on visibility. Individual requirements under this subsection apply either to States with Class I areas within their borders, States with no Class I areas but that are reasonably anticipated to cause or contribute to visibility impairment in any Class I area, or both. A State with Class I areas within its borders must submit with its SIP revision a monitoring strategy for measuring, characterizing, and reporting regional haze visibility impairment that is representative of all Class I areas within the State. SIP revisions for such States must also provide for the establishment of any additional monitoring sites or equipment needed to assess visibility conditions in Class I areas, as well as reporting of all visibility monitoring data to EPA at least annually. Compliance with the monitoring strategy requirement may be met through a State's participation in the IMPROVE monitoring network, which is used to measure visibility impairment caused by air pollution at the 156 Class I areas covered by the visibility program.
All States' implementation plans must provide for procedures by which monitoring data and other information are used to determine the contribution of emissions from within the State to regional haze visibility impairment in affected Class I areas.
Separate from the requirements related to monitoring for regional haze purposes under 40 CFR 51.308(f)(6), the RHR also contains a requirement at 40 CFR 51.308(f)(4) related to any additional monitoring that may be needed to address visibility impairment in Class I areas from a single source or a small group of sources. This is called “reasonably attributable visibility impairment.”
Section 51.308(f)(5) requires a State's regional haze SIP revision to address the
A core component of the progress report requirements is an assessment of changes in visibility conditions on the clearest and most impaired days. For second planning period progress reports, 40 CFR 51.308(g)(3) requires States with Class I areas within their borders to first determine current visibility conditions for each area on the most impaired and clearest days, 40 CFR 51.308(g)(3)(i), and then to calculate the difference between those current conditions and baseline (2000-2004) visibility conditions in order to assess progress made to date.
Similarly, States must provide analyses tracking the change in emissions of pollutants contributing to visibility impairment from all sources and activities within the State over the period since they submitted their first planning period progress reports.
CAA section 169A(d) requires that before a State holds a public hearing on a proposed regional haze SIP revision, it must consult with the appropriate FLM or FLMs; pursuant to that consultation, the State must include a summary of the FLMs' conclusions and recommendations in the notice to the public. Consistent with this statutory requirement, the RHR also requires that States “provide the [FLM] with an opportunity for consultation, in person and at a point early enough in the State's policy analyses of its long-term strategy emission reduction obligation so that information and recommendations provided by the [FLM] can meaningfully inform the State's decisions on the long-term strategy.”
On August 11, 2022, GA EPD submitted a revision to the Georgia SIP to address the State's regional haze obligations for the second planning period, which runs through 2028, in accordance with CAA sections 169A and the RHR at 40 CFR 51.308(f).
Based on these results for the out-of-state Class I areas, GA EPD consulted with the VISTAS States, including Florida, North Carolina, and South Carolina. The purpose of this consultation was to identify whether Georgia's statewide impacts to the VISTAS and non-VISTAS States are significant enough to develop coordinated emission management strategies containing the emission reductions necessary to make reasonable progress. Consultation is further discussed in Section IV.C.2.e of this notice and in Section I.E of EPA's Technical Support Document (TSD) for this proposed rulemaking.
Additionally, Figures 3-1 and 3-2 of Georgia's Haze Plan provides the URP figures on the 20 percent most impaired days for Cohutta and Okefenokee, respectively. The URP shown in Figure 3-2 for Okefenokee is considered representative of Wolf Island.
States may rely on technical information developed by the RPOs of which they are members to select sources for FFA and to satisfy the documentation requirements under section 51.308(f). Where an RPO has performed source selection and/or FFAs (or considered the five additional factors in section 51.308(f)(2)(iv)) for its member States, those States may rely on the RPO's analyses for the purpose of satisfying the requirements of section 51.308(f)(2)(i) so long as the States have a reasonable basis to do so and all State participants in the RPO process have approved the technical analyses.
The consultation requirements of section 51.308(f)(2)(ii) provide that States must consult with other States that are reasonably anticipated to contribute to visibility impairment in a Class I area to develop coordinated emission management strategies containing the emission reductions measures that are necessary to make reasonable progress. Section 51.308(f)(2)(ii)(A) and (B) require States to consider the emission reduction measures identified by other States as necessary for reasonable progress and to include agreed upon measures in their SIPs, respectively. Section 51.308(f)(2)(ii)(C) speaks to what happens if States cannot agree on what measures are necessary to make reasonable progress. The documentation requirement of section 51.308(f)(2)(iii) provides that States may meet their obligations to document the technical bases on which they are relying to determine the emission reductions measures that are necessary to make reasonable progress through an RPO, as
Section 51.308(f)(2)(iii) also requires that the emissions information considered to determine the measures that are necessary to make reasonable progress include information on emissions for the most recent year for which the State has submitted triennial emissions data to EPA (or a more recent year), with a 12-month exemption period for newly submitted data.
Georgia, in coordination with the other VISTAS States, set a PSAT threshold of greater than or equal to one percent for sulfate and a separate PSAT threshold of greater than or equal to one percent for nitrate, by facility.
Although ammonium sulfate remains the dominant visibility impairing pollutant, GA EPD noted that NO
Figures 7-20, 7-21, and 7-22 in the Haze Plan show that projected light extinction in 2028 from total sulfate on the 20 percent most impaired days is significantly larger than light extinction from total nitrate for the Georgia Class I areas. At Cohutta, 2028 projected total sulfate and 2028 total nitrate extinction are approximately 41.3 percent (19 Mm
In Section 7.6.4 of the Haze Plan, the State reviewed Georgia facilities that were not selected for PSAT modeling and which had an AoI contribution greater than one percent for one or more Class I areas. This review included Georgia Power—Plant Wansley (Plant Wansley); Mohawk Industries Inc.; Southern States Phosphate & Fertilizer (now Seagate Terminals Savannah); and Savannah Sugar Refinery (now Imperial-Savannah LP). Regarding Plant Wansley, Georgia states that a recent change from coal to natural gas reduced visibility impacts from this facility and adjusting the AoI contribution from this facility to account for this change resulted in an AoI contribution below the State's screening threshold for further PSAT tagging. Additionally, Georgia has notified EPA that Plant Wansley has permanently ceased operations, and therefore, as of December 28, 2022, Georgia revoked all air quality permits previously issued for this facility, including its Part 70 Operating Permit No. 4911-149-0001-V-04-0.
For the No. 5 and No. 6 Recovery Furnaces, the FFA reviewed the following potential controls: use of low-sulfur fuels and a wet scrubber system. Tables 7-39 and 7-40 of the Haze Plan show that the most cost-effective control options for the No. 5 and No. 6 Recovery Furnaces are: replacement of No. 6. fuel oil with one percent sulfur fuel oil at the No. 4 Power Boiler, No. 5 Recovery Furnace, and No. 5 Lime Kiln
As explained in Section 7.7 of the Haze Plan, GA EPD reviewed a spreadsheet assembled by the Arkansas Department of Environmental Quality that compares the cost of compliance for SO
GA EPD also included an analysis of the other three factors in Section 7.8.3 of the Haze Plan. Regarding the time necessary for compliance, if controls, such as the installation of a new fuel oil tank or new burner were required, the facility would need at least four to five years to implement these changes. GA EPD notes that the emission units included are assumed to have a remaining useful life of 30 years or more. Regarding the energy and non-air related impacts, GA EPD included the impacts associated with each add-on control option evaluated in the FFA. Use of an SO
The results of GA EPD's FFA for Brunswick Cellulose were to eliminate firing of tire-derived fuel in the No. 4 Power Boiler and to limit the firing of No. 6 fuel oil in the No. 4 Power Boiler to times of natural gas curtailment with additional fuel oil firing allowed during adverse bark/wood fuel conditions. GA
Regarding the No. 5 and No. 6 Recovery Furnaces, for the reasons stated above, Georgia concluded that the costs associated with each of the measures considered were not reasonable and therefore did not select further controls for the No. 5 and No. 6 Recovery Furnaces. GA EPD also indicated that the facility has consistently utilized good operating practices as existing measures for the No. 5 and No. 6 Recovery Furnaces, and that GA EPD expects emissions from these units to remain in the range of 90.4-213.5 tons/year for the No. 5 Recovery Furnace and in the range of 7.8-22.0 tpy of SO
Georgia provided EPA with Permit No. 2631-127-0003-V-07-3, issued on October 25, 2023, to implement the control measures that were selected from the FFA for Brunswick Cellulose for the No. 4 Power Boiler.
The FFA reviewed the following potential controls for the No. 13 Power Boiler: addition of a circulating dry scrubber with pulse jet fabric filter; addition of a DSI system; and permanent removal of coal as a permissible fuel. The FFA determined that installation of the dry scrubber would remove 3,674 tons of SO
GA EPD also included an analysis of the other three factors in Section 7.8.1 of the Haze Plan of the Haze Plan. Regarding the time necessary for compliance, GA EPD estimates it would take at least three years to implement the installation of any add-on controls. Regarding the remaining useful life of existing sources, GA EPD notes that the No. 13 Power Boiler has a useful life of 20 years or more. Regarding the energy and non-air related impacts, GA EPD included the impacts associated with each add-on control option evaluated in the FFA. The FFA notes that both the dry scrubber and DSI system options would utilize additional energy and water usage and generate additional solid waste and wastewater and could potentially cause a smaller compliance margin against non-air permit limits. In addition, GA EPD notes that both the dry scrubber and DSI option would require an expansion of the existing mill-owned landfill.
As such, GA EPD selected the removal of coal as an allowable fuel for the No. 13 Power Boiler as a necessary measure for reasonable progress. The FFA also concluded that installation of a dry scrubber or DSI carried unreasonable cost and that the other, non-cost factors weighed against installation of add-on controls. The FFA therefore determined that the installation of a dry scrubber or DSI were not necessary to make reasonable progress.
Georgia provided EPA with Permit No. 2631-051-0007-V-04-1, issued on October 20, 2023, to implement control measures that were selected from the FFA for IP-Savannah for incorporation into the SIP.
The FFA reviewed the following potential controls for Plant Bowen: the installation of dry flue gas desulfurization (DFGD) scrubbers to replace the existing wet scrubbers; switching coal to Powder River Basin coal, which has an average sulfur content of 0.42 percent and average heat content of 8,800 Btu per pound; and switching to Central Appalachian coal, which has an average sulfur content of 1.1 percent and average heat content of 12,000 Btu per pound.
GA EPD used the Arkansas Department of Environmental Quality spreadsheet for evaluating the cost-effectiveness for each of the controls evaluated, as explained in Section IV.C.2.b.1 of the proposed rule and Section 7.7 of the Haze Plan. While GA EPD did not identify a specific cost per ton threshold, GA EPD used the spreadsheet as rationale for the determination that cost-effectiveness of $6,424/ton and $13,447/ton of SO
GA EPD also included an analysis of the other three factors in Appendix G-1b of the Haze Plan. For a switch to either Powder River Basin coal or Central Appalachian coal, Georgia notes that extensive engineering evaluations would be needed. Therefore, GA EPD estimates that the time necessary for compliance could take until December 31, 2028. Regarding the energy and non-air related impacts, the FFA explains that due to limitations in the plant's coal handling facilities, a switch to Powder River Basin coal would result in an electric generation derate of 27 percent or more based on the lower heat content of this type of coal that could not easily be remedied by simply increasing the tonnage of coal burned at the plant.
The FFA concluded that no new measures were reasonable for Plant Bowen, and therefore concluded that existing measures are necessary to make reasonable progress. Specifically, GA EPD concluded that adopting an SO
With respect to modeling information documentation pursuant to 40 CFR 51.308(f)(2)(iii), Sections 5 and 6 of the Haze Plan describe the modeling methods used to develop the plan with additional documentation provided in Appendix E and results of the RPG modeling in Section 8 of the plan. Appendix D contains AoI analysis documentation, and Appendix E contains PSAT analysis documentation.
With respect to cost and engineering information documentation pursuant to 40 CFR 51.308(f)(2)(iii), Section 7.8 of the Haze Plan details the State's analysis of proposed FFAs for Brunswick Cellulose, IP-Savannah, and Plant Bowen located in Appendix G which evaluated the four factors, including the cost of compliance factor, and provided detailed cost calculations for potential new control measures assessed as part of the engineering analyses.
With respect to monitoring information documentation pursuant to 40 CFR 51.308(f)(2)(iii), the State assessed baseline (2000-2004), current (2014-2018), and natural visibility conditions for Georgia's Class I areas in Section 2 of the Georgia's Haze Plan with supporting information located in Appendix C.
Section I of the TSD provides a more detailed summary of the State's assessment of the documentation of the technical basis for the Georgia's Haze Plan under 40 CFR 51.308(f)(2)(iii) and 40 CFR 51.308(f)(6)(v).
See Section I.E. of the TSD associated with this rulemaking for additional description of Georgia's interstate consultation for regional haze for the second period regarding: (a) visibility impacts from Georgia sources on other States' Class I area(s) and (b) visibility impacts from other States' sources on one or more of Georgia's Class I areas.
EPA also proposes to find that Georgia's source selection methodology was reasonable and resulted in a reasonable set of sources contributing to visibility impairment at Class I areas affected by Georgia's sources. AoI and PSAT are acceptable and well-established methods for selecting sources for a control analysis.
Apart from AoI and PSAT being well-established methods to select sources, Georgia's source selection methodology is also reasonable given the specific circumstances present in Georgia. Georgia (through VISTAS' analysis) projects that visibility conditions in Georgia's Class I areas in 2028 are estimated to improve since the 2000-2004 baseline period by 14.22 deciviews (Cohutta) and 8.44 deciviews (Okefenokee and Wolf Island). Specific to the second planning period, visibility conditions in Georgia's Class I areas in 2028 are estimated to improve since the
Regarding the No. 4 Power Boiler, EPA proposes to find that GA EPD's determination of measures that are necessary for reasonable progress for the second planning period are reasonable. These measures include: a) Brunswick Cellulose's No. 4 Power Boiler must eliminate the firing of tire-derived fuel and limit the firing of No. 6 fuel oil to times of natural gas curtailment with additional fuel oil firing allowances during adverse bark/wood fuel conditions and b) the No. 4 Power Boiler will be limited to 15 tpy of SO
Regarding the No. 5 and No. 6 Recovery Furnaces, EPA finds that Georgia has adequately demonstrated that based on high control costs, none of the add-on SO
The measures resulting from the FFA for Brunswick Cellulose are being implemented by GA EPD through the issuance of Permit No. 2631-127-0003-V-07-3 dated October 25, 2023, which is included in the docket for this proposed rule. EPA is proposing to incorporate by reference this permit and its associated conditions into Georgia's SIP because these measures are necessary to make reasonable progress toward visibility improvement at Class I areas impacted by this facility. These permit conditions are also described under “Summary and Proposed Permit Conditions” in Section 7.8.3 of the Haze Plan.
Thus, EPA finds that GA EPD's conclusions as summarized below are reasonable: a) there are no new SO
This existing measure is being implemented by GA EPD through the conditions in Permit No. 4911-015-0011-V-04-3 dated September 6, 2023, which is included in the docket for this proposed rule. EPA is proposing to incorporate by reference this permit and its associated conditions into Georgia's SIP because these measures are necessary to make reasonable progress toward visibility improvement at Class I areas impacted by this facility. These permit conditions are also described under “Summary and Proposed Permit Conditions” in Section 7.8.2 of the Haze Plan.
With respect to 40 CFR 51.308(f)(2)(iv)(A), EPA proposes to find that EPD adequately addressed the requirement to assess emission reductions due to ongoing air pollution control programs, including measures to address RAVI, through the State's emissions inventory work for the base year of 2011 as projected out to 2028.
With respect to 40 CFR 51.308(f)(2)(iv)(B), EPA proposes to find that Georgia adequately addressed this requirement to evaluate measures to mitigate the impacts of construction activities by describing various State regulations that address control of erosion, siltation, and pollution from construction activities and that require subject facilities to control PM from fugitive dust emission sources generated within plant boundaries.
With respect to 40 CFR 51.308(f)(2)(iv)(C), EPA proposes to find that Georgia adequately addressed source retirement and replacement schedules by summarizing existing and planned source retirements throughout the Haze Plan, including in Section 7.2.2 (retirements accounted for in the 2028 inventory/RPGs).
With respect to 40 CFR 51.308(f)(2)(iv)(D), EPA proposes to find that Georgia adequately addressed the requirement to consider the State's basic smoke management practices for prescribed fire used for agricultural and wildland vegetation management purposes and smoke management programs for the following reasons. The State describes its smoke management plan, which is implemented through a memorandum of understanding between EPD, the Georgia Forestry Commission, and the Georgia Department of Natural Resources Wildlife Resources Division.
With respect to 40 CFR 51.308(f)(2)(iv)(E), EPA proposes to find that Georgia assessed the anticipated net effect on visibility due to projected changes in point, area, and mobile source emissions over the second period in development of the 2028 RPGs for the Georgia Class I areas. EPD used the 2011 base year emissions inventory to project emissions from various source sectors to 2028, the end of the second planning period. EPD, through VISTAS, completed CAMx modeling to estimate visibility impairment in 2028 based on projected 2028 emissions from the 2011 base year inventory and using IMPROVE monitoring data for 2009-2013.
Figures 3-1 and 3-2 of the Haze Plan show the URP for the 20 percent most impaired days for Cohutta and Okefenokee (also Wolf Island), respectively.
Section 51.308(f)(6)(i) requires SIPs to provide for the establishment of any additional monitoring sites or equipment needed to assess whether RPGs to address regional haze for all mandatory Class I areas within the State are being achieved. Section 51.308(f)(6)(ii) requires SIPs to provide for procedures by which monitoring data and other information are used in determining the contribution of emissions from within the State to regional haze visibility impairment at mandatory Class I areas both within and outside the State. Section 51.308(f)(6)(iii) applies only to States that do not have a mandatory Class I areas. Section 51.308(f)(6)(iv) requires the SIP to provide for the reporting of all visibility monitoring data to the Administrator at least annually for each Class I area in the State. Section 51.308(f)(6)(v) requires SIPs to provide for a statewide inventory of emissions of pollutants that are reasonably anticipated to cause or contribute to visibility impairment, including emissions for the most recent year for which data are available and estimates of future projected emissions. It also requires a commitment to update the inventory periodically. Section 51.308(f)(6)(v) also requires States to include estimates of future projected emissions and include a commitment to update the inventory periodically. Under 40 CFR 51.308(f)(4), if EPA or the FLM of an affected Class I area has advised a State that additional monitoring is needed to assess RAVI, the State must include in its SIP revision for the second planning period an appropriate strategy for evaluating such impairment.
EPA proposes to determine that Georgia has satisfied 40 CFR 51.308(f)(6), which is generally met by the State's continued participation in the IMPROVE monitoring network and the VISTAS RPO, for the following reasons. With respect to 40 CFR 51.308(f)(6)(i), Georgia stated that the existing IMPROVE monitors relied upon for the State's three Class I areas are adequate, and thus, additional monitoring sites or equipment are not needed to assess whether RPGs for all Class I areas within the State are being achieved. With respect to 40 CFR 51.308(f)(6)(ii), Georgia has procedures by which monitoring data and other information are used to determine the contribution of emissions from within the State to regional haze at Class I areas both within and outside the State through Georgia's continued participation in VISTAS' regional haze work. With respect to 40 CFR 51.308(f)(6)(iii), this provision is applicable for States with no Class I areas and does not apply to Georgia. Regarding the reporting of visibility monitoring data to EPA at least annually for each Class I area in the State pursuant to 40 CFR 51.308(f)(6)(iv), EPA proposes to find that Georgia's participation in the IMPROVE Steering Committee and the IMPROVE monitoring network addresses this requirement. With respect to 40 CFR 51.308(f)(6)(v), EPA proposes to find that Georgia's continued participation in VISTAS' efforts for projecting future emissions and continued compliance with the requirements of the AERR to periodically update emissions inventories satisfies the requirement to provide for an emissions inventory for the most recent year for which data are available. EPA proposes to find that Georgia adequately documented that no further elements are necessary at this time for the State to assess and report on visibility pursuant to 40 CFR 51.308(f)(6)(vi).
Regarding 40 CFR 51.308(g)(1) and 40 CFR 51.308(g)(2), GA EPD describes the status of the implementation of the measures of the LTS from the first planning period and provides a summary of the emission reductions achieved by implementing those measures from 2014-2019 in Section 13.3.1. Emissions reductions data is quantified where such data is available. The status of the SO
With respect to 40 CFR 51.308(g)(3), in Tables 13-5 through 13-9 of the Haze Plan, GA EPD calculated for the three Class I areas: current visibility conditions (2014-2018), changes in visibility relative to baseline (2000-2004) visibility conditions, and changes in visibility conditions compared to the last five years. The data shows that all Class I areas saw an improvement in
Regarding 40 CFR 51.308(g)(4), in Section 13.5, GA EPD provided emissions trends from 2011 through 2019 for SO
Regarding 40 CFR 51.308(g)(5), GA EPD believes that there does not appear to be any significant change in anthropogenic emissions within Georgia or outside the State that have occurred since the period addressed in the most recent plan that would limit or impede progress in reducing pollutant emissions or improving visibility. Section III of the TSD to this rulemaking provides a more detailed summary of the State's assessment of how Georgia addressed requirements for periodic reports describing progress toward the RPGs for the State's Class I areas pursuant to 40 CFR 51.308(f)(5).
2.
With respect to 40 CFR 51.308(i)(2), GA EPD offered to the three FLM agencies the opportunity to consult on the April 22, 2022, draft Georgia Haze Plan. Additionally, GA EPD shared with the FLMs the June 24, 2022, Prehearing Georgia Haze Plan issued for State public notice and comment with a public hearing held July 25, 2022, with the close of the comment period on July 26, 2022. A summary of this consultation process is discussed and documented in Appendix H-4a of the Haze Plan (responses to FLM comments) with supporting information in Appendix H-1a, H-1b, and H-1c (FLM comments received) and Appendix F.
To address 40 CFR 51.308(i)(3), GA EPD provided responses to NPS and USFS comments in Appendix H-4a of the Haze Plan.
With respect to 40 CFR 51.308(i)(4), Georgia updated its existing procedures for continuing consultation with the FLMs, including annual discussions with a review of the most recent IMPROVE monitoring data. Records of annual consultations and progress report consultations will be maintained in GA EPD's regional haze files.
EPA proposes to find that Georgia fully addressed the minimum 60-day requirement for FLM consultation under 40 CFR 51.308(i)(2) for the Haze Plan because GA EPD offered the April 22, 2022, draft Georgia Haze Plan for FLM comment at least 60 days prior to the start of GA EPD's public comment opportunity which opened on June 24, 2022, and closed on July 26, 2022.
EPA proposes to find that Georgia adequately addressed 40 CFR 51.308(i)(3) for the Haze Plan because the State's provided its responses to the FLM comments, as detailed in Appendices H-1a, 1b, and 1c of the Haze Plan.
EPA proposes to find that Georgia adequately addressed 40 CFR 51.308(i)(4) because the SIP revision provides ongoing consultation procedures with the FLMs, including annual discussions regarding implementation of the State's regional haze program with a review of the most recent IMPROVE monitoring data.
This proposed action would adopt source-specific provisions addressing SO
In this document, EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, and as discussed above in this preamble, EPA is proposing to incorporate by reference into Georgia's SIP GA EPD Permit No. 4911-015-0011-V-04-3 for Bowen Steam-Electric Generating Plant (State effective September 6, 2023), GA EPD Permit No. 2631-051-0007-V-04-1 for International Paper—Savannah (State effective October 20, 2023), and GA EPD Permit No. 2631-127-0003-V-07-3 for Brunswick Cellulose LLC (State effective October 25, 2023). EPA has made, and will continue to make, the SIP generally available through
EPA is proposing to approve Georgia's August 11, 2022, SIP submission as satisfying the regional haze requirements for the second planning period contained in 40 CFR 51.308(f). Thus, EPA is proposing to adopt into Georgia's SIP GA EPD Permit No. 4911-015-0011-V-04-3 for Bowen Steam-Electric Generating Plant (State effective September 6, 2023), GA EPD Permit No. 2631-051-0007-V-04-1 for International Paper—Savannah (State effective October 20, 2023), and GA EPD Permit No. 2631-127-0003-V-07-3 for Brunswick Cellulose LLC (State effective October 25, 2023).
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations.
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 14094 (88 FR 21879, April 11, 2023);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it approves a State program;
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and
• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA.
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian Tribe has demonstrated that a Tribe has jurisdiction. In those areas of Indian country, the rule does not have Tribal implications and will not impose substantial direct costs on Tribal governments or preempt Tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Executive Order 12898 (Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”
Georgia did not evaluate EJ considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. EPA did not perform an EJ analysis and did not consider EJ in this proposed action. Due to the nature of the action being proposed here, this proposed action is expected to have positive impact on the air quality of the affected area. Consideration of EJ is not required as part of this proposed action, and there is no information in the record inconsistent with the stated goal of Executive Order 12898 of achieving EJ
Environmental protection, Air pollution control, Incorporation by reference, Nitrogen dioxide, Particulate matter, Sulfur oxides.
42 U.S.C. 7401
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve revisions to the Nebraska State Implementation Plan (SIP), Operating Permits Program, and 112(l) Plan. The revisions were submitted by the State of Nebraska on December 2, 2022. This proposed action will amend the SIP to revise Nebraska air quality regulations and will add specific definitions from a Nebraska statute. These proposed changes include new and renumbered rules, the consolidation of 43 chapters into 16 chapters, replacement of duplicative language with references to state statute and federal regulation, revisions to reflect changes to state and federal law, and other changes to state regulations. The EPA's proposed approval of this rule revision is in accordance with the requirements of the Clean Air Act (CAA).
Comments must be received on or before July 3, 2024.
You may send comments, identified by Docket ID No. EPA-R07-OAR-2024-0025 to
William Stone, Environmental Protection Agency, Region 7 Office, Air Permitting and Planning Branch, 11201 Renner Boulevard, Lenexa, Kansas 66219; telephone number: (913) 551-7714; email address:
Throughout this document “we,” “us,” and “our” refer to the EPA.
Submit your comments, identified by Docket ID No. EPA-R07-OAR-2024-0025, at
The EPA is proposing to amend Nebraska's SIP and Operating Permits Program to include revisions to title 129 of the Nebraska Administrative Code and to add specific definitions from Nebraska Revised Statute 81-1502. The EPA is proposing to approve revisions to the Nebraska SIP received on December 2, 2022. The revisions are to Title 129—Nebraska Air Quality Regulations and include specific definitions from Nebraska Revised Statute 81-1502. These proposed changes include new and renumbered rules, the consolidation of 43 chapters into 16 chapters, replacement of duplicative language with references to state statute and federal regulation, approval of specific definitions in state statute, revisions to reflect changes to state and federal law, and other changes to state regulations.
In addition to the changes discussed above, the state's revision to title 129 includes state rules that allow small projects to start construction prior to receiving a construction permit. To be eligible for this program, the new source or modification to an existing source must not be subject to Nonattainment New Source Review (NSR), case-by-case Maximum Achievable Control Technology (MACT) or Prevention of Significant Deterioration (PSD) or be a source seeking federally enforceable permit restrictions to avoid review under Nonattainment NSR, case-by-case MACT or PSD. The source is prohibited from operating until a construction permit has been issued. Since the source is not allowed to hook up the equipment to the exhaust stack or operate the equipment in any way that may emit any pollutant prior to receiving a construction permit, there is no change to emissions or air quality as a result of these revisions. Nebraska Department of Environment and Energy's (NDEE's) requirements for reviewing the permit application and protecting air quality are unchanged by these revisions. In the Technical Support Document (TSD) for Chapter 3 included in the docket for this action, we include more information about this change.
This revision is in compliance with federal requirements, including: (1) CAA section 110(a)(2)(c), which requires states to include a minor NSR program in their SIP to regulate modifications and new construction of stationary sources within the area as necessary to assure the National Ambient Air Quality Standards (NAAQS) are achieved; (2) The regulatory requirements under 40 CFR 51.160, including § 51.160(b), which requires states to have legally enforceable procedures to prevent construction or modification of a source if it would violate any SIP control strategies or interfere with attainment or maintenance of the NAAQS; and (3) the statutory requirements under CAA section 110(l), which provides that the EPA cannot approve a SIP revision if the revision would interfere with any applicable requirement concerning attainment and reasonable further
The state also revised the carbon monoxide threshold for minor construction permitting from 50 tons per year to 100 tons per year. In the TSD for Chapter 3 included in the docket for this action, we explain how allowing NDEE to increase the permitting threshold for Carbon Monoxide (CO) for minor construction permits meets the requirements of section 110(l) of the CAA. The summary includes the state's monitoring and emissions trends for CO and an explanation of how Nebraska's construction permitting program protects protect air quality in Nebraska from exceeding the NAAQS. In this analysis we also stated that the state of Nebraska operates two CO monitors and both are in attainment for the 1-hour and 8-hour 1971 CO NAAQS, with design values less than 16% of the 8-hour NAAQS.
In addition, title 129 has been revised to include an exemption to emission standards for oxides of nitrogen at nitric acid production installations if the installation is subject to 40 CFR part 60 Subpart Ga Standards of Performance for Nitric Acid Plants for Which Construction, Reconstruction, or Modification Commenced After October 14, 2011 or other more stringent federal standards or a more stringent permit limit. Section 110(l) of the CAA states that EPA cannot approve a SIP revision if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress (RFP), or any other applicable requirement of the CAA. The new exemptions to the nitrogen oxide limit of this regulation only apply to sources subject to the NSPS or other more stringent limits. This means that any source that becomes exempt from the nitrogen oxide limit in title 129, is controlled for this pollutant by the NSPS or other more stringent limits. In addition to this regulatory backstop EPA acknowledges that the state of Nebraska in currently in attainment with all NAAQS. For these reasons, we find that this action will not interfere with any applicable requirement concerning attainment and reasonable further progress (as defined in section 171 of the CAA), or any other applicable requirement of the CAA as required under section 110(l). This change is further explained the TSD for Chapter 16.
This action also proposes to remove the total reduced sulfur (TRS) ambient standard from the SIP. On April 16, 2024, Nebraska requested that EPA not approve this portion of Chapter 2 from the December 2, 2022 submission. This standard was approved into the SIP initially in Chapter 4, but has no federal basis, so the state has proposed to remove it from the SIP, but retain it as a state only standard. Because Nebraska's December 2, 2022 submission requested that the EPA replace rules that were approved in the SIP with the amended title 129 rules, and because Nebraska has withdrawn the amended title 129 rules related to TRS, the EPA proposes to remove rules related to TRS from the SIP. In the TSD for Chapter 2 included in the docket for this action, we explain how removing TRS from the SIP meets the requirements of section 110(l) of the CAA.
In Chapter 10 Permits—Public Participation, NDEE has removed language that is duplicated in Title 115 Chapter 3 Public Hearings which was approved into the SIP (86 FR 26843). In section 2 of Chapter 10, NDEE has also removed language requiring public notice to be distributed to persons that have signed up for a department mailing list. The state continues to distribute public notices for air permits by email to person who provide and email to the department as required by 40 CFR 70.7(h)(2).
In section 3 of Chapter 10, NDEE removed language that specifically requires the public notice to contain the emissions change involved in any permit modification. Title 115 Chapter 3 section 7 requires the public notice to contain a brief description of the business conducted at the facility or activity described in the permit application or the draft permit. The department considers any change in emissions to be an activity described in the permit application, and as such, continues to put any emission change in the public notice. The EPA agrees with NDEE that this requirement fulfills the requirement of 40 CFR 70.7(h)(2) to identify the emissions change involved in any permit modification.
All of the revisions are described in detail in the technical support documents (TSD) included in the docket for this action.
The State submission has met the public notice requirements for SIP submissions in accordance with 40 CFR 51.102. The submission also satisfied the completeness criteria of 40 CFR part 51, appendix V. The State provided public notice on this SIP revision from February 23, 2022 to March 29, 2022, and held a public hearing on March 30, 2022 and received no comments. In addition, as explained above and in more detail in the TSD which is part of this docket, the revision meets the substantive SIP requirements of the CAA, including section 110 and implementing regulations.
We are proposing to amend the Nebraska SIP by approving the State's request to revise Title 129—Nebraska Air Quality Regulations and certain definitions in Nebraska Revised Statute 81-1502. Approval of these revisions will ensure consistency between state and federally-approved rules. The EPA has determined that these changes will not adversely impact air quality.
The EPA is soliciting comment on the substantive revisions detailed in this proposal and the TSDs. The EPA is not soliciting comment on existing rule text, including existing rule text that has been reorganized, as these provisions have been previously approved by the EPA into the SIP or Operating Permits Program. Final rulemaking will occur after consideration of any comments.
In this document, the EPA is proposing to include regulatory text in an EPA final rule that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the Nebraska rules:
• Chapter 1—General Provisions; Definitions, which provides general provisions and definitions for air quality regulations;
• Chapter 2—Nebraska Air Quality Standards, which lists the ambient air quality standards;
• Chapter 3—Construction Permits, which regulates air construction permitting in Nebraska;
• Chapter 4—Prevention Of Significant Deterioration of Air Quality (PSD) which regulates PSD permitting in Nebraska;
• Chapter 6—Operating Permits which regulates air operating permitting in Nebraska;
• Chapter 7—General Permits which regulates air general permitting in Nebraska;
• Chapter 8—Permits-By-Rule which regulates air permit-by-rule permitting in Nebraska;
• Chapter 9—Permit Revisions; Reopening For Cause which regulates air permit revisions in Nebraska;
• Chapter 10—Permits—Public Participation which regulates public notice requirements for air permitting in Nebraska;
• Chapter 11—Emissions Reporting, When Required which regulates air emissions inventory in Nebraska;
• Chapter 14—Incinerators, Emission Standards which regulates emissions from incinerators in Nebraska;
• Chapter 15—Compliance which regulates compliance with air regulations in Nebraska;
• Chapter 16—Sulfur Compound and Nitrogen Oxides Emissions Standards which regulates emissions of sulfur dioxide and nitrogen oxides in Nebraska;
• Appendix I—Hazardous Air Pollutants Sorted by CAS Number which lists the hazardous air pollutants;
• Appendix II—Air Pollution Emergency Episodes which explains Nebraska's emergency episode procedures; and
• Nebraska Revised Statute 81-1502—Terms, Defined which contains definitions for Nebraska's air quality regulations.
The state effective date of these rules is September 28, 2022. The state effective date of Nebraska Revised Statute 81-1502 is March 21, 2019. The EPA has made, and will continue to make, these materials generally available through
Also, in this document, as described in the proposed amendments to 40 CFR part 52 set forth below, EPA is proposing to remove provisions of the EPA-Approved Nebraska Regulations and Statutes from the Nebraska State Implementation Plan, which is incorporated by reference in accordance with the requirements of 1 CFR part 51.
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 14094 (88 FR 21879, April 11, 2023);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it approves a state program;
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and
• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA.
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Executive Order 12898 (Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”
The NDEE did not evaluate environmental justice considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. EPA did not perform an EJ analysis and did not consider EJ in this action. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goal of E.O. 12898 of achieving environmental justice for people of color, low-income populations, and Indigenous peoples.
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Particulate matter, Reporting and recordkeeping requirements, Volatile organic compounds.
Environmental protection, Administrative practice and procedure, Air pollution control, Intergovernmental relations, Operating permits, Reporting and recordkeeping requirements.
For the reasons stated in the preamble, the EPA proposes to amend 40 CFR parts 52 and 70 as set forth below:
42 U.S.C. 7401
The revisions and additions read as follows:
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42 U.S.C. 7401,
(r) The Nebraska Department of Environment and Energy submitted for program approval revisions to the Nebraska Administrative Code, title 129, chapters 1, 6, 7, 9, 10, 11, and appendix I on December 2, 2022. Title 129 Chapter 8 “Operating Permit Content” has been renumbered and renamed Chapter 6 “Operating Permits” and Chapter 8 is no longer part 70 approved. Appendix III has been repealed and is no longer part 70 approved. The state effective date is September 28, 2022. The proposed revision effective date is [date 30 days after date of publication of the final rule in the
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; extension of public comment period.
NMFS announces the extension of the public comment period on our May 3, 2024, proposed rule to modify the regulations for Marine Mammal Protection Act (MMPA) section 104 permits, including scientific research, enhancement, photography, and public display permits and Letters of Confirmation (LOCs). We published our proposed rule with a 30-day public comment period. Today we extend the public comment period by 15 days.
The deadline for receipt of comments is extended from June 3, 2024, until June 18, 2024.
A plain language summary of this proposed rule is available at
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Sara Young or Carrie Hubard, Office of Protected Resources, NMFS, (301) 427-8401.
On May 3, 2024, NMFS published a proposed rule to modify the regulations for MMPA section 104 permits, including scientific research, LOCs with a 30-day public comment period. NMFS received a request from the Animal Welfare Institute to extend the public comment period by 60 days to maximize public input on the proposed rule. NMFS considered the request and concluded that a 15-day extension should allow sufficient time for responders to submit public comments without significantly delaying the rulemaking process. We are therefore extending the close of the public comment period from June 3, 2024, to June 18, 2024. This extension provides a total of 45 days for public input on the proposed rule. All comments and information submitted previously regarding the proposed rule will be fully considered during the development of the final rule, if promulgated, and do not need to be resubmitted.
Forest Service, Agriculture (USDA).
Notice of meeting.
The Alpine County Resource Advisory Committee (RAC) will hold a public meeting according to the details shown below. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with title II of the Act, as well as make recommendations on recreation fee proposals for sites on the Humboldt-Toiyabe National Forest within Alpine County, consistent with the Federal Lands Recreation Enhancement Act.
An in-person and virtual meeting will be held on June 17, 2024, 2:00 p.m. to 4:00 p.m., Pacific Daylight Time (PDT).
All committee meetings are subject to cancellation. For status of the meeting prior to attendance, please contact the person listed under
This meeting will be held in-person at the Turtle Rock Park Community Center, located at 17300 State Route 89/4, Markleeville, CA 96120. The public may also join the meeting virtually via Microsoft Teams (Meeting ID: 293 992 503 784; Passcode: NhGGUn). More information about RACs and meeting details can be found on the advisory committees website (
Matthew Zumstein, Designated Federal Officer, by phone at 775-884-8100 or email at
The purpose of the meeting is to:
1. Hear from Title II project proponents and discuss project status;
2. Update on current funding;
3. Decide on the next round of Project Solicitation; and
4. Schedule the next meeting.
The agenda will include time for individuals to make oral statements of three minutes or less. Individuals wishing to make an oral statement should make a request in writing at least three days prior to the meeting date to be scheduled on the agenda. Written comments may be submitted to the Forest Service up to 7 days after the meeting date listed under
Please contact the person listed under
USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Equal opportunity practices in accordance with USDA's policies will be followed in all appointments to the committee. To ensure that the recommendations of the committee have taken in account the needs of the diverse groups served by USDA, membership shall include to the extent possible, individuals with demonstrated ability to represent minorities, women, and person with disabilities. USDA is an equal opportunity provider, employer, and lender.
Forest Service, Agriculture (USDA).
Notice of meeting.
The Southern Arizona Resource Advisory Committee will hold a public meeting according to the details shown below. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with title II of the Act for the Maricopa, Cochise, Pima, Pinal, and Santa Cruz counties in Arizona.
An in-person and virtual meeting will be held on June 17, 2024, at 8 a.m. Pacific standard time (PST) and will end when all business is concluded.
All committee meetings are subject to cancellation. For status of the meeting prior to attendance, please contact the person listed under
This meeting will be held in-person at the Santa Catalina Ranger District, located at 5700 North Sabino Canyon Road, Tucson, Arizona 85750. The public may also join the meeting virtually via Microsoft Teams at: Meeting ID: 230310191174 Passcode: ke94Rv or dial in by phone at +1 202-650-0123 Phone conference ID: 563900529#. More information and meeting details can be found on the Advisory Committees website at
Kerwin Dewberry, Designated Federal Officer, by phone at 520-388-8300 or email at
The purpose of the meeting is to:
1. Add, remove, or edit the below agenda items, as needed;
2. Hear from title II project proponents and discuss title II project proposals;
3. Make funding recommendations on title II projects;
4. Approve meeting minutes; and
5. Other.
The agenda will include time for individuals to make oral statements of three minutes or less. Individuals wishing to make an oral statement should make a request in writing at least three days prior to the meeting date to be scheduled on the agenda. Written comments may be submitted to the Forest Service up to 14 days after the meeting date listed under
Please contact the person listed under
USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Equal opportunity practices in accordance with USDA's policies will be followed in all appointments to the committee. To ensure that the recommendations of the Committee have taken into account the needs of the diverse groups served by the Department, membership shall include, to the extent practicable, individuals with demonstrated ability to represent the many communities, identities, races, ethnicities, backgrounds, abilities, cultures, and beliefs of the American people, including underserved communities. USDA is an equal opportunity provider, employer, and lender.
Rural Housing Service, USDA.
Notice.
The Rural Housing Service (RHS or the Agency), a Rural Development (RD) agency of the United States Department of Agriculture (USDA), announces that it is accepting applications under the Community Facilities Technical Assistance and Training (TAT) Grant Program for fiscal year (FY) 2024. The funding amount available for FY 24 is $540,000.
Complete applications for grants must be submitted according to the following deadlines:
This funding announcement will be announced on
Entities wishing to apply for assistance may download the application documents and requirements described in this notice from
Louis Trivette, Asset Risk Management Specialist at email address:
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Prior to official submission of applications, applicants may request technical assistance or other application guidance from the Agency, as long as such requests are made prior to June 28, 2024. Technical assistance is not meant to be an analysis or assessment of the quality of the materials submitted, a substitute for agency review of completed applications, nor a determination of eligibility, if such determination requires in-depth analysis. The Agency will not solicit or consider scoring or eligibility information that is submitted after the application deadline. The Agency reserves the right to contact applicants to seek clarification information on materials contained in the submitted application.
• Creating More and Better Market Opportunities: Assisting rural communities recover economically through more and better market opportunities through improved infrastructure.
• Addressing Climate Change and Environmental Justice: Reducing climate pollution and increasing resilience to the impacts of climate change through economic support to rural communities.
• Advancing Racial Justice, Place-Based Equity, and Opportunity: Ensuring all rural residents have equitable access to RD programs and benefits from RD funded projects.
For further information, visit
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The requirements for submitting an application can be found at 7 CFR 3570.267 (
5. The Agency advises all interested parties that the applicant bears the burden in preparing and submitting an application in response to this notice whether or not the applicant receives any funding as a result of its application.
6. If the proposal involves large increases in employment; hazardous waste; a change in use, size, capacity, purpose, or location from an original facility; or is publicly controversial, the following is required: environmental documentation in accordance with 7 CFR part 1970; financial and statistical information; and a written project description.
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Non-tribal applicants proposing to provide Technical Assistance to Tribes should provide adequate documentation (for example, a letter of support from the Tribe or Tribes) that the Technical Assistance they are proposing to provide is supported by the Tribes they plan to serve.
Any corporation that has been convicted of a felony criminal violation under any Federal law within the past 24 months, or that has any unpaid Federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability, is not eligible for financial assistance provided with full-year appropriated funds, unless a Federal agency has considered suspension or debarment of the corporation and has made a determination that this further action is not necessary to protect the interests of the Government.
Debarment and suspension information is required in accordance with 2 CFR parts 417 (Nonprocurement Debarment and Suspension) and 180 (OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement). The section heading “What information must I provide before entering into a covered transaction with a Federal agency?” located at 2 CFR 180.335 is part of OMB's Guidance for Grants and Agreements concerning Governmentwide Debarment and Suspension. Applicants are not eligible if they have been debarred or suspended or otherwise excluded from, or ineligible for, participation in Federal assistance programs under 2 CFR parts 180 and 417.
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Applications will not be considered for funding if they do not provide sufficient information to determine eligibility or are missing required elements.
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Prior to official submission of applications, applicants may request application guidance from the Agency, as long as such requests are made prior to June 28, 2024. Technical assistance is not meant to be an analysis or assessment of the quality of the materials submitted, a substitute for agency review of completed applications, nor a determination of eligibility. The Agency will not solicit or consider scoring or eligibility information that is submitted after the application deadline. The Agency reserves the right to contact applicants to seek clarification information on materials contained in the submitted application.
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a. Applicant must maintain an active SAM registration, with current, accurate and complete information, at all times during which it has an active Federal award or an application under consideration by a Federal awarding agency.
b. Applicant must ensure that it completes the Financial Assistance General Certifications and Representations in SAM.
c. Applicant must provide a valid UEI in its application, unless determined exempt under 2 CFR 25.110.
d. The Agency will not make an award until the applicant has complied with all SAM requirements including providing the UEI. If an applicant has not fully complied with the requirements by the time the Agency is ready to make an award, the Agency may determine that the applicant is not qualified to receive a Federal award and use that determination as a basis for making a Federal award to another applicant.
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All applications that are complete and eligible will be scored and ranked competitively.
The categories for scoring criteria used are the following:
The Agency will score each application using the following scoring factors unless otherwise provided in an annual Notice in the
(a) Experience: Applicant Experience at developing and implementing successful technical assistance and/or training programs:
(1) More than 10 years—40 points.
(2) More than 5 years to 10 years—25 points.
(3) 3 to 5 years—10 points.
(b) No prior grants received:
(1) Applicant has never received a TAT Grant—5 points.
(c) Population: The average population of proposed area(s) to be served:
(1) 2,500 or less—15 points.
(2) 2,501 to 5,000—10 points.
(3) 5,001 to 10,000—5 points.
(d) MHI: The average median household income (MHI) of proposed area to be served is below the higher of the poverty line or:
(1) 60 percent of the State's MHI—15 points.
(2) 70 percent of the State MHI—10 points.
(3) 90 percent of the State's MHI—5 points.
(e) Multi-jurisdictional: The proposed technical assistance or training project is a part of a Multi-jurisdictional project comprised of:
(1) More than 10 jurisdictions—15 points.
(2) More than 5 to 10 jurisdictions—10 points.
(3) 3 to 5 jurisdictions—5 points.
(f) Soundness of approach: Up to 10 points.
(1) Needs assessment: The problem/issue being addressed is clearly defined, supported by data, and addresses the needs;
(2) Goals and objectives are clearly defined, tied to the need as defined in the work plan, and are measurable;
(3) Work plan clearly articulates a well thought out approach to accomplishing objectives and clearly identifies who will be served by the project;
(4) The proposed activities are needed in order for a complete Community Facilities loan and/or grant application.
(g) Matching funds:
(1) There is evidence of the commitment of other cash funds of 20% of the total project costs—10 points.
(2) There is evidence of the commitment of other cash funds of 10% of the total project costs—5 points.
(h) State Director discretionary points. The State Director may award up to 10 discretionary points for the highest priority project in each state, up to 7 points for the second highest priority project in each state, and up to 5 points for the third highest priority project that addresses unforeseen exigencies or emergencies, such as the loss of a community facility due to an accident or natural disaster, or other areas of need in their particular state. The State Director will place written documentation in the project file each time the State Director assigns these points—Up to 10 points.
(i) Administrator discretionary points. The Administrator may award up to 20 discretionary points for projects to address geographic distribution of funds, emergency conditions caused by economic problems, natural disasters and other initiatives identified by the Secretary—Up to 20 points.
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• Addressing Climate Change and Environmental Justice: Reducing climate pollution and increasing resilience to the impacts of climate change through economic support to rural communities. An applicant can receive priority points through one of the three options listed below:
• A “brownfield site” (as defined in certain subparagraphs of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)).
• A “metropolitan statistical area” or “non-metropolitan statistical area” that has (or had at any time after 2009).
• 0.17% or greater direct employment or 25% or greater local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas; and has an unemployment rate at or above the national average unemployment rate for the previous year.
• A census tract (or directly adjoining census tract) in which a coal mine has closed after 1999; or in which a coal-fired electric generating unit has been retired after 2009.
To determine if your project qualifies for priority points under Option 1 or Option 2, please use the Disadvantaged Community & Energy Community Look-Up Map.
For more information, please use the following link:
• Advancing Racial Justice, Place-Based Equity, and Opportunity: Ensuring all rural residents have equitable access to RD programs and benefits from RD funded projects.
Applicant receives priority points if the project is located in or serving a community with score 0.75 or above on the CDC Social Vulnerability Index. Please use Community Look-Up Map to look up map or list to determine if your project qualifies for priority points.
Applications from Federally Recognized Tribes, including Tribal instrumentalities and entities that are wholly owned by Tribes will receive priority points. Federally Recognized Tribes are classified as any Indian or Alaska Native tribe, band, nation, pueblo, village or community as defined by the Federally Recognized Indian Tribe List Act (List Act) of 1994 (Pub. L. 103-454). Please refer to the Bureau of Indian Affairs for a listing of Federally Recognized Tribes.
Additionally, projects where at least 50% of the project beneficiaries are members of Federally Recognized Tribes, will receive priority points if applications from non-Tribal applicants include a Tribal Resolution of Consent from the Tribe or Tribes that the applicant is proposing to serve.
Applications from or benefiting a Rural Partner's Network's (RPN) community network will receive priority points (
For additional information on data sources used for this priority determination, please download the Data Sources for Rural Development Priorities document at the following link:
• Creating More and Better Market Opportunities: Assisting rural communities recover economically through more and better market opportunities through improved infrastructure. Applicants receive priority points if the project is located in or serving a rural community whose economic well-being ranks in the most distressed tier of the Distressed Communities Index. The Distressed Communities Index provides a score between 1-100 for every community at the zip code level. The most distressed tier of the index are those communities with a score over 80. Please use the Distressed Communities Index Look-Up Map to determine if your project qualifies for priority points.
For additional information on data sources used for this priority determination, please download the Data Sources for Rural Development Priorities document at the following link:
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If the applicant wishes to consider beginning its project performance prior to the grant being officially closed, all pre-evaluation award costs must be approved in writing and in advance by the Agency.
In addition, all recipients of Federal financial assistance are required to report information about first-tier sub-awards and executive compensation (see 2 CFR part 170 (
The following additional requirements apply to Grantees selected for these Programs:
(a) Form RD 1940-1, “Request for Obligation of Funds.”
(b) Form RD 1942-46, “Letter of Intent to Meet Conditions.”
(c) Form SF-LLL, “Disclosure of Lobbying Activities,” if applicable.
(d) Form SF 270, “Request for Advance or Reimbursement.”
(e) Form RD 400-4, “Assurance Agreement” must be completed by the applicant and each prospective ultimate recipient.
(f) Grantees must collect and maintain data provided by ultimate recipients on race, sex, and national origin and ensure ultimate recipients collect and maintain this data. Race and ethnicity data will be collected in accordance with OMB
(e) The applicant and the ultimate recipient must comply with Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Americans with Disabilities Act (ADA), Section 504 of the Rehabilitation Act of 1973, Age Discrimination Act of 1975, Executive Order 12250, Executive Order 13166 Limited English Proficiency (LEP), and 7 CFR part 1901, subpart E.
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For general questions about this announcement, please contact your USDA RDSO as provided in the
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Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information (
To file a program discrimination complaint, a complainant should complete a Form AD-3027, USDA Program Discrimination Complaint Form, which can be obtained online at
The completed AD-3027 form or letter must be submitted to USDA by:
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USDA is an equal opportunity provider, employer, and lender.
United States Commission on Civil Rights.
Notice of Commission public business meeting.
Friday, June 7, 2024, 10:00 a.m. ET.
Meeting to take place virtually and is open to the public via livestream on the Commission's YouTube page:
Angelia Rorison: 202-376-8371;
In accordance with the Government in Sunshine Act (5 U.S.C. 552b), the Commission on Civil Rights is holding a meeting to discuss the Commission's business for the month. This business meeting is open to the public. Computer assisted real-time transcription (CART) will be provided. The web link to access CART (in English) on Friday, June 7, 2024, is
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) is amending its preliminarily affirmative determination in the less-than-fair value (LTFV) investigation of aluminum lithographic printing plates (printing plates) from People's Republic of China (China) to correct significant ministerial errors. The period of investigation (POI) is January 1, 2023, through June 30, 2023.
Applicable June 3, 2024.
Benito Ballesteros, AD/CVD Operations, Office IX, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-7425.
On May 1, 2024, Commerce published in the
The products covered by this investigation are printing plates from China. For a complete description of the scope of this investigation,
Pursuant to 19 CFR 351.224(e), Commerce will correct any significant ministerial error by amending the preliminary determination. A ministerial error is defined as including errors “in addition, subtraction, or other arithmetic function, clerical error resulting from inaccurate copying, duplication, or the like, and any other similar type of unintentional error which {Commerce} considers ministerial.”
The petitioner alleged that: (1) Commerce's conversion of surrogate value (SV) information, from a per-kilogram to a per-pound basis for direct material and packing inputs, results in a mismatch in the units of measure between the SV information and Fujifilm's reported data; (2) Commerce erroneously converted the natural gas and steam surrogate values from kilograms to pounds, not to cubic meters and metric tons; and (3) Commerce did not include certain packing input variables in the calculation of the PACKING variable, which is used in the calculation of normal value.
Commerce finds that the allegations by the petitioner constitute significant ministerial errors within the meaning of 19 CFR 351.224(f) and (g)(1), because correcting for these errors increases Fujifilm's preliminary weighted-average dumping margin from 38.57 to 164.31 percent, which is a change that is at least five absolute percentage points in, but not less than 25 percent of, the weighted-average dumping margin calculated for Fujifilm in the
Furthermore, in the
As a result of correcting these significant ministerial errors, Commerce determines the following weighted-average dumping margins exist:
We intend to disclose the calculations performed for this amended preliminary determination to parties within five days after public announcement or, if there is no public announcement, within five days of the date of publication of this notice, in accordance with 19 CFR 351.224(b).
The collection of cash deposits and suspension of liquidation will be revised according to the rates established in this amended preliminary determination, in accordance with section 773(d) of the Act. Because this amended preliminary determination results in increased cash deposit rates, these rates will be effective on the date of publication of this notice in the
In accordance with section 733(f) of the Act, we intend to notify the ITC of our amended preliminary determination.
This amended preliminary determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act, and 19 CFR 351.224(e).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) determines that Koehler Paper SE and Koehler Kehl GmbH (collectively, Koehler), the sole producer/exporter subject from the Federal Republic of Germany (Germany) subject to this administrative review, made sales of subject merchandise at less than normal value during the period of review (POR), May 12, 2021, through October 31, 2022.
Applicable June 3, 2024.
Ashley Cossaart, AD/CVD Operations, Office IX, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-0462.
On November 29, 2023, Commerce published the
The merchandise subject to the
All issues raised in the case and rebuttal briefs are listed in the appendix to this notice and addressed in the Issues and Decision Memorandum. The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users
Based on a review of the record and comments received from interested parties regarding our
As a result of this review, we determine the following estimated weighted-average dumping margin for the period May 12, 2021, through October 31, 2022:
Commerce intends to disclose the calculations performed for Koehler in connection with these final results to interested parties within five days of the date of publication of this notice in the
Pursuant to section 751(a)(2)(C) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.212(b)(1), Commerce has determined, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries of subject merchandise in accordance with the final results of this review.
Pursuant to 19 CFR 351.212(b)(1), because Koehler reported the entered value for all of its U.S. sales, we calculated importer-specific
Commerce's “automatic assessment” will apply to entries of subject merchandise during the POR produced by Koehler for which it did not know that the merchandise it sold to an intermediary (
Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of the final results of this review in the
The following cash deposit requirements will be effective for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) the cash deposit rate for Koehler will be the rate shown above; (2) if the exporter is not a firm covered in this review, or the less-than-fair-value (LTFV) investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent segment for the manufacturer of the merchandise; and (3) the cash deposit rate for all other manufacturers and/or exporters will continue to be 2.90 percent, the all-others rate established in the LTFV investigation.
This notice serves as the only reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.
This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Brenda E. Brown, Office of AD/CVD Operations, Customs Liaison Unit, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230, telephone: (202) 482-4735.
Each year during the anniversary month of the publication of an antidumping duty (AD) or countervailing duty (CVD) order, finding, or suspended investigation, an interested party, as defined in section 771(9) of the Tariff Act of 1930, as amended (the Act), may request, in accordance with 19 CFR 351.213, that the U.S. Department of Commerce (Commerce) conduct an administrative review of that AD or CVD order, finding, or suspended investigation.
All deadlines for the submission of comments or actions by Commerce discussed below refer to the number of calendar days from the applicable starting date.
In the event Commerce limits the number of respondents for individual examination for administrative reviews initiated pursuant to requests made for the orders identified below, Commerce intends to select respondents based on U.S. Customs and Border Protection (CBP) data for U.S. imports during the period of review (POR). We intend to release the CBP data under Administrative Protective Order (APO) to all parties having an APO within five days of publication of the initiation notice and to make our decision regarding respondent selection within 35 days of publication of the initiation
In the event Commerce decides it is necessary to limit individual examination of respondents and conduct respondent selection under section 777A(c)(2) of the Act:
In general, Commerce finds that determinations concerning whether particular companies should be “collapsed” (
Pursuant to 19 CFR 351.213(d)(1), a party that requests a review may withdraw that request within 90 days of the date of publication of the notice of initiation of the requested review. The regulation provides that Commerce may extend this time if it is reasonable to do so. Determinations by Commerce to extend the 90-day deadline will be made on a case-by-case basis.
Section 504 of the Trade Preferences Extension Act of 2015 amended the Act by adding the concept of particular market situation (PMS) for purposes of constructed value under section 773(e) of the Act.
Neither section 773(e) of the Act nor 19 CFR 351.301(c)(2)(v) set a deadline for the submission of PMS allegations and supporting factual information. However, in order to administer section 773(e) of the Act, Commerce must receive PMS allegations and supporting factual information with enough time to consider the submission. Thus, should an interested party wish to submit a PMS allegation and supporting new factual information pursuant to section 773(e) of the Act, it must do so no later than 20 days after submission of initial Section D responses.
In accordance with 19 CFR 351.213(b), an interested party as defined by section 771(9) of the Act may request in writing that Commerce conduct an administrative review. For both AD and CVD reviews, the interested party must specify the individual producers or exporters covered by an AD finding or an AD or CVD order or suspension agreement for which it is requesting a review. In addition, a domestic interested party or an interested party described in section 771(9)(B) of the Act must state why it desires Commerce to review those particular producers or exporters. If the interested party intends for Commerce to review sales of merchandise by an exporter (or a producer if that producer also exports merchandise from other suppliers) which was produced in more than one country of origin and each country of origin is subject to a separate order, then the interested party must state specifically, on an order-by-order basis, which exporter(s) the request is intended to cover.
Note that, for any party Commerce was unable to locate in prior segments, Commerce will not accept a request for an administrative review of that party absent new information as to the party's location. Moreover, if the interested party who files a request for review is unable to locate the producer or exporter for which it requested the review, the interested party must provide an explanation of the attempts it made to locate the producer or exporter at the same time it files its request for review, in order for Commerce to determine if the interested party's attempts were reasonable, pursuant to 19 CFR 351.303(f)(3)(ii).
As explained in
Commerce no longer considers the non-market economy (NME) entity as an exporter conditionally subject to an AD administrative review.
All requests must be filed electronically in Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS) on Enforcement and Compliance's ACCESS website at
Commerce will publish in the
For the first administrative review of any order, there will be no assessment of antidumping or countervailing duties on entries of subject merchandise entered, or withdrawn from warehouse, for consumption during the relevant provisional-measures “gap” period of the order, if such a gap period is applicable to the period of review.
On September 20, 2021, Commerce published the final rule titled “
In accordance with the
As mentioned in the
Interested parties have 30 days after the date of this notice to submit new or amended entries of appearance. Commerce will then finalize the annual inquiry service lists five business days thereafter. For ease of administration, please note that Commerce requests that law firms with more than one attorney representing interested parties in a proceeding designate a lead attorney to be included on the annual inquiry service list.
Commerce may update an annual inquiry service list at any time as needed based on interested parties' amendments to their entries of appearance to remove or otherwise modify their list of members and representatives, or to update contact information. Any changes or announcements pertaining to these procedures will be posted to the ACCESS website at
In the
This notice is not required by statute but is published as a service to the international trading community.
International Trade Administration (ITA), Department of Commerce (DOC).
Request for comment.
This notice requests input on proposed topics for the agenda of the 22nd Plenary of the U.S.-Brazil Commercial Dialogue (Dialogue), taking place on September 19, 2024. In 2006, the Governments of the United States and Brazil established the Dialogue with the purpose of working together to prevent, reduce and remove non-tariff barriers to trade.
In order to be considered in advance of Dialogue, comments should be received by July 31, 2024. Comments received after that date will be evaluated for future discussions.
Comments should be submitted by email to
Maria Cameron,
The Dialogue was established by a Letter of Intent between the U.S. Department of Commerce (Commerce) and the Brazilian Ministry of Development, Industry and Foreign Trade (MDIC) on June 6, 2006, which was intended to guide commercial cooperation between the two Ministries. The Dialogue is the mechanism through which Commerce and MDIC work together to prevent, reduce and remove non-tariff barriers to trade in order to foster increased bilateral trade and investment. The Dialogue does this through a working group structure and organizes regular information exchanges between technical experts.
Following the 21st Plenary of the U.S.-Brazil Commercial Dialogue in November 2023, Commerce and MDIC issued a Joint Statement which noted the Dialogue maintains its overarching intention to:
• Support the implementation of the U.S.-Brazil Protocol on Trade Rules and Transparency;
• Foster an environment for ongoing and future cooperation;
• Support both countries' efforts to enhance resilient supply chains; and
• Remain engaged with the private sector and other stakeholders.
Currently the Dialogue is made up of working groups which address topics including but not limited to:
• Good regulatory practices;
• Standards, metrology and conformity assessment;
• Trade in the digital economy;
• Customs and trade facilitation;
• Trade and sustainable development.
Commerce will use the information gathered in this request for comment to develop proposed topics for the Dialogue agenda.
More information about the Dialogue can be found at:
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) preliminarily determines that large diameter welded pipe (welded pipe) from the Republic of Korea (Korea) was not sold in the United States at less than normal value (NV) during the period of review (POR) May 1, 2022, through April 30, 2023. We invite interested parties to comment on these preliminary results.
Applicable June 3, 2024.
Kate Johnson or Davyd Williams, AD/CVD Operations, Office VIII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-4929 or (202) 482-4338, respectively.
On May 2, 2019, Commerce published in the
The product covered by the
Commerce is conducting this administrative review in accordance with section 751(a) of the Act. Constructed export price is calculated in accordance with section 772 of the Act. NV is calculated in accordance with section 773 of the Act.
For a full description of the methodology underlying these preliminary results,
The statute and Commerce's regulations do not address the establishment of a weighted-average dumping margin to be determined for companies not selected for individual examination when Commerce limits its examination in an administrative review pursuant to section 777A(c)(2) of the Act. Generally, Commerce looks to section 735(c)(5) of the Act, which provides instructions for calculating the all-others rate in an investigation, for guidance when determining the weighted-average dumping margin for companies which were not selected for individual examination in an administrative review. Under section 735(c)(5)(A) of the Act, the all-others rate is normally “an amount equal to the weighted average of the estimated weighted average dumping margins established for exporters and producers individually investigated, excluding any zero and
Where the rates for the individually examined companies are all zero,
In this review, we have preliminarily calculated a weighted-average dumping margin for each of the mandatory respondents, Hyundai Steel Company (Hyundai Steel) and SeAH Steel Corporation (SeAH), that is zero percent. Accordingly, we preliminarily assign to the non-selected companies a dumping margin of zero percent consistent with section 735(c)(5)(B) of the Act.
We preliminarily determine that the following estimated weighted-average dumping margins exist for the period May 1, 2022, through April 30, 2023:
Commerce intends to disclose its calculations performed for these preliminary results to interested parties within five days of the date of publication of this notice in the
Interested parties may submit case briefs to Commerce no later than 30 days after the date of publication of this notice.
As provided under 19 CFR 351.309(c)(2) and (d)(2), in prior proceedings we have encouraged interested parties to provide an executive summary of their brief that should be limited to five pages total, including footnotes. In this review, we instead request that interested parties provide at the beginning of their briefs a public, executive summary for each issue raised in their briefs.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically via ACCESS. Requests should contain: (1) the party's name, address, and telephone number; (2) the number of participants and whether any participant is a foreign national; and (3) a list of issues to be discussed. Issues raised in the hearing will be limited to those raised in the respective case and rebuttal briefs. An electronically filed hearing request must be received successfully in its entirety via ACCESS by 5 p.m. Eastern Time within 30 days after the date of publication of this notice.
Pursuant to section 751(a)(2)(A) of the Act and 19 CFR 351.212(b)(1), upon completion of the final results of this administrative review, Commerce shall determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries of subject merchandise covered by this review.
If the weighted-average dumping margin for an individually examined respondent is not zero or
Where we do not have entered values for all U.S. sales to a particular importer (or customer), we will calculate a per-unit assessment rate by aggregating the antidumping duties due for all U.S. sales to that importer (or customer) and dividing this amount by the total quantity sold to that importer (or customer).
If the weighted-average dumping margin for an individually examined respondent or an importer-specific assessment rate is zero or
For entries of subject merchandise during the POR produced by each individually examined respondent for which it did not know that the merchandise was destined for the United States, we intend to instruct CBP to liquidate unreviewed entries at the all-others rate (
Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of the final results of this administrative review in the
The following cash deposit requirements will be effective upon publication in the
Unless the deadline is extended, Commerce intends to issue the final results of this administrative review, including the results of our analysis of issues raised by interested parties in any case or rebuttal briefs, within 120 days
This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping and/or countervailing duties prior to liquidation of the relevant entries during this POR. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping and/or countervailing duties occurred and the subsequent assessment of doubled antidumping duties, and/or an increase in the amount of antidumping duties by the amount of the countervailing duties.
We are issuing and publishing these preliminary results in accordance with sections 751(a)(1) and 777(i)(1) of the Act, and 19 CFR 351.221(b)(4).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
In accordance with the Tariff Act of 1930, as amended (the Act), the U.S. Department of Commerce (Commerce) is automatically initiating the five-year reviews (Sunset Reviews) of the antidumping duty and countervailing duty (AD/CVD) order(s) and suspended investigation(s) listed below. The U.S. International Trade Commission (ITC) is publishing concurrently with this notice its notice of
Applicable June 3, 2024.
Commerce official identified in the
Commerce's procedures for the conduct of Sunset Reviews are set forth in its
In accordance with section 751(c) of the Act and 19 CFR 351.218(c), we are initiating the Sunset Reviews of the following antidumping and countervailing duty order(s) and suspended investigation(s):
As a courtesy, we are making information related to sunset proceedings, including copies of the pertinent statute and Commerce's regulations, Commerce's schedule for Sunset Reviews, a listing of past revocations and continuations, and current service lists, available to the public on Commerce's website at the following address:
In accordance with section 782(b) of the Act, any party submitting factual information in an AD/CVD proceeding must certify to the accuracy and completeness of that information. Parties must use the certification formats provided in 19 CFR 351.303(g). Commerce intends to reject factual submissions if the submitting party does not comply with applicable revised certification requirements.
Pursuant to 19 CFR 351.103(d), Commerce will maintain and make available a public service list for these proceedings. Parties wishing to participate in any of these five-year reviews must file letters of appearance as discussed at 19 CFR 351.103(d). To facilitate the timely preparation of the public service list, it is requested that those seeking recognition as interested parties to a proceeding submit an entry of appearance within 10 days of the publication of the Notice of Initiation. Because deadlines in Sunset Reviews can be very short, we urge interested parties who want access to proprietary information under administrative protective order (APO) to file an APO application immediately following publication in the
Domestic interested parties, as defined in sections 771(9)(C), (D), (E), (F), and (G) of the Act and 19 CFR 351.102(b), wishing to participate in a Sunset Review must respond not later than 15 days after the date of publication in the
If we receive an order-specific notice of intent to participate from a domestic interested party, Commerce's regulations provide that
This notice of initiation is being published in accordance with section 751(c) of the Act and 19 CFR 351.218(c).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) is rescinding the administrative review of the countervailing duty (CVD) order on steel racks from the People's Republic of China (China), covering the period of review (POR), January 1, 2022, through December 31, 2022.
Applicable June 3, 2024.
Thomas Martin or Dylan Hill, AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-3936 or (202) 482-1197, respectively.
On September 6, 2023, Commerce published in the
On January 10, 2024, Commerce selected Dongsheng as the sole mandatory respondent, having accounted for all suspended entries of
Pursuant to 19 CFR 351.213(d)(3), it is Commerce's practice to rescind an administrative review of a CVD order where it concludes that there were no reviewable entries of subject merchandise during the POR.
As Commerce has proceeded to a final rescission of this administrative review, no cash deposit rates will change. Accordingly, the current cash deposit requirements shall remain in effect until further notice.
Commerce will instruct CBP to assess countervailing duties on all appropriate entries. Because Commerce is rescinding this review in its entirety, the entries to which this administrative review pertained shall be assessed at rates equal to the cash deposit of estimated countervailing duties required at the time of entry, or withdrawal from warehouse, for consumption, in accordance with 19 CFR 351.212(c)(1)(i). Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of this rescission notice in the
This notice serves as a final reminder to parties subject to administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of the APO materials, or conversion to judicial protective order is hereby requested. Failure to comply with regulations and terms of an APO is a violation, which is subject to sanction.
This notice is issued and published in accordance with sections 751(a)(1) and 777(i)(l) of the Act, and 19 CFR 351.213(d)(4).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) has determined that Surya Roshni Limited (Surya) made no shipments during the period of review (POR), May 1, 2022, through April 30, 2023.
Applicable June 3, 2024.
Garry Kasparov, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-1397.
On February 6, 2024, Commerce published the
The products covered by the order include certain welded carbon steel standard pipes and tubes with an outside diameter of 0.375 inch or more but not over 16 inches. A full description of the scope of the order is contained in the
In the
Normally, Commerce discloses to interested parties the calculations performed in final results within five days of any public announcement or, if there is no public announcement, within five days of the date of publication of these final results in the
For entries of subject merchandise during the POR produced by Surya, we will instruct CBP to liquidate suspended entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction.
Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of the final results of this review in the
The following cash deposit requirements for estimated antidumping duties will be effective for all shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) for merchandise exported by a producer or exporter not covered in this review but covered in a prior completed segment of the proceeding, the cash deposit rate will continue to be the company-specific rate published for the most recently-completed segment of this proceeding; (2) if the exporter is not a firm covered in this review, a prior review, or the original less-than-fair-value (LTFV) investigation, but the producer has been covered in a prior completed segment of this proceeding, the cash deposit rate will be the company-specific rate established for the most recent period for the producer of the merchandise; (3) the cash deposit rate for all other producers or exporters will continue to be 7.08 percent,
This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during the POR. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice also serves as a final reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.
We are issuing and publishing these final results of administrative review in accordance with sections 751(a)(1) and 777(i) of the Act, and 19 CFR 351.221(b)(5).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) preliminarily determines that PT Ecos Jaya Indonesia and PT Grantec Jaya Indonesia (collectively, Ecos/Grantec), and the non-individually-examined companies for which a review was requested made sales of mattresses from Indonesia at prices below normal value (NV) during the period of review (POR), May 1, 2022, through April 30, 2023. Additionally, Commerce preliminarily determines that PT Zinus Global Indonesia (Zinus Indonesia) did not make sales of mattresses from Indonesia at prices below NV during the POR. We invite interested parties to comment on these preliminary results.
Applicable June 3, 2024.
Katherine Johnson or Brian Smith, AD/CVD Operations, Office VIII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-4929 or (202) 482-1766, respectively.
On May 14, 2021, Commerce published the antidumping duty (AD) order on mattresses from Indonesia.
Pursuant to section 751(a)(3)(A) of the Tariff Act of 1930, as amended (the Act), on January 10, 2024, Commerce determined that it was not practicable to complete the preliminary results of this review within 245 days and extended the deadline for the preliminary results of this review by 120 days, until May 30, 2024.
For a detailed description of the events that followed the initiation of this review,
The products covered by the
Commerce is conducting this administrative review in accordance with section 751(a) of the Act. Export price and constructed export price are calculated in accordance with section 772 of the Act. NV is calculated in accordance with section 773 of the Act. For a full description of the methodology underlying these preliminary results,
The statute and Commerce's regulations do not address the establishment of a weighted-average dumping margin to be determined for companies not selected for individual examination when Commerce limits its examination in an administrative review pursuant to section 777A(c)(2) of the Act. Generally, Commerce looks to section 735(c)(5) of the Act, which provides instructions for calculating the all-others rate in an investigation, for guidance when determining the weighted-average dumping margin for companies which were not selected for individual examination in an administrative review. Under section 735(c)(5)(A) of the Act, the all-others rate is normally “an amount equal to the weighted average of the estimated weighted average dumping margins established for exporters and producers individually investigated, excluding any zero and
We preliminarily calculated dumping margins for the two mandatory respondents, Ecos/Grantec and Zinus Indonesia, of 31.17 percent and 0.00 percent, respectively, and we have assigned to the non-selected companies a rate of 31.17 percent, which is the rate for Ecos/Grantec.
We preliminarily determine that the following weighted-average dumping margins exist for the period May 1, 2022, through April 30, 2023:
Commerce intends to disclose its calculations and analysis performed for these preliminary results to interested parties within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b).
Pursuant to 19 CFR 351.309(c), interested parties may submit case briefs to Commerce no later than 30 days after the date of publication of this notice.
As provided under 19 CFR 351.309(c)(2) and (d)(2), in prior proceedings we have encouraged interested parties to provide an executive summary of their brief that should be limited to five pages total, including footnotes. In this review, we instead request that interested parties provide at the beginning of their briefs a public, executive summary for each issue raised in their briefs.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically via ACCESS. Requests should contain: (1) the party's name, address, and telephone number; (2) the number of participants and whether any participant is a foreign national; and (3) a list of issues to be discussed. Issues raised in the hearing will be limited to those raised in the respective case briefs. An electronically filed hearing
Pursuant to section 751(a)(2)(A) of the Act and 19 CFR 351.212(b)(1), Commerce intends to determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries of subject merchandise covered by this review. Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of the final results of this administrative review in the
For an individually examined respondent whose weighted-average dumping margin is not zero or
For entries of subject merchandise during the POR produced by each individually-examined respondent for which it did not know its merchandise was destined for the United States, we intend to instruct CBP to liquidate such entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction.
For the companies which were not selected for individual examination, we intend to assign an AD assessment rate equal to the dumping margin determined for Ecos/Grantec in the final results of review.
The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the final results of this review and for future cash deposits of estimated antidumping duties, where applicable.
The following cash deposit requirements will be effective for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) the cash deposit rate for the companies listed above will be equal to the weighted-average dumping margin established in the final results of this review, except if the rate is less than 0.50 percent and, therefore,
These cash deposit requirements, when imposed, shall remain in effect until further notice.
Unless the deadline is otherwise extended, Commerce intends to issue the final results of this administrative review, including the results of our analysis of issues raised by the parties in the written comments, within 120 days of publication of these preliminary results in the
This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this POR. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties.
These preliminary results are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act, and 19 CFR 351.221(b)(4).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) preliminarily determines that certain carbon and alloy steel cut-to-length plate (CTL plate) from the Federal Republic of Germany (Germany) is not being, or is not likely to be, sold in the United States at less than normal value (NV) during the period of review (POR) May 1, 2022, through April 30, 2023.
Applicable June 3, 2024.
Adam Simons, AD/CVD Operations, Office IX, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-6172.
On July 12, 2023, based on a timely request for review, in accordance with 19 CFR 351.221(c)(1)(i), we initiated an administrative review on CTL plate from Germany.
The products covered by the order are certain carbon and alloy steel hot-rolled or forged flat plate products not in coils, whether or not painted, varnished, or coated with plastics or other non-metallic substances from Germany. Products subject to the order are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7208.40.3030, 7208.40.3060, 7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7211.13.0000, 7211.14.0030, 7211.14.0045, 7225.40.1110, 7225.40.1180, 7225.40.3005, 7225.40.3050, 7226.20.0000, and 7226.91.5000. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise subject to this scope is dispositive.
Commerce is conducting this review in accordance with section 751(a) of the Tariff Act of 1930, as amended (the Act). Export price is calculated in accordance with section 772 of the Act. NV is calculated in accordance with section 773 of the Act. For a full description of the methodology underlying our conclusions,
As a result of this review, we preliminarily determine that the following weighted-average dumping margin exists for the period May 1, 2022, through April 30, 2023:
We intend to disclose the calculations performed for these preliminary results to interested parties within five days after the date of publication of this notice.
As provided under 19 CFR 351.309(c)(2) and (d)(2), in prior proceedings we have encouraged interested parties to provide an executive summary of their briefs that should be limited to five pages total, including footnotes. In this review, we instead request that interested parties provide at the beginning of their briefs a public, executive summary for each issue raised in their briefs.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically via ACCESS by 5:00 p.m. Eastern Time within 30 days after the date of publication of this notice. Requests should contain: (1) the party's name,
Upon issuing the final results, Commerce shall determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries. Pursuant to 19 CFR 351.212(b)(1), because Dillinger reported the entered value of its U.S. sales, we calculated importer-specific
Commerce's “automatic assessment” will apply to entries of subject merchandise during the POR produced by Dillinger for which it did not know that the merchandise it sold to an intermediary (
Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of the final results of this review in the
The following deposit requirements will be effective for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) the cash deposit rate for Dillinger will be equal to the weighted-average dumping margin established in the final results of this review, except if the rate is less than 0.50 percent and, therefore,
This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
We are issuing and publishing these preliminary results in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Every five years, pursuant to the Tariff Act of 1930, as amended (the Act), the U.S. Department of Commerce (Commerce) and the International Trade Commission automatically initiate and conduct reviews to determine whether revocation of a countervailing or antidumping duty order or termination of an investigation suspended under section 704 or 734 of the Act would be likely to lead to continuation or recurrence of dumping or a countervailable subsidy (as the case may be) and of material injury.
Pursuant to section 751(c) of the Act, the following Sunset Reviews are scheduled for initiation in July 2024 and will appear in that month's
Commerce's procedures for the conduct of Sunset Review are set forth in 19 CFR 351.218. The
Pursuant to 19 CFR 351.103(c), Commerce will maintain and make available a service list for these proceedings. To facilitate the timely preparation of the service list(s), it is requested that those seeking recognition as interested parties to a proceeding contact Commerce in writing within 10 days of the publication of the Notice of Initiation.
Please note that if Commerce receives a Notice of Intent to Participate from a member of the domestic industry within 15 days of the date of initiation, the review will continue.
Thereafter, any interested party wishing to participate in the Sunset Review must provide substantive comments in response to the notice of initiation no later than 30 days after the date of initiation. Note that Commerce has amended certain of its requirements pertaining to the service of documents in 19 CFR 351.303(f).
This notice is not required by statute but is published as a service to the international trading community.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) preliminarily determines that countervailable subsidies are being provided to producers and exporters of certain glass wine bottles from the People's Republic of China (China). The period of investigation (POI) is January 1, 2022, through December 31, 2022. Interested parties are invited to comment on this preliminary determination.
Applicable June 3, 2024.
Preston Cox or Theodora Mattei, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-5041 or (202) 482-4834, respectively.
This preliminary determination is made in accordance with section 703(b) of the Tariff Act of 1930, as amended (the Act). Commerce published the notice of initiation of this countervailing duty (CVD) investigation on January 18, 2024.
For a complete description of events that followed the initiation of this investigation,
The products covered by this investigation are certain glass wine bottles from China. For a complete description of the scope of this investigation,
In accordance with the
Commerce is conducting this investigation in accordance with section 701 of the Act. For each of the subsidy programs found to be countervailable, Commerce preliminarily determines that there is a subsidy,
Moreover, Commerce notes that, in making its findings of countervailability, it relied, in part, on facts available, and, because it finds that certain of the respondents and the Government of China failed to cooperate by not acting to the best of their abilities to respond to Commerce's requests for information, it drew an adverse inference where appropriate in selecting from among the facts otherwise available.
In accordance with section 703(e)(1) of the Act, we preliminarily find that critical circumstances exist with respect to imports of subject merchandise for Shandong Changyu Glass Co., Ltd. (Shandong Changyu), the non-responsive companies, and all other producers and/or exporters. For a full discussion of our preliminary critical circumstances determination,
Sections 703(d) and 705(c)(5)(A) of the Act provide that, in the preliminary determination, Commerce shall determine an estimated all-others rate for companies not individually examined. This rate shall be an amount equal to the weighted average of the estimated subsidy rates established for those companies individually examined, excluding any rates that are zero,
In this investigation, Commerce preliminarily calculated an individual estimated countervailable subsidy rate for Shandong Changyu, the only individually-examined exporter/producer in this investigation for which Commerce is calculating an estimated countervailable subsidy rate. Because the only individually calculated rate is not zero,
Eight potential exporters and/or producers of wine bottles from China did not respond to Commerce's quantity and value (Q&V) questionnaire (
We further preliminarily determine that an adverse inference is warranted, pursuant to section 776(b) of the Act. By failing to submit responses to Commerce's Q&V Questionnaire, the non-responsive companies did not cooperate to the best of their ability in this investigation. Accordingly, we preliminarily find that an adverse inference is warranted to ensure that the non-responsive companies will not obtain a more favorable result than had they fully complied with our request for information. For more information on the application of adverse facts available to the non-responsive companies,
Commerce preliminarily determines that the following estimated countervailable subsidy rates exist:
Commerce intends to disclose to interested parties the calculations performed in connection with this preliminary determination within five days of its public announcement or, if there is no public announcement, within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b).
In accordance with section 703(d)(1)(B) and (d)(2) of the Act, Commerce will direct U.S. Customs and Border Protection (CBP) to suspend liquidation of entries of subject merchandise as described in the scope of the investigation section entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the
Section 703(e)(2) of the Act provides that, given an affirmative determination of critical circumstances, any suspension of liquidation shall apply to unliquidated entries of merchandise entered, or withdrawn from warehouse, for consumption on or after the later of: (a) the date which is 90 days before the date on which the suspension of liquidation was first ordered; or (b) the date on which notice of initiation of the investigation was published. Commerce preliminarily finds that critical circumstances exist for imports of subject merchandise produced and/or exported by for Shandong Changyu, the non-responsive companies, and all other producers and/or exporters. In accordance with section 703(e)(2)(A) of the Act, the suspension of liquidation shall apply to unliquidated entries of merchandise from the exporters/producers identified in this paragraph that were entered, or withdrawn from warehouse, for consumption on or after the date which is 90 days before the publication of this notice.
As provided in section 782(i)(1) of the Act, Commerce intends to verify the information relied upon in making its final determination.
All interested parties are invited to comment on the preliminary scope decision made in this investigation, according to the schedule provided in the Preliminary Scope Decision Memorandum. The Preliminary Scope Decision Memorandum provides the schedule for parties to comment on the preliminary scope decision. For all scope case and rebuttal briefs, parties must file identical documents simultaneously on the records of the ongoing companion AD and CVD investigations. No new factual information or business proprietary information may be included in either scope case or rebuttal briefs.
Case briefs or other written comments on non-scope issues may be submitted to the Assistant Secretary for Enforcement and Compliance no later than seven days after the date on which the last verification report is issued in this investigation. Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than five days after the date for filing case briefs.
As provided under 19 CFR 351.309(c)(2) and (d)(2), in prior proceedings we have encouraged interested parties to provide an executive summary of their brief that should be limited to five pages total, including footnotes. In this investigation, we instead request that interested parties provide at the beginning of their briefs a public, executive summary for each issue raised in their briefs. Further, we request that interested parties limit their executive summary of each issue to no more than 450 words, not including citations. We intend to use the executive summaries as the basis of the comment summaries included in the issues and decision memorandum that will accompany the final determination in this investigation. We request that interested parties include footnotes for relevant citations in the executive summary of each issue. Note that Commerce has amended certain of its requirements pertaining to the service of documents in 19 CFR 351.303(f).
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, limited to issues raised in the case and rebuttal briefs, must submit a written request to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce via ACCESS within 30 days after the date of publication of this notice. Requests should contain the party's name, address, and telephone number, the number of participants, and a list of the issues to be discussed. Oral presentations at the hearing will be limited to issues raised in the briefs. If a request for a hearing is made, parties will be notified of the time and date for the hearing.
In accordance with section 703(f) of the Act, Commerce will notify the U.S. International Trade Commission (ITC) of its determination. If the final determination is affirmative, the ITC will determine before the later of 120 days after the date of this preliminary determination or 45 days after the final determination whether imports of certain glass wine bottles from China are materially injuring, or threaten material injury to, the U.S. industry.
This determination is issued and published in accordance with sections 703(f) and 777(i)(1) of the Act, and 19 CFR 351.205(c).
The merchandise covered by the investigation is certain narrow neck glass bottles, with a nominal capacity of 740 milliliters (25.02 ounces) to 760 milliliters (25.70 ounces); a nominal total height between 24.8 centimeters (9.75 inches) to 35.6 centimeters (14 inches); a nominal base diameter between 4.6 centimeters (1.8 inches) to 11.4 centimeters (4.5 inches); and a mouth with an outer diameter of between 25 millimeters (.98 inches) to 37.9 millimeters (1.5 inches); frequently referred to as a “wine bottle.” In scope merchandise may include but is not limited to the following shapes: Bordeaux (also known as “Claret”), Burgundy, Hock, Champagne, Sparkling, Port, Provence, or Alsace (also known as “Germanic”). In scope glass bottles generally have an approximately round base and have shapes including but not limited to, straight-sided, a tapered slope from shoulder (
Excluded from the scope of the investigation are: (1) glass containers made of borosilicate glass, meeting United States Pharmacopeia requirements for Type 1 pharmaceutical containers; and (2) glass containers without a “finish” (
Glass bottles subject to the investigation are specified within the Harmonized Tariff Schedule of the United States (HTSUS) under subheading 7010.90.5019. The HTSUS subheading is provided for convenience and
International Trade Administration, Department of Commerce.
Notice; request for public comments.
The Department of Commerce (Commerce) seeks public comment to inform its work on assessing and analyzing risk in global supply chains. This includes input into a determination of an initial list of “critical sectors” and “key goods” as provided under the Indo-Pacific Economic Framework for Prosperity (IPEF) Agreement Relating to Supply Chain Resilience (Supply Chain Agreement). The United States' initial list will be shared with the IPEF Supply Chain Council members and will inform work undertaken pursuant to the Agreement. Comments will also inform other analytical tools and methodologies developed by Commerce's Industry & Analysis unit to support resilient supply chains for U.S. industry.
To be assured of consideration, submit any written comments by the June 21 deadline. Commerce may consider comments filed after the deadline.
You may submit comments, identified by 240530-0148 by the following methods:
Kevin Doyle, Policy Advisor for IPEF, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Ave NW; telephone 202-779-0376; or emails at
Ahmad Khalil, Managing Director, Risk Assessment and Advanced Analytics, Supply Chain Center, International Trade Administration, Industry and Analysis unit, U.S. Department of Commerce, 1401 Constitution Ave NW; telephone 202-779-0376; or emails at
Please direct media inquiries to ITA's Office of Public Affairs at
Building supply chain resilience is a top priority of the Department of Commerce, building on a long history of supply chain work led by the Industry & Analysis (I&A) unit in the International Trade Administration (ITA). I&A is comprised of a broad set of industry experts with unique commercial perspectives in understanding supply chains and informing and driving policy action. In 2023, the Department launched a first-of its-kind Supply Chain Center to serve as an analytic engine to help drive decision-making and policy action on efforts to strengthen supply chain resilience, leveraging I&A's deep industry expertise, quantitative data, and advanced analytics to help make the government's work on supply chains more proactive and impactful. The Center is facilitating collaboration across I&A, other parts of Commerce, and other government agencies to support a proactive approach by the U.S. government in getting ahead of supply chain challenges, to be strategic in setting priorities for policy focus and action based on data-driven risk analysis, and to serve as a force multiplier in improving the targeting and effectiveness of U.S. government investments. Across these efforts, the Department depends on close partnerships with stakeholders from government, industry, academia, labor, and civil society.
Central to the Supply Chain Center's work are efforts to boost the U.S. government's ability to understand systemic supply chain risks by building a cross-sectoral risk assessment framework (the “tool”). The tool will utilize a comprehensive set of indicators to assess current or prospective supply chain risk across the U.S. economy, with an emphasis on risks to national security, including economic security, most relevant to the U.S. government. The goal is to help the U.S. government more comprehensively and systematically identify supply chain vulnerabilities and pursue in-depth analysis for actionable and evidence-based policy recommendations.
This is the first effort by the U.S. government to assess supply chain vulnerability across all major sectors of the economy. This tool will help the U.S. government to determine—at the sectoral, and eventually product, level—where there are hidden vulnerabilities that could be addressed through policy action by the U.S. government and/or public-private partnerships.
The supply chain risk assessment framework is an iterative tool. The latest version of the framework incorporates upwards of 40 indicators of risk that relate to a sector's criticality to the U.S. government, vulnerability to disruption, and resilience in the face of disruption.
Examples of criticality of a product or sector include products listed in the White House Critical and Emerging Technologies list, the products required for the Department of Defense industrial base, and products central to U.S. public health and safety, such as pharmaceuticals and certain nutritional foods.
The vulnerability indicators cover six categories of risk: geopolitical; economic; logistical; business/financial; technological; and environmental.
Resiliency indicators focus on how quickly a sector can bounce back from a disruption, considering levels of substitutability, unutilized capacity, and replacement of key inputs.
The Center has been consulting with relevant external stakeholders in the development of this tool as well, including reaching out to dozens of industry and academic experts. The vision and success of this framework depend on close collaboration with industry stakeholders, as well as those from government, academia, civil society, labor, and others, to gather insights, develop accurate assessments of risks and mitigation options, and then take targeted and coordinated action to
The creation of an economy-wide risk tool is an important element of the Commerce Department's Supply Chain Center work, though not the only instance in which the Center is leveraging big data and the qualitative insights of industry experts and economists. The Center is also leveraging analytic tools for targeted scans of critical sectors; expanding its ability to model scenarios and evaluate the potential impacts of proposed policy actions; and deepening its proactive analysis through case studies and replicable and scalable frameworks and toolkits for supply chain analysis and policy action. The Center is also bolstering its ability to produce quick-turn analysis in the event of supply chain disruptions by building partnerships with academia, civil society, labor and others as well as standing playbooks that can help inform policy responses and industry engagement.
Commerce's supply chain resilience efforts are also being advanced through the Supply Chain Agreement. Launched in May 2022 with 13 regional partners—Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam—IPEF seeks to establish a platform for long-term economic engagement and cooperation, and to tackle present-day challenges.
Negotiations among the 14 IPEF partners for the Supply Chain Agreement substantially concluded on May 27, 2023, and a signing ceremony of the Agreement was held on November 14 of that same year. The Supply Chain Agreement entered into force on February 24, 2024, after the fifth partner deposited its instrument of ratification, acceptance, or approval. As of May 6, 2024, a total of six partners—Japan, the United States, Singapore, Fiji, India, and the Republic of Korea—have deposited their instruments, in that order.
Parties to the Supply Chain Agreement intend to collaborate on initiatives aimed at strengthening the resilience and competitiveness of target supply chains, better preparing for and responding to supply chain disruptions, and enhancing the role of workers across these supply chains. To do this, the Supply Chain Agreement establishes three supply chain bodies tasked with facilitating various forms of cooperation—a Supply Chain Council, a Crisis Response Network, and a Labor Rights Advisory Board. Parties to the Supply Chain Agreement shall, and signatories that have not deposited an instrument of ratification, acceptance, or approval may designate representatives to these bodies to discuss and carry out this work.
Article 10 of the Supply Chain Agreement requires the development of initial lists of “critical sectors” and “key goods,” which will then be shared through the Supply Chain Council. The Parties can change or update these lists at any time. As the U.S. Government's representative to the Council, the Department of Commerce, through the International Trade Administration (ITA), is leading the process to prepare and submit this list on behalf of the United States, and intends to update the list periodically, as appropriate and as envisioned under the Supply Chain Agreement.
These lists will, among other things, inform discussions among the members of the IPEF Supply Chain Council on opportunities for collaboration under the Supply Chain Agreement through the IPEF Supply Chain Council. Such collaboration could take the form of actions to promote business matchmaking, encourage investment, or improve policy coordination in areas impacting supply chains, among others. The Council may establish teams to develop Action Plans to provide recommendations to promote resilience and competitiveness for critical sectors or key goods based on the lists provided. Those critical sectors and key goods that appear on three or more lists are eligible for the development of an Action Plan.
Article 1 of the Supply Chain Agreement provides the following definitions of “critical sectors” and “key goods”:
• critical sectors means sectors that produce goods and supply any related essential services critical to a Party's national security, public health and safety, or prevention of significant or widespread economic disruptions, as identified by that Party in accordance with Article 10;
• key goods means raw, in-process, or manufactured materials, articles, or commodities, the absence of which could have a significant effect on a Party's national security, public health and safety, or prevention of significant or widespread economic disruptions, as identified by that Party in accordance with Article 10;
Article 10 of the Supply Chain Agreement further outlines the factors intended to be considered in identifying respective critical sectors and key goods. These include:
(a) the impact of a potential shortage on its national security, public health and safety, or prevention of significant or widespread economic disruptions;
(b) the level of dependence on a single supplier or a single country, region, or geographic location;
(c) geographic factors including actual or potential transport constraints, especially for its island or remote regions;
(d) the availability and reliability of alternative suppliers or supply locations;
(e) the extent of imports required to meet domestic demand;
(f) the availability of domestic production capacity; or
(g) the extent of interconnectedness with other critical sectors or key goods.
The Department of Commerce recognizes the importance of a deliberative and inclusive review and selection process for identifying the United States' initial list of critical sectors and key goods under the Supply Chain Agreement.
To assist in these endeavors, Commerce requests information from the public on the topics provided below.
Comments will be reviewed by Commerce staff, including the Supply Chain Center, the Industry & Analysis business unit offices, the IPEF team, and, as appropriate, Commerce
• What tools, approaches, and methodologies do you recommend that Commerce utilize in order to identify priority products and sectors at elevated risk of supply chain disruption, particularly those of relevance to the United States based on national security, including economic security?
• More specifically, what definitions, indicators, and data sets do you recommend that Commerce use to evaluate the following aspects of supply chain risk:
• What tools, approaches, and methodologies could Commerce use to assess a supply chain's areas of greatest vulnerability? How can those vulnerabilities be quantified and tracked over time?
• What factors influence your organization's evaluation of risk in your supply chains? What additional data, information, or analysis from the U.S. government would you view as valuable in this assessment?
• How should the U.S. government leverage technological advancements to foster data collection, analysis, and dissemination for both public and private entities?
• What data, indicia, or criteria might help Commerce identify those supply chains where the market would be least likely to prevent or quickly resolve a disruption?
• How should Commerce assess “significant or widespread economic disruptions” for purposes of the Supply Chain Agreement? What thresholds or metrics should Commerce consider in assessing the risk of such disruptions for the purposes of identifying critical sectors and key goods?
• Which, if any, of the factors listed in Article 10 of the Supply Chain Agreement should Commerce prioritize in making its determinations of critical sectors or key goods for cooperation under the Supply Chain Agreement? Please offer a justification.
• In your view, bearing in mind the seven factors outlined above, what sectors and goods best fit the criteria for “critical sectors” and “key goods” for cooperation under the Supply Chain Agreement and why?
• For those sectors and goods that Commerce should consider “critical sectors” and “key goods” for cooperation under the Supply Chain Agreement, what types of activities, either by governments, by companies, or via public-private cooperation, would be most valuable to the private sector?
• The U.S. Department of Commerce requests U.S. small businesses (generally defined by the Small Business Administration as firms with fewer than 500 employees) or organizations representing U.S. small business members that submit comments to self-identify as such, so that we may be aware of issues of particular interest to small businesses.
To be assured of consideration, submit any written comments by the June 21 deadline. All submissions must be in English. Commerce strongly encourages submissions via
To submit via
Please include the name, email address, and telephone number of an individual Commerce can contact if there are issues or questions with the submission. You will receive a tracking number upon completion of the submission procedure at
Commerce is not able to provide technical assistance for
If you are unable to submit through
If you ask Commerce to treat information you submit as BCI, you must certify that the information is business confidential and that you would not customarily release it to the public. For any comments submitted electronically containing BCI, the file name of the business confidential version should begin with the characters `BCI.' You must clearly mark any page containing BCI with `BUSINESS CONFIDENTIAL' on the top of that page. Filers of submissions containing BCI also must submit a public version that will be placed in the docket for public inspection. The file name of the public version should begin with the character `P.' Follow the `BCI' and `P' with the name of the individual or organization submitting the comments.
ITA will post written submissions in the docket for public inspection, except properly designated BCI. You can view comments on
A Federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a penalty for failure to comply with an information collection subject to the requirements of the Paperwork Reduction Act of 1995 unless the information collection has a currently valid OMB Control Number. The approved OMB Control Number for this information collection is 0690-0038. Without this approval, we could not conduct this information collection. Public reporting for this information collection is estimated to be approximately 2 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the information collection. All responses to this information collection are voluntary. Send comments regarding this burden estimate or any other aspect of this information collection, including suggestions for reducing this burden to the International Trade Administration Paperwork Reduction Act Program:
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; issuance of incidental harassment authorizations.
In accordance with the regulations implementing the Marine Mammal Protection Act (MMPA) as amended, notification is hereby given that NMFS has issued an incidental harassment authorization (IHA) to the United States Navy (Navy) to incidentally harass marine mammals during construction activities associated with the Naval Facilities Engineering Command Northwest (NAVFAC NW) Maintenance and Pile Replacement (MPR) project in Puget Sound, Washington.
These authorizations are effective from July 1, 2024 through June 30, 2025 and July 1, 2025 through June 30, 2026.
Electronic copies of the application and supporting documents, as well as a list of the references cited in this document, may be obtained online at:
Kate Fleming, Office of Protected Resources, NMFS, (301) 427-8401.
The MMPA prohibits the “take” of marine mammals, with certain exceptions. Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
Authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s) and will not have an unmitigable adverse impact on the availability of the species or stock(s) for taking for subsistence uses (where relevant). Further, NMFS must prescribe the permissible methods of taking and other “means of effecting the least practicable adverse impact” on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stocks for taking for certain subsistence uses (referred to in shorthand as “mitigation”); and requirements pertaining to the monitoring and reporting of the takings. The definitions of all applicable MMPA statutory terms cited above are included in the relevant sections below.
On October 5, 2023, NMFS received a request from the Navy for two consecutive 1-year IHAs to take marine mammals incidental to construction associated with the Navy's NAVFAC NW MPR project in Puget Sound, Washington. Following NMFS' review of the application, the Navy submitted a revised version on December 14, 2023, additional information on January 10, 2024, and the marine mammal monitoring plan on January 23, 2024. Final revisions to both the application and the marine mammal monitoring plan were provided on March 2, 2024. The application was deemed adequate and complete on February 27, 2024. The Navy's request is for take of 10 species of marine mammals by Level B harassment and, for harbor seal, Level B and Level A harassment. Neither the Navy nor NMFS expect serious injury or mortality to result from this activity. Therefore, IHAs are appropriate.
NMFS previously issued a regulation and associated Letters of Authorization (LOAs) to the Navy for related work (84 FR 15963, April 17, 2019);
There are no changes from the Proposed IHAs to the Final IHAs.
Maintaining existing wharfs and piers is vital to sustaining the Navy's mission and ensuring readiness. To ensure continuance of necessary missions at the four installations, the Navy must conduct annual maintenance and repair activities at existing marine waterfront structures, including removal and replacement of piles of various types and sizes. The Navy refers to this program as the Marine Structure MPR program.
The activities that have the potential to take marine mammals by Level A harassment and Level B harassment include installation and/or removal of timber, concrete, and steel piles by vibratory and impact pile driving and down-the hole (DTH) drilling. Construction will span the course of 2 years, with the first year beginning on July 15, 2024, and lasting through July 14, 2025. The second year of construction activities will begin July 15, 2025, and continue through July 14, 2026.
A detailed description of the planned construction project is provided in the
A notice of NMFS' proposal to issue an IHA to the Navy was published in the
Sections 3 and 4 of the application summarize available information regarding status and trends, distribution and habitat preferences, and behavior and life history of the potentially affected species. NMFS fully considered all of this information, and we refer the reader to these descriptions, instead of reprinting the information. Additional information regarding population trends and threats may be found in NMFS' Stock Assessment Reports (SARs;
Table 1 lists all species or stocks for which take is expected and authorized for both IHAs, and summarizes information related to the population or stock, including regulatory status under the MMPA and Endangered Species Act (ESA) and potential biological removal (PBR), where known. PBR is defined by the MMPA as the maximum number of animals, not including natural mortalities, that may be removed from a marine mammal stock while allowing that stock to reach or maintain its optimum sustainable population (as described in NMFS' SARs). While no serious injury or mortality is anticipated or authorized here, PBR and annual serious injury and mortality from anthropogenic sources are included here as gross indicators of the status of the species or stocks and other threats.
Marine mammal abundance estimates presented in this document represent the total number of individuals that make up a given stock or the total number estimated within a particular study or survey area. NMFS' stock abundance estimates for most species represent the total estimate of individuals within the geographic area, if known, that comprises that stock. For some species, this geographic area may extend beyond U.S. waters. All managed stocks in this region are assessed in NMFS' U.S. Alaska and Pacific SARs. All values presented in table 1 are the most recent available at the time of publication (including from the draft 2023 SARs) and are available online at:
A detailed description of the species likely to be affected by the Navy's NAVFAC NW MPR project, including brief introductions to the species and relevant stocks as well as available information regarding population trends and threats, and information regarding local occurrence, were provided in the
Hearing is the most important sensory modality for marine mammals underwater, and exposure to anthropogenic sound can have deleterious effects. To appropriately assess the potential effects of exposure to sound, it is necessary to understand the frequency ranges marine mammals are able to hear. Not all marine mammal species have equal hearing capabilities (
The pinniped functional hearing group was modified from Southall
For more detail concerning these groups and associated frequency ranges,
The effects of underwater noise from the Navy's construction activities have the potential to result in behavioral harassment of marine mammals in the vicinity of the project area. The notice of the proposed IHAs (89 FR 25580, April 11, 2024) included a discussion of the effects of anthropogenic noise on marine mammals and the potential effects of underwater noise from the Navy's construction on marine mammals and their habitat. That information and analysis is referenced in this final IHA determination and is not repeated here; please refer to the notice of proposed IHAs (89 FR 25580, April 11, 2024).
This section provides an estimate of the number of incidental takes authorized through the IHAs, which will inform both NMFS' consideration of “small numbers,” and the negligible impact determinations.
Harassment is the only type of take expected to result from these activities. Except with respect to certain activities not pertinent here, section 3(18) of the MMPA defines “harassment” as any act of pursuit, torment, or annoyance, which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
Authorized takes will primarily be by Level B harassment, as use of the acoustic sources (
As described previously, no serious injury or mortality is anticipated or authorized for this activity. Below, we describe how the take numbers are estimated.
For acoustic impacts, generally speaking, we estimate take by considering: (1) acoustic thresholds above which NMFS believes the best available science indicates marine mammals will be behaviorally harassed or incur some degree of permanent hearing impairment; (2) the area or volume of water that will be ensonified above these levels in a day; (3) the density or occurrence of marine mammals within these ensonified areas; and (4) the number of days of activities. We note that while these factors can contribute to a basic calculation to provide an initial prediction of potential takes, additional information that can qualitatively inform take estimates is also sometimes available (
NMFS recommends the use of acoustic thresholds that identify the received level of underwater sound above which exposed marine mammals would be reasonably expected to be behaviorally harassed (equated to Level B harassment) or to incur permanent threshold shift (PTS) of some degree (equated to Level A harassment).
The Navy's activity includes the use of continuous (vibratory pile driving and removal and DTH drilling) and impulsive (impact pile driving and DTH drilling) sources, and therefore the RMS SPL thresholds of 120 and 160 dB re 1 μPa is applicable, respectively.
These thresholds are provided in the table below. The references, analysis, and methodology used in the development of the thresholds are described in NMFS' 2018 Technical Guidance, which may be accessed at:
Here, we describe operational and environmental parameters of the activity that are used in estimating the area ensonified above the acoustic thresholds, including source levels and transmission loss (TL) coefficient.
The sound field in the project area is the existing background noise plus additional construction noise from the project. Marine mammals are expected to be affected via sound generated by the primary components of the project (
The project includes vibratory pile installation and removal, impact pile driving, and DTH drilling in year 1 and vibratory pile installation and removal and impact pile driving in year 2. Source levels for these activities are based on reviews of measurements of the same or similar types and dimensions of piles available in the literature. Source levels for each pile size and activity each year are presented in table 4. Source levels for vibratory installation and removal of piles of the same diameter are assumed to be the same.
NMFS recommends treating DTH systems as both impulsive and continuous, non-impulsive sound source type simultaneously. Thus, impulsive thresholds are used to evaluate Level A harassment, and continuous thresholds are used to evaluate Level B harassment. With regards to DTH mono-hammers, NMFS recommends proxy levels for Level A harassment based on available data regarding DTH systems of similar sized piles and holes (Heyvaert and Reyff, 2021) (table 5 and table 6 includes number of piles and duration each year; table 4 includes sound pressure and sound exposure levels for each pile type).
The Navy plans to use bubble curtains when impact driving steel piles (relevant to year 2 activities only). For the reasons described in the next paragraph, we assume here that use of the bubble curtain would result in a reduction of 8 dB from the assumed SPL (rms) and SPL (peak) source levels for these pile sizes, and reduce the applied source levels accordingly.
During the 2023 study at Naval Base Kitsap (NBK) Bremerton, the Navy conducted comparative measurements of source levels when impact driving steel piles with and without a bubble curtain. Underwater sound levels were measured at two locations during the installation of one 24-in diameter steel pile and four 36-in steel piles. The bubble curtain used during the measurements reduced median peak sound levels by between 8 and 12 dB, median RMS sound levels by 10 and 12 dB, and median single strike SEL sound levels by 7 and 8 dB. The analysis included in the proposed rule for the regulations preceding these IHAs (83 FR 9366, March 5, 2018) as well as results from the NBK Bangor Trident Support Facilities Explosive Handling Wharf study (Navy, 2013), are consistent with these findings. While proper set-up and operation of the system is critical, and variability in performance should be expected, we believe that in the circumstances evaluated here an effective attenuation performance of 8 dB is a reasonable assumption.
Absent site-specific acoustical monitoring with differing measured TL, a practical spreading value of 15 is used as the TL coefficient in the above formula. Site-specific TL data for the Puget Sound are not available; therefore, the default coefficient of 15 is used to determine the distances to the Level A harassment and Level B harassment thresholds.
The ensonified area associated with Level A harassment is more technically challenging to predict due to the need to account for a duration component. Therefore, NMFS developed an optional User Spreadsheet tool to accompany the Technical Guidance that can be used to relatively simply predict an isopleth distance for use in conjunction with marine mammal density or occurrence to help predict potential takes. We note that because of some of the assumptions included in the methods underlying this optional tool, we anticipate that the resulting isopleth estimates are typically overestimates of some degree, which may result in an overestimate of potential take by Level A harassment. However, this optional tool offers the best way to estimate isopleth distances when more sophisticated modeling methods are not available or practical. For stationary sources such as pile driving, the optional User Spreadsheet tool predicts the distance at which, if a marine mammal remained at that distance for the duration of the activity, it would be expected to incur PTS. Inputs used in the optional User Spreadsheet tool, and the resulting estimated isopleths, are reported below.
In this section, we provide information about the occurrence of marine mammals, including density or other relevant information that will inform the take calculations.
Available information regarding marine mammal occurrence in the vicinity of the four installations includes density information aggregated in the Navy's Marine Mammal Species Density Database (NMSDD; Navy, 2019) or site-specific survey information from particular installations (
All species described above are considered as rare, unpredictably occurring species. A density-based analysis is used for harbor porpoise (table 8), while data from site-specific abundance surveys are used for California sea lion, Steller sea lion, and harbor seal at all installations. One exception is that for Steller sea lion at NBK Bremerton, a density-based analysis is used because local data have resulted in no observations of this species (Navy, 2023).
Here, we describe how the information provided above is synthesized to produce a quantitative estimate of the take that is reasonably likely to occur and authorized.
To quantitatively assess exposure of marine mammals to noise from pile driving activities, the Navy plans three methods, to be used depending on the species' assumed spatial and temporal occurrence. For species with rare or infrequent occurrence at a given installation during the in-water work window, the likelihood of interaction was reviewed on the basis of past records of occurrence (described in Description of Marine Mammals in the Area of Specified Activities) and the potential maximum duration of work days at each installation, as well as total work days for all installations. Occurrence of the species in this category [
For species that occur regularly but for which site-specific abundance information is not available, density estimates (table 8) were used to determine the number of animals potentially exposed on any one day of pile driving or removal. The calculation for density-based analysis of species with regular occurrence is:
For remaining species, site-specific abundance information (
It is important to note that the Navy proposes to implement a shutdown of pile driving activity if any large whale is observed within any defined harassment zone (see Mitigation). Therefore, the IHAs are intended to provide insurance against the event that whales occur within Level B harassment zones that cannot be fully observed by monitors. As a result of this planned mitigation, we do not believe that Level A harassment is a likely outcome upon occurrence of any large whale. The calculated Level A harassment zone is a maximum of 374 m for DTH installation of 24-in concrete piles in year 1 and 542 m for impact installation of 36-in steel piles with a bubble curtain in year, and this requires that a whale be present at that range for the full duration of 1,000 pile strikes. Given the Navy's commitment to shut down upon observation of a large whale in any harassment zone, and the likelihood that the presence of a large whale in the vicinity of any Navy installation would be known due to reporting via Orca Network, we do not expect that any whale would be present within a Level A harassment zone for sufficient duration to actually experience PTS.
Similar to large whales, the Navy plans to implement shutdown of pile driving activity at any time that any killer whale is observed within any calculated harassment zone. We expect this to minimize the extent and duration of any behavioral harassment. Given the small size of calculated Level A harassment zones—maximum of 13 m for DTH in year 1, and 20 m for the worst-case scenario of impact-driven 36-in steel piles with a bubble curtain—we do not anticipate any potential for Level A harassment of killer whales.
The Navy plans to implement shutdown of pile driving activity at any time if a Dall's porpoise is observed in the Level A harassment zone. The calculated Level A harassment zone is as large as 445 m for DTH of 24-in concrete in year 1 and as large as 646 m for impact driving of 36-in steel piles with a bubble curtain in year 2. Take by level A harassment would require that a porpoise be present at that range for the full duration of 1,000 pile strikes. Given the rarity of Dall's porpoise in the area, the Navy's commitment to shut down upon observation of a porpoise within the Level A harassment zone, and the likelihood that a porpoise would engage in aversive behavior prior to experiencing PTS, we do not expect that any porpoise would be present within a Level A harassment zone for sufficient duration to actually experience PTS.
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The Navy plans to implement shutdown of pile driving activity at any time if a harbor porpoise is observed in the Level A harassment zone. As a result of this planned mitigation, we do not believe that Level A harassment is a likely outcome. There are two instances where the Level A harassment zone may extend beyond a distance where harbor porpoise may reliably be detected by protected species observers (PSOs). In year 1, the Level A harassment zone is 445 m during DTH drilling of 24-in concrete at NBK Manchester. In year 2, the Level A harassment zone is 645 m during impact driving of 36-in steel piles with a bubble curtain at NBK Bangor. However, Rone
Across all installations, we propose to authorize 794 takes by Level B harassment of harbor porpoise in year 1 and 1,157 takes by Level B harassment of harbor porpoise in year 2.
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Given the small size of calculated Level A harassment zones—maximum of 15 m for the worst-case scenario of DTH-installed 24-in concrete piles in year 1 and maximum of 21 m for the worst-case scenario of impact-driven 36-in steel piles with the use of a bubble curtain in year 2—we do not anticipate any potential for Level A harassment of Steller sea lions.
Across all installations we propose to authorize take by 231 takes by Level B harassment of Steller sea lion in year 1 and 287 takes by Level B harassment of Steller sea lions in year 2.
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Given the small size of calculated Level A harassment zones—maximum of 15 m for the worst-case scenario of DTH-installed 24-in concrete piles in year 1 and maximum of 21 m for the worst-case scenario of impact-driven 36-in steel piles with the use of a bubble curtain in year 2—we do not anticipate any potential for Level A harassment of California sea lions.
Across all installations we propose to authorize 3,926 takes by Level B harassment of California sea lions in year 1 and 3,636 takes by Level B harassment of California sea lions in year 2.
Harbor seals are expected to be the most abundant marine mammal at all installations, often occurring in and around existing in-water structures in a way that may restrict observers' ability to adequately observe seals and subsequently implement shutdowns. In addition, the calculated Level A harassment zones are significantly larger than those for sea lions, which may also be abundant at various installations at certain times of year. For harbor seals in year 1, the largest calculated Level A harassment zone is 200 m (compared with a maximum zone of 15 m for sea lions), calculated for the worst-case scenario of DTH-installed 24-in concrete piles (other scenarios range from 5-75 m). In year 2, the largest calculated Level A harassment zone is 290 m (compared with a maximum zone of 21 m for sea lions), calculated for the worst-case scenario of impact-driven 36-in steel piles with the use of a bubble curtain (other scenarios range from 1-21 m). Therefore, we assume that some Level A harassment is likely to occur for harbor seals and provide installation-specific estimates below.
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The Level A harassment zone expected to occur during impact installation of 36-in steel at NBK Bangor is 290 m. Since the Navy plans to maintain a shutdown zone of at 180 m (see table 11), the Navy estimates and NMFS agrees that one seal per day (n = 20) could remain within the calculated Level A harassment zone for a sufficient period to accumulate enough energy to result in PTS. As such, we propose to authorize 20 incidents of take by Level A harassment.
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In year 1, the Level A harassment zone expected to occur during impact installation of 18-in steel at NBK Bremerton is 39 m and the Level A harassment zone expected to occur during impact installation of 24-in steel is 73 m. Although the Navy plans to shut down at distances slightly larger than these Level A harassment zones (see table 10), the Navy assumes and NMFS agrees that it is possible that one seal per day could go unobserved and remain within the calculated zone for a sufficient period to accumulate enough energy to result in PTS. As such, we propose to authorize 20 takes by Level A harassment. In year 2, the largest Level A harassment zone is much smaller (<10 m) and as such we do not expect take by Level A harassment to occur and we do not propose to authorize such take.
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The Level A harassment zone expected to occur during DTH installation of 24-in concrete at NBK Manchester is 200 m. Since the Navy plans to shut down at 150 m due to practicability concerns (see table 10), the Navy assumes and NMFS agrees that one seal per day (n = 37) could remain within the calculated zone for a sufficient period to accumulate enough energy to result in PTS. As such, we propose to authorize 37 incidents of take by Level A harassment.
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The largest Level A harassment zone expected to occur at NS Everett is 21 m and the Navy plans to shut down at this distance should a harbor seal be observed entering or within this zone. As such we do not expect take by Level A harassment to occur and we do not propose to authorize such take here.
Any individuals exposed to the higher levels associated with the potential for PTS closer to the source might also be behaviorally disturbed, however, for the
The total take authorization for all species each year is summarized in table 9 below. No authorization of take by Level A harassment is authorized except a total of 57 such incidents for harbor seals in year 1 and 20 such incidents for harbor seals in year 2.
In order to issue an IHA under section 101(a)(5)(D) of the MMPA, NMFS must set forth the permissible methods of taking pursuant to the activity, and other means of effecting the least practicable impact on the species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stock for taking for certain subsistence uses (latter not applicable for this action). NMFS regulations require applicants for incidental take authorizations to include information about the availability and feasibility (economic and technological) of equipment, methods, and manner of conducting the activity or other means of effecting the least practicable adverse impact upon the affected species or stocks, and their habitat (50 CFR 216.104(a)(11)).
In evaluating how mitigation may or may not be appropriate to ensure the least practicable adverse impact on species or stocks and their habitat, as well as subsistence uses where applicable, NMFS considers two primary factors:
(1) The manner in which, and the degree to which, the successful implementation of the measure(s) is expected to reduce impacts to marine mammals, marine mammal species or stocks, and their habitat. This considers the nature of the potential adverse impact being mitigated (likelihood, scope, range). It further considers the likelihood that the measure will be effective if implemented (probability of accomplishing the mitigating result if implemented as planned), the likelihood of effective implementation (probability implemented as planned); and
(2) The practicability of the measures for applicant implementation, which may consider such things as cost, and impact on operations.
On a daily basis, in-water construction activities will occur only during daylight hours (sunrise to sunset) except from July 16 to September 15, when impact pile driving will only occur starting 2 hours after sunrise and ending 2 hours before sunset in order to protect marbled murrelets (
Finally, construction activities will be halted upon observation of a species for which incidental take is not authorized or a species for which incidental take has been authorized but the authorized number of takes has been met entering or within the harassment zone.
In order to document observed incidents of harassment, PSOs record all marine mammal observations, regardless of location. The PSO's location and the location of the pile being driven are known, and the location of the animal may be estimated as a distance from the observer and then compared to the location from the pile. It may then be estimated whether the animal was exposed to sound levels constituting incidental harassment on the basis of predicted distances to relevant thresholds in post-processing of observational data, and a precise accounting of observed incidents of harassment created.
The Navy also plans to take measures to ensure that killer whales and large cetaceans (
To avoid loss of attenuation from design and implementation errors, the Navy will require specific bubble curtain design specifications, including testing requirements for air pressure and flow at each manifold ring prior to initial impact hammer use, and a requirement for placement on the substrate. The bubble curtain must distribute air bubbles around 100 percent of the piling perimeter for the full depth of the water column. The lowest bubble ring shall be in contact with the mudline for the full circumference of the ring, and the weights attached to the bottom ring shall ensure 100 percent mudline contact. No parts of the ring or other objects shall prevent full mudline contact. The contractor shall also train personnel in the proper balancing of air flow to the bubblers, and must submit an inspection/performance report to the Navy for approval within 72 hours following the performance test. Corrections to the noise attenuation device to meet the performance standards shall occur prior to use for impact driving.
Based on our evaluation of the applicant's planned measures, NMFS has determined that the mitigation measures provide the means of effecting the least practicable impact on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.
In order to issue an IHA for an activity, section 101(a)(5)(D) of the MMPA states that NMFS must set forth requirements pertaining to the monitoring and reporting of such taking. The MMPA implementing regulations at 50 CFR 216.104(a)(13) indicate that requests for authorizations must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and of the level of taking or impacts on populations of marine mammals that are expected to be present while conducting the activities. Effective reporting is critical both to compliance as well as ensuring that the most value is obtained from the required monitoring.
Monitoring and reporting requirements prescribed by NMFS should contribute to improved understanding of one or more of the following:
• Occurrence of marine mammal species or stocks in the area in which take is anticipated (
• Nature, scope, or context of likely marine mammal exposure to potential stressors/impacts (individual or cumulative, acute or chronic), through better understanding of: (1) action or environment (
• Individual marine mammal responses (behavioral or physiological) to acoustic stressors (acute, chronic, or cumulative), other stressors, or cumulative impacts from multiple stressors;
• How anticipated responses to stressors impact either: (1) long-term fitness and survival of individual marine mammals; or (2) populations, species, or stocks;
• Effects on marine mammal habitat (
• Mitigation and monitoring effectiveness.
• PSOs must be independent of the activity contractor (for example, employed by a subcontractor), and have no other assigned tasks during monitoring periods;
• At least one PSO must have prior experience performing the duties of a PSO during construction activity pursuant to a NMFS-issued incidental take authorization;
• Other PSOs may substitute other relevant experience, education (degree in biological science or related field) or training for experience performing the duties of a PSO during construction activities pursuant to a NMFS-issued incidental take authorization;
• Where a team of three or more PSOs is required, a lead observer or monitoring coordinator will be designated. The lead observer will be required to have prior experience working as a marine mammal observer during construction activity pursuant to a NMFS-issued incidental take authorization; and
• PSOs must be approved by NMFS prior to beginning any activity subject to each IHA.
PSOs should also have the following additional qualifications:
• Ability to conduct field observations and collect data according to assigned protocols;
• Experience or training in the field identification of marine mammals, including identification of behaviors;
• Sufficient training, orientation, or experience with the construction operation to provide for personal safety during observations;
• Writing skills sufficient to prepare a report of observations including, but not limited to, the number and species of marine mammals observed; dates and times when in-water construction activities were conducted; dates, times, and reason for implementation of mitigation (or why mitigation was note implemented when required); and marine mammal behavior; and
• Ability to communicate orally, by radio or in person, with project personnel to provide real-time information on marine mammals observed in the area as necessary.
Visual monitoring will be conducted by a minimum of three trained PSOs positioned at suitable vantage points practicable (
Monitoring will be conducted 30 minutes before, during, and 30 minutes after all in water construction activities. In addition, PSOs will record all incidents of marine mammal occurrence, regardless of distance from activity, and will document any behavioral reactions in concert with distance from piles being driven or removed. Pile driving activities include the time to install or remove a single pile or series of piles, as long as the time elapsed between uses of the pile driving equipment is no more than 30 minutes.
The Navy plans to conduct hydroacoustic monitoring for a subset of impact-driven steel piles for projects including more than three piles where a bubble curtain is used (relevant to year 2 project activities only).
The Navy will submit a draft marine mammal monitoring report to NMFS within 90 days after the completion of pile driving activities, or 60 days prior to a requested date of issuance of any future IHAs for the project, or other projects at the same location, whichever comes first. The marine mammal monitoring report will include an overall description of work completed, a narrative regarding marine mammal sightings, and associated PSO data sheets. Specifically, the report will include:
• Dates and times (begin and end) of all marine mammal monitoring;
• Construction activities occurring during each daily observation period, including: (1) The number and type of piles that were driven and the method (
• PSO locations during marine mammal monitoring;
• Environmental conditions during monitoring periods (at beginning and end of PSO shift and whenever conditions change significantly), including Beaufort sea state and any other relevant weather conditions including cloud cover, fog, sun glare, and overall visibility to the horizon, and estimated observable distance;
• Upon observation of a marine mammal, the following information: (1) Name of PSO who sighted the animal(s) and PSO location and activity at time of sighting; (2) Time of sighting; (3) Identification of the animal(s) (
• Number of marine mammals detected within the harassment zones, by species; and
• Detailed information about implementation of any mitigation (
A final report must be prepared and submitted within 30 calendar days following receipt of any NMFS comments on the draft report. If no comments are received from NMFS within 30 calendar days of receipt of the draft report, the report will be considered final. All PSO data will be submitted electronically in a format that can be queried such as a spreadsheet or database and will be submitted with the draft marine mammal report.
In the event that personnel involved in the construction activities discover an injured or dead marine mammal, the Holder must report the incident to the Office of Protected Resources (OPR), NMFS (
• Time, date, and location (latitude/longitude) of the first discovery (and updated location information if known and applicable);
• Species identification (if known) or description of the animal(s) involved;
• Condition of the animal(s) (including carcass condition if the animal is dead);
• Observed behaviors of the animal(s), if alive;
• If available, photographs or video footage of the animal(s); and
• General circumstances under which the animal was discovered.
NMFS has defined negligible impact as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival (50 CFR 216.103). A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (
To avoid repetition, the majority of our analysis applies to all the species listed in table 1, given that many of the anticipated effects of this project on different marine mammal stocks are expected to be relatively similar in nature. Where there are meaningful differences between species or stocks, or groups of species, in anticipated individual responses to activities, impact of expected take on the population due to differences in population status, or impacts on habitat, they are described independently in the analysis below.
Pile driving activities associated with the maintenance projects, as described previously, have the potential to disturb or displace marine mammals. Specifically, the specified activities may result in take, in the form of Level B harassment (behavioral disturbance) only (for all species other than harbor seal) from underwater sounds generated from pile driving. Potential takes could occur if individual marine mammals are present in the ensonified zone when pile driving is happening.
No serious injury or mortality would be expected even in the absence of the planned mitigation measures. For all species other than the harbor seal, no Level A harassment is anticipated given the nature of the activities,
As described previously, there are multiple species that are considered rare in the project areas and for which we authorize limited take, by Level B harassment, of a single group for a minimal period of time in each authorization year (1 or 2 days).
ESA critical habitat for southern resident killer whale occurs in Puget Sound (see the Description of Marine Mammals in the Area of Specified Activities section of this notice). NMFS did not identify in-water sound levels as a separate essential feature of critical habitat, though anthropogenic sound is recognized as one of the primary threats to SRKW (NMFS, 2019). The exposure of SRKW to sound from the planned activities would be minimized by the required mitigation measures (
Puget Sound is part of a biologically important area (BIA) for migrating gray whales (Calambokidis
Aside from the SRKW critical habitat and BIA for gray whales, there are no known important areas for other marine mammals, such as feeding or pupping areas. Therefore, we do not expect meaningful impacts to these species (
For remaining species (harbor porpoise, California sea lion, Steller sea lion, and harbor seal), we discuss the likely effects of the specified activities in greater detail. Effects on individuals that are taken by Level B harassment, on the basis of reports in the literature as well as monitoring from other similar activities, will likely be limited to reactions such as increased swimming speeds, increased surfacing time, or decreased foraging (if such activity were occurring) (
The Navy has conducted multi-year activities potentially affecting marine mammals, and typically involving greater or similar levels of activity than is contemplated here in various locations, such as San Diego Bay, and some of the installations considered herein (NBK Bangor, NBK Bremerton, NBK Manchester). Reporting from these activities has similarly reported no apparently consequential behavioral reactions or long-term effects on marine mammal populations (Lerma, 2014; Navy, 2016; Sandoval
In addition to the expected effects resulting from authorized Level B harassment, we anticipate that harbor seals may sustain some limited Level A harassment in the form of auditory injury at two installations in year 1 (NBK Bremerton and NBK Manchester) and one installation in year 2 (NBK Bangor), assuming they remain within a given distance of the pile driving activity for the full number of pile strikes. However, seals in these locations that experience PTS would likely only receive slight PTS,
The pile driving activities are also not expected to have significant adverse effects on these affected marine mammals' habitats. The activities may cause some fish to leave the area of disturbance, thus temporarily impacting marine mammals' foraging opportunities in a limited portion of the foraging range; but, because of the short duration of the activities and the relatively small area of the habitat that may be affected (with no known particular importance to marine mammals), the impacts to marine mammal habitat are not expected to cause significant or long-term negative consequences.
In combination, we believe that these factors, as well as the available body of evidence from other similar activities, demonstrate that the specified activities will have only minor, short-term effects on individuals that will not have any bearing on those individuals' fitness. Thus the specified activities are not expected to impact rates of recruitment or survival and will therefore have a negligible impact on those species or stocks.
In summary and as described above, the following factors primarily support our determination that the impacts resulting from this activity are not expected to adversely affect any of the species or stocks through effects on annual rates of recruitment or survival:
• No serious injury or mortality is anticipated or authorized;
• The anticipated incidents of Level B harassment consist of, at worst, temporary modifications in behavior;
• The additional impact of PTS of a slight degree to few individual harbor seals at two locations in year 1 and one location in year 2 is not anticipated to increase individual impacts to a point where any population-level impacts might be expected;
• The absence of any significant habitat within the industrialized project areas, including known areas or features of special significance for foraging or reproduction; and
• The presumed efficacy of the mitigation measures in reducing the effects of the specified activity to the level of least practicable adverse impact.
• The effects on species that serve as prey for marine mammals from the activities are expected to be short-term and, therefore, any associated impacts on marine mammal feeding are not expected to result in significant or long-term consequences for individuals, or to accrue to adverse impacts on their populations from either project;
• The ensonifed areas from both projects are very small relative to the overall habitat ranges of all species and stocks, and will not cause more than minor impacts in any ESA-designated critical habitat, BIAs or any other areas of known biological importance.
Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the monitoring and mitigation measures, NMFS finds that the total marine mammal take from the activity, specific to each of the year 1 and year 2 IHAs, will have a negligible impact on all affected marine mammal species or stocks.
As noted previously, only take of small numbers of marine mammals may be authorized under sections 101(a)(5)(A) and (D) of the MMPA for specified activities other than military readiness activities. The MMPA does not define small numbers and so, in practice, where estimated numbers are available, NMFS compares the number of individuals taken to the most appropriate estimation of abundance of the relevant species or stock in our determination of whether an authorization is limited to small numbers of marine mammals. When the predicted number of individuals to be taken is less than one-third of the species or stock abundance, the take is considered to be of small numbers. Additionally, other qualitative factors may be considered in the analysis, such as the temporal or spatial scale of the activities.
We propose to authorize incidental take of 14 marine mammal stocks each project year (table 9). The total amount of taking authorized is less than 1 percent for eight of these stocks in year 1 and year 2, equal or less than 10 percent for an additional four stocks in year 1 and three stocks in year 2, and equal or less than 27 percent for another stock in year 1 and three stocks in year 2, all of which we consider relatively small percentages and thus small numbers of marine mammals relative to the estimated overall population abundances for those stocks.
Based on the analysis contained herein of the activity (including the mitigation and monitoring measures) and the anticipated take of marine mammals, NMFS finds, for each of the year 1 and year 2 IHAs, that small numbers of marine mammals would be taken relative to the population size of the affected species or stocks.
There are no relevant subsistence uses of the affected marine mammal stocks or species implicated by this action. Therefore, NMFS has determined that the total taking of affected species or stocks would not have an unmitigable adverse impact on the availability of such species or stocks for taking for subsistence purposes.
Section 7(a)(2) of the ESA of 1973 (16 U.S.C. 1531
NMFS is authorizing take of SRKW, as well as two distinct population segments (DPSs) of humpback whale (Central American/Southern Mexico-California-Oregon-Washington and Mainland Mexico-California-Oregon-
The NMFS OPR requested initiation of section 7 consultation with the NMFS West Coast Region (WCR) for the issuance of these IHAs. On April 29, 2024, WCR concluded that NMFS' current action remains covered by the programmatic Biological Opinion (WCRO-2016-00018) completed for the issuance of regulations preceding these IHAs (83 FR 9366, March 5, 2018), and that reinitiation of the consultation is not required. WCR specified that the new IHAs are consistent with the original effects analysis included in the original programmatic opinion, and OPR's action would not change the conclusions nor the effects of the proposed action as written in the Biological Opinion.
To comply with the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321
This action is consistent with categories of activities identified in Categorical Exclusion B4 (IHAs with no anticipated serious injury or mortality) of the Companion Manual for NAO 216-6A, which do not individually or cumulatively have the potential for significant impacts on the quality of the human environment and for which we have not identified any extraordinary circumstances that would preclude this categorical exclusion. Accordingly, NMFS has determined that the issuance of the IHAs qualifies to be categorically excluded from further NEPA review.
NMFS has issued two consecutive IHAs to the Navy for the potential harassment of small numbers of 10 marine mammal species incidental to the NAVFAC NW MPR Project in Puget Sound, Washington, that includes the previously explained mitigation, monitoring, and reporting requirements.
National Ocean Service, National Oceanic and Atmospheric Administration (NOAA), Department of Commerce.
Notice of solicitation of nominations for NOAA's Hydrographic Services Review Panel Federal Advisory Committee.
NOAA is seeking nominations for members to serve on the Hydrographic Services Review Panel (HSRP) Federal Advisory Committee. Nominations are due by February 21, 2025.
Nominations for members to serve on the HSRP Federal Advisory Committee must be submitted by February 21, 2025, and will be kept on file and used for future HSRP vacancies. NOAA anticipates there will be five vacancies starting on January 1, 2026, each with a four-year term. Current members who may be eligible for a second term in 2026 must reapply. Pursuant to the Hydrographic Services Improvement Act, as amended (HSIA; 33 U.S.C. 892
Nominations will be accepted by email and should be sent to:
NOAA HSRP Program Manager, Ashley Chappell, email
Pursuant to the HSIA, NOAA shall solicit nominations for HSRP membership once each year (33 U.S.C. 892c). The HSRP advises the NOAA Administrator “on matters related to the responsibilities and authorities set forth in [the HSIA] and such other appropriate matters as the Administrator refers to the [HSRP] for review and advice.” (33 U.S.C. 892c(b)(1).) The NOAA Administrator's responsibilities and authorities include promoting safe, efficient, and environmentally sound marine transportation under the Coast and Geodetic Survey Act (CGSA; 33 U.S.C. 883
1. acquire and disseminate hydrographic data and provide hydrographic services;
2. promulgate standards for hydrographic data and services;
3. ensure comprehensive geographic coverage of hydrographic services;
4. maintain a national database of hydrographic data, in cooperation with other appropriate Federal agencies;
5. provide hydrographic services in uniform, easily accessible formats; and
6. participate in the development of, and implement for the United States in cooperation with other appropriate Federal agencies, international standards for hydrographic data and services.
The HSRP has fifteen voting members appointed by the NOAA Administrator in accordance with the HSIA, 33 U.S.C. 892c. Voting members are individuals who, by reason of knowledge, experience, or training, are especially qualified in one or more disciplines relating to hydrographic data and services, marine transportation, port administration, vessel pilotage, coastal and fishery management, and other disciplines as determined appropriate by the NOAA Administrator. Two NOAA employees, the Directors of the National Geodetic Survey and the Center for Operational Oceanographic Products and Services, and the Co-Directors of the Center for Coastal and Ocean Mapping/Joint Hydrographic Center serve as non-voting members. The Director of the NOAA Office of Coast Survey serves as the Designated Federal Officer (DFO) along with two Alternate DFOs. Full-time officers or employees of the United States may not be appointed as voting members. Any voting member of the HSRP who is an applicant for or beneficiary of (as determined by the Administrator) any assistance under the HSIA shall disclose to the HSRP that relationship, and may not vote on any other matter pertaining to that assistance.
Voting members of the HSRP serve a four-year term, except that vacancy appointments are for the remainder of the unexpired term of the vacancy. Members serve at the Administrator's discretion and are subject to government ethics standards. Public meetings occur at least twice a year. Voting members receive compensation at a rate established by the Administrator, not to exceed the maximum daily rate payable under 5 U.S.C. 5376 when engaged in performing duties for the HSRP during the public meeting. Members are reimbursed for actual and reasonable travel expenses incurred in performing such duties according to Federal Travel Regulation.
Upon selection and agreement to serve on the HSRP, members become Special Government Employees (SGEs) of the United States Government. An SGE, as defined in 18 U.S.C. 202(a), is an officer or employee of an agency who is retained, designated, appointed, or employed to perform temporary duties, with or without compensation, not to exceed 130 days during any period of 365 consecutive days, either on a full time or intermittent basis. After the selection process is complete, applicants selected to serve on the HSRP must complete the following actions before they can be appointed as an HSRP member:
(a) Security Clearance (online Background Security Check process and fingerprinting conducted through NOAA's Office of Security and Office of Human Capital Services); and
(b) Confidential Financial Disclosure Report—SGEs are required to file a Confidential Financial Disclosure Report to avoid involvement in a real or apparent conflict of interest. You may find information on the Confidential Financial Disclosure Report:
In accordance with the Federal Advisory Committee Act (FACA), as amended (5 U.S.C. app.), and the pertinent FACA Implementing Regulations (41 CFR 102-3.30(c)), NOAA seeks a balanced HSRP membership. Subject matter expertise, with subjects as specified in the HSIA, is the primary criterion considered in the evaluation process. Professional sector representation (academia, industry, research, scientific institution, State and local government, Tribal interests, consultant, non-governmental organization, etc.), geographic expertise, experience working productively with committees and working groups, and leadership with navigation, observations, and positioning are other criteria that will be considered. The diverse membership of the HSRP ensures expertise reflecting the full breadth of the HSRP's responsibilities.
NOAA requests nominations from individuals meeting the criteria above. Nominees are required to submit four items; the nomination package should include all components, be submitted in Microsoft Word and/or PDF, and be no longer than eight pages. The four required items are,
1. A cover letter that responds to the Five Short Response Questions noted below and serves as a statement of interest to serve on the HSRP. Please highlight the nominee's specific area(s) of expertise related to the disciplines and fields described in 33 U.S.C. 892c(c).
2. A short biography of 300-400 words.
3. A resume of 3 pages maximum.
4. The nominee's full work and home contact information including: full name, work title, institutional affiliation, work and home mailing addresses, email address(es), phone number(s), and fax number. Please note preferred email, phone number and mailing address.
1. List your area(s) of expertise from the following list: Hydrographic data and services (
2. List the geographic region(s) of the country with which you primarily associate your expertise from the following list: Northeast, Mid-Atlantic, Southeast, Gulf of Mexico, Pacific Northwest, California, Hawaii, Pacific Islands, Alaska, Arctic, Great Lakes, Caribbean, National, and/or International.
3. Describe your leadership or professional experiences that you believe will contribute to the HSRP.
4. Describe your familiarity and experience with NOAA navigation, observations and positioning data, products, and services.
5. Generally describe the breadth and scope of your knowledge of stakeholders, users, or other groups who interact with NOAA and whose views and input you believe you can share with the HSRP.
Additional HSRP information, including past HSRP public meeting summary reports, agendas, presentations, transcripts, webinars, and other information is available online at
On May 13, 2024, Hybrid Renewables LLC, filed an application for a preliminary permit, pursuant to section 4(f) of the Federal Power Act (FPA), proposing to study the feasibility of a hydropower project to be located at the U.S. Army Corps of Engineers' (Corps) Oologah Lake Dam near the Town of Oologah, in Rogers County, Oklahoma. The sole purpose of a preliminary permit, if issued, is to grant the permit holder priority to file a license application during the permit term. A preliminary permit does not authorize the permit holder to perform any land-disturbing activities or otherwise enter upon lands or waters owned by others without the owners' express permission.
The proposed Oologah Lake Dam Hydroelectric Project would consist of the following: (1) an steel extension to the existing dam's left outlet conduit that would house a control valve and connect to; (2) a 19-foot-diameter, 228-foot-long steel penstock; (3) the penstock would split into two 16.5-foot-diameter, 58-foot-long and 49-foot-long penstocks before entering; (4) an 80-foot-long, 19-foot-wide, powerhouse containing two turbine-generator units with a total capacity of 24.0 megawatts; (5) a 100-foot-long, 63-foot-wide concrete tailrace; and (6) a .37-mile-long, 138 kilovolt transmission line with a new substation at its end. The proposed project would have an estimated annual generation of 64,600 megawatt-hours.
Deadline for filing comments, motions to intervene, competing applications (without notices of intent), or notices of intent to file competing applications: 60 days from the issuance of this notice. Competing applications and notices of intent must meet the requirements of 18 CFR 4.36.
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help
The Commission strongly encourages electronic filing. Please file comments, motions to intervene, notices of intent, and competing applications using the Commission's eFiling system at
More information about this project, including a copy of the application, can be viewed or printed on the “eLibrary” link of the Commission's website at
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
Take notice that the Commission received the following public utility holding company filings:
The filings are accessible in the Commission's eLibrary system (
Any person desiring to intervene, to protest, or to answer a complaint in any of the above proceedings must file in accordance with Rules 211, 214, or 206 of the Commission's Regulations (18 CFR 385.211, 385.214, or 385.206) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
This is a supplemental notice in the above-referenced proceeding of Keydet Solar Center, LLC's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is June 17, 2024.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically may mail similar pleadings to the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426. Hand delivered submissions in docketed proceedings should be delivered to Health and Human Services, 12225 Wilkins Avenue, Rockville, Maryland 20852.
In addition to publishing the full text of this document in the
User assistance is available for eLibrary and the Commission's website during normal business hours from FERC Online Support at 202-502-6652 (toll free at 1-866-208-3676) or email at
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202)502-6595 or
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
Any person desiring to intervene, to protest, or to answer a complaint in any of the above proceedings must file in accordance with Rules 211, 214, or 206 of the Commission's Regulations (18 CFR 385.211, 385.214, or 385.206) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
Any person desiring to protest in any the above proceedings must file in accordance with Rule 211 of the Commission's Regulations (18 CFR 385.211) on or before 5:00 p.m. Eastern time on the specified comment date.
The filings are accessible in the Commission's eLibrary system (
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal Agencies to take this opportunity to comment on the following information collection. Pursuant to the Small Business Paperwork Relief Act of 2002, the FCC seeks specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”
The Commission may not conduct or sponsor a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written comments and recommendations for the proposed information collection should be submitted on or before July 3, 2024.
Comments should be sent to
For additional information or copies of the information collection, contact Nicole Ongele at (202) 418-2991. To view a copy of this information collection request (ICR) submitted to OMB: (1) go to the web page
As part of its continuing effort to reduce paperwork burdens, as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the FCC invited the general public and other Federal Agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. Pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the FCC seeks specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”
Thursday, May 16, 2024, 10:00 a.m.
Hybrid Meeting: 1050 First Street NE Washington, DC (12th Floor) and Virtual.
The June 6, 2024 Open Meeting has been canceled.
Judith Ingram, Press Officer; Telephone: (202) 694-1220.
Individuals who plan to attend in person and who require special assistance, such as sign language interpretation or other reasonable accommodations, should contact Laura E. Sinram, Secretary and Clerk, at (202) 694-1040 or
Office of the Integrated Award Environment, General Services Administration (GSA).
Notice of request for public comments regarding an extension to an existing OMB clearance.
Under the provisions of the Paperwork Reduction Act of 1995, the Regulatory Secretariat Division will be submitting to the Office of Management and Budget (OMB) a request to review and approve a renewal of the currently approved information collection requirement regarding FSRS Registration Requirements for Prime Grant Awardees.
Submit comments on or before July 3, 2024.
Written comments and recommendations for this information collection should be sent within 30 days of publication of this notice to
Ms. Salomeh Ghorbani, Director, IAE Outreach and Stakeholder Engagement Division, at 703-605-3467 or
The Federal Funding Accountability and Transparency Act (Pub. L. 109-282, as amended by section 6202(a) of Pub. L. 110-252), known as FFATA or the Transparency Act, requires information disclosure of entities receiving Federal financial assistance through Federal awards such as Federal contracts, sub-contracts, grants and sub-grants, FFATA 2(a), (2), (i), (ii). The system that collects this information is called the FFATA Sub-award Reporting System (FSRS,
If a prime awardee has already registered in FSRS to report contracts-related Transparency Act financial data, a new log-in will not be required. In addition, if a prime awardee had a user account in the Electronic Subcontract Reporting System (eSRS), a new log-in will not be required.
A 60-day notice published in the
Agency for Healthcare Research and Quality, Department of Health and Human Services.
Notice of Request for Information regarding a sustainment model for CDS Connect.
Clinical decision support (CDS) enables providers and others to implement up-to-date research findings quickly into their practice. In 2016, the Agency for Healthcare Research and Quality (AHRQ) supported the development of (CDS) by establishing
Comments on this notice must be received on or before July 31, 2024.
Interested parties may submit comments electronically to
Questions may be addressed to Mario Teran, MD, MSc, Division of Digital Healthcare Research in the Center for Evidence and Practice Improvement at AHRQ. Email:
The Agency for Healthcare Research and Quality (AHRQ) seeks public comment about strategies and approaches to advancing shareable, interoperable, and reusable clinical decision support (CDS) resources. AHRQ seeks comment on models and possible partnerships to strengthen and sustain CDS Connect as a national hub for clinical decision support. CDS Connect enables the creation of standards-based CDS resources (sometimes called CDS “artifacts”) and the integration of evidence-based care data into clinical practice through electronic health systems and applications.
Established in 2016, CDS Connect has steadily grown in functionality and use. It enjoys an active following of diverse stakeholders and users, including various electronic health record (EHR) developers, CDS developers, other health information technology (health IT), healthcare advocacy organizations, federal and local government representatives, clinicians, patients, and caregivers. CDS Connect offers a repository of CDS artifacts, a standards-based CDS Authoring Tool, and multiple open-source tools and resources (available on the CDS Connect Technical Resources web page).
In October 2023, AHRQ conducted a challenge competition to solicit innovative approaches and input on the future design and sustainability of CDS Connect. AHRQ obtained valuable insight and information from the competition, including identifying collaborative models that have the potential to sustain and further develop CDS Connect as a public resource. This Request for Information (RFI) incorporates vital takeaways from the challenge competition to help inform the public's responses to questions posed in the RFI. However, possible future models for CDS Connect are not limited to the ideas generated during the Challenge Competition; AHRQ encourages suggesting alternate and innovative approaches. AHRQ also welcomes information on any sustainment models that respondents feel are appropriate for AHRQ to consider, including collaborative relationships with industry,
The challenge competition identified several possible CDS Connect enhancements:
• Enhancing the user experience, including mechanisms for users to obtain support and provide feedback.
• Additional educational or training resources should be provided to support a variety of users.
• Leveraging, facilitating, and promoting CDS and health information technology standards.
• Artificial intelligence (AI) is introduced into CDS Connect, ranging from AI-based mechanisms to develop CDS artifacts to using large language models (LLMs) and AI-based artifact maintenance.
• Creating processes, standards, and tools to assist and accelerate CDS development through successive levels of computability and readiness for real-world implementation.
• Developing and making available a more significant number of executable CDS artifacts.
• Expanding the number of CDS artifacts at all levels in the repository.
• Integrating directly within EHR systems.
• Creating a “sandbox” allows potential users to sample, test, and deploy CDS artifacts in real-time scenarios before selecting/purchasing them.
The Challenge Competition highlighted several possible business models to enable long-term sustainability.
• Removing the restriction that CDS artifacts in the Repository be made available free of charge, allowing for revenue opportunities through fee-based services.
• Adopting standardized and commercial-friendly licensing and compensation models (
• Developing enhanced functionality and subscription models for different types of users (
• Requiring a one-time or ad hoc payment to use CDS Connect's services or products (
• Offering different tiers of service capabilities at different costs, such as a “Freemium” model allowing access to publicly funded CDS Connect artifacts and a basic form of the Authoring Tool without charge, but imposing a cost for additional services (
• Establishing a payment incentive for independent individuals, developers, EHR vendors, CDS vendors, or others; in turn, content can be offered to end users at a cost.
AHRQ is exploring collaborative initiatives with private industry, academia, and nonprofit entities to identify potential sustainment paths. AHRQ is interested in exploring a PPP to continue CDS Connect's operation and expansion.
AHRQ invites stakeholders and other interested parties to submit ideas on the future of shareable, interoperable, and reusable CDS resources, particularly on sustainment models for CDS Connect. Submissions should address the qualifications of potential partnering organizations, the proposed governance structure of a PPP, the content of improvements to the CDS Connect platform, the business model (including costs), and community engagement.
Responses can also address the following questions:
1. What areas of expertise are essential for potential partnering organizations to possess in a PPP with AHRQ to grow and sustain CDS Connect?
2. If submitting as a potential partnering organization, what are the organization's interests and expertise in CDS, health information technology, and/or healthcare modernization?
3. What is the value of a platform like CDS Connect?
4. What can be done to improve the value of CDS Connect to clinicians, patients, CDS developers, and other stakeholders?
5. What governance structure and framework does the submitting organization envision for the PPP (or other sustainment model)?
6. How would the PPP (or other sustainment model) operate, accounting for the involvement of AHRQ, other federal agencies, or other potential external partners?
7. What suggestions (if any) would be proposed to modify or enhance the CDS Connect Repository, CDS artifacts within the CDS Connect Repository, and/or the CDS Connect Authoring Tool?
8. If submitting as an organization, what other suggestions does the submitting organization have to modify or enhance CDS Connect's content and/or capabilities?
9. What existing infrastructure can support these suggested modifications or enhancements, or what additional infrastructure would be needed? What are the barriers or general feasibility issues to implementation?
10. What business model(s) can ensure that CDS Connect remains sustainable (
11. If submitting as an organization, what are the submitting organization's suggested mechanisms of models for generating revenue that will enable a sustainable PPP (or other sustainment model)?
12. What are the anticipated project start-up costs for the proposed business model?
1. How can CDS become more shareable, interoperable, and reusable, in particular, please identify:
a. Enablers;
b. Barriers;
c. Potential role(s) for AHRQ and other federal agencies;
d. Sustainable models for collaborative relationships among government agencies, academic institutions, private industry, non-profit organizations, patient advocacy groups, and other stakeholders.
2. What are sustainable approaches for scaling CDS, including AI-based methods, to under-served settings that may not have the staff and resources to develop CDS on their own or to purchase CDS resources (
AHRQ welcomes responses from any stakeholders interested in the continued sustainment and growth of CDS Connect. AHRQ is interested in perspectives from:
Centers for Medicare & Medicaid Services, Health and Human Services (HHS).
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (PRA), Federal agencies are required to publish notice in the
Comments on the collection(s) of information must be received by the OMB desk officer by July 3, 2024.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, please access the CMS PRA website by copying and pasting the following web address into your web browser:
William Parham at (410) 786-4669.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal agencies to publish a 30-day notice in the
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In accordance with section 1847A(i) of the Act, for calendar quarters beginning January 1, 2023, a manufacturer of a Part B rebatable drug will owe a rebate, to be deposited in the Federal Supplementary Medical Insurance Trust Fund, if the amount specified in section 1847A(i)(3)(A)(ii)(I) of the Act exceeds the inflation-adjusted payment amount, which is calculated as set forth in section 1847A(i)(3)(C) of the Act. A “Part B rebatable drug” means a single-source drug or biological product (as defined section 1847A(c)(6)(D) of the Act), including a biosimilar biological product (as defined section 1847A(c)(6)(H) of the Act) but excluding a qualifying biosimilar biological product (as defined section 1847A(b)(8)(B)(iii) of the Act), for which payment is made under Medicare Part B, except such term shall not include such a drug or biological product if, as determined by the Secretary, the average total allowed charges for such drug or biological product under Part B for a year per individual that uses such a drug or biological product are less than the applicable threshold; or that is a vaccine described in subparagraph (A) or (B) of section 1861(s)(10) of the Act.
In accordance with section 1860D-14B of the Act, for each 12-month applicable period, starting with the applicable period beginning October 1, 2022, a manufacturer of a Part D rebatable drug will owe a rebate, to be deposited in the Federal Supplementary Medical Insurance Trust Fund, if the annual manufacturer price exceeds the inflation-adjusted payment amount. Section 1860D-14B(g)(1)(A) of the Act defines a “Part D rebatable drug,” in part, as a drug or biological described at section 1860D-14B(g)(1)(C) that is a “covered Part D drug” as that term is defined in section 1860D-2(e) of the Act. The definition of a Part D rebatable drug includes generic drugs that meet certain statutory criteria (effectively sole source generics). The definition of a Part D rebatable drug does not include a drug or biological if, as determined by the Secretary, the “average annual total cost” for such drug or biological under Part D for a year per individual that uses such a drug or biological is less than the applicable threshold.
Sections 1847A(i)(3)(G)(ii) and 1860D-14B(b)(1)(C)(ii) of the Act require that CMS reduce or waive the inflation rebate amount owed (if any) for a Part B rebatable biosimilar biological product and generic Part D rebatable drug or biosimilar when CMS determines there is a severe supply chain disruption during a calendar quarter or applicable period, respectively, such as that caused by a natural disaster or other unique or unexpected event. CMS must also reduce or waive the inflation rebate amount owed (if any) for a generic Part D rebatable drug if CMS determines that without such reduction or waiver, the drug is likely to be in shortage in a subsequent applicable period, as required by section 1860D-14B(b)(1)(C)(iii) of the Act.
CMS does not have information necessary to determine whether manufacturers of Part B and Part D rebatable drugs should have their rebate amount reduced due to either a severe supply chain disruption or a likely shortage as required by sections 1847A(i)(3)(G)(ii), 1860D-14B(b)(1)(C)(ii), and 1860D-14B(b)(1)(C)(iii) of the Act. Some of the information and supporting documentation needed for CMS to make a determination regarding a severe supply chain disruption and the likelihood of a future shortage are held by manufacturers and are not available to CMS. As such, for CMS to determine whether there is a severe supply chain disruption or likelihood of future shortage, in accordance with sections 1847A(i)(3)(G)(ii), 1860D-14B(b)(1)(C)(ii), and 1860D-14B(b)(1)(C)(iii) of the Act, a manufacturer must submit to CMS a
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is issuing an order under the Federal Food, Drug, and Cosmetic Act (FD&C Act) debarring Shanif Abdul Punjani for a period of 5 years from importing or offering for import any drug into the United States. FDA bases this order on a finding that Mr. Punjani was convicted of one felony count under Federal law for Conspiracy to Defraud the United States. The factual basis supporting Mr. Punjani's conviction, as described below, is conduct relating to the importation into the United States of a drug or controlled substance. Mr. Punjani was given notice of the proposed debarment and was given an opportunity to request a hearing to show why he should not be debarred. As of March 6, 2024 (30 days after receipt of the notice), Mr. Punjani had not responded. Mr. Punjani's failure to respond and request a hearing constitutes a waiver of his right to a hearing concerning this matter.
This order is applicable June 3, 2024.
Any application by Mr. Punjani for termination of debarment under section 306(d)(1) of the FD&C Act (21 U.S.C. 335a(d)(1)) may be submitted at any time as follows:
•
• If you want to submit an application with confidential information that you do not wish to be made available to the public, submit the application as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
•
• For a written/paper application submitted to the Dockets Management Staff, FDA will post your application, as well as any attachments, except for information submitted, marked, and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit an application with confidential information that you do not wish to be made publicly available, submit your application only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of your application. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Jaime Espinosa, Division of Compliance and Enforcement, Office of Policy, Compliance, and Enforcement, Office of Regulatory Affairs, Food and Drug Administration, at 240-402-8743, or
Section 306(b)(1)(D) of the FD&C Act permits debarment of an individual from importing or offering for import any drug into the United States if FDA finds, as required by section 306(b)(3)(C) of the FD&C Act, that the individual has been convicted of a felony for conduct relating to the importation into the United States of any drug or controlled substance.
On August 16, 2023, Mr. Punjani was convicted as defined in section 306(l)(1) of the FD&C Act in the U.S. District Court for the Northern District of Georgia-Atlanta Division, when the court accepted his plea of guilty and entered judgment against him for the offense of Conspiracy to Defraud the United States in violation of 18 U.S.C. 371. The underlying facts supporting the conviction are as follows: As contained in the Information and the Government's Sentencing Statement from Mr. Punjani's case, in or about March 2019, and continuing until February 2021, he imported thousands of Aurogra 100mg Sildenafil tablets, which were male enhancement pills manufactured in India, but not authorized for sale in the United States. Sildenafil is the same active pharmaceutical ingredient (API) as that in the prescription drug Viagra. The FDA approved drugs containing the active ingredient sildenafil are only
As a result of this conviction, FDA sent Mr. Punjani, by certified mail, on January 30, 2024, a notice proposing to debar him for a 5-year period from importing or offering for import any drug into the United States. The proposal was based on a finding under section 306(b)(3)(C) of the FD&C Act that Mr. Punjani's felony conviction under Federal law for Conspiracy to Defraud the United States in violation of 18 U.S.C. 371, was for conduct relating to the importation into the United States of any drug or controlled substance because Mr. Punjani illegally imported and introduced unapproved and misbranded prescription drug products into interstate commerce. In proposing a debarment period, FDA weighed the considerations set forth in section 306(c)(3) of the FD&C Act that it considered applicable to Mr. Punjani's offense and concluded that the offense warranted the imposition of a 5-year period of debarment.
The proposal informed Mr. Punjani of the proposed debarment and offered him an opportunity to request a hearing, providing him 30 days from the date of receipt of the letter in which to file the request, and advised him that failure to request a hearing constituted a waiver of the opportunity for a hearing and of any contentions concerning this action. Mr. Punjani received the proposal and notice of opportunity for a hearing on February 5, 2024. Mr. Punjani failed to request a hearing within the timeframe prescribed by regulation and has, therefore, waived his opportunity for a hearing and waived any contentions concerning his debarment (21 CFR part 12).
Therefore, the Assistant Commissioner, Office of Human and Animal Food Operations, under section 306(b)(3)(C) of the FD&C Act, under authority delegated to the Assistant Commissioner, finds that Mr. Shanif Abdul Punjani has been convicted of a felony under Federal law for conduct relating to the importation into the United States of any drug or controlled substance. FDA finds that the offense should be accorded a debarment period of 5 years as provided by section 306(c)(2)(A)(iii) of the FD&C Act.
As a result of the foregoing finding, Mr. Punjani is debarred for a period of 5 years from importing or offering for import any drug into the United States, effective (see
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) is withdrawing approval of 23 new drug applications (NDAs) from multiple applicants. The applicants notified the Agency in writing that the drug products were no longer marketed and requested that the approval of the applications be withdrawn.
Approval is withdrawn as of July 3, 2024.
Kimberly Lehrfeld, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6226, Silver Spring, MD 20993-0002, 301-796-3137,
The applicants listed in table 1 have informed FDA that these drug products are no longer marketed and have requested that FDA withdraw approval of the applications under the process in § 314.150(c) (21 CFR 314.150(c)). The applicants have also, by their requests, waived their opportunity for a hearing. Withdrawal of approval of an application or abbreviated application under § 314.150(c) is without prejudice to refiling.
Therefore, approval of the applications listed in table 1, and all amendments and supplements thereto, is hereby withdrawn as of July 3, 2024. Approval of each entire application is withdrawn, including any strengths and dosage forms included in the application but inadvertently missing from table 1. Introduction or delivery for introduction into interstate commerce of products listed in table 1 without an approved new drug application violates sections 505(a) and 301(d) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(a) and 331(d)). Drug products that are listed in table 1 that are in inventory on July 3, 2024 may continue to be dispensed until the inventories have been depleted or the drug products have reached their expiration dates or otherwise become violative, whichever occurs first.
Food and Drug Administration, Department of Health and Human Services.
Notice.
The Food and Drug Administration (FDA), Office of the Commissioner, Headquarters organizations, and Centers have modified their organizational structure
This organization was approved by the Secretary of Health and Human Services on March 5, 2024, and became effective on May 13, 2024.
Yashika Rahaman, Director, Office of Planning, Evaluation, and Risk Management, Office of the Finance, Budget, Acquisitions and Planning, Food and Drug Administration, 10903 New Hampshire Avenue, WO32, Room 4216, Silver Spring, MD 20993, 301-796-4710.
Part D, Chapter D-B, (Food and Drug Administration), the Statement of Organization, Functions, and Delegations of Authority for the Department of Health and Human Services (35 FR 3685, February 25, 1970; 60 FR 56606, November 9, 1995, 64 FR 36361, July 6, 1999, 72 FR 50112, August 30, 2007; 74 FR 41713, August 18, 2009, 76 FR 45270, July 28, 2011, and 84 FR 22854, May 20, 2019) is amended to reflect the approved Food and Drug Administration's Human Foods reorganization.
The Food and Drug Administration (FDA) is focused on transforming its organization structure to be more efficient, nimble, and ready for the future with the ever-changing and complex industries we regulate, including the emergence of new food and medical product technologies, the impacts of globalization, climate change and other factors that require FDA to quickly adapt to a consistently evolving world.
FDA carefully reviewed the findings and recommendations of the Reagan-Udall Foundation evaluation, an internal review of FDA's infant formula response and feedback from external and internal stakeholders during events such as listening sessions with FDA employees. The approved changes in the Human Foods Program (HFP) would allow us to fully realize the preventive vision laid out in the FDA Food Safety Modernization Act, elevate the importance of nutrition, strengthen local, state, and international partnerships, position the FDA to regulate innovative food and agricultural products more effectively, and uphold safety of the nation's food supply. The organizational changes impact other products that FDA regulates, such as medical products and cosmetics, by promoting more streamlined, efficient decision-making and strengthening the enterprise-wide structure to enhance collaboration across FDA.
The intent is to have a modernized FDA that optimizes resources to help the agency meet its public health mission; provide employees with clearer priorities and more career opportunities; and comply with recent legislation such as the Food and Drug Omnibus Reform Act of 2022 (FDORA) mandating the establishment of the Office of Critical Foods, and the Modernization of Cosmetics Regulation Act of 2022 (MoCRA) to ensure the safety of cosmetics products.
The reorganization establishes the HFP by realigning the functions of the Center for Food Safety and Applied Nutrition (CFSAN), Office of Food Policy and Response, as well as key functions from the Office of Regulatory Affairs (ORA) including human foods compliance, Human and Animal Food Laboratories, and State Partnerships to this new organization. The reorganization will also:
Realign ORA's compliance functions to Center for Biologics Evaluation and Research's Office of Compliance and Biologics Quality, Center for Devices and Radiological Health's Office of Product Evaluation and Quality, Center for Drug Evaluation and Research's Office of Compliance and its substructure organizations, and the Center for Veterinary Medicine's Office of Surveillance and Compliance.
Realign ORA's laboratory safety functions and resources as well as the Medical Product and Specialty Laboratories safety functions and resources to the Office of the Chief Scientist.
Retitle ORA to the Office of Inspections and Investigations (OII) and establish new inspection and investigation offices to focus on inspections, investigations, and imports as its core mission.
Realign emergency response functions and resources from the Office of Operations' Office of Security and Emergency Management to OII.
Realign select functions to strengthen the Office of the Commissioner (OC) and headquarter organizations, including:
Establish, within OC immediate organization, the Office of Enterprise Transformation to focus on key information technology transformation projects across FDA.
Realign the Office of Planning, Evaluation and Risk Management, within OC immediate organization, to focus on strategic initiatives for FDA.
Retitle the Office of Clinical Policy and Programs and realign functions to form the Office of the Chief Medical Officer.
Retitle the Office of External Affairs' Stakeholder Engagement Staff to Public Engagement Staff.
Realign select functions to strengthen the Office of Operations (OO) and substructure organizations, including:
Realign the Office of Executive Secretariat's Freedom of Information Staff functions and resources from the OC's Immediate Office to OO's Office of Enterprise Management Services (OEMS) to consolidate and streamline information disclosure operations.
Retitle OO's OEMS to the Office of Management and Enterprise Services (OMES). Restructure the organization by establishing two office level organizations: the Office of Disclosure, Information Governance, and Accessibility (ODIGA) and the Office of Management (OM) and substructure organizational components within OMES.
Retitle OO's Office of Security and Emergency Management (OSEM) to the Office of Security and Passport Operations (OSPO). Abolish the substructure organizations, and establish the Division of Personnel Security and Credentialing, the Division of Physical Security and Integration, and the Division of Resource Integration and Passport Operations.
Retitle OO's Office of Finance, Budget, Acquisitions and Planning (OFBAP) to the Office of Finance, Budget, and Acquisitions (OFBA).
Realign travel functions and resources from ORA to the Office of Financial Management within OFBA.
Abolish OO's Office of Facilities Engineering and Mission Support Services' (OFEMS) Employee Safety and Occupational Health Staff (ESOHS) and realign emergency safety and occupational health functions from OFEMS to the Office of the Chief Scientist (OCS).
Realign select functions to strengthen the OCS and substructure organizations, as follows:
Establish an Administrative Staff organizational component and realign functions and resources from within the immediate organization into this new component.
Realign the Informatics and Business Operations Staff from the ORA Office of Regulatory Science to the OCS immediate organization.
Merge the Office of Counter-Terrorism and Emerging Threats, and the Office of Regulatory Science and Innovation, to form the Office of Regulatory and Emerging Science. Establish the Communications and Outreach Staff, the Preparedness Research Staff and the Regulatory Science Staff to this new organization.
Merge the Office of Laboratory Safety and OO's ESOH within OFEMS to the organization titled as the Office of Occupational Safety and Health (OOSH). Within the OOSH, merge the functions of the former OO ESOH with those of the OCS Office of Laboratory Safety, and establish the Occupational Safety Staff and the Occupational Health Services Staff to this new organizational component.
Realign the Office of Cosmetics and Colors organization, including its Divisions and Branches, functions and resources, from CFSAN to OCS.
Establish the Office of Analytical and Regulatory Laboratories and realign resources from the ORA Office of Medical Products Laboratory Operations and substructure organizations, and realign functions from within the CFSAN Office of Regulatory Science to this new organization which will be a direct report to OCS.
Establish the Office of Specialty Laboratories and Enforcement Support and realign functions from the ORA's Office of Medical Products Laboratory Operations within the Office of Regulatory Science to this new organization which will be a direct report to OCS.
Establish the Office of Science and Laboratory Advancement and realign functions from ORA's Office of Safety within the Office of Regulatory Science to this new organization which will be a direct report to OCS.
DCA. ORGANIZATION. To reflect these changes, Part D, Section D-B, is replaced with the following:
The Office of the Commissioner is headed by the Commissioner of Food and Drugs, and includes the following organizational units:
DCBC. ORGANIZATION. The Office of Compliance and Biologics Quality within the Center for Biologics Evaluation and Research is headed by the Director for Compliance and Biologics Quality and includes the following organizational units:
DCDF. ORGANIZATION. The Office of Compliance within the Center for Drug Evaluation and Research is headed by the Director for Compliance and includes the following organization units:
DCGD. ORGANIZATION. The Office of Surveillance and Compliance within the Center for Veterinary Medicine is headed by the Director of Surveillance and Compliance and includes the following organization units:
DCJ. ORGANIZATION. The Office of the Chief Medical Officer is headed by the Chief Medical Officer, and includes the following organization units:
DCK. ORGANIZATION. The Office of External Affairs is headed by the Associate Commissioner for External Affairs, and includes the following organization units:
DCN. ORGANIZATION. The Office of Operations is headed by the Deputy Commissioner for Operations and Chief Operations Officer and includes the following organization units:
DCP. ORGANIZATION. The Office of the Chief Scientist is headed by the Chief Scientist and includes the following organization units:
DCR. ORGANIZATION. The Human Foods Program is headed by the Deputy Commissioner for Human Foods, and includes the following organizational units:
DCS. ORGANIZATION. The Office of Inspections and Investigations is headed by the Associate Commissioner for Inspections and Investigations, and includes the following organizational units:
Pending further delegation, directives, or orders by the Commissioner of Food and Drugs, all delegations and redelegations of authority made to officials and employees of affected organizational components will continue in them or their successors pending further redelegations, provided they are consistent with this reorganization.
This reorganization is reflected in FDA's Staff Manual Guide (SMG). Persons interested in seeing the complete Staff Manual Guide can find it on FDA's website at:
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is issuing an order under the Federal Food, Drug, and Cosmetic Act (FD&C Act) debarring Michael Terry Little for a period of 5 years from importing or offering for import any drug into the United States. FDA bases this order on a finding that Mr. Little was convicted of one felony count under Federal law for introduction of unapproved new drugs in interstate commerce. The factual basis supporting Mr. Little's conviction, as described below, is conduct relating to the importation into the United States of a drug or controlled substance. Mr. Little was given notice of the proposed debarment and was given an opportunity to request a hearing to show why he should not be debarred. As of March 13, 2024 (30 days after receipt of the notice), Mr. Little had not responded. Mr. Little's failure to respond and request a hearing constitutes a waiver of his right to a hearing concerning this matter.
This order is applicable June 3, 2024.
Any application by Mr. Little for termination of debarment under section 306(d)(1) of the FD&C Act (21 U.S.C. 335a(d)(1)) may be submitted at any time as follows:
•
• If you want to submit an application with confidential information that you do not wish to be made available to the public, submit the application as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
•
• For a written/paper application submitted to the Dockets Management Staff, FDA will post your application, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit an application with confidential information that you do not wish to be made publicly available, submit your application only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of your application. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Jaime Espinosa, Division of Compliance and Enforcement, Office of Policy, Compliance, and Enforcement, Office of Regulatory Affairs, Food and Drug Administration, 240-402-8743, or
Section 306(b)(1)(D) of the FD&C Act permits debarment of an individual from importing or offering for import any drug into the United States if FDA finds, as required by section 306(b)(3)(C) of the FD&C Act, that the individual has been convicted of a felony for conduct relating to the importation into the United States of any drug or controlled substance.
On November 7, 2023, Mr. Little was convicted as defined in section 306(l)(1) of the FD&C Act, in the U. S. District Court for the District of Idaho when the court accepted his plea of guilty and entered judgment against him for the offense of Introduction of Unapproved New Drugs in Interstate Commerce in violation of 21 U.S.C. 331(d) and 333(a)(2) (sections 301(d) and 303(a)(2) of the FD&C Act). The underlying facts supporting the conviction are as follows: as charged in the Information and stated in the Plea Agreement, beginning in or about March 2018, and continuing to on or about January 2022, Mr. Little ran a business selling Selective Androgen Receptor Modulators (SARMs). SARMs are synthetic chemicals designed to mimic the effects of testosterone and other anabolic steroids. SARMs are new drugs under the FD&C Act that have not been reviewed by FDA for safety and effectiveness and have not been approved for marketing in the United States. Mr. Little primarily sold his SARM products via the website https://sarm.tech, under the name SARMTECH. Mr. Little imported the bulk ingredients from China which he then processed at his business location in Idaho. At Mr. Little's business location he used the imported bulk ingredients to manufacture the SARM products and he encapsulated, bottled, and prepared the products for shipment to his customers. To avoid government seizures of SARMs shipped to other countries, Mr. Little offered a stealth shipping option for an additional fee that intentionally mispackaged and falsely declared SARMs shipments as vitamins and supplements. Mr. Little sold at least $4,499,197.46 worth of SARMs between March 2018 and January 2022.
FDA sent Mr. Little, by certified mail, on February 5, 2024, a notice proposing to debar him for a 5-year period from importing or offering for import any drug into the United States. The proposal was based on a finding under section 306(b)(3)(C) of the FD&C Act that Mr. Little's felony conviction under Federal law for Introduction of Unapproved New Drugs in Interstate Commerce in violation of 21 U.S.C. 331(d) and 333(a)(2), was for conduct relating to the importation of any drug or controlled substance into the United States because Mr. Little illegally imported bulk ingredients for SARMs from China which he used as components to manufacture unapproved new drugs that he then distributed for sale to his customers. In proposing a debarment period, FDA weighed the considerations set forth in section 306(c)(3) of the FD&C Act that it considered applicable to Mr. Little's offense and concluded that the offense warranted the imposition of a 5-year period of debarment.
The proposal informed Mr. Little of the proposed debarment and offered him an opportunity to request a hearing, providing him 30 days from the date of receipt of the letter in which to file the request, and advised him that failure to request a hearing constituted a waiver of the opportunity for a hearing and of any contentions concerning this action. Mr. Little received the proposal and notice of opportunity for a hearing on February 12, 2024. Mr. Little failed to request a hearing within the timeframe prescribed by regulation and has, therefore, waived his opportunity for a hearing and waived any contentions concerning his debarment (21 CFR part 12).
Therefore, the Assistant Commissioner, Office of Human and Animal Food Operations, under section 306(b)(3)(C) of the FD&C Act, under authority delegated to the Assistant Commissioner, finds that Mr. Michael Terry Little has been convicted of a felony under Federal law for conduct relating to the importation into the United States of any drug or controlled substance. FDA finds that the offense should be accorded a debarment period
As a result of the foregoing finding, Mr. Little is debarred for a period of 5 years from importing or offering for import any drug into the United States, effective (see DATES). Pursuant to section 301(cc) of the FD&C Act, the importing or offering for import into the United States of any drug by, with the assistance of, or at the direction of Mr. Little is a prohibited act.
Office of the Secretary, HHS
Notice.
In compliance with the requirement of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, is publishing the following summary of a proposed collection for public comment.
Comments on the ICR must be received on or before July 3, 2024.
Submit your comments to
When submitting comments or requesting information, please include the document identifier 0945-0005 and project title for reference to Sherrette A. Funn, the Reports Clearance Officer, email
Interested persons are invited to send comments regarding this burden estimate or any other aspect of this collection of information, including any of the following subjects: (1) The necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
The survey will gather information relating to the effect of the audits on the audited entities and the entities' opinions about the audit process.
OCR is conducting a review of the 2016-2017 HIPAA Audits to determine its efficacy in assessing the HIPAA compliance efforts of covered entities.
As part of that review, the online survey will be used to:
• Measure the effect of the 2016-2017 HIPAA Audits on covered entities' and business associates' subsequent actions to comply with the HIPAA Rules.
• Provide entities with an opportunity to give feedback on the Audit and its features, such as the helpfulness of HHS' guidance materials and communications, the utility of the online submission portal, whether the Audit helped improve entity compliance, and the entities' responses to the Audit-report findings and recommendations.
• Provide OCR with information on the burden imposed on entities to collect audit-related documents and to respond to audit-related requests; and
• Seek feedback on the effect of the HIPAA Audit program on the entities' day-to-day business operations. The information, opinions, and comments collected using the online survey will be used to improve future OCR HIPAA Audits.
Office of the Secretary, HHS.
Notice.
In compliance with the requirement of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, is publishing the following summary of a proposed collection for public comment.
Comments on the ICR must be received on or before August 2, 2024.
Submit your comments to
When submitting comments or requesting information, please include the document identifier 0990-0260-60D and project title for reference, to Sherrette A. Funn, email:
Interested persons are invited to send comments regarding this burden estimate or any other aspect of this collection of information, including any of the following subjects: (1) The necessity and
Information reported to the Federal departments and agencies under the Common Rule with respect to a satisfactory assurance is used to ensure that an institution engaged in non-exempt research involving human subjects conducted or supported by a Common Rule department or agency has (1) established adequate administrative policies and procedures for protecting the rights and welfare of human subjects in research, and (2) accepts that responsibility. Other reporting requirements are used to: assess whether the institution is following the established procedures; ensure that Federal funds are not expended for unapproved human subjects research; and, determine if the approved status of an awarded grant, contract, or cooperative agreement should be reviewed, with the ultimate goal of maintaining or increasing human subject protections.
Substance Abuse and Mental Health Services Administration, HHS.
Notice.
The Department of Health and Human Services (HHS) notifies Federal agencies of the laboratories and Instrumented Initial Testing Facilities (IITFs) currently certified to meet the standards of the Mandatory Guidelines for Federal Workplace Drug Testing Programs (Mandatory Guidelines) using Urine and the laboratories currently certified to meet the standards of the Mandatory Guidelines using Oral Fluid.
Anastasia Flanagan, Division of Workplace Programs, SAMHSA/CSAP, 5600 Fishers Lane, Room 16N06B, Rockville, Maryland 20857; 240-276-
The Department of Health and Human Services (HHS) publishes a notice listing all HHS-certified laboratories and Instrumented Initial Testing Facilities (IITFs) in the
If any laboratory or IITF has withdrawn from the HHS National Laboratory Certification Program (NLCP) during the past month, it will be listed at the end and will be omitted from the monthly listing thereafter.
This notice is also available on the internet at
HHS separately notifies Federal agencies of the laboratories and IITFs currently certified to meet the standards of the Mandatory Guidelines using Urine and of the laboratories currently certified to meet the standards of the Mandatory Guidelines using Oral Fluid.
The Mandatory Guidelines using Urine were first published in the
The Mandatory Guidelines using Oral Fluid were first published in the
The Mandatory Guidelines were initially developed in accordance with Executive Order 12564 and section 503 of Public Law 100-71 and allowed urine drug testing only. The Mandatory Guidelines using Urine have since been revised, and new Mandatory Guidelines allowing for oral fluid drug testing have been published. The Mandatory Guidelines require strict standards that laboratories and IITFs must meet in order to conduct drug and specimen validity tests on specimens for Federal agencies. HHS does not allow IITFs to conduct oral fluid testing.
To become certified, an applicant laboratory or IITF must undergo three rounds of performance testing plus an on-site inspection. To maintain that certification, a laboratory or IITF must participate in a quarterly performance testing program plus undergo periodic, on-site inspections.
Laboratories and IITFs in the applicant stage of certification are not to be considered as meeting the minimum requirements described in the HHS Mandatory Guidelines using Urine and/or Oral Fluid. An HHS-certified laboratory or IITF must have its letter of certification from HHS/SAMHSA (formerly: HHS/NIDA), which attests that the test facility has met minimum standards. HHS does not allow IITFs to conduct oral fluid testing.
In accordance with the Mandatory Guidelines using Oral Fluid effective October 10, 2023 (88 FR 70814), the following HHS-certified laboratories meet the minimum standards to conduct drug and specimen validity tests on oral fluid specimens:
At this time, there are no laboratories certified to conduct drug and specimen validity tests on oral fluid specimens.
In accordance with the Mandatory Guidelines using Urine effective February 1, 2024 (88 FR 70768), the following HHS-certified IITFs meet the minimum standards to conduct drug and specimen validity tests on urine specimens:
In accordance with the Mandatory Guidelines using Urine effective February 1, 2024 (88 FR 70768), the following HHS-certified laboratories meet the minimum standards to conduct drug and specimen validity tests on urine specimens:
* The Standards Council of Canada (SCC) voted to end its Laboratory Accreditation Program for Substance Abuse (LAPSA) effective May 12, 1998. Laboratories certified through that program were accredited to conduct forensic urine drug testing as required by U.S. Department of Transportation (DOT) regulations. As of that date, the certification of those accredited Canadian laboratories continued under DOT authority. The responsibility for conducting quarterly performance testing plus periodic on-site inspections of those LAPSA-accredited laboratories was transferred to the U.S. HHS, with the HHS' NLCP contractor continuing to have an active role in the performance testing and laboratory inspection processes. Other Canadian laboratories wishing to be considered for the NLCP may apply directly to the NLCP contractor just as U.S. laboratories do.
Upon finding a Canadian laboratory to be qualified, HHS will recommend that DOT certify the laboratory as meeting the minimum standards of the current Mandatory Guidelines published in the
Department of Homeland Security (DHS).
Request for applicants for appointment to the Department of Homeland Security Data Privacy and Integrity Advisory Committee.
The U.S. Department of Homeland Security seeks applicants for appointment to the Data Privacy and Integrity Advisory Committee.
Applications for membership must reach the Department of Homeland Security Privacy Office via email or fax within 45 days of the date of this notice.
To apply for membership, please submit the documents described below to Sandra L. Taylor, Designated Federal Officer, DHS Data Privacy and Integrity Advisory Committee, by either of the following methods:
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•
Sandra L. Taylor, Designated Federal Officer, DHS Data Privacy and Integrity Advisory Committee, Department of Homeland Security, 2707 Martin Luther King Jr. Ave. SE, Mail Stop 0655, Washington, DC 20598-0655, by telephone (202) 343-1717, by fax (202) 343-4010, or by email
The DHS Data Privacy and Integrity Advisory Committee is an advisory committee established in accordance with the Federal Advisory Committee Act (FACA), 5 U.S.C. ch. 10. The Committee was established by the Secretary of Homeland Security under 6 U.S.C. 451. The Committee provides advice at the request of the Secretary and the Chief Privacy Officer on programmatic, policy, operational, security, administrative, and technological issues within DHS that relate to personally identifiable information (PII) and data integrity, transparency, and other privacy-related matters. The duties of the Committee are solely advisory in nature. In developing its advice and recommendations, the Committee may, consistent with FACA, conduct studies, inquiries, or briefings in consultation with individuals and groups in the private sector and/or other governmental entities. The Committee holds at least one public meeting per calendar year.
1. Individuals currently working in higher education, state or local government, or not-for-profit organizations;
2. Individuals currently working in for-profit organizations including at least one who shall be familiar with the data privacy-related issues addressed by small- to medium-sized enterprises;
3. Individuals currently working in for-profit organizations, including at least one who shall be familiar with data privacy-related issues addressed by large-sized and/or multinational enterprises; and
4. Other individuals, as determined appropriate by the Secretary.
Committee members serve as Special Government Employees (SGE) as defined in section 202(a) of title 18 U.S.C. As such, they are subject to Federal conflict of interest laws and government-wide standards of conduct regulations. Members must annually file a New Entrant Confidential Financial Disclosure Report (OGE Form 450) for review and approval by Department ethics officials. DHS may not release these reports or the information in them to the public except under an order issued by a Federal court or as otherwise permitted under the Privacy Act (5 U.S.C. 552a) or Freedom of Information Act (FOIA) (5 U.S.C. 552). Committee members are also required to obtain and retain at least a secret-level security clearance as a condition of their appointment. Members are not compensated for their service on the Committee; however, while attending meetings or otherwise engaged in Committee business, members may receive travel expenses and per diem in
1. A current resume and
2. A letter that explains your qualifications for service on the Committee and describes in detail how your experience is relevant to the Committee's work.
Your resume and letter will be weighed equally in the application review process. Please note that individuals who are registered as Federal lobbyists are not eligible to serve on Federal advisory committees in an individual capacity.
Please send your documents to Sandra L. Taylor, Designated Federal Officer, DHS Data Privacy and Integrity Advisory Committee, by either of the following methods:
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•
U.S. Citizenship and Immigration Services, Department of Homeland Security.
Notice.
Through this notice, the Department of Homeland Security (DHS), United States Citizenship and Immigration Services (USCIS) announces the retirement of the Forms by Mail service on July 18, 2024. The Forms by Mail service provides paper copies of available USCIS forms by mail to individuals who submit a request online using the
USCIS will not accept forms requests received through the
Mary Zimmerman, Supervisor, Intake and Processing Unit, Central Operations Branch, Office of Intake and Document Production, U.S. Citizenship and Immigration Services, Department of Homeland Security, 124 Leroy Road, Williston, VT 05495.
Mary Zimmerman, Supervisor, Intake and Processing Unit, Central Operations Branch, Office of Intake and Document Production, U.S. Citizenship and Immigration Services, Department of Homeland Security, 124 Leroy Road, Williston, VT 05495 or by phone at 802-309-0284.
On April 5, 1978, the Immigration and Naturalization Service (Legacy INS) published a final rule amending the regulations at 8 CFR part 299 to provide guidance on the issuance of agency forms to the public.
As a result of the 1978 final rule, Legacy INS created the Forms by Mail service. Under 8 CFR 299.2, USCIS may, but is not required to, provide physical copies of forms to the person for whom the form is intended or a representative of the intended user.
Since fiscal year (FY) 2019, form requests submitted through the USCIS Forms by Mail service have decreased by over 500%.
In addition, USCIS spends over $35,000 annually to manage the Forms by Mail program, including employees' salaries, postage, and other materials.
Before deciding to retire the Forms by Mail Service, USCIS assessed whether there were reliance interests, whether they were significant, and weighed such interests against the benefits of and rationale behind making this change along with competing policy concerns. DHS reviewed data such as the number of forms requests received through the Forms by Mail service in recent years. DHS has not received any indication that stakeholders do not have access to the internet, a computer, a printer, or online filing capabilities. The total number of requests made through Forms by Mail in FY23 was 10,783 and in FY23 USCIS had over 7.7 million paper filings. Therefore, DHS determined that there are not significant reliance interests in the Forms by Mail service, and to the extent that such reliance interests exist, the competing policy concerns, including the human resources and operational and financial costs savings from retiring the Forms by Mail service, outweigh any potential reliance interest. DHS concluded there are no alternatives to retiring the program that would meet the competing policy concerns. Nevertheless, USCIS is providing 45 days advance notice in this notice before the Forms by Mail service is retired to mitigate any reliance interests and facilitate adjustment to other avenues to obtain forms. Therefore, after considering the decreasing demand for the USCIS Forms by Mail service, the availability of USCIS forms on the
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, Department of Housing and Urban Development (HUD).
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for 60 days of public comment.
Interested persons are invited to submit comments regarding this proposal. Written comments and recommendations for the proposed information collection can be sent within 60 days of publication of this notice to
Colette Pollard, Reports Management Officer, REE, Department of Housing and Urban Development, 451 7th Street, SW, Washington, DC 20410; email;
This notice informs the public that HUD is seeking approval from OMB for the information collection described in Section A.
Post M2M documents—Accommodation Agreement (Debt Assignment), Agreement of Assignment of MRN/CRN from QNP (Acquiring Purchaser), Agreement of Assignment of MRN/CRN to QNP (Acquiring Purchaser), Allonge—CRN Assignment from QNP, Allonge—CRN Assignment to QNP, Allonge—MRN Assignment from QNP, Allonge—MRN Assignment to QNP, Assignment, Assumption and Modification of M2M Use Agreement (QNP-Non-Exception Rents), Assignment, Assumption and Modification of M2M Use Agreement (QNP Exception Rents), Assignment, Assumption, and Modification of M2M Use Agreement (Not QNP), General Guidance Memorandum (GGM) Exhibits (Exhibit 1: Assignment and Assumption of M2M Use Agreement, Exhibit 2: Subordination Agreement Mortgage Loan to M2M Use Agreement, Exhibit 3A: Modification of M2M Use Agreement, Exhibit 3B: Assignment, Assumption and Modification of M2M Use Agreement (Not QNP), Exhibit 4: Release from Land Records of Accommodation Agreement).
The information collection is used to determine the eligibility of FHA-insured or formerly insured multifamily properties for participation in the M2M program and the terms on which such participation should occur. The collection is also used to structure the closing of debt restructures that are finalized under the program, to track the post-closing performance of the restructures, to evaluate the performance of the Agency's Participating Administrative Entities (PAEs) in undertaking restructures on the Agency's behalf as the Agency agent, and to facilitate subsequent transactions involving the restructured properties under the Post-M2M program. Post-M2M is an extended component of the M2M program and addresses the processing of owner requests to refinance or to sell a property that has received the benefits of a debt restructuring under M2M or M2M Program's predecessor program, the Portfolio Reengineering Demonstration Program (Demo Program).
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) The accuracy of the agency's estimate of the burden of the proposed collection of information;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology,
HUD encourages interested parties to submit comment in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35.
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for 60 days of public comment.
Interested persons are invited to submit comments regarding this proposal.
Written comments and recommendations for the proposed information collection can be sent within 60 days of publication of this notice to
Colette Pollard, Reports Management Officer, REE, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC, Room 8210, 20410; email
Copies of available documents submitted to OMB may be obtained from Ms. Pollard.
This notice informs the public that HUD is seeking approval from OMB for the information collection described in Section A.
This allows HUD the opportunity to examine additional data to confirm or adjust the set loan limit for a particular area.
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) The accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Ways to enhance the quality, utility, and clarity of the information to be collected; and (4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology,
HUD encourages interested parties to submit comments in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35.
Fish and Wildlife Service, Interior.
Notice of receipt of permit applications; request for comments.
We, the U.S. Fish and Wildlife Service, invite the public to comment on applications to conduct certain activities with foreign species that are listed as endangered under the Endangered Species Act (ESA). With some exceptions, the ESA prohibits activities with listed species unless Federal authorization is issued that allows such activities. The ESA also requires that we invite public comment before issuing permits for any activity otherwise prohibited by the ESA with respect to any endangered species.
We must receive comments by July 3, 2024.
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For more information, see Public Comment Procedures under
Timothy MacDonald, by phone at 703-358-2185 or via email at
We invite the public and local, State, Tribal, and Federal agencies to comment on these applications. Before issuing any of the requested permits, we will take into consideration any information that we receive during the public comment period.
You may submit your comments and materials by one of the methods in
When submitting comments, please specify the name of the applicant and the permit number at the beginning of your comment. Provide sufficient information to allow us to authenticate any scientific or commercial data you include. The comments and recommendations that will be most useful and likely to influence agency decisions are: (1) Those supported by quantitative information or studies; and (2) those that include citations to, and analyses of, the applicable laws and regulations.
You may view and comment on others' public comments at
If you submit a comment at
To help us carry out our conservation responsibilities for affected species, and in consideration of section 10(c) of the Endangered Species Act of 1973, as amended (ESA; 16 U.S.C. 1531
We invite comments on the following applications.
The applicant requests authorization to import biological samples from wild and captive-born owls from the order Strigiformes and falcons from the order Falconiformes for the purpose of scientific research. This notification covers activities to be conducted by the applicant over a 5-year period.
The applicant requests authorization to export live juvenile white sturgeon (
The applicant requests a permit to export one male and one female captive-bred American crocodile (
The applicant requests reissuance of a permit to import and export biological samples collected from wild and captive-bred Kemp's ridley sea turtle (
The applicant requests a captive-bred wildlife registration under 50 CFR 17.21(g) for the following species, to enhance the propagation or survival of the species. This notification covers activities to be conducted by the applicant over a 5-year period.
The applicant requests a captive-bred wildlife registration under 50 CFR 17.21(g) for red siskin (
The applicant requests a permit to import a sport-hunted trophy of male bontebok (
After the comment period closes, we will make decisions regarding permit
We issue this notice under the authority of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531
Fish and Wildlife Service, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, we, the U.S. Fish and Wildlife Service (Service), are proposing to revise a currently approved information collection.
Interested persons are invited to submit comments on or before August 2, 2024.
Send your comments on the information collection request (ICR) by one of the following methods (please reference “1018-0135” in the subject line of your comments):
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To request additional information about this ICR, contact Madonna L. Baucum, Service Information Collection Clearance Officer, by email at
In accordance with the Paperwork Reduction Act (PRA, 44 U.S.C. 3501
As part of our continuing effort to reduce paperwork and respondent burdens, we invite the public and other Federal agencies to comment on new, proposed, revised, and continuing collections of information. This helps us assess the impact of our information collection requirements and minimize the public's reporting burden. It also helps the public understand our information collection requirements and provide the requested data in the desired format.
We are especially interested in public comment addressing the following:
(1) Whether or not the collection of information is necessary for the proper performance of the functions of the agency, including whether or not the information will have practical utility;
(2) The accuracy of our estimate of the burden for this collection of information, including the validity of the methodology and assumptions used;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) How might the agency minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
The Electronic Duck Stamp Act of 2005 (Pub. L. 109-266) required the Secretary of the Interior to conduct a 3-year pilot program, under which States could issue electronic Federal Duck Stamps. This pilot program was made permanent with the passage of the Permanent Electronic Duck Stamp Act of 2013 (Pub. L. 113-239). The Duck Stamp Modernization Act of 2023 (Modernization Act; Pub. L. 118-25) removed the temporary nature of the electronic stamp certificate, making the electronic stamp valid from the time of purchase through the next June 30. The electronic stamp can be stored either digitally or printed and carried as a hard copy. The Modernization Act also stipulates that a physical stamp would be mailed to all electronic stamp purchasers after March 10.
Today anyone, regardless of their State or country of residence, is able to purchase an electronic Duck Stamp through any State that participates in the program. The electronic stamp is issued as a certificate or proof of purchase and is valid from the date of purchase until the end of the Federal
Eight States participated in the pilot program beginning in 2007. At the end of the pilot, we provided a report to Congress outlining the successes of the program. The program improved public participation by increasing the ability of the public to obtain required Federal Duck Stamps.
Under our authorities in 16 U.S.C. 718
With the passage of the Modernization Act and to mitigate several challenges faced by the Service in implementing the program, Memorandums of Understanding (MOU) signed between the States and the Service must be reviewed, rewritten, and signed to reflect changes in the law and address several issues which reflect on the accountability, transparency, and effectiveness of the electronic Duck Stamp.
Interested States must apply, using Form 3-2341, based on their ability to meet the responsibilities as outlined in the updated MOU. We will use the information provided in the application to determine a State's eligibility to participate in the program and willingness to comply with the requirements of issuing an electronic stamp. Information includes, but is not limited to:
• Information verifying the current systems the State uses to sell hunting, fishing, and other associated licenses and products.
• Applicable State laws, regulations, or policies that authorize the use of electronic systems to issue licenses.
• Examples and explanations of the codes the State proposes to use to create and endorse the unique identifier for the individual to whom each stamp is issued.
• Mockup copy of the printed version of the State's proposed electronic stamp, including a description of how attention will be drawn to customer support information and identifying features of the licensee to be specified on the permit.
• Description of all fees the State will charge for issuance of an electronic stamp and how these will be conveyed to the customer.
• Description of the process the State will use to account for and transfer the amounts collected by the State that are required to be transferred under the program.
• Manner in which the State will transmit electronic stamp customer data.
Each State approved to participate in the program must provide the following information, on a regular basis (not to exceed 7 days post purchase), to the Service-approved stamp distribution company, to enable that company to issue the physical stamp and to collect funds owed to the Service:
• Full name (first, middle, last, and any prefixes/suffixes), and complete mailing address of each individual who purchases an electronic stamp from the State.
• Date of e-stamp purchase.
Changes to Form 3-2341, “Application and Instructions to Participate in the Electronic Federal Duck Stamp Program” include:
• change in effective date from September 1, 20##, to July 1, 20## (field is customizable each year), to coincide with the Duck Stamp issue date;
• removal of Application Deadline;
• update the Background of the Electronic Federal Duck Stamp Program;
• update website contact information;
• request for transparent description of all charges assessed to each customer for the purchase of an Electronic Federal Duck Stamp and how they will be relayed to the customer;
• removal of language reflecting the past temporary nature of the Electronic Federal Duck Stamp; and
• request for information allowing the Service to measure any challenges to the diversity and number of interested Electronic Federal Duck Stamp purchasers.
Changes to the example Memorandum of Understanding (MOU) referenced in Form 3-2341 include:
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○ mailing of physical stamps on or after March 10 of each year;
○ monthly invoicing for e-stamp purchases;
○ clarification of the review of handling charges to include monitoring for cost efficiencies, consistencies, accuracies, and transparency.
Update the requirements for the States to:
○ assist the Service in promoting the art, tradition, and history of the printed pictorial stamp;
○ provide an online electronic stamp option for at least 9 months covering the period of August 1 through April 30;
○ issue an electronic certificate and a proof of purchase that can be carried digitally or on paper which is readily available for inspection with supporting identification by all authorized individuals (
○ clarify that both the certificate and the receipt of purchase will contain and display a secure, unique identifier for the individual to whom it is issued, specify that the e-stamp is valid until June 30 of the year printed on the physical stamp, statement that the e-stamp is both non-refundable and non-transferable, information that a physical stamp will be mailed after March 10, and contact information for the Service's stamp fulfillment center in the event of questions;
○ clarify that the State will not provide or replicate a digital image of the Federal Duck Stamp itself as proof of purchase;
○ require the State provide the customer with a breakdown of all fees the State is charging related to their purchased e-stamp;
○ inform and provide the customer with assistance in the event they need to reprint or otherwise retrieve the State issued proof of purchase in digital or physical form;
○ inform customers that all sales of the electronic Federal Duck Stamp are final and non-refundable;
○ Promptly send the required information for all customers who have purchased an e-stamp to the Service's designated stamp fulfillment center within a maximum of 7 days of purchase by customer (preferably on a daily basis);
○ State will be invoiced at the end of the month for all sales of Federal Duck Stamps sold through the State's licensing system during the month and partial payments or payments on a quarterly or annual basis will not be allowed; and
○ Provide the Service and their Distributor with any updates to laws,
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Upon request, copies of the draft Form 3-2341 and example MOU are available by sending a request to the Service Information Collection Clearance Officer at
An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.
The authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Fish and Wildlife Service, Interior.
Notice of availability; request for comments and information.
We, the U.S. Fish and Wildlife Service, have received an application from Great Pathfinder Wind LLC (applicant), to amend an existing incidental take permit under the Endangered Species Act, for its Great Pathfinder Wind Project. We request public comment on the application, which includes the applicant's proposed amended habitat conservation plan, and the Service's preliminary determination that the proposed permitting action may be eligible for a categorical exclusion pursuant to the Council on Environmental Quality's National Environmental Policy Act (NEPA) regulations, the Department of the Interior's (DOI) NEPA regulations, and the DOI Departmental Manual. To make this preliminary determination, we prepared a draft environmental action statement and low-effect screening form, both of which are also available for public review. We invite comment from the public and local, State, Tribal, and Federal agencies.
We will accept comments received or postmarked on or before July 3, 2024.
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Kraig McPeek, Field Supervisor, Illinois-Iowa Ecological Services Field Office, by email at
We, the U.S. Fish and Wildlife Service (Service), have received an application from Great Pathfinder Wind LLC (applicant), to amend an existing incidental take permit (ITP) under the Endangered Species Act of 1973, as amended (ESA; 16 U.S.C. 1531
Section 9 of the Endangered Species Act of 1973, as amended (ESA; 16 U.S.C. 1531
The applicant requests to amend their current 6-year ITP (ESPER0627303). The proposed HCP amendment, if approved, would add authorization to incidentally take the proposed endangered tricolored bat (
The issuance of an ITP is a Federal action that triggers the need for compliance with NEPA. The Service has made a preliminary determination that the applicant's proposed amended project, and the proposed mitigation measures, would individually and cumulatively have a minor effect on the covered species and the human environment. Therefore, we have preliminarily determined that the proposed ESA section 10(a)(1)(B) permit would be a low-effect ITP that individually or cumulatively would have a minor effect on the species and may qualify for application of a categorical exclusion pursuant to the Council on Environmental Quality's NEPA regulations, DOI's NEPA regulations, and the DOI Departmental Manual. A low-effect ITP is one that would result in (1) minor or nonsignificant effects on species covered in the HCP; (2) nonsignificant effects on the human environment; and (3) impacts that, when added together with the impacts of other past, present, and reasonable foreseeable actions, would not result in significant cumulative effects to the human environment.
The Service will evaluate the application and the comments received to determine whether to issue the requested ITP. We will also conduct an intra-Service consultation pursuant to section 7 of the ESA to evaluate the effects of the proposed take. After considering the preceding and other matters, we will determine whether the permit issuance criteria of section 10(a)(1)(B) of the ESA have been met. If met, the Service will issue the requested amended ITP to the applicant.
The Service invites comments and suggestions from all interested parties during a 30-day public comment period (see
1. The effects that implementation of any alternative under this proposed amendment could have on the human environment;
2. Whether or not the significance of the impact on various aspects of the human environment has been adequately analyzed in this proposed amendment;
3. Any threats to the tricolored bat that may influence their populations over the life of the ITP that are not addressed in the proposed HCP amendment or screening form; and
4. Any other information pertinent to evaluating the effects of the proposed amendment on the human environment.
You may submit comments by one of the methods shown under
We provide this notice under section 10(c) of the ESA (16 U.S.C. 1531
Fish and Wildlife Service, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, we, the U.S. Fish and Wildlife Service
Interested persons are invited to submit comments on or before July 3, 2024.
Written comments and recommendations for the proposed information collection should be submitted within 30 days of publication of this notice at
To request additional information about this ICR, contact Madonna L. Baucum, Service Information Collection Clearance Officer, by email at
In accordance with the Paperwork Reduction Act of 1995 (PRA, 44 U.S.C. 3501
On January 26, 2024, we published in the
Now you have radicals like Mike Lee of Utah who wants to give public lands to developers to continue to over develop Salt Lake Valley. The state of Utah has for decades failed to clean the air and created a water shortage by over developing. The Federal government should not contribute to the problems created by the State government. The public lands in urban, rural, and suburban areas should always have the priority of open space for wildlife.
The Urban Bird Treaty Program Requirements are crucial for supporting bird conservation in urban areas, where factors like habitat loss and pollution threaten bird populations. The program fosters partnerships between federal agencies, local governments, and community organizations to safeguard bird species, preserve urban habitats, and involve residents in conservation efforts. Recognizing the significance of the Urban Bird Treaty, Program emphasizes the importance of urban bird conservation and encourages collaborative efforts to address the unique challenges faced by birds in cities. Prioritizing the protection of urban bird populations can help preserve biodiversity, enhance urban ecosystems, and strengthen the bond between people and nature in urban settings.
As part of our continuing effort to reduce paperwork and respondent burdens, we are again soliciting comments from the public and other Federal agencies on the proposed ICR that is described below. We are especially interested in public comment addressing the following:
(1) Whether or not the collection of information is necessary for the proper performance of the functions of the agency, including whether or not the information will have practical utility;
(2) The accuracy of our estimate of the burden for this collection of information, including the validity of the methodology and assumptions used;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) How might the agency minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Comments that you submit in response to this notice are a matter of public record. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we
The Service designates UBT cities or municipalities through a process in which applicants submit a nomination package, including a letter of intention and an implementation plan, for approval by the Service's Migratory Bird Program. Within 3 months, the Service reviews the package, makes any necessary recommendations for changes, and then decides to either approve or reject the package. If rejected, the city can reapply the following year. In most cases, when the Service designates a new city partner, the Service and the new city partner hold a signing ceremony, during which a representative from both the Service and the city sign a nonbinding document that states the importance of conserving birds and their habitats to the health and well-being of people that live in and visit the city. To maintain this city partner designation, the city must submit information on the activities it has carried out to meet the goals of the UBT Program, including those related to bird habitat conservation, bird hazard reduction, and bird-related community education and engagement. By helping make cities healthier places for birds and people, the UBT Program contributes to the Administration's priorities of justice and racial equity, climate resiliency, and the President's Executive Order 14008 to protect 30 percent of the Nation's land and 30 percent of its ocean areas by 2030.
The UBT program benefits city partners in many ways, including:
• Helps city partners achieve their goals for making cities healthier places for birds and people.
• Provides opportunities to share and learn from other city partners' tools, tactics, successes, and challenges, to advance city partners' urban bird conservation efforts.
• Strengthens the cohesion and effectiveness of the partnerships by coming together and working under the banner of the UBT Program.
• Gives city partners improved access to funding through the National Fish and Wildlife Foundation's Five Star and Urban Waters Restoration grant program, as UBT cities receive priority in this program.
• Helps partners garner additional funds through other urban conservation grant programs that have shared goals and objectives.
• Helps partners achieve green building credits, reduced energy costs, green space requirements, environmental equity, and other sustainability goals.
• Promotes the livability and sustainability of partner cities by spreading the word about the city's UBT Federal designation and all the benefits of a green and bird-friendly city.
We collect the following information from prospective and successful applicants in conjunction with the UBT Program:
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We will use the information collected for storytelling purposes to promote the urban bird conservation work of city partners, and to enable the Migratory Bird Program to develop UBT Program accomplishment reports and other communications tools to share with the public and the conservation community at large. The reporting requirement ensures that the UBT city designation is meaningful and that city partners are accountable for the efforts that they agreed to undertake to earn their designation. Additionally, we will use the information to promote the UBT Program to other interested city partners and the benefits of urban bird conservation generally.
The public may request copies of documents referenced in this
An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.
The authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Bureau of Indian Affairs, Interior.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, we, the Office of the Assistant Secretary—Indian Affairs (AS-IA) are proposing to renew an information collection.
Interested persons are invited to submit comments on or before July 3, 2024.
Written comments and recommendations for the proposed information collection request (ICR) should be sent within 30 days of publication of this notice to the Office of Information and Regulatory Affairs (OIRA) through
To request additional information about this ICR, contact Steven Mullen, Information Collection Clearance Officer, Office of Regulatory Affairs and Collaborative Action—Indian Affairs, U.S. Department of the Interior, 1001 Indian School Road NW, Suite 229, Albuquerque, New Mexico 87104;
In accordance with the Paperwork Reduction Act of 1995 (PRA, 44 U.S.C. 3501
A
As part of our continuing effort to reduce paperwork and respondent burdens, we are again soliciting comments from the public and other Federal agencies on the proposed ICR that is described below. We are especially interested in public comment addressing the following:
(1) Whether or not the collection of information is necessary for the proper performance of the functions of the agency, including whether or not the information will have practical utility;
(2) The accuracy of our estimate of the burden for this collection of information, including the validity of the methodology and assumptions used;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) How might the agency minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Comments that you submit in response to this notice are a matter of public record. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
An agency may not conduct or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Bureau of Indian Affairs, Interior
Notice of meeting.
The Bureau of Indian Education (BIE) is announcing that the Advisory Board for Exceptional Children will hold a one-day online meeting. The purpose of the meeting is to meet the mandates of the Individuals with Disabilities Education Act of 2004 (IDEA) for Indian children with disabilities.
The BIE Advisory Board meeting will be held Tuesday, June 18, 2024, from 10:10 a.m. to 4:00 p.m. MST. There will also be a 2-hour training for board members only, Tuesday, June 18, 2024, from 8:00 a.m. to 10:00 p.m. MST.
This meeting will be conducted online. To attend, participants may use this link to register:
Jennifer Davis, Designated Federal Officer, Bureau of Indian Education, 2600 N. Central Ave., 12th floor, Suite 250, Phoenix, AZ 85004,
In accordance with the Federal Advisory Committee Act (5 U.S.C. 10), the BIE is announcing the Advisory Board will hold its next meeting online. The Advisory Board was established under the Individuals with Disabilities Act of 2004 (20 U.S.C. 1400
The following agenda items will be for the June 18, 2024, meeting:
• The Technical Assistance for Excellence in Special Education (TAESE) will provide a 2-hour training session for BIE Advisory Board members only, 8:00 a.m. to 10:00 a.m. MST.
• The BIE's Division of Performance and Accountability will provide Special Education updates about: BIE Summer Trainings (Principal Leadership Academy, Interactive Data Workshop, Fiscal Management); BIE Annual Performance Data; and the BIE Special Education Policy & Procedures Handbook.
• The entire afternoon session from 12:10 to 4:00 p.m. MST, the Advisory Board will work on identifying priority topics for the annual report, wrap-up important decisions, discuss outstanding tasks, and discuss next steps.
• A Public Comment Session will be offered to the general public on Tuesday, June 18, 2024, from 10:15 a.m. to 4:00 p.m. MST. Public comments can be provided verbally via webinar or in writing using the chat box throughout the public meeting. Public comments can also be emailed to the DFO at
Please make requests in advance for sign language interpreter services, assistive listening devices, language translation services or other reasonable accommodations. Please contact the person listed in the section titled
Individuals in the United States who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States.
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), Oregon Health & Sciences University (OHSU) has completed an inventory of human remains and has determined that there is a cultural affiliation between the human remains and Indian Tribes or Native Hawaiian organizations in this notice.
Repatriation of the human remains in this notice may occur on or after July 3, 2024.
Alice Cuprill Comas, Oregon Health & Sciences University, 3181 SW Sam Jackson Park Road, Portland, OR 97239, telephone (503) 494-5222, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of OHSU, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.
Based on the information available, human remains representing, at least, two individuals have been reasonably identified. In 1978, the human remains were removed from the Cholick site (35MU1), possibly by Bob Morrow. They were housed at OHSU's School of Dentistry until 2001, when they were transferred to the university's Historical Collections & Archives Medical Museum Collection.
Based on the information available and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains described in this notice.
OHSU has determined that:
• The human remains described in this notice represent the physical remains of two individuals of Native American ancestry.
• There is a reasonable connection between the human remains and associated funerary objects described in this notice and the Confederated Tribes and Bands of the Yakama Nation; Confederated Tribes of Siletz Indians of Oregon; Confederated Tribes of the Grand Ronde Community of Oregon; Confederated Tribes of the Umatilla Indian Reservation; and the Confederated Tribes of the Warm Springs Reservation of Oregon.
Written requests for repatriation of the human remains in this notice must be sent to the authorized representative identified in this notice under
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, OHSU must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains are considered a single request and not competing requests. OHSU is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the University of Nebraska State Museum intends to repatriate certain cultural items that meet the definition of objects of cultural patrimony and that have a cultural affiliation with the Indian Tribes or Native Hawaiian organizations in this notice.
Repatriation of the cultural items in this notice may occur on or after July 3, 2024.
Taylor Ronquillo NAGPRA Project Manager, University of Nebraska State Museum, University of Nebraska of Nebraska-Lincoln, 645 N 14th Street, Lincoln, NE 68588, telephone (402) 472-6592, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the University of Nebraska State Museum, and additional information on the determinations in this notice, including the results of consultation, can be found in the summary or related records. The National Park Service is not responsible for the determinations in this notice.
A total of 24 cultural items have been requested for repatriation. The 24 objects of cultural patrimony are three Cradleboards, 11 Moccasins, five Bags, one Blanket Stap, two Leggings, one Fragment of beaded band, and one Purse. The 24 cultural items were removed from the Plains Region of Northern America: two items were removed from Wyoming; two items were removed from Montana and two items were removed from South Dakota. Other than state location, there is no additional data for these items. On May 24, 2021, the UNSM obtained ownership of 1,355 objects from the Joslyn Art Museum (JAM). JAM obtained ownership of this collection from the Omaha Public Library on December 10, 2020. Among these 1,355 objects were 24 cultural items from the Plains Region of Northern America.
The University of Nebraska State Museum has determined that:
• The 24 objects of cultural patrimony described in this notice have ongoing historical, traditional, or cultural importance central to the Native American group, including any constituent sub-group (such as a band, clan, lineage, ceremonial society, or other subdivision), according to the Native American traditional knowledge of an Indian Tribe or Native Hawaiian organization.
• There is a reasonable connection between the cultural items described in this notice and the Northern Cheyenne Tribe of the Northern Cheyenne Indian Reservation, Montana.
Additional, written requests for repatriation of the cultural items in this notice must be sent to the authorized representative identified in this notice under
Repatriation of the cultural items in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the University of Nebraska State Museum must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of cultural items are considered a single request and not competing requests. The University of Nebraska State Museum is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice and to any other consulting parties.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), San Diego State University (SDSU) has completed an inventory of human remains and associated funerary objects and has determined that there is a cultural affiliation between the human remains and associated funerary objects and Indian Tribes or Native Hawaiian organizations in this notice.
Repatriation of the human remains and associated funerary objects in this notice may occur on or after July 3, 2024.
Jaime Lennox, San Diego State University, 5500 Campanile Drive, San Diego, CA 92182, telephone (619)594-4575, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of SDSU, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.
Based on the information available, human remains representing, at least, two individuals have been reasonably identified. The 16,994 associated funerary objects are: 8,244 shell fragments and beads; 4,027 lithic fragments and tools; 36 ceramic sherds; 980 charcoal fragments; 1,082 fire affected rock fragments; 116 groundstone fragments; 2,449 faunal fragments; 15 asphaltum fragments; two ochre fragments; two glass fragments; one soil sample; one concretion fragment; six wood fragments; and 33 non-cultural stones. Site SDI-18009 (Lomas Santa Fe) is located in San Diego County, CA, and was excavated by environmental consultants David Smith and Associates in 1972. SDSU received the collection resulting from this excavation in 1973 and was accessioned into the SDSU assemblage as CMP-SDSU-0025.
Based on the information available, human remains representing, at least, one individual have been reasonably identified. The 3,588 associated funerary objects are: 3,530 faunal fragments; 41 shell fragments; and 17 vegetal fragment. Site SDI-5443 (W-654; Rimbach/Sorrento Valley; Lion Research Site; Village of Ystagua) is located in San Diego County, CA. SDSU received the collection removed from SDI-5443 at an unknown date by an unknown individual and was accessioned into the SDSU assemblage as CMP-SDSU-0819.
Based on the information available, human remains representing, at least, one individual have been reasonably identified. The 952 associated funerary objects are 942 faunal fragments and 10 shell fragments. Site SDI-4513/SDI-4609/SDI-5443 (W-654; 1992-17; Rimbach/Sorrento Valley; Lion Research Site; Village of Ystagua) is located in San Diego County, CA. SDSU received the collection removed from SDI-4513/SDI-4609/SDI-5443 at an unknown date by an unknown individual and was accessioned into the SDSU assemblage as CMP-SDSU-0822.
Based on the information available, human remains representing, at least, nine individuals have been reasonably identified. The 16,818 associated funerary objects are: 117 vegetal flotation samples; three floral samples; 159 ochre fragments; 176 baked clay fragments; 110 wood fragments; 22 mica fragments; 14 graphite fragments; 85 lots of charcoal fragments; 17 unidentified vegetal fragments; one steatite fragment; two sand concentrations; one insect husk; one seed; 6,446 lithics; 395 groundstone fragments; one metate; 3,665 faunal fragments; 4,828 ceramic sherds; 16 soil samples; 80 fire affected rock fragments; 44 shell beads and fragments; and 635 historic items including glass sherds, metal fragments and nails. Site SDI-945 (W-835; Cuyamaca Rancho State Park) is located in San Diego County, CA. The collection removed from site SDI-945 resulted from a 1999 archaeological field school conducted by SDSU. The collection was accessioned into the SDSU assemblage as CMP-SDSU-0824.
Based on the information available and the results of consultation, cultural affiliation is reasonably identified by the geographical location or acquisition history of the human remains and associated funerary objects described in this notice.
SDSU has determined that:
• The human remains described in this notice represent the physical remains of 13 individuals of Native American ancestry.
• The 38,352 objects described in this notice are reasonably believed to have been placed intentionally with or near individual human remains at the time of
• There is a reasonable connection between the human remains and associated funerary objects described in this notice and the Campo Band of Diegueno Mission Indians of the Campo Indian Reservation, California; Capitan Grande Band of Diegueno Mission Indians of California (Barona Group of Capitan Grande Band of Mission Indians of the Barona Reservation, California; Viejas (Baron Long) Group of Capitan Grande Band of Mission Indians of the Viejas Reservation, California); Ewiiaapaayp Band of Kumeyaay Indians, California; Iipay Nation of Santa Ysabel, California; Inaja Band of Diegueno Mission Indians of the Inaja and Cosmit Reservation, California; Jamul Indian Village of California; La Posta Band of Diegueno Mission Indians of the La Posta Indian Reservation, California; Manzanita Band of Diegueno Mission Indians of the Manzanita Reservation, California; Mesa Grande Band of Diegueno Mission Indians of the Mesa Grande Reservation, California; San Pasqual Band of Diegueno Mission Indians of California; and the Sycuan Band of the Kumeyaay Nation.
Written requests for repatriation of the human remains and associated funerary objects in this notice must be sent to the authorized representative identified in this notice under
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains and associated funerary objects in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, SDSU must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains and associated funerary objects are considered a single request and not competing requests. SDSU is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), Auburn University has completed an inventory of human remains and associated funerary objects and has determined that there is a cultural affiliation between the human remains and associated funerary objects and Indian Tribes or Native Hawaiian organizations in this notice.
Repatriation of the human remains and associated funerary objects in this notice may occur on or after July 3, 2024.
Michael Walters, Auburn University, 7030 Haley Center, Auburn, AL 36849, telephone (334) 844-8300, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of Auburn University, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.
Based on the information available, human remains representing at least five individuals have been identified. The 6,067 associated funerary objects are 5,720 beads, two lots of beads, 16 ceramic sherds, one lot of ceramic sherds, eight lots of charcoal, one clay pipe, one potter's clay, 60 pieces of daub, three lots of fabric, three lots of faunal bone, one lot of fiber, six pieces of glass, 34 lots of lithics, 109 lots of metal items, 13 metal bracelets, eight metal broaches/buckles, five metal gorgets, one metal musket ball, seven metal thimbles, one cast-iron kettle, seven metal earrings, one iron ring, one lot of iron scissors, one lot of metal pins, one silver piece, two triangles, four peach pits, 10 lots of red pigment, seven lots of plant material, 20 seeds, two lots of seeds, one lot of shell fragments, three lots of soil samples, one lot of wood, two unidentified objects, and four lots of unidentified objects. The human remains and associated funerary objects were removed from Hickory Ground (1EE89x1) in Elmore County, AL, by Dr. John Cottier of Auburn University and Dr. Craig Sheldon of Auburn University at Montgomery in 1992 and 1994. Auburn University received the collection at an unknown date. Hickory Ground is culturally affiliated to Poarch Band of Creek Indians and The Muscogee (Creek) Nation. No known hazardous substances were used to treat the human remains or associated funerary objects.
Based on the information available and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains and associated funerary objects described in this notice.
Auburn University has determined that:
• The human remains described in this notice represent the physical remains of five individuals of Native American ancestry.
• The 6,067 objects described in this notice are reasonably believed to have been placed intentionally with or near individual human remains at the time of death or later as part of the death rite or ceremony.
• There is a reasonable connection between the human remains and associated funerary objects described in this notice and the Poarch Band of Creek Indians and The Muscogee (Creek) Nation.
Written requests for repatriation of the human remains and associated funerary objects in this notice must be sent to the authorized representative identified in this notice under
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains and associated funerary objects in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, Auburn University must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains and associated funerary objects are considered a single request and not competing requests. Auburn University is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the Minnesota Historical Society (MNHS) intends to repatriate a certain cultural item that meets the definition of an object of cultural patrimony and that has a cultural affiliation with the Indian Tribes or Native Hawaiian organizations in this notice.
Repatriation of the cultural item in this notice may occur on or after July 3, 2024.
Cecily Marcus, Minnesota Historical Society, 345 West Kellogg Boulevard, Saint Paul, MN 55102, telephone (651) 259-3123, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the Minnesota Historical Society, and additional information on the determinations in this notice, including the results of consultation, can be found in the summary or related records. The National Park Service is not responsible for the determinations in this notice.
A total of one cultural item has been requested for repatriation. The one object of cultural patrimony is a Beaver Chilkat Robe (S'igeidi Naaxein), MHS #10,000.804, held by MNHS. The item was purchased in 1946 from the Alaska Native Service, Juneau, AK, by Frederick and Elizabeth Ayer for sale at the Mille Lacs Trading Post in Mille Lacs, MN; donated to the Minnesota Historical Society by Jeanette Ayer in 1959. The robe was woven by Ms. Mary Willard (Tlingit name Aklé, of the Kaawaantaan clan, Gooch Hit (Wolf House), Klukwan) as an item for purchase.
The Minnesota Historical Society has determined that:
• The one object of cultural patrimony described in this notice has ongoing historical, traditional, or cultural importance central to the Native American group, including any constituent sub-group (such as a band, clan, lineage, ceremonial society, or other subdivision), according to the Native American traditional knowledge of an Indian Tribe or Native Hawaiian organization.
• There is a reasonable connection between the cultural item described in this notice and the Angoon Community Association and the Central Council of the Tlingit & Haida Indian Tribes.
Additional, written requests for repatriation of the cultural item in this notice must be sent to the authorized representative identified in this notice under
Repatriation of the cultural item in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the Minnesota Historical Society must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the cultural item are considered a single request and not competing requests. The Minnesota Historical Society is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice and to any other consulting parties.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the University of Southern California (U.S.C.) has completed an inventory of human remains and has determined that there is a cultural affiliation between the human remains and Indian Tribes or Native Hawaiian organizations in this notice.
Repatriation of the human remains in this notice may occur on or after July 3, 2024.
Bethany Montagano, University of Southern California, 3551 Trousdale Parkway, Suite 102, Los Angeles, CA 90089, telephone (626) 787-2696, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of U.S.C., and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.
Based on the information available, human remains representing, at least, one individual have been reasonably identified. On an unknown date, the individual was likely removed from an area east of The Dalles, Oregon or eastern Washington along the Columbia River. The individual was then housed at a museum at Northwestern
Based on the information available and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains described in this notice.
U.S.C. has determined that:
• The human remains described in this notice represent the physical remains of one individual of Native American ancestry.
• There is a reasonable connection between the human remains described in this notice and the Confederated Tribes and Bands of the Yakama Nation; Confederated Tribes of the Umatilla Indian Reservation; Confederated Tribes of the Warm Springs Reservation of Oregon; and the Nez Perce Tribe.
Written requests for repatriation of the human remains in this notice must be sent to the authorized representative identified in this notice under
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice and, if joined to a request from one or more of the Indian Tribes, the Wanapum Band of Priest Rapids, a non-federally recognized Indian group.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or an Indian Tribe or Native Hawaiian organization with cultural affiliation.
Repatriation of the human remains in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, U.S.C. must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains are considered a single request and not competing requests. U.S.C. is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the California State University, Sacramento intends to repatriate certain cultural items that meet the definition of objects of cultural patrimony and that have a cultural affiliation with the Indian Tribes or Native Hawaiian organizations in this notice.
Repatriation of the cultural items in this notice may occur on or after July 3, 2024.
Dr. Mark Wheeler, Senior Advisor to President Luke Wood, California State University, Sacramento, 6000 J Street Sacramento, CA 95819, telephone (916) 460-0490, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the California State University, Sacramento, and additional information on the determinations in this notice, including the results of consultation, can be found in the summary or related records. The National Park Service is not responsible for the determinations in this notice.
A total of 291 cultural items have been requested for repatriation.
In 1956-1959, archaeologists associated with Sacramento State College (now California State University, Sacramento) removed cultural items from several localities prior to the construction of Monticello Dam by the US Bureau of Reclamation. The resulting collections were subsequently housed at California State University, Sacramento under accession 81-183. The 19 objects of cultural patrimony from CA-NAP-47 are faunal remains, flaked stone, and ground stone objects. The 19 objects of cultural patrimony from NAP-79 are faunal remains, flaked stone, ground stone, and unmodified stone objects. The three objects of cultural patrimony from NAP-88 are ground stone objects. The 16 objects of cultural patrimony from NAP-99 are faunal remains, flaked stone objects, and unmodified stone. The one object of cultural patrimony from NAP-100 is a biface. The one object of cultural patrimony from NAP-108 is a projectile point. The 38 objects of cultural patrimony from NAP-109 are flaked and ground stone objects, a shell bead, and unmodified stone. The five objects of cultural patrimony from NAP-112 are ground stone objects. The two objects of cultural patrimony from NAP-113 are flaked and unmodified stone. The three objects of cultural patrimony from S-NAP-3 are ground stone objects. The 21 objects of cultural patrimony for S-NAP-4 are baked clay objects, flaked and ground stone objects, and unmodified stone. An unknown number of objects may be missing from the collection, and California State University, Sacramento continues to look for them.
At an unknown date, California State University, Sacramento came into possession of objects from CA-SOL-30 (accession 81-383). The 25 objects of cultural patrimony are flaked stone, ground stone, modified stone, modified shell, modified bone, and thermally-altered rock. An unknown number of objects may be missing from the collection, and California State University, Sacramento continues to look for them.
In 1981, archaeologists associated with California State University, Sacramento collected objects during survey and monitoring work at CA-SOL-55 (accession 81-102). The 26 objects of cultural patrimony are flaked stone and ground stone objects. An unknown number of objects may be missing from the collection, and California State University, Sacramento continues to look for them.
In 1980, a student associated with California State University, Sacramento collected objects from CA-SOL-281 (accession 81-102). The 112 objects of cultural patrimony are faunal remains, flaked stone, thermally-altered rock, and unmodified stone and concretions. An
The California State University, Sacramento has determined that:
• The 291 objects of cultural patrimony described in this notice have ongoing historical, traditional, or cultural importance central to the Native American group, including any constituent sub-group (such as a band, clan, lineage, ceremonial society, or other subdivision), according to the Native American traditional knowledge of an Indian Tribe or Native Hawaiian organization.
• There is a reasonable connection between the cultural items described in this notice and the Yocha Dehe Wintun Nation, California.
Additional, written requests for repatriation of the cultural items in this notice must be sent to the authorized representative identified in this notice under
Repatriation of the cultural items in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the California State University, Sacramento must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the cultural items are considered a single request and not competing requests. The California State University, Sacramento is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice and to any other consulting parties.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the Field Museum has completed an inventory of human remains and has determined that there is a cultural affiliation between the human remains and Indian Tribe in this notice.
Repatriation of the human remains in this notice may occur on or after July 3, 2024.
June Carpenter, NAGPRA Director, Field Museum, 1400 S Lake Shore Drive, Chicago, IL 60605, telephone (312) 665-7820, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the Field Museum, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.
Based on the information available, human remains representing, at least, one individual have been reasonably identified. No associated funerary objects are present. The human remains are hair clippings belonging to one individual, identified with the tribal designation “Warm Spring” (Field Museum catalog number 193216.11). Field Museum staff believe they were collected under the direction of Franz Boas and Frederick Ward Putnam for the 1893 World's Columbian Exposition in Chicago. The hair clippings were accessioned into the Field Museum's collection in 1939. No information regarding the individual's name, sex, age, or geographic location has been found. There is no known presence of any potentially hazardous substances.
Based on the information available and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains described in this notice.
The Field Museum has determined that:
• The human remains described in this notice represent the physical remains of one individual of Native American ancestry.
• There is a reasonable connection between the human remains described in this notice and the Confederated Tribes of the Warm Springs Reservation of Oregon.
Written requests for repatriation of the human remains in this notice must be sent to the authorized representative identified in this notice under
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the Field Museum must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains are considered a single request and not competing requests. The Field Museum is responsible for sending a copy of this notice to the Indian Tribe identified in this notice.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and
Repatriation of the human remains in this notice may occur on or after July 3, 2024.
June Carpenter, NAGPRA Director, Field Museum, 1400 S. Lake Shore Drive, Chicago, IL 60605, telephone (312) 665-7820, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the Field Museum, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.
Based on the information available, human remains representing, at least, one individual have been reasonably identified. No associated funerary objects are present. The human remain is a hair clipping belonging to one individual, identified with the tribal designation “Shoshone” (Field Museum catalog number 193211.1). Field Museum staff believe the hair clipping was collected under the direction of Franz Boas and Frederick Ward Putnam for the 1893 World's Columbian Exposition in Chicago. The hair clippings were accessioned into the Field Museum's collection in 1939. No information regarding the individual's name, sex, age, or geographic location has been found. There is no known presence of any potentially hazardous substances.
Based on the information available and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains described in this notice.
The Field Museum has determined that:
• The human remains described in this notice represent the physical remains of one individual of Native American ancestry.
• There is a reasonable connection between the human remains described in this notice and the Eastern Shoshone Tribe of the Wind River Reservation, Wyoming; Ely Shoshone Tribe of Nevada; Lone Pine Paiute-Shoshone Tribe; Shoshone-Bannock Tribes of the Fort Hall Reservation; Shoshone-Paiute Tribes of the Duck Valley Reservation, Nevada; and the Yomba Shoshone Tribe of the Yomba Reservation, Nevada.
Written requests for repatriation of the human remains in this notice must be sent to the authorized representative identified in this notice under
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the Field Museum must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains are considered a single request and not competing requests. The Field Museum is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the Peabody Museum of Archaeology and Ethnology, Harvard University (PMAE) has completed an inventory of human remains and has determined that there is a cultural affiliation between the human remains and Indian Tribes or Native Hawaiian organizations in this notice. The human remains were collected at the Sherman Institute, Riverside County, CA.
Repatriation of the human remains in this notice may occur on or after July 3, 2024.
Jane Pickering, Peabody Museum of Archaeology and Ethnology, Harvard University, 11 Divinity Avenue, Cambridge, MA 02138, telephone (617) 496-2374, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the PMAE, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.
Based on the information available, human remains representing, at minimum, one individual was collected at the Sherman Institute, Riverside County, CA. The human remains are hair clippings collected from one individual who was recorded as being 22 years old and identified as “Suquamish.” Samuel H. Gilliam took the hair clippings at the Sherman Institute between 1930 and 1933. Gilliam sent the hair clippings to George Woodbury, who donated the hair clippings to the PMAE in 1935. No associated funerary objects are present.
Based on the available information and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains described in this notice.
The PMAE has determined that:
• The human remains described in this notice represent the physical remains of one individual of Native American ancestry.
• There is a reasonable connection between the human remains described in this notice and the Suquamish Indian Tribe of the Port Madison Reservation.
Written requests for repatriation of the human remains in this notice must be sent to the Responsible Official identified in
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the PMAE must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains are considered a single request and not competing requests. The PMAE is responsible for sending a copy of this notice to the Indian Tribe identified in this notice.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the University of Nebraska State Museum intends to repatriate certain cultural items that meet the definition of unassociated funerary objects and that have a cultural affiliation with the Indian Tribes or Native Hawaiian organizations in this notice.
Repatriation of the cultural items in this notice may occur on or after July 3, 2024.
Taylor Ronquillo NAGPRA Project Manager, University of Nebraska State Museum, University of Nebraska of Nebraska-Lincoln, 645 N 14th Street, Lincoln, NE 68588, telephone (402) 472-6592, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the University of Nebraska State Museum, and additional information on the determinations in this notice, including the results of consultation, can be found in the summary or related records. The National Park Service is not responsible for the determinations in this notice.
A total of four cultural item has been requested for repatriation.
One of unassociated funerary objects is one lot of beads. This item was donated by J.W. Markin in 1937 to UNSM. The museum was not provided with any additional information.
One unassociated funerary object is one lot of beads. This item was donated by C.B. Shultz and the LeMar Field Party in 1928. The exact excavation site is described as: “One mile south, 3 miles west of Republican City.” Field notes state “dug some Indian material from old sacrificial burial grounds.”
One unassociated funerary object is one necklace. This item was donated by Thomas and Delta Cain in 1991. The museum was not provided with any other information. This item is eight pieces of shell formed into disc-shaped beads.
One unassociated funerary object is one lot of beads. This item was donated to UNSM by J.W. Markin in 1937. No other information was given to the museum.
The University of Nebraska State Museum has determined that:
• The four unassociated funerary objects described in this notice are reasonably believed to have been placed intentionally with or near human remains, and are connected, either at the time of death or later as part of the death rite or ceremony of a Native American culture according to the Native American traditional knowledge of a lineal descendant, Indian Tribe, or Native Hawaiian organization. The unassociated funerary objects have been identified by a preponderance of the evidence as related to human remains, specific individuals, or families, or removed from a specific burial site or burial area of an individual or individuals with cultural affiliation to an Indian Tribe or Native Hawaiian organization.
• There is a reasonable connection between the cultural items described in this notice and the Pawnee Nation of Oklahoma.
Additional, written requests for repatriation of the cultural items in this notice must be sent to the authorized representative identified in this notice under
Repatriation of the cultural items in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the University of Nebraska State Museum must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of cultural items are considered a single request and not competing requests. The University of Nebraska State Museum is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice and to any other consulting parties.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the University of New Hampshire (UNH) has completed an inventory of human remains and has determined that there is a cultural affiliation between the human remains and Indian Tribes or Native Hawaiian organizations in this notice.
Repatriation of the human remains in this notice may occur on or after July 3, 2024.
Dr. Michele Dillon, University of New Hampshire, COLA Dean's Office, Murkland Hall Rm 110, Durham, NH 03824, telephone (603) 862-2062, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the University of New Hampshire, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.
Based on the information available, human remains representing, at least, four individuals have been reasonably identified. On an unknown date, the human remains were acquired by Laurence Crosbie (Crosby), a teacher at Phillips Exeter Academy (PEA), which is located in Exeter, New Hampshire. Sometime in the 1980s, the individuals were received by the University of New Hampshire (UNH) from Phillips Exeter Academy. Crosbie frequently collected in the New England area and was active in the New Hampshire Archaeological Society (which he co-founded), the Massachusetts Archaeological Society, and the Connecticut Archaeological Society. Based on the available information, the individuals were likely removed from the coastal New England region. UNH has no knowledge or record of any potentially hazardous substances being used to treat the human remains.
Based on the information available and the results of consultation, cultural affiliation is reasonably identified by the geographical location or acquisition history of the human remains in this notice.
The University of New Hampshire has determined that:
• The human remains described in this notice represent the physical remains of four individuals of Native American ancestry.
• There is a reasonable connection between the human remains described in this notice and the Delaware Nation, Oklahoma; Delaware Tribe of Indians; Mashantucket Pequot Indian Tribe; Mashpee Wampanoag Tribe; Mi'kmaq Nation (
Written requests for repatriation of the human remains in this notice must be sent to the authorized representative identified in this notice under
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the University of New Hampshire must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains are considered a single request and not competing requests. The University of New Hampshire is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
National Park Service, Interior.
Notice.
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the California State University, Sacramento has completed an inventory of human remains and associated funerary objects and has determined that there is a cultural affiliation between the human remains and associated funerary objects and Indian Tribes or Native Hawaiian organizations in this notice.
Repatriation of the human remains and associated funerary objects in this notice may occur on or after July 3, 2024.
Dr. Mark Wheeler, Senior Advisor to President Luke Wood, California State University, Sacramento, 6000 J Street Sacramento, CA 95819, telephone (916) 460-0490, email
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the California State University, Sacramento, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.
In 1956-1959, archaeologists associated with Sacramento State College (now California State University, Sacramento) removed human remains and objects from CA-NAP-52, CA-NAP-74, CA-NAP-87, CA-NAP-94, CA-NAP-97, and CA-NAP-98 prior to the construction of Monticello Dam by the US Bureau of Reclamation. The resulting collections were subsequently housed at California State University, Sacramento under accessions 81-183, 81-184, and 81-185. Based on the information available, human remains representing, at least, two individuals have been reasonably identified from CA-NAP-52. The 127 associated funerary objects from the site include faunal remains, flaked and
Based on the information available, human remains representing, at least, one individual has been reasonably identified from an unknown location(s) in Napa County. The 346 associated funerary objects include faunal and floral remains, flaked stone, and ground stone objects. These objects and human remains were found within Napa County collections (accession 81-183) without site provenience and are reasonably believed to derive from Napa County.
Based on the information available, human remains were recovered from CA-NAP-26 in by another institution in the 1950s. In 1960, a student of Sacramento State College surface collected objects from the location (accession 81-392). The 72 associated funerary objects include faunal remains and flaked stone objects. An unknown number of objects may be missing from the collection, and California State University, Sacramento continues to look for them.
Based on the information available, human remains representing, at least, one individual has been reasonably identified from an unknown location in Green Valley, Solano County. The five associated funerary objects include faunal remains, floral remains, and unmodified stone. The remains and objects were donated to California State University, Sacramento by a private individual under accession 1980-5. An unknown number of objects may be missing from the collection, and California State University, Sacramento continues to look for them.
Based on the information available and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains and associated funerary objects described in this notice.
The California State University, Sacramento has determined that:
• The human remains described in this notice represent the physical remains of 42 individuals of Native American ancestry.
• The 10,484 objects described in this notice are reasonably believed to have been placed intentionally with or near individual human remains at the time of death or later as part of the death rite or ceremony.
• There is a reasonable connection between the human remains and associated funerary objects described in this notice and the Cachil DeHe Band of Wintun Indians of the Colusa Indian Community of the Colusa Rancheria, California; Kletsel Dehe Wintun Nation of the Cortina Rancheria (
Written requests for repatriation of the human remains and associated funerary objects in this notice must be sent to the authorized representative identified in this notice under
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains and associated funerary objects in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the California State University, Sacramento must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains and associated funerary objects are considered a single request and not competing requests. The California State University, Sacramento is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
Bureau of Reclamation, Interior.
Notice of public meeting.
In accordance with the Federal Advisory Committee Act of 1972, the Bureau of Reclamation (Reclamation) is publishing this notice to announce that a Federal Advisory Committee meeting of the Glen Canyon Dam Adaptive Management Work Group (AMWG) will take place. The meeting is open to the public.
The meeting will be held in-person and virtually on Wednesday, August 21, 2024, from 9:30 a.m. to approximately 5:00 p.m. (PDT); and Thursday, August 22, 2024, from 8:30 a.m. to approximately 3:30 p.m. (PDT).
The in-person meeting will be held at the Shrine of the Ages, Grand Canyon South Rim.
The virtual meeting held on Wednesday, August 21, 2024, may be accessed at
The virtual meeting held on Thursday, August 22, 2024, may be
Mr. William Stewart, Bureau of Reclamation, telephone (385) 622-2179, email at
The Glen Canyon Dam Adaptive Management Program (GCDAMP) was implemented as a result of the Record of Decision on the Operation of Glen Canyon Dam Final Environmental Impact Statement to comply with consultation requirements of the Grand Canyon Protection Act (Pub. L. 102-575) of 1992. The AMWG makes recommendations to the Secretary of the Interior concerning Glen Canyon Dam operations and other management actions to protect resources downstream of Glen Canyon Dam, consistent with the Grand Canyon Protection Act. The AMWG meets two to three times a year.
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has determined to review in part a final initial determination (“Final ID”) issued by the presiding administrative law judge (“ALJ”) finding a violation of section 337 of the Tariff Act of 1930. The Commission requests briefing from the parties on the issues under review and from the parties, interested government agencies, and interested persons on remedy, the public interest, and bonding based on the schedule set forth below. The target date is extended to April 15, 2024.
Robert Needham, Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone (202) 708-5468. Copies of non-confidential documents filed in connection with this investigation may be viewed on the Commission's electronic docket (EDIS) at
The Commission instituted this investigation on August 26, 2022, based on a complaint filed by complainants Hasbro, Inc. of Pawtucket, Rhode Island (“Hasbro”), and Spin Master, Inc. of Los Angeles, California (“Spin Master”) (together, “Complainants”). 87 FR 52595-96 (Aug. 26, 2022). The complaint, as supplemented, alleges a violation of section 337 of the Tariff Act of 1930, as amended,19 U.S.C. 1337 (“section 337”), based upon the importation into the United States, the sale for importation, and the sale within the United States after importation of certain soft projectile launching devices, components thereof, ammunition, and products containing same by reason of the infringement of one or more of claims 1-15 and 17-21 of U.S. Patent No. 8,371,282 (“the '282 patent”) and claims 1-6 and 10-15 of U.S. Patent No. 8,640,683 (“the '683 patent”).
Complainants originally asserted that Respondents violated section 337 based on infringement of claims 1-15 and 17-21 of the '282 patent and claims 1-6 and 10-15 of the '683 patent.
On November 10, 2022, Complainants and Respondents stipulated that the '282 and '683 patents share a common specification and describe projectile launchers, soft projectiles made with “super absorbent polymers,” and systems comprised of projectile launchers and soft projectiles. Technology Stipulation (Nov. 10, 2022).
On November 21, 2022, Respondents stipulated that the importation requirement is satisfied. On May 16, 2023, Complainants and Respondents stipulated that the technical prong of the domestic industry requirement is satisfied under the ALJ's construction of “super absorbent polymer.” On May 18, 2023, the parties stipulated regarding the disclosure of prior art.
On March 27, 2023, the ALJ issued a claim construction order. Order No. 28 (Mar. 27, 2023). The ALJ held an evidentiary hearing on May 19, and 22-23, 2023.
On April 27, 2023, the ALJ granted a motion for a summary determination that Respondents infringed claims 6, 8, 19, and 20 of the '282 patent and claims 1, 5, and 11 of the '683 patent. Order No. 37 (Apr. 27, 2023). Shortly thereafter, the Commission terminated the Gel Blaster Respondents and Splat-R-Ball Respondents based on settlement. Order No. 42 (May 17, 2023),
On October 25, 2023, the ALJ issued the Final ID finding a violation of section 337 with respect to claims 8, 19, and 20 of the '282 patent and claims 5 and 14 of the '683 patent. Final ID at ii-iii. Specifically, the Final ID notes that the Commission already found that “the Accused Blasters (
On October 26, 2023, the Commission requested comments from the public and interested government agencies regarding any public interest issues raised by the ALJ's RD.
On November 6, 2023, PTT filed a petition for review challenging the Final ID's findings that: (1) PTT failed to provide motivations to combine prior art to support a finding of obviousness; (2) secondary considerations support a finding of nonobviousness; and (3) Complainants showed an industry in the process of being established. Also on November 6, 2023, Complainants filed a contingent petition for review of the Final ID's finding that Complainants failed to show that a domestic industry exists. On November 14. 2023, the Complainants and PTT filed responses opposing each other's petitions, and OUII filed a response opposing both petitions.
Having examined the record of this investigation, including the Final ID, the petitions for review, and the responses thereto, the Commission has determined to review the Final ID in part. Specifically, the Commission has determined to review the Final ID's findings on obviousness and the economic prong of the domestic industry requirement. The Commission has determined not to review the remainder of the Final ID. The Commission has also determined to extend the target date to April 15, 2024.
In connection with its review, the Commission requests briefing on the following issue. The parties are requested to brief their positions with reference to the applicable law, the existing evidentiary record, and the parties' submissions during the investigation.
Please identify and discuss with citations to the record whether any argument or evidence was presented to the ALJ that a significant and unusual development(s) existed after the complaint was filed in this matter that may justify consideration of post-complaint evidence to support Complainants' domestic industry claim.
In connection with the final disposition of this investigation, the Commission may (1) issue an order that could result in the exclusion of the subject articles from entry into the United States, and/or (2) issue cease and desist order(s) that could result in the respondents being required to cease and desist from engaging in unfair acts in the importation and sale of such articles. Accordingly, the Commission is interested in receiving written submissions that address the form of remedy, if any, that should be ordered. If a party seeks exclusion of an article from entry into the United States for purposes other than entry for consumption, the party should so indicate and provide information establishing that activities involving other types of entry either are adversely affecting it or likely to do so. For background, see
If the Commission contemplates some form of remedy, it must consider the effects of that remedy upon the public
If the Commission orders some form of remedy, the U.S. Trade Representative, as delegated by the President, has 60 days to approve, disapprove, or take no position on the Commission's action.
Persons filing written submissions must file the original document electronically on or before the deadlines stated above. The Commission's paper filing requirements in 19 CFR 210.4(f) are currently waived. 85 FR 15798 (March 19, 2020). Submissions should refer to the investigation number (Inv. No. 337-TA-1325) in a prominent place on the cover page and/or the first page. (
Any person desiring to submit a document to the Commission in confidence must request confidential treatment by marking each document with a header indicating that the document contains confidential information. This marking will be deemed to satisfy the request procedure set forth in Rules 201.6(b) and 210.5(e)(2) (19 CFR 201.6(b) & 210.5(e)(2)). Documents for which confidential treatment by the Commission is properly sought will be treated accordingly. A redacted non-confidential version of the document must also be filed simultaneously with any confidential filing. All information, including confidential business information and documents for which confidential treatment is properly sought, submitted to the Commission for purposes of this investigation may be disclosed to and used: (i) by the Commission, its employees and Offices, and contract personnel (a) for developing or maintaining the records of this or a related proceeding, or (b) in internal investigations, audits, reviews, and evaluations relating to the programs, personnel, and operations of the Commission including under 5 U.S.C. appendix 3; or (ii) by U.S. Government employees and contract personnel, solely for cybersecurity purposes. All contract personnel will sign appropriate nondisclosure agreements. All nonconfidential written submissions will be available for public inspection on EDIS.
The Commission vote for this determination took place on January 30, 2024.
The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in part 210 of the Commission's Rules of Practice and Procedure (19 CFR part 210).
By order of the Commission.
Original Issued Date: January 30, 2024.
International Trade Commission.
Notice.
The Commission hereby gives notice that it has instituted reviews pursuant to the Tariff Act of 1930 (“the Act”), as amended, to determine whether revocation of the antidumping and countervailing duty orders on raw flexible magnets from China and Taiwan would be likely to lead to continuation or recurrence of material injury. Pursuant to the Act, interested parties are requested to respond to this notice by submitting the information specified below to the Commission.
Instituted June 3, 2024. To be assured of consideration, the deadline for responses is July 3, 2024. Comments on the adequacy of responses may be filed with the Commission by August 9, 2024.
Alexis Yim (202-708-1446), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
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Former Commission employees who are seeking to appear in Commission five-year reviews are advised that they may appear in a review even if they participated personally and substantially in the corresponding underlying original investigation or an earlier review of the same underlying investigation. The Commission's designated agency ethics official has advised that a five-year review is not the same particular matter as the underlying original investigation, and a five-year review is not the same particular matter as an earlier review of the same underlying investigation for purposes of 18 U.S.C. 207, the post-employment statute for Federal employees, and Commission rule 201.15(b) (19 CFR 201.15(b)), 79 FR 3246 (Jan. 17, 2014), 73 FR 24609 (May 5, 2008). Consequently, former employees are not required to seek Commission approval to appear in a review under Commission rule 19 CFR 201.15, even if the corresponding underlying original investigation or an earlier review of the same underlying investigation was pending when they were Commission employees. For further ethics advice on this matter, contact Charles Smith, Office of the General Counsel, at 202-205-3408.
Please note the Secretary's Office will accept only electronic filings at this time. Filings must be made through the Commission's Electronic Document Information System (EDIS,
No response to this request for information is required if a currently valid Office of Management and Budget (“OMB”) number is not displayed; the OMB number is 3117 0016/USITC No. 24-5-603, expiration date June 30, 2026. Public reporting burden for the request is estimated to average 15 hours per response. Please send comments regarding the accuracy of this burden estimate to the Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.
Those responding to this notice of institution are encouraged, but not required, to visit the USITC's website at
(1) The name and address of your firm or entity (including World Wide Web address) and name, telephone number, fax number, and email address of the certifying official.
(2) A statement indicating whether your firm/entity is an interested party under 19 U.S.C. 1677(9) and if so, how, including whether your firm/entity is a U.S. producer of the
(3) A statement indicating whether your firm/entity is willing to participate in this proceeding by providing information requested by the Commission.
(4) A statement of the likely effects of the revocation of the antidumping and countervailing duty orders on the
(5) A list of all known and currently operating U.S. producers of the
(6) A list of all known and currently operating U.S. importers of the
(7) A list of 3-5 leading purchasers in the U.S. market for the
(8) A list of known sources of information on national or regional prices for the
(9) If you are a U.S. producer of the
(a) Production (quantity) and, if known, an estimate of the percentage of total U.S. production of the
(b) Capacity (quantity) of your firm to produce the
(c) the quantity and value of U.S. commercial shipments of the
(d) the quantity and value of U.S. internal consumption/company transfers of the
(e) the value of (i) net sales, (ii) cost of goods sold (COGS), (iii) gross profit, (iv) selling, general and administrative (SG&A) expenses, and (v) operating income of the
(10) If you are a U.S. importer or a trade/business association of U.S. importers of the
(a) The quantity and value (landed, duty-paid but not including antidumping or countervailing duties) of U.S. imports and, if known, an estimate of the percentage of total U.S. imports of
(b) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. commercial shipments of
(c) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. internal consumption/company transfers of
(11) If you are a producer, an exporter, or a trade/business association of producers or exporters of the
(a) Production (quantity) and, if known, an estimate of the percentage of total production of
(b) Capacity (quantity) of your firm(s) to produce the
(c) the quantity and value of your firm's(s') exports to the United States of
(12) Identify significant changes, if any, in the supply and demand conditions or business cycle for the
(13) (OPTIONAL) A statement of whether you agree with the above definitions of the
By order of the Commission.
International Trade Commission.
Notice.
The Commission hereby gives notice that it has instituted a review pursuant to the Tariff Act of 1930 (“the Act”), as amended, to determine whether revocation of the antidumping duty order on non-malleable cast iron pipe fittings from China would be likely to lead to continuation or recurrence of material injury. Pursuant to the Act, interested parties are requested to respond to this notice by submitting the information specified below to the Commission.
Instituted June 3, 2024. To be assured of consideration, the deadline for responses is July 3, 2024. Comments on the adequacy of responses may be filed with the Commission by August 9, 2024.
Kenneth Gatten (202-708-1447), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
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Former Commission employees who are seeking to appear in Commission five-year reviews are advised that they may appear in a review even if they participated personally and substantially in the corresponding underlying original investigation or an earlier review of the same underlying investigation. The Commission's designated agency ethics official has advised that a five-year review is not the same particular matter as the underlying original investigation, and a five-year review is not the same particular matter as an earlier review of the same underlying investigation for purposes of 18 U.S.C. 207, the post-employment statute for Federal employees, and Commission rule 201.15(b) (19 CFR 201.15(b)), 79 FR 3246 (Jan. 17, 2014), 73 FR 24609 (May 5, 2008). Consequently, former employees are not required to seek Commission approval to appear in a review under Commission rule 19 CFR 201.15, even if the corresponding underlying original investigation or an earlier review of the same underlying investigation was pending when they were Commission employees. For further ethics advice on this matter, contact Charles Smith, Office of the General Counsel, at 202-205-3408.
Please note the Secretary's Office will accept only electronic filings at this time. Filings must be made through the Commission's Electronic Document Information System (EDIS,
No response to this request for information is required if a currently valid Office of Management and Budget (“OMB”) number is not displayed; the OMB number is 3117 0016/USITC No. 24-5-601, expiration date June 30, 2026. Public reporting burden for the request is estimated to average 15 hours per response. Please send comments regarding the accuracy of this burden estimate to the Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.
Those responding to this notice of institution are encouraged, but not required, to visit the USITC's website at
(1) The name and address of your firm or entity (including World Wide Web address) and name, telephone number, fax number, and Email address of the certifying official.
(2) A statement indicating whether your firm/entity is an interested party under 19 U.S.C. 1677(9) and if so, how, including whether your firm/entity is a U.S. producer of the
(3) A statement indicating whether your firm/entity is willing to participate in this proceeding by providing information requested by the Commission.
(4) A statement of the likely effects of the revocation of the antidumping duty order on the
(5) A list of all known and currently operating U.S. producers of the
(6) A list of all known and currently operating U.S. importers of the
(7) A list of 3-5 leading purchasers in the U.S. market for the
(8) A list of known sources of information on national or regional prices for the
(9) If you are a U.S. producer of the
(a) Production (quantity) and, if known, an estimate of the percentage of total U.S. production of the
(b) Capacity (quantity) of your firm to produce the
(c) the quantity and value of U.S. commercial shipments of the
(d) the quantity and value of U.S. internal consumption/company transfers of the
(e) the value of (i) net sales, (ii) cost of goods sold (COGS), (iii) gross profit, (iv) selling, general and administrative (SG&A) expenses, and (v) operating income of the
(10) If you are a U.S. importer or a trade/business association of U.S. importers of the
(a) The quantity and value (landed, duty-paid but not including antidumping duties) of U.S. imports and, if known, an estimate of the percentage of total U.S. imports of
(b) the quantity and value (f.o.b. U.S. port, including antidumping duties) of U.S. commercial shipments of
(c) the quantity and value (f.o.b. U.S. port, including antidumping duties) of U.S. internal consumption/company transfers of
(11) If you are a producer, an exporter, or a trade/business association of producers or exporters of the
(a) Production (quantity) and, if known, an estimate of the percentage of total production of
(b) Capacity (quantity) of your firm(s) to produce the
(c) the quantity and value of your firm's(s') exports to the United States of
(12) Identify significant changes, if any, in the supply and demand conditions or business cycle for the
(13) (OPTIONAL) A statement of whether you agree with the above definitions of the
By order of the Commission.
United States International Trade Commission.
Notice.
May 24, 2024.
Andres Andrade ((202) 205-2078), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on (202) 205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at (202) 205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
Effective January 3, 2024, the Commission established a general schedule for the conduct of the final phase of its investigations on paper shopping bags from Cambodia, China, Colombia, India, Malaysia, Portugal, Taiwan, Turkey, and Vietnam
The Commission subsequently issued its final determination that an industry in the United States was materially injured by reason of imports of paper shopping bags from Turkey that Commerce had determined were sold at LTFV in the United States.
This supplemental schedule is as follows: the deadline for filing supplemental party comments on Commerce's final antidumping and countervailing duty determinations is 5:15 p.m. on May 31, 2024. Supplemental party comments may address only Commerce's final antidumping and countervailing duty determinations regarding imports of product from Cambodia, China, Colombia, India, Malaysia, Portugal, Taiwan, and Vietnam. These supplemental final comments may not contain new factual information and may not exceed five (5) pages in length. The supplemental staff report in the final phase of these investigations regarding subject imports from Cambodia, China, Colombia, India, Malaysia, Portugal, Taiwan, and Vietnam will be placed in the nonpublic record on June 17, 2024; and a public version will be issued thereafter.
For further information concerning these investigations see the Commission's notice cited above and the Commission's Rules of Practice and Procedure, part 201, subparts A and B (19 CFR part 201), and part 207, subparts A and C (19 CFR part 207).
Please note the Secretary's Office will accept only electronic filings during this time. Filings must be made through the Commission's Electronic Document Information System (EDIS,
Additional written submissions to the Commission, including requests pursuant to section 201.12 of the Commission's rules, shall not be accepted unless good cause is shown for accepting such submissions, or unless the submission is pursuant to a specific request by a Commissioner or Commission staff.
In accordance with sections 201.16(c) and 207.3 of the Commission's rules, each document filed by a party to the investigation must be served on all other parties to the investigation (as identified by either the public or BPI service list), and a certificate of service must be timely filed. The Secretary will not accept a document for filing without a certificate of service.
By order of the Commission.
United States International Trade Commission.
Notice.
The Commission hereby gives notice that it has instituted a review pursuant to the Tariff Act of 1930 (“the Act”), as amended, to determine whether revocation of the countervailing and antidumping duty orders on quartz surface products from China would be likely to lead to continuation or recurrence of material injury. Pursuant to the Act, interested parties are requested to respond to this notice by submitting the information specified below to the Commission.
Instituted June 3, 2024. To be assured of consideration, the deadline for responses is July 3, 2024. Comments on the adequacy of responses may be filed with the Commission by August 9, 2024.
Julie Duffy (202-708-2579), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
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(5) The
(6) An
Former Commission employees who are seeking to appear in Commission five-year reviews are advised that they may appear in a review even if they participated personally and substantially in the corresponding underlying original investigation or an earlier review of the same underlying investigation. The Commission's designated agency ethics official has advised that a five-year review is not the same particular matter as the underlying original investigation, and a five-year review is not the same particular matter as an earlier review of the same underlying investigation for purposes of 18 U.S.C. 207, the post-employment statute for Federal employees, and Commission rule 201.15(b) (19 CFR 201.15(b)), 79 FR 3246 (Jan. 17, 2014), 73 FR 24609 (May 5, 2008). Consequently, former employees are not required to seek Commission approval to appear in a review under Commission rule 19 CFR 201.15, even if the corresponding underlying original investigation or an earlier review of the same underlying investigation was pending when they were Commission employees. For further ethics advice on this matter, contact Charles Smith, Office of the General Counsel, at 202-205-3408.
Please note the Secretary's Office will accept only electronic filings at this time. Filings must be made through the Commission's Electronic Document Information System (EDIS,
No response to this request for information is required if a currently valid Office of Management and Budget (“OMB”) number is not displayed; the OMB number is 3117 0016/USITC No. 24-5-602, expiration date June 30, 2026. Public reporting burden for the request is estimated to average 15 hours per response. Please send comments regarding the accuracy of this burden estimate to the Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.
Those responding to this notice of institution are encouraged, but not required, to visit the USITC's website at
(1) The name and address of your firm or entity (including World Wide Web address) and name, telephone number, fax number, and Email address of the certifying official.
(2) A statement indicating whether your firm/entity is an interested party under 19 U.S.C. 1677(9) and if so, how, including whether your firm/entity is a U.S. producer of the
(3) A statement indicating whether your firm/entity is willing to participate in this proceeding by providing information requested by the Commission.
(4) A statement of the likely effects of the revocation of the countervailing and antidumping duty orders on the
(5) A list of all known and currently operating U.S. producers of the
(6) A list of all known and currently operating U.S. importers of the
(7) A list of 3-5 leading purchasers in the U.S. market for the
(8) A list of known sources of information on national or regional prices for the
(9) If you are a U.S. producer of the
(a) Production (quantity) and, if known, an estimate of the percentage of total U.S. production of the
(b) Capacity (quantity) of your firm to produce the
(c) the quantity and value of U.S. commercial shipments of the
(d) the quantity and value of U.S. internal consumption/company transfers of the
(e) the value of (i) net sales, (ii) cost of goods sold (COGS), (iii) gross profit, (iv) selling, general and administrative (SG&A) expenses, and (v) operating income of the
(10) If you are a U.S. importer or a trade/business association of U.S. importers of the
(a) The quantity and value (landed, duty-paid but not including antidumping or countervailing duties) of U.S. imports and, if known, an estimate of the percentage of total U.S. imports of
(b) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. commercial shipments of
(c) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. internal consumption/company transfers of
(11) If you are a producer, an exporter, or a trade/business association of producers or exporters of the
(a) Production (quantity) and, if known, an estimate of the percentage of total production of
(b) Capacity (quantity) of your firm(s) to produce the
(c) the quantity and value of your firm's(s') exports to the United States of
(12) Identify significant changes, if any, in the supply and demand conditions or business cycle for the
(13) (OPTIONAL) A statement of whether you agree with the above definitions of the
By order of the Commission.
Coordinating Council on Juvenile Justice and Delinquency Prevention.
Notice of meeting.
The Coordinating Council on Juvenile Justice and Delinquency Prevention announces its next meeting.
Thursday, June 27, 2024, at 1 p.m.-4 p.m. ET.
The meeting will take place at the Department of Justice, 810 7th St. NW, Washington, DC.
Visit the website for the Coordinating Council at
The Coordinating Council on Juvenile Justice and Delinquency Prevention (“Council”), established by statute in the Juvenile and Delinquency Prevention Act of 1974 section 206(a) (34 U.S.C. 11116(a)), will meet to carry out its advisory functions. Information regarding this meeting will be available on the Council's web page at
Although designated agency representatives may attend in lieu of members, the Council's formal membership consists of the following
Council meeting agendas are available on
All members of the public who wish to attend must register in advance. To attend
Interested parties may submit written comments and questions in advance to Maegen Barnes, Senior Program Manager/Federal Contractor (contact information above). All comments and questions should be submitted no later than 5:00 p.m. ET on Wednesday, June 19, 2024.
The Council will limit public statements if they are found to be duplicative. Written questions submitted by public attendees may also be considered by the Council, time permitting.
The Finance Committee of the Legal Services Corporation Board of Directors will meet virtually on June 11, 2024. The meeting will commence at 11:30 a.m. EDT and will continue until the conclusion of the Committee's agenda.
To join the Zoom meeting by computer, please use this link.
To join the Zoom meeting by telephone, please dial one of the following numbers:
Once connected to Zoom, please immediately mute your computer or telephone. Members of the public are asked to keep their computers or telephones muted to eliminate background noise. To avoid disrupting the meetings, please refrain from placing the call on hold if doing so will trigger recorded music or other sound.
From time to time, the Finance Committee Chair may solicit comments from the public. To participate in the meeting during public comment, use the `raise your hand' or `chat' functions in Zoom and wait to be recognized by the Chair before stating your questions and/or comments.
Open.
Cheryl DuHart, Administrative Coordinator, at (202) 295-1621. Questions may also be sent by electronic mail to
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing for the Commission's consideration concerning a negotiated service agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202-789-6820.
The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or
Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request's acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request.
The public portions of the Postal Service's request(s) can be accessed via the Commission's website (
The Commission invites comments on whether the Postal Service's request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern Market Dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3030, and 39 CFR part 3040, subpart B. For request(s) that the Postal Service states concern Competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3035, and 39 CFR part 3040, subpart B. Comment deadline(s) for each request appear in section II.
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This Notice will be published in the
On May 21, 2024, NYSE Arca, Inc. (“NYSE Arca” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to list and trade shares of the following under NYSE Arca Rule 8.201-E: Grayscale Ethereum Mini Trust (ETH) (the “Trust”). This Amendment No. 3 to SR-NYSEARCA-2024-44 replaces Amendment No. 2 to SR-NYSEARCA-2024-44 and supersedes such filing in its entirety. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
Under NYSE Arca Rule 8.201-E, the Exchange may propose to list and/or trade pursuant to unlisted trading privileges “Commodity-Based Trust Shares.”
The sponsor of the Trust is Grayscale Investments, LLC (“Sponsor”), a
The Trust is a Delaware statutory trust, formed on April 23, 2024, that operates pursuant to a trust agreement between the Sponsor and the Trustee (“Trust Agreement”). The Trust has no fixed termination date.
According to the Registration Statement, the Trust's assets consist solely of ether (“Ether”).
Each Share represents a proportional interest, based on the total number of Shares outstanding, in each of the Trust's assets as determined by reference to the Index Price,
The activities of the Trust are limited to (i) issuing “Baskets” (as defined below) in exchange for Ether transferred to the Trust as consideration in connection with creations, (ii) transferring or selling Ether as necessary to cover the “Sponsor's Fee”
The Trust will not be actively managed. It will not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the market prices of Ether.
According to the Registration Statement, and as further described below, the Trust's investment objective is for the value of the Shares (based on Ether per Share) to reflect the value of the Ether held by the Trust, determined by reference to the Index Price, less the Trust's expenses and other liabilities. While an investment in the Shares is not a direct investment in Ether, the Shares are designed to provide investors with a cost-effective and convenient way to gain investment exposure to Ether. Generally speaking, a substantial direct investment in Ether may require expensive and sometimes complicated arrangements in connection with the acquisition, security and safekeeping of the Ether and may involve the payment of substantial fees to acquire such Ether from third-party facilitators through cash payments of U.S. dollars. Because the value of the Shares is correlated with the value of Ether held by the Trust, it is important to understand the investment attributes of, and the market for, Ether.
The Trust uses the Index Price to calculate its “NAV,” which is the aggregate value, expressed in U.S. dollars, of the Trust's assets (other than U.S. dollars or other fiat currency), less the U.S. dollar value of the Trust's expenses and other liabilities calculated in the manner set forth under “Valuation of Ether and Determination of NAV.” “NAV per Share” is calculated by dividing NAV by the number of Shares then outstanding.
The following is a description of the material terms of the Trust Agreement as they relate to valuation of the Trust's Ether and the NAV calculations.
On each business day at 4:00 p.m., New York time, or as soon thereafter as practicable (the “Evaluation Time”), the Sponsor will evaluate the Ether held by the Trust and calculate and publish the NAV of the Trust. To calculate the NAV, the Sponsor will:
1. Determine the Index Price as of such business day.
2. Multiply the Index Price by the Trust's aggregate number of Ether owned by the Trust as of 4:00 p.m., New York time, on the immediately preceding day, less the aggregate number of Ether payable as the accrued and unpaid Sponsor's Fee as of 4:00 p.m., New York time, on the immediately preceding day.
3. Add the U.S. dollar value of Ether, calculated using the Index Price, receivable under pending creation orders, if any, determined by multiplying the number of the Baskets represented by such creation orders by the Basket Amount and then multiplying such product by the Index Price.
4. Subtract the U.S. dollar amount of accrued and unpaid Additional Trust Expenses, if any.
5. Subtract the U.S. dollar value of the Ether, calculated using the Index Price, to be distributed under pending redemption orders, if any, determined by multiplying the number of Baskets to be redeemed represented by such redemption orders by the Basket Amount and then multiplying such product by the Index Price (the amount derived from steps 1 through 5 above, the “NAV Fee Basis Amount”).
6. Subtract the U.S. dollar amount of the Sponsor's Fee that accrues for such business day, as calculated based on the NAV Fee Basis Amount for such business day.
In the event that the Sponsor determines that the primary methodology used to determine the Index Price is not an appropriate basis for valuation of the Trust's Ether, the Sponsor will utilize the cascading set of rules as described in “Determination of the Index Price When Index Price is Unavailable” below.
According to the Registration Statement, Ether is a digital asset that is created and transmitted through the operations of the peer-to-peer “Ethereum Network,” a decentralized network of computers that operates on cryptographic protocols. No single entity owns or operates the Ethereum Network, the infrastructure of which is collectively maintained by a decentralized user base. The Ethereum Network allows people to exchange tokens of value, called Ether, which are recorded on a public transaction ledger known as a blockchain. Ether can be used to pay for goods and services, including computational power on the Ethereum Network, or it can be converted to fiat currencies, such as the U.S. dollar, at rates determined on “Digital Asset Markets”
Furthermore, the Ethereum Network also allows users to write and implement smart contracts—that is, general-purpose code that executes on every computer in the network and can instruct the transmission of information and value based on a sophisticated set of logical conditions. Using smart contracts, users can create markets, store registries of debts or promises, represent the ownership of property, move funds in accordance with conditional instructions and create digital assets other than Ether on the Ethereum Network. Smart contract operations are executed on the Ethereum Blockchain in exchange for payment of Ether. The Ethereum Network is one of a number of projects intended to expand blockchain use beyond just a peer-to-peer money system.
The Ethereum Network went live on July 30, 2015. Unlike other digital assets, such as Bitcoin, which are solely created through a progressive mining process, 72.0 million Ether were created in connection with the launch of the Ethereum Network. At the time of the network launch, a non-profit called the Ethereum Foundation was the sole organization dedicated to protocol development.
The Ethereum Network is decentralized in that it does not require governmental authorities or financial institution intermediaries to create, transmit, or determine the value of Ether. Rather, following the initial distribution of Ether, Ether is created, burned, and allocated by the Ethereum Network protocol through a process that is currently subject to an issuance and burn rate. The value of Ether is determined by the supply of and demand for Ether on the Digital Asset Trading Platforms or in private end-user-to-end-user transactions.
New Ether are created and rewarded to the validators of a block in the Ethereum Blockchain for verifying transactions. The Ethereum Blockchain is effectively a decentralized database that includes all blocks that have been validated, and it is updated to include new blocks as they are validated. Each Ether transaction is broadcast to the Ethereum Network and, when included in a block, recorded in the Ethereum Blockchain. As each new block records outstanding Ether transactions, and outstanding transactions are settled and validated through such recording, the Ethereum Blockchain represents a complete, transparent and unbroken history of all transactions of the Ethereum Network.
Among other things, Ether is used to pay for transaction fees and computational services (
Smart contracts are programs that run on a blockchain that can execute automatically when certain conditions are met. Smart contracts facilitate the exchange of anything representative of value, such as money, information, property, or voting rights. Using smart contracts, users can send or receive digital assets, create markets, store registries of debts or promises, represent ownership of property or a company, move funds in accordance with conditional instructions and create new digital assets.
Development on the Ethereum Network involves building more complex tools on top of smart contracts, such as decentralized apps (“DApps”); organizations that are autonomous, known as decentralized autonomous organizations (“DAOs”); and entirely new decentralized networks. For example, a company that distributes charitable donations on behalf of users could hold donated funds in smart contracts that are paid to charities only if the charity satisfies certain pre-defined conditions.
Moreover, the Ethereum Network has also been used as a platform for creating new digital assets and conducting their associated initial coin offerings. As of December 31, 2023, a majority of digital assets were built on the Ethereum
More recently, the Ethereum Network has been used for decentralized finance (“DeFi”) or open finance platforms, which seek to democratize access to financial services, such as borrowing, lending, custody, trading, derivatives and insurance, by removing third-party intermediaries. DeFi can allow users to lend and earn interest on their digital assets, exchange one digital asset for another and create derivative digital assets such as stablecoins, which are digital assets pegged to a reserve asset such as fiat currency. Over the course of 2023, between $20 billion and $30 billion worth of digital assets were locked up as collateral on DeFi platforms on the Ethereum Network.
In addition, the Ethereum Network and other smart contract platforms have been used for creating non-fungible tokens, or “NFTs.” Unlike digital assets native to smart contract platforms which are fungible and enable the payment of fees for smart contract execution. Instead, NFTs allow for digital ownership of assets that convey certain rights to other digital or real-world assets. This new paradigm allows users to own rights to other assets through NFTs, which enable users to trade them with others on the Ethereum Network. For example, an NFT may convey rights to a digital asset that exists in an online game or a DApp, and users can trade their NFT in the DApp or game, and carry them to other digital experiences, creating an entirely new free-market, internet-native economy that can be monetized in the physical world.
In order to own, transfer, or use Ether directly on the Ethereum Network (as opposed to through an intermediary, such as a custodian), a person generally must have internet access to connect to the Ethereum Network. Ether transactions may be made directly between end-users without the need for a third-party intermediary. To prevent the possibility of double-spending Ether, a user must notify the Ethereum Network of the transaction by broadcasting the transaction data to its network peers. The Ethereum Network provides confirmation against double-spending by memorializing every transaction in the Ethereum Blockchain, which is publicly accessible and transparent. This memorialization and verification against double-spending is accomplished through the Ethereum Network validation process, which adds “blocks” of data, including recent transaction information, to the Ethereum Blockchain.
Prior to engaging in Ether transactions directly on the Ethereum Network, a user generally must first install on its computer or mobile device an Ethereum Network software program that will allow the user to generate a private and public key pair associated with an Ether address, commonly referred to as a “wallet.” The Ethereum Network software program and the Ether address also enable the user to connect to the Ethereum Network and transfer Ether to, and receive Ether from, other users.
Each Ethereum Network address, or wallet, is associated with a unique “public key” and “private key” pair. To receive Ether, the Ether recipient must provide its public key to the party initiating the transfer. This activity is analogous to a recipient for a transaction in U.S. dollars providing a routing address in wire instructions to the payor so that cash may be wired to the recipient's account. The payor approves the transfer to the address provided by the recipient by “signing” a transaction that consists of the recipient's public key with the private key of the address from where the payor is transferring the Ether. The recipient, however, does not make public or provide to the sender its related private key.
Neither the recipient nor the sender reveal their private keys in a transaction, because the private key authorizes transfer of the funds in that address to other users. Therefore, if a user loses his or her private key, the user may permanently lose access to the Ether contained in the associated address. Likewise, Ether is irretrievably lost if the private key associated with them is deleted and no backup has been made. When sending Ether, a user's Ethereum Network software program must validate the transaction with the associated private key. In addition, since every computation on the Ethereum Network requires processing power, there is a transaction fee involved with the transfer that is paid by the payor. The resulting digitally validated transaction is sent by the user's Ethereum Network software program to the Ethereum Network validators to allow transaction confirmation.
Ethereum Network validators record and confirm transactions when they validate and add blocks of information to the Ethereum Blockchain. In proof-of-stake, validators compete to be randomly selected to validate transactions. When a validator is selected to validate a block, it creates that block, which includes data relating to (i) the verification of newly submitted and accepted transactions and (ii) a reference to the prior block in the Ethereum Blockchain to which the new block is being added. The validator becomes aware of outstanding, unrecorded transactions through the data packet transmission and distribution discussed above.
Upon the addition of a block included in the Ethereum Blockchain, the Ethereum Network software program of both the spending party and the receiving party will show confirmation of the transaction on the Ethereum Blockchain and reflect an adjustment to the Ether balance in each party's Ethereum Network public key, completing the Ether transaction. Once a transaction is confirmed on the Ethereum Blockchain, it is irreversible.
Some Ether transactions are conducted “off-blockchain” and are therefore not recorded in the Ethereum Blockchain. These “off-blockchain transactions” involve the transfer of control over, or ownership of, a specific digital wallet holding Ether or the reallocation of ownership of certain Ether in a pooled-ownership digital wallet, such as a digital wallet owned by a Digital Asset Trading Platform. In contrast to on-blockchain transactions, which are publicly recorded on the Ethereum Blockchain, information and data regarding off-blockchain transactions are generally not publicly available. Therefore, off-blockchain transactions are not truly Ether transactions in that they do not involve the transfer of transaction data on the Ethereum Network and do not reflect a movement of Ether between addresses recorded in the Ethereum Blockchain. For these reasons, off-blockchain transactions are subject to risks, as any such transfer of Ether ownership is not protected by the protocol behind the Ethereum Network or recorded in, and validated through, the blockchain mechanism.
Unlike other digital assets such as Bitcoin, which are solely created through a progressive mining process, 72.0 million Ether were created in connection with the launch of the Ethereum Network. The initial 72.0 million Ether were distributed as follows:
Following the launch of the Ethereum Network, Ether supply initially increased through a progressive mining process. Following the introduction of EIP-1559, described below, Ether supply and issuance rate varies based on factors such as recent use of the network.
Prior to September 2022, Ethereum operated using a proof-of-work consensus mechanism. Under proof-of-work, in order to incentivize those who incurred the computational costs of securing the network by validating transactions, there was a reward given to the computer that was able to create the latest block on the chain. Every 14 seconds, on average, a new block was added to the Ethereum Blockchain with the latest transactions processed by the network, and the computer that generated this block was awarded a variable amount of Ether, depending on use of the network at the time. In certain mining scenarios, Ether was sometimes sent to another miner if they were also able to find a solution, but their block was not included. This scenario is referred to as an uncle/aunt reward. Due to the nature of the algorithm for block generation, this process (generating a “proof-of-work”) was guaranteed to be random. The process by which a digital asset was “mined” resulted in new blocks being added to such digital asset's blockchain and new digital assets being issued to the miners. Prior to the Merge upgrade, described below, computers on the Ethereum Network engaged in a set of prescribed complex mathematical calculations in order to add a block to the Ethereum Blockchain and thereby confirm Ether transactions included in that block's data.
In the second half of 2020, the Ethereum Network began the first of several stages of an upgrade that was initially known as “Ethereum 2.0” and eventually became known as the “Merge” to transition the Ethereum Network from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism. The Merge was completed on September 15, 2022, and the Ethereum Network has operated on a proof-of-stake model since such time.
Unlike proof-of-work, in which miners expend computational resources to compete to validate transactions and are rewarded coins in proportion to the amount of computational resources expended, in proof-of-stake, miners (sometimes called validators) risk or “stake” coins to compete to be randomly selected to validate transactions and are rewarded coins in proportion to the amount of coins staked. Any malicious activity, such as validating multiple blocks, disagreeing with the eventual consensus, or otherwise violating protocol rules, results in the forfeiture or “slashing” of a portion of the staked coins. Proof-of-stake is viewed as more energy efficient and scalable than proof-of-work and is sometimes referred to as “virtual mining.” As of December 31, 2023, every 12 seconds, approximately, a new block is added to the Ethereum Blockchain with the latest transactions processed by the network, and the validator that generated this block is awarded Ether.
The rate at which new Ether are issued and put into circulation is expected to vary. As of December 31, 2023, following the Merge, approximately 2,400 Ether are issued per day, though the issuance rate varies based on the number of validators on the network. In addition, the issuance of new Ether could be partially or completely offset by the burn mechanism introduced by the EIP-1559 modification, under which Ether are removed from supply at a rate that varies with network usage. On occasion, the Ether supply has been deflationary over a 24-hour period as a result of the burn mechanism. The attributes of the new consensus algorithm are subject to change, but in sum, the new consensus algorithm and related modifications reduced total new Ether issuances and could turn the Ether supply deflationary over the long term.
As of December 31, 2023, approximately 120 million Ether were outstanding.
The Ethereum Network is an open source project with no official developer or group of developers that controls it. However, the Ethereum Network's development has historically been overseen by the Ethereum Foundation and other core developers. The Ethereum Foundation and core developers are able to access and alter the Ethereum Network source code and, as a result, they are responsible for quasi-official releases of updates and other changes to the Ethereum Network's source code.
For example, in 2019, the Ethereum Network completed a network upgrade called Metropolis that was designed to enhance the usability of the Ethereum Network and was introduced in two stages. The first stage, called Byzantium, was implemented in October 2017. The purpose of Byzantium was to increase the network's privacy, security, and scalability and reduce the block reward from 5.0 Ether to 3.0 Ether. The second stage, called Constantinople, was implemented in February 2019, along with another upgrade, called St. Petersburg. Another network upgrade, called Istanbul, was implemented in December 2019. The purpose of Istanbul was to make the network more resistant to denial of service attacks, enable greater Ether and Zcash interoperability as well as other Equihash-based proof-of-work digital assets, and to increase the scalability and performance for solutions on zero-knowledge privacy technology like SNARKs and STARKs. The purpose of these upgrades was to prepare the Ethereum Network for the introduction of a proof-of-stake algorithm and reduce the block reward from 3.0 Ether to 2.0 Ether. In the second half of 2020, the Ethereum Network began the first of several stages of an upgrade culminating in the Merge. The Merge amended the Ethereum Network's consensus mechanism to include proof-of-stake. In April 2023, the Ethereum Network completed a network upgrade called Shapella, which enabled users to unstake their previously-staked Ether and remove it from the relevant smart contract. Forthcoming planned upgrades include Dencun, which will enable “proto-danksharding.” The purpose of proto-danksharding is to increase scalability of the Ethereum Network by allowing easy synchronization with Layer 2 networks capable of processing many more transactions than the Ethereum Blockchain alone. The intended effect would be to increase the rate of transactions that can be processed by the Ethereum Network.
In 2021, the Ethereum Network implemented the EIP-1559 upgrade. EIP-1559 changed the methodology used to calculate the fees paid to miners (now validators). This new methodology splits fees into two components: a base cost and priority fee. The base cost is now removed from circulation, or “burnt,” and the priority fee is paid to validators. EIP-1559 has reduced the total net issuance of Ether fees to validators. The release of updates to the Ethereum Network's source code does not guarantee that the updates will be automatically adopted. Users and validators must accept any changes made to the Ethereum source code by downloading the proposed modification of the Ethereum Network's source code. A modification of the Ethereum Network's source code is effective only with respect to the Ethereum users and validators that download it. If a modification is accepted by only a percentage of users and validators, a division in the Ethereum Network will occur such that one network will run the pre-modification source code and the other network will run the modified source code. Such a division is known as a “fork.” Consequently, as a practical matter, a modification to the source code becomes part of the Ethereum Network only if accepted by participants collectively having most of the validation power on the Ethereum Network.
Core development of the Ethereum source code has increasingly focused on modifications of the Ethereum protocol to increase speed and scalability and also allow for financial and non-financial next generation uses. The Trust's activities will not directly relate to such projects, though such projects may utilize Ether as tokens for the facilitation of their non-financial uses, thereby potentially increasing demand for Ether and the utility of the Ethereum Network as a whole. Conversely, projects that operate and are built within the Ethereum Blockchain may increase the data flow on the Ethereum Network and could either “bloat” the size of the Ethereum Blockchain or slow confirmation times.
Digital assets and digital asset transactions are recorded and validated on blockchains, the public transaction ledgers of a digital asset network. Each digital asset blockchain serves as a record of ownership for all of the units of such digital asset, even in the case of certain privacy-preserving digital assets, where the transactions themselves are not publicly viewable. All digital assets recorded on a blockchain are associated with a public blockchain address, also referred to as a digital wallet. Digital assets held at a particular public blockchain address may be accessed and transferred using a corresponding private key.
Public addresses and their corresponding private keys are generated by the Custodian in secret key generation ceremonies at secure locations inside faraday cages, which are enclosures used to block electromagnetic fields and thus mitigate against attacks. The Custodian uses quantum random number generators to generate the public and private key pairs.
Once generated, private keys are encrypted, separated into “shards,” and then further encrypted. After the key generation ceremony, all materials used to generate private keys, including computers, are destroyed. All key generation ceremonies are performed offline. No party other than the Custodian has access to the private key shards of the Trust, including the Trust itself.
Private key shards are distributed geographically in secure vaults around the world, including in the United States. The locations of the secure vaults may change regularly and are kept confidential by the Custodian for security purposes.
The “Digital Asset Account” is a segregated custody account controlled and secured by the Custodian to store private keys, which allows for the transfer of ownership or control of the Trust's Ether on the Trust's behalf. The Digital Asset Account uses offline storage, or “cold,” mechanisms to secure the Trust's private keys. The term cold storage refers to a safeguarding method by which the private keys corresponding to digital assets are disconnected and/or deleted entirely from the internet. Cold storage of private keys may involve keeping such keys on a non-networked (or “air-gapped”) computer or electronic device or storing the private keys on a storage device (for example, a USB thumb drive) or printed medium (for example, papyrus, paper, or a metallic object). A digital wallet may receive deposits of digital assets but may not send digital assets without use of the digital assets' corresponding private keys. In order to send digital assets from a digital wallet in which the private keys are kept in cold storage, either the private keys must be retrieved from cold storage and entered into an online, or “hot,” digital asset software program to sign the transaction, or the unsigned transaction must be transferred to the cold server in which the private keys are held for signature by the private keys and then transferred back to the online digital asset software program. At that point, the user of the digital wallet can transfer its digital assets.
The Custodian is the custodian of the Trust's private keys (which, as noted above, facilitate the transfer of ownership or control of the Trust's Ether) in accordance with the terms and provisions of the custodian agreement by and between the Custodian, the Sponsor and the Trust (the “Custodian Agreement”). Transfers from the Digital Asset Account require certain security procedures, including, but not limited to, multiple encrypted private key shards, usernames, passwords and 2-step verification. Multiple private key shards held by the Custodian must be combined to reconstitute the private key to sign any transaction in order to transfer the Trust's assets. Private key shards are distributed geographically in secure vaults around the world, including in the United States.
As a result, if any one secure vault is ever compromised, this event will have no impact on the ability of the Trust to access its assets, other than a possible delay in operations, while one or more of the other secure vaults is used instead. These security procedures are intended to remove single points of failure in the protection of the Trust's assets.
Transfers of Ether to the Digital Asset Account will be available to the Trust once processed on the Blockchain.
Subject to obtaining regulatory approval to operate a redemption program and authorization of the Sponsor, the process of accessing and withdrawing Ether from the Trust to redeem a Basket by an Authorized Participant
The Sponsor will maintain ownership and control of the Trust's Ether in a manner consistent with good delivery requirements for spot commodity transactions.
According to the Registration Statement, the value of Ether is determined by the value that various market participants place on Ether through their transactions. The most common means of determining the value of an Ether is by surveying one or more Digital Asset Trading Platforms where Ether is traded publicly and transparently (
On each online Digital Asset Trading Platform, Ether is traded with publicly disclosed valuations for each executed trade, measured by one or more fiat currencies such as the U.S. dollar or euro, or by the widely used cryptocurrency Bitcoin. Over-the-counter dealers or market makers do not typically disclose their trade data.
As of December 31, 2023, the Digital Asset Trading Platforms included in the Index were Coinbase, Kraken, LMAX Digital, and Crypto.com. As further described below, the Sponsor and the Trust reasonably believe each of these Digital Asset Trading Platforms are in material compliance with applicable U.S. federal and state licensing requirements and maintain practices and policies designed to comply with know-your-customer (“KYC”) and anti-money-laundering (“AML”) regulations.
Currently, there are several Digital Asset Trading Platforms operating worldwide, and online Digital Asset Trading Platforms represent a substantial percentage of Ether buying and selling activity and provide the most data with respect to prevailing valuations of Ether. These trading platforms include established trading platforms such as those included in the Index, which provide a number of options for buying and selling Ether. The below table reflects the trading volume in Ether and market share
The domicile, regulation, and legal compliance of the Digital Asset Trading Platforms included in the Index varies. Information regarding each Digital Asset Trading Platform may be found, where available, on the websites for such Digital Asset Trading Platforms, among other places.
The Index is a U.S. dollar-denominated composite reference rate for the price of Ether. The Index is designed to (i) mitigate the effects of fraud, manipulation and other anomalous trading activity from impacting the Ether reference rate, (ii) provide a real-time, volume-weighted fair value of Ether and (iii) appropriately handle and adjust for non-market related events.
The Index Price is determined by the Index Provider through a process in which trade data is cleansed and compiled in such a manner as to algorithmically reduce the impact of anomalistic or manipulative trading. This is accomplished by adjusting the weight of each data input based on price deviation relative to the observable set, as well as recent and long-term trading volume at each venue relative to the observable set.
The value of the Index is calculated and disseminated on a 24-hour basis and will be available on a continuous
According to the Registration Statement, the Digital Asset Trading Platforms that are included in the Index are selected by the Index Provider utilizing a methodology that is guided by the International Organization of Securities Commissions (“IOSCO”) principles for financial benchmarks. For a trading platform to become a Constituent Trading Platform, it must satisfy the criteria listed below (the “Inclusion Criteria”):
• Sufficient USD liquidity relative to the size of the listed assets;
• No evidence in the past 12 months of trading restrictions on individuals or entities that would otherwise meet the trading platform's eligibility requirements to trade;
• No evidence in the past 12 months of undisclosed restrictions on deposits or withdrawals from user accounts;
• Real-time price discovery;
• Limited or no capital controls;
• Transparent ownership including a publicly-owned ownership entity;
• Publicly available language and policies addressing legal and regulatory compliance in the U.S., including KYC (Know Your Customer), AML (Anti-Money Laundering) and other policies designed to comply with relevant regulations that might apply to it;
• Be a U.S.-domiciled trading platform or a non-U.S. domiciled trading platform that is able to service U.S. investors; and
• Offer programmatic spot trading of the trading pair
A Digital Asset Trading Platform is removed as a Constituent Trading Platform when it no longer satisfies the Inclusion Criteria. The Index Provider does not currently include data from over-the-counter markets or derivatives platforms among the Constituent Trading Platforms. According to the Registration Statement, over-the-counter data is not currently included because of the potential for trades to include a significant premium or discount paid for larger liquidity, which creates an uneven comparison relative to more active markets. There is also a higher potential for over-the-counter transactions to not be arms-length, and thus not be representative of a true market price. Ether derivative markets data, including Ether futures markets and perpetuals markets data, are also not currently included. While the Index Provider has no plans to include data from over-the-counter markets or derivative platforms at this time, the Index Provider will consider IOSCO principles for financial benchmarks, the management of trading venues of Ether derivatives and the aforementioned Inclusion Criteria when considering whether to include over-the-counter or derivative platform data in the future.
The Index Provider and the Sponsor have entered into the index license agreement, dated as of February 1, 2022 (as amended, the “Index License Agreement”), governing the Sponsor's use of the Index Price.
The Index Provider may change the trading venues that are used to calculate the Index or otherwise change the way in which the Index is calculated at any time. For example, the Index Provider has scheduled quarterly reviews in which it may add or remove Constituent Trading Platforms that satisfy or fail the Inclusion Criteria. The Index Provider does not have any obligation to consider the interests of the Sponsor, the Trust, the shareholders, or anyone else in connection with such changes. While the Index Provider is not required to publicize or explain the changes or to alert the Sponsor to such changes, it has historically notified the Trust (and other subscribers to the Index) of any material changes to the Constituent Trading Platforms, including any additions or removals, contemporaneous with its issuance of press releases in connection with the same. The Sponsor will notify investors of any such material event by filing a current report on Form 8-K. Although the Index methodology is designed to operate without any manual intervention, rare events would justify manual intervention. Intervention of this kind would be in response to non-market-related events, such as the halting of deposits or withdrawals of funds on a Digital Asset Trading Platform, the unannounced closure of operations on a Digital Asset Trading Platform, insolvency or the compromise of user funds. In the event that such an intervention is necessary, the Index Provider would issue a public announcement through its website, API and other established communication channels with its clients.
The Index applies an algorithm to the price of Ether on the Constituent Trading Platforms calculated on a per second basis over a 24-hour period. The Index's algorithm is expected to reflect a four-pronged methodology to calculate the Index Price from the Constituent Trading Platforms:
The Index Provider re-evaluates the weighting algorithm on a periodic basis, but maintains discretion to change the way in which an Index Price is calculated based on its periodic review or in extreme circumstances and does not make the exact methodology to calculate the Index Price publicly available. Nonetheless, the Sponsor believes that the Index is designed to limit exposure to trading or price distortion of any individual Digital Asset Trading Platform that experiences periods of unusual activity or limited liquidity by discounting, in real-time, anomalous price movements at individual Digital Asset Trading Platforms.
The Sponsor believes the Index Provider's selection process for Constituent Trading Platforms as well as the methodology of the Index Price's algorithm provides a more accurate picture of Ether price movements than a simple average of Digital Asset Trading Platform spot prices, and that the weighting of Ether prices on the Constituent Trading Platforms limits the inclusion of data that is influenced by temporary price dislocations that may result from technical problems, limited liquidity or fraudulent activity elsewhere in the Ether spot market. By referencing multiple trading venues and weighting them based on trade activity, the Sponsor believes that the impact of any potential fraud, manipulation or anomalous trading activity occurring on any single venue is reduced.
If the Index Price becomes unavailable, or if the Sponsor determines in good faith that such Index Price does not reflect an accurate price for Ether, then the Sponsor will, on a best efforts basis, contact the Index Provider to obtain the Index Price directly from the Index Provider. If after such contact such Index Price remains unavailable or the Sponsor continues to believe in good faith that such Index Price does not reflect an accurate price for Ether, then the Sponsor will employ a cascading set of rules to determine the Index Price, as described below in “Determination of the Index Price When Index Price is Unavailable.”
The Trust values its Ether for operational purposes by reference to the Index Price. The Index Price is the value of an Ether as represented by the Index, calculated at 4:00 p.m., New York time, on each business day.
For the purposes of illustration, outlined below are examples of how the attributes that impact weighting and adjustments in the aforementioned methodology may be utilized to generate the Index Price for a digital asset. For example, Constituent Trading Platforms used to calculate the Index Price of the digital asset may include trading platforms such as Coinbase, Kraken, LMAX Digital, and
The Index Price algorithm, as described above, accounts for manipulation at the outset by only including data from executed trades on Constituent Trading Platforms that charge trading fees. Then, the below-listed elements may impact the weighting of the Constituent Trading Platforms on the Index Price as follows:
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The Sponsor uses the following cascading set of rules to calculate the Index Price when the Index Price is unavailable.
1. Index Price = The price set by the Index as of 4:00 p.m., New York time, on the valuation date.
2. Index Price = The price set by Coin Metrics Real-Time Rate (the “Secondary Index”) as of 4:00 p.m., New York time,
3. Index Price = The price set by the Trust's principal market (as defined in the Registration Statement) (the “Tertiary Pricing Option”) as of 4:00 p.m., New York time, on the valuation date. The Tertiary Pricing Option is a spot price derived from the principal market's public data feed that is believed to be consistently publishing pricing information as of 4:00 p.m., New York time, and is provided to the Sponsor via an application programming interface. If the Tertiary Pricing Option becomes unavailable, or if the Sponsor determines in good faith that the Tertiary Pricing Option does not reflect an accurate price, then the Sponsor will, on a best efforts basis, contact the Tertiary Pricing Provider to obtain the Tertiary Pricing Option directly from the Tertiary Pricing Provider. If after such contact the Tertiary Pricing Option remains unavailable after such contact or the Sponsor continues to believe in good faith that the Tertiary Pricing Option does not reflect an accurate price, then the Sponsor will employ the next rule to determine the Index Price. There are no predefined criteria to make a good faith assessment and it will be made by the Sponsor in its sole discretion.
4. Index Price = The Sponsor will use its best judgment to determine a good faith estimate of the Index Price. There are no predefined criteria to make a good faith assessment and it will be made by the Sponsor in its sole discretion.
In the event of a fork, the Index Provider may calculate the Index Price based on a digital asset that the Sponsor does not believe to be an appropriate asset of the Trust (
The Sponsor may, in its sole discretion, select a different index provider, select a different index price provided by the Index Provider, calculate the Index Price by using the cascading set of rules set forth above, or change the cascading set of rules set forth above at any time.
On October 2, 2023, the first Ether-based exchange-traded funds (“ETFs”) were approved by the Commission for trading.
In the context of other digital asset-based ETF and ETP proposals for Bitcoin, the Commission has sought to justify treating futures-based ETFs differently from spot-based ETPs because of (i) distinctions between the regulations under which the two products would be registered (the Investment Company Act of 1940 (the “ '40 Act”) for digital-asset futures ETFs and '33 Act for spot digital-asset ETPs) and (ii) the existence of regulation and surveillance-sharing over the CME digital-asset futures market through the Intermarket Surveillance Group (“ISG”), as compared to the spot market for those digital assets.
While the '40 Act has certain added investor protections that the '33 Act does not require, these protections do not seek to allay harms arising from underlying assets or markets of assets that ETFs hold, such as the potential for fraud or manipulation in such markets. In other words, the Sponsor does not believe that the application of the '40 Act supports the purported justifications the Commission has made in denying other spot digital asset ETPs. Instead, the '40 Act seeks to remedy certain abusive practices in the
The Sponsor believes that, because the CME Ether futures market is priced based on the underlying spot Ether market, any fraud or manipulation in the spot market would necessarily affect the price of CME Ether futures, thereby affecting the net asset value of an ETP holding spot Ether or an ETF holding CME Ether futures, as well as the price investors pay for such product's shares.
Given the similarity between an ETP holding spot Ether and an ETF holding CME Ether futures, the Sponsor believes that it must be the case that CME surveillance can either detect spot-market fraud that affects both futures ETFs and spot ETPs, or that such surveillance cannot do so for either type of product. Having approved CME Ether futures ETFs in part on the basis of such surveillance, the Commission has clearly determined that CME surveillance can detect spot-market fraud that would affect spot ETPs, and the Sponsor thus believes that it must also approve spot Ether ETPs on that basis.
In summary, the Sponsor believes that the distinctions between the '40 Act and the '33 Act, and the surveillance-sharing available for the CME Ether futures market versus the spot Ether market, are not meaningful in the context of Ether-based ETF and ETP proposals, and that such reasoning cannot be a basis for the Commission treating Ether futures ETFs differently from spot Ether ETPs like the Trust. The Sponsor believes that the Commission's approval of CME Ether futures ETFs means it must also approve spot Ether ETPs like the Trust.
Even if the Commission had not approved CME Ether futures ETFs, the Sponsor still believes the Commission should approve the listing and trading of Shares of the Trust. In the context of prior spot digital asset ETP proposal disapproval orders for Bitcoin, the Commission expressed concerns about the underlying Digital Asset Market due to the potential for fraud and manipulation and has outlined the reasons why such ETP proposals have been unable to satisfy these concerns.
In the Prior Spot Digital Asset ETP Disapproval Orders, the Commission outlined that a proposal relating to a digital asset-based ETP could satisfy its concerns regarding potential for fraud and manipulation by demonstrating:
(1)
(2)
(3)
As described below, the Sponsor believes the structure and operation of the Trust are designed to prevent fraudulent and manipulative acts and practices, to protect investors and the public interest, and to respond to the specific concerns that the Commission may have with respect to potential fraud and manipulation in the context of an Ether-based ETP.
In the Prior Spot Digital Asset ETP Disapproval Orders, the Commission disagreed with the proposition that a digital asset's fungibility, transportability and exchange tradability combine to provide unique protections against, and allow such digital asset to be uniquely resistant to, attempts at price manipulation. The Commission reached its conclusion based on concessions by one issuer that 95% of the reported trading in the digital asset, Bitcoin, is “fake” or non-economic, effectively admitting that the properties of Bitcoin do not make it inherently resistant to manipulation. Such issuer's concessions were further compounded by evidence of potential and actual fraud and manipulation in the historical trading of Bitcoin on certain marketplaces such as (1) “wash” trading, (2) trading based on material, non-public information, including the dissemination of false and misleading information, (3) manipulative activity involving Tether, and (4) fraud and manipulation.
The Sponsor acknowledges the possibility that fraud and manipulation may exist in commodity markets and that digital asset trading, such as Ether,
The Commission has recognized that a listing exchange could demonstrate that other means to prevent fraudulent and manipulative acts and practices are sufficient to justify dispensing with the requisite surveillance-sharing agreement.
The Sponsor believes the Index represents a novel means to prevent fraud and manipulation from impacting a reference price for Ether and that it offers protections beyond those that exist in traditional commodity markets or equity markets. The Index operates materially similarly to CoinDesk Bitcoin Price Index (XBX). Specifically, digital assets, such as Ether, are novel and exist outside traditional commodity markets. It therefore stands to reason that the methods by which they trade will be novel and that the market for digital assets like Ether will have different attributes than traditional commodity markets. Digital assets like Ether were only introduced within the past decade, twenty years after the first U.S. ETFs were offered
An affiliate of the Trust that is structured identically to the Trust and also seeking to list its shares as an ETP on the Exchange, Grayscale Ethereum Trust (ETH) (“ETHE”), has priced its Shares consistently for more than six years based on the Index.
As described in more detail below, the Sponsor believes that the Index accomplishes those objectives in the following ways:
1. The Index tracks the Digital Asset Trading Platform Market price through trading activity at “U.S.-Compliant Trading Platform”;
“Non-U.S.-Compliant Trading Platforms” are all other trading platforms in the Digital Asset Trading Platform Market.
As of December 31, 2023, the U.S.-Compliant Trading Platforms that the Index Provider considered for inclusion in the Index were Coinbase, Kraken, LMAX Digital and
From these U.S.-Compliant Trading Platforms, the Index Provider then applies additional Inclusion Criteria to determine the Constituent Trading Platforms.
2. The Index mitigates the impact of instances of fraud, manipulation and other anomalous trading activity in real-time through systematic adjustments;
3. The Index is constructed and maintained by an expert third-party index provider, allowing for prudent handling of non-market-related events; and
4. The Index mitigates the impact of instances of fraud, manipulation and other anomalous trading activity concentrated on any one specific trading platform through a cross-trading platform composite index rate.
To reduce the risk of fraud, manipulation, and other anomalous trading activity from impacting the Index, only U.S.-Compliant Trading Platforms are eligible to be included in the Index.
The Index maintains a minimum number of three trading platforms and a maximum number of five trading platforms to track the Digital Asset Trading Platform Market while offering replicability for traders and market makers.
U.S.-Compliant Trading Platforms possess safeguards that protect against fraud and manipulation. For example, U.S.-Compliant Trading Platforms regulated by the NYDFS under the BitLicense program have regulatory requirements to implement measures designed to effectively detect, prevent, and respond to fraud, attempted fraud, market manipulation, and similar wrongdoing, and to monitor, control, investigate and report back to the NYDFS regarding any wrongdoing.
• Submission of audited financial statements including income statements, statements of assets/liabilities, insurance, and banking;
• Compliance with capitalization requirements set at NYDFS's discretion;
• Prohibitions against the sale or encumbrance to protect full reserves of custodian assets;
• Fingerprints and photographs of employees with access to customer funds;
• Retention of a qualified Chief Information Security Officer and annual penetration testing/audits;
• Documented business continuity and disaster recovery plan, independently tested annually; and
• Participation in an independent exam by NYDFS.
Other U.S.-Compliant Trading Platforms have voluntarily implemented measures to protect against common forms of market manipulation.
Furthermore, all U.S.-Compliant Trading Platforms are considered MSBs that are subject to FinCEN's federal and state reporting requirements that provide additional safeguards. For example, unscrupulous traders may be less likely to engage in fraudulent or manipulative acts and practices on trading platforms that (1) report suspicious activity to FinCEN as money services businesses, (2) report to state regulators as money transmitters, and/or (3) require customer identification through KYC procedures. U.S.-Compliant Trading Platforms are required to:
• Identify people with ownership stakes or controlling roles in the MSB;
• Establish a formal Anti-Money Laundering (AML) policy in place with documentation, training, independent review, and a named compliance officer;
• Implement strict customer identification and verification policies and procedures;
• File Suspicious Activity Reports (SARs) for suspicious customer transactions;
• File Currency Transaction Reports (CTRs) for cash-in or cash-out transactions greater than $10,000; and
• Maintain a five-year record of currency exchanges greater than $1,000 and money transfers greater than $3,000.
Lastly, because of Ether's classification as a commodity, the CFTC has authority to police fraud and manipulation on U.S.-Compliant Trading Platforms.
The Sponsor acknowledges that there are substantial differences between FinCEN and New York state regulations and the Commission's regulation of the national securities exchanges.
The Index is calculated once every second according to a systematic methodology that relies on observed trading activity on the Constituent Trading Platforms. While the precise methodology underlying the Index is currently proprietary, the key elements of the Index are outlined below:
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The Index Provider reviews and periodically updates which trading platforms are included in the Index by utilizing a methodology that is guided by the IOSCO principles for financial benchmarks.
According to the Index methodology, for a trading platform to become a Constituent Trading Platform, it must satisfy the following Inclusion Criteria:
• Sufficient USD liquidity relative to the size of the listed assets;
• No evidence in the past 12 months of trading restrictions on individuals or entities that would otherwise meet the trading platform's eligibility requirements to trade;
• No evidence in the past 12 months of undisclosed restrictions on deposits or withdrawals from user accounts;
• Real-time price discovery;
• Limited or no capital controls;
• Transparent ownership including a publicly-owned ownership entity;
• Publicly available language and policies addressing legal and regulatory compliance in the US, including KYC (Know Your Customer), AML (Anti-Money Laundering) and other policies designed to comply with relevant regulations that might apply to it;
• Be a U.S.-domiciled trading platform or a non-U.S. domiciled trading platform that is able to service U.S. investors;
• Offer programmatic spot trading of the trading pair and reliably publish trade prices and volumes on a real-time basis through Rest and Websocket APIs.
Although the Index methodology is designed to operate without any human interference, rare events would justify manual intervention. Manual intervention would only be in response to “non-market-related events” (
The Index is based on the price and volume data of multiple U.S.-Compliant Trading Platforms that satisfy the Index Provider's Inclusion Criteria. By referencing multiple trading venues and weighting them based on trade activity, the impact of any potential fraud, manipulation, or anomalous trading activity occurring on any single venue is reduced. Specifically, the effects of fraud, manipulation, or anomalous trading activity occurring on any single venue are de-weighted and consequently diluted by non-anomalous trading activity from other Constituent Trading Platforms.
Although the Index is designed to accurately capture the market price of Ether, third parties may be able to purchase and sell Ether on public or private markets included or not included among the Constituent Trading Platforms, and such transactions may take place at prices materially higher or lower than the Index Price. For example, based on data provided by the Index Provider, on any given day during the twelve months ended December 31, 2023, the maximum differential between the 4:00 p.m., New York time spot price of any single Digital Asset Trading Platform included in the Index and the Index Price was 2.76% and the average of the maximum differentials of the 4:00 p.m., New York time spot price of each Digital Asset Trading Platform included in the Index and the Index Price was 0.75%. During this same period, the average differential between the 4:00 p.m., New York time spot prices of all the Digital Asset Trading Platforms included in the Index and the Index Price was 0.012%.
As described above, the Trust's affiliate, ETHE, has consistently priced its Shares at 4:00 p.m., New York time based on the Index Price. While that pricing would be known to the market, the Sponsor believes that, even if efforts to manipulate the price of Ether at 4:00 p.m., E.T. were successful on any trading platform, such activity would have had a negligible effect on the pricing of the Trust, due to the controls embedded in the structure of the Index.
Accordingly, the Sponsor believes that the Index has proven its ability to (i) mitigate the effects of fraud, manipulation and other anomalous trading activity on the Ether reference rate, (ii) provide a real-time, volume-weighted fair value of Ether and (iii) appropriately handle and adjust for non-market related events. For these reasons, the Sponsor believes that the Index represents an effective alternative means to prevent fraud and manipulation and the Trust's reliance on the Index addresses the Commission's concerns with respect to potential fraud and manipulation.
In the Prior Spot Digital Asset ETP Disapproval Orders, the Commission described both the need for and the definition of a surveilled market of significant size for commodity-trust ETPs like the Trust to date.
Further, the Commission stated that its interpretation of the term “market of significant size” depends on the interrelationship between the market with which the listing exchange has a surveillance-sharing agreement and the proposed ETP.
In the context of the Prior Spot Digital Asset ETP Disapproval Orders specifically, the Commission has stated that establishing a lead-lag relationship between the futures market and the spot market is central to understanding whether it is reasonably likely that a would-be manipulator of the ETP would need to trade on the futures market to successfully manipulate prices on those spot platforms that feed into the proposed ETP's pricing mechanism such that a surveillance-sharing agreement would assist the ETP listing market in detecting and deterring misconduct.
While studies have found that the CME Bitcoin futures market does lead the spot market in the context of Bitcoin,
Regardless of the irrelevance of the lead/lag relationship and the mixed findings regarding the lead/lag relationship between the CME futures and spot markets in the context of Ether, the Sponsor believes that the CME Ether futures market represents a large, surveilled and regulated market and meets the Commission's definition of a “significant market.” For example, from November 1, 2019 to December 31, 2023, the CME Ether futures market trading volume was over $461 billion, compared to $732 billion in trading volume across the Constituent Trading Platforms included in the Index. With over 60% of the Index trading volume, the CME Ether futures market represents significant coverage of U.S.-Compliant Trading Platforms in the Ether market.
Given the size of the CME Ether futures markets, the Sponsor believes such markets meet the Commission's definition of “significant market” because there is a reasonable likelihood that a person attempting to manipulate the ETP would also have to trade on that market to successfully manipulate the ETP, since arbitrage between the derivative and spot markets would tend to counter an attempt to manipulate the spot market alone. As a result, the Exchange's ability to obtain information regarding trading in the Shares and futures from markets and other entities that are members of the Intermarket Trading Group (“ISG”), including the CME, would assist the Exchange in detecting and deterring misconduct.
The Sponsor also believes it is unlikely that the ETP would become the predominant influence on prices in the market. While future inflows to the proposed Trust cannot be predicted, to provide comparable data, the Sponsor examined the change in market capitalization of Ether with net inflows into ETHE, another spot Ether fund that the Sponsor manages. ETHE currently trades on OTC Markets and is largest and most liquid Ether investment product in the world.
Additionally, ETHE experienced approximately $71 billion of trading volume from November 1, 2019 to December 31, 2023, only 15% of the CME Ether futures market and 10% of the Index over the same period.
In summary, the Sponsor believes that the foregoing addresses concerns the Commission may have with respect to Ether-based ETPs, based on the Commission's articulated concerns with respect to potential fraud and manipulation in Bitcoin-based ETPs. Specifically, the Sponsor believes that, although Ether is not itself inherently resistant to fraud and manipulation, the Index represents an effective means to prevent fraudulent and manipulative acts and practices. As discussed above, the Trust has used the Index to price the Shares for more than six years, and the Index has proven its ability to (i) mitigate the effects of fraud, manipulation and other anomalous trading activity on the Ether reference rate, (ii) provide a real-time, volume-weighted fair value of Ether and (iii) appropriately handle and adjust for non-market related events. The Sponsor also believes that the CME Ether futures market is a significant, surveilled and regulated market that is closely connected with the spot market for Ether and fulfills the requirements for surveillance sharing given the Exchange's ability to obtain information from markets and other entities that are members of the ISG to assist in detecting and deterring misconduct.
Authorized Participants may submit orders to create or redeem Shares under procedures for “Cash Orders.”
The Authorized Participants will deliver only cash to create Shares and will receive only cash when redeeming Shares. Further, Authorized Participants will not directly or indirectly purchase, hold, deliver, or receive Ether as part of the creation or redemption process or otherwise direct the Trust or a third party with respect to purchasing, holding, delivering, or receiving Ether as part of the creation or redemption process.
The Trust will create Shares by receiving Ether from a third party that is not the Authorized Participant and the Trust, or an affiliate of the Trust (and in any event not the Authorized Participant), is responsible for selecting the third party to deliver the Ether. Further, the third party will not be acting as an agent of the Authorized Participant with respect to the delivery of the Ether to the Trust or acting at the direction of the Authorized Participant with respect to the delivery of the Ether to the Trust. The Trust will redeem Shares by delivering Ether to a third party that is not the Authorized Participant and the Trust, or an affiliate of the Trust (and in any event not the Authorized Participant), is responsible for selecting the third party to receive the Ether. Further, the third party will not be acting as an agent of the Authorized Participant with respect to the receipt of the Ether from the Trust or acting at the direction of the Authorized Participant with respect to the receipt of the Ether from the Trust.
Cash Orders are made through the participation of a Liquidity Provider
According to the Registration Statement, the Trust creates Baskets (as described below) of Shares only upon receipt of Ether and redeems Shares only by distributing Ether. “Authorized Participants” are the only persons that may place orders to create and redeem Baskets. Each Authorized Participant must (i) be a registered broker-dealer and (ii) enter into an agreement with the Sponsor and Transfer Agent that provides the procedures for the creation and redemption of Baskets and for the delivery of Ether required for the creation and redemption of Baskets via a Liquidity Provider (each, a “Participant Agreement”). An Authorized Participant may act for its own account or as agent for broker-dealers, custodians and other securities market participants that wish to create or redeem Baskets. Shareholders who are not Authorized Participants will only be able to create or redeem their Shares through an Authorized Participant.
The Trust issues Shares to and redeems Shares from Authorized Participants on an ongoing basis, but only in one or more “Baskets” (with a Basket being a block of 10,000 Shares). The Trust will not issue fractions of a Basket.
The creation and redemption of Baskets will be made only in exchange for the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional Ether represented by each Basket being created or redeemed, which is determined by dividing (x) the number of Ether owned by the Trust at 4:00 p.m., New York time, on the trade date of a creation or redemption order, after deducting the number of Ether representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one Ether (
The creation of Baskets requires the delivery by the Authorized Participant of the Total Basket Amount and the redemption of Baskets requires the distribution to the Authorized Participant of the Total Basket Amount.
Although the Trust creates Baskets only upon the receipt of Ether, and redeems Baskets only by distributing Ether, an Authorized Participant will submit Cash Orders, pursuant to which the Authorized Participant will deposit cash with, or accept cash from, the Transfer Agent in connection with the creation and redemption of Baskets.
Cash Orders will be facilitated by the Transfer Agent and Liquidity Engager, acting other than in its capacity as Sponsor. On an order-by-order basis, the Liquidity Engager will engage one or more Liquidity Providers to obtain or receive Ether in exchange for cash in connection with such order, as described in more detail below.
Unless the Sponsor requires that a Cash Order be effected at actual execution prices (an “Actual Execution Cash Order”),
Alternatively, the Sponsor may require that a Cash Order be effected as an Actual Execution Cash Order, in its sole discretion based on market conditions and other factors existing at the time of such Cash Order, and under such circumstances, any price differential of Ether between the trade date and the settlement date will be borne solely by the Authorized Participant until such Ether have been received or liquidated by the Trust.
In the case of creations, to transfer the Total Basket Amount to the Trust's Digital Asset Account, the Liquidity Provider will transfer Ether to one of the public key addresses associated with the Digital Asset Account and as provided by the Sponsor. In the case of redemptions, the same procedure is conducted, but in reverse, using the public key addresses associated with the wallet of the Liquidity Provider and as provided by such party. All such transactions will be conducted on the Blockchain and parties acknowledge and agree that such transfers may be irreversible if done incorrectly.
Authorized Participants do not pay a transaction fee to the Trust in connection with the creation or redemption of Baskets, but there may be transaction fees associated with the validation of the transfer of Ether by the Ethereum Network, which will be paid by the Custodian in the case of redemptions and the Authorized Participant or the Liquidity Provider in the case of creations. Service providers may charge Authorized Participants administrative fees for order placement and other services related to creation of Baskets. As discussed above, Authorized Participants will also pay the Variable Fee in connection with Variable Fee Cash Orders. Under certain circumstances Authorized Participants may also be required to deposit additional cash in the Cash Account, or be entitled to receive excess cash from the Cash Account, in connection with creations and redemptions pursuant to Actual Execution Cash Orders. Authorized Participants will receive no fees, commissions or other form of compensation or inducement of any kind from either the Sponsor or the Trust and no such person has any obligation or responsibility to the Sponsor or the Trust to effect any sale or resale of Shares.
The following is a summary of the procedures for the creation and redemption of Baskets.
On any business day, an Authorized Participant may place an order with the Transfer Agent to create one or more Baskets.
Cash Orders for creation must be placed with the Transfer Agent no later than 1:59:59 p.m., New York time.
The Sponsor may in its sole discretion limit the number of Shares created pursuant to Cash Orders on any specified day without notice to the Authorized Participants and may direct the Marketing Agent to reject any Cash Orders in excess of such capped amount. In exercising its discretion to limit the number of Shares created pursuant to Cash Orders, the Sponsor expects to take into consideration a number of factors, including the availability of Liquidity Providers to facilitate Cash Orders and the cost of processing Cash Orders.
Creations under Cash Orders will take place as follows, where “T” is the trade date and each day in the sequence must be a business day. Before a creation order is placed, the Sponsor determines if such creation order will be a Variable Fee Cash Order or an Actual Execution Cash Order, which determination is communicated to the Authorized Participant.
The procedures by which an Authorized Participant can redeem one or more Baskets mirror the procedures for the creation of Baskets. On any business day, an Authorized Participant may place a redemption order specifying the number of Baskets to be redeemed.
The redemption of Shares pursuant to Cash Orders will only take place if approved by the Sponsor in writing, in its sole discretion and on a case-by-case basis. In exercising its discretion to approve the redemption of Shares pursuant to Cash Orders, the Sponsor expects to take into consideration a number of factors, including the availability of Liquidity Providers to facilitate Cash Orders and the cost of processing Cash Orders
Cash Orders for redemption must be placed no later than 1:59:59 p.m., New York time on each business day. The Authorized Participants may only redeem Baskets and cannot redeem any Shares in an amount less than a Basket.
Redemptions under Cash Orders will take place as follows, where “T” is the trade date and each day in the sequence must be a business day. Before a redemption order is placed, the Sponsor determines if such redemption order will be a Variable Fee Cash Order or an Actual Execution Cash Order, which determination is communicated to the Authorized Participant.
The creation or redemption of Shares may be suspended generally, or refused with respect to particular requested creations or redemptions, during any period when the transfer books of the Transfer Agent are closed or if circumstances outside the control of the Sponsor or its delegates make it for all practicable purposes not feasible to process creation orders or redemption orders or for any other reason at any time or from time to time.
The Trust's website (
One or more major market data vendors, will provide an intra-day indicative value (“IIV”) per Share updated every 15 seconds, as calculated by the Exchange or a third party financial data provider during the Exchange's Core Trading Session (9:30 a.m. to 4:00 p.m., E.T.). The IIV will be calculated using the same methodology as the NAV per Share of the Trust (as described above), specifically by using the prior day's closing NAV per Share as a base and updating that value during the NYSE Arca Core Trading Session to reflect changes in the value of the Index during the trading day.
The IIV disseminated during the NYSE Arca Core Trading Session should not be viewed as an actual real-time update of the NAV per Share, which will be calculated only once at the end of each trading day. The IIV will be widely disseminated on a per Share basis every 15 seconds during the NYSE Arca Core Trading Session by one or more major market data vendors. In addition, the IIV will be available through on-line information services.
The NAV for the Trust will be calculated by the Sponsor once a day and will be disseminated daily to all
Quotation and last sale information for Ether will be widely disseminated through a variety of major market data vendors, including Bloomberg and Reuters. In addition, real-time price (and volume) data for Ether is available by subscription from Reuters and Bloomberg. The spot price of Ether is available on a 24-hour basis from major market data vendors, including Bloomberg and Reuters. Information relating to trading, including price and volume information, in Ether will be available from major market data vendors and from the trading platforms on which Ether are traded. The normal trading hours for Digital Asset Trading Platforms are 24-hours per day, 365-days per year.
On each business day, the Sponsor will publish the Index Price, the Trust's NAV, and the NAV per Share on the Trust's website as soon as practicable after its determination. If the NAV and NAV per Share have been calculated using a price per Ether other than the Index Price for such Evaluation Time, the publication on the Trust's website will note the valuation methodology used and the price per Ether resulting from such calculation.
The Trust will provide website disclosure of its NAV daily. The website disclosure of the Trust's NAV will occur at the same time as the disclosure by the Sponsor of the NAV to Authorized Participants so that all market participants are provided such portfolio information at the same time. Therefore, the same portfolio information will be provided on the public website as well as in electronic files provided to Authorized Participants. Accordingly, each investor will have access to the current NAV of the Trust through the Trust's website, as well as from one or more major market data vendors.
The value of the Index, as well as additional information regarding the Index, will be available on a continuous basis at
Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services.
Information regarding the previous day's closing price and trading volume information for the Shares will be published daily in the financial section of newspapers.
The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. Shares will trade on the NYSE Arca Marketplace from 4:00 a.m. to 8:00 p.m., E.T. in accordance with NYSE Arca Rule 7.34-E (Early, Core, and Late Trading Sessions). The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in NYSE Arca Rule 7.6-E, the minimum price variation (“MPV”) for quoting and entry of orders in equity securities traded on the NYSE Arca Marketplace is $0.01, with the exception of securities that are priced less than $1.00, for which the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing criteria under NYSE Arca Rule 8.201-E. The trading of the Shares will be subject to NYSE Arca Rule 8.201-E(g), which sets forth certain restrictions on Equity Trading Permit Holders (“ETP Holders”) acting as registered Market Makers in Commodity-Based Trust Shares to facilitate surveillance. The Exchange represents that, for initial and continued listing, the Trust will be in compliance with Rule 10A-3
With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Trust.
The Exchange may halt trading during the day in which an interruption to the dissemination of the IIV or the value of the Index occurs. If the interruption to the dissemination of the IIV or the value of the Index persists past the trading day in which it occurred, the Exchange will halt trading no later than the beginning of the trading day following the interruption. In addition, if the Exchange becomes aware that the NAV per Share is not disseminated to all market participants at the same time, it will halt trading in the Shares until such time as the NAV per Share is available to all market participants.
The Exchange represents that trading in the Shares of the Trust will be subject to the existing trading surveillances administered by the Exchange, as well as cross-market surveillances administered by FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in the Shares and Ether derivatives from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and Ether derivatives from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement (“CSSA”).
In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees.
All statements and representations made in this filing regarding (a) the description of the index, portfolio, or reference assets of the Trust, (b) limitations on index or portfolio holdings or reference assets, or (c) the applicability of Exchange listing rules specified in this rule filing shall constitute continued listing requirements for listing the Shares on the Exchange.
The Sponsor has represented to the Exchange that it will advise the Exchange of any failure by the Trust to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If the Trust is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Rule 5.5-E(m).
Prior to the commencement of trading, the Exchange will inform its ETP Holders in an “Information Bulletin” of the special characteristics and risks associated with trading the Shares. Specifically, the Information Bulletin will discuss the following: (1) the procedures for creations of Shares in Baskets; (2) NYSE Arca Rule 9.2-E(a), which imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading the Shares; (3) information regarding how the value of the Index and NAV are disseminated; (4) the possibility that trading spreads and the resulting premium or discount on the Shares may widen during the Opening and Late Trading Sessions, when an updated IIV will not be calculated or publicly disseminated; (5) the requirement that members deliver a prospectus to investors purchasing newly issues Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information. The Exchange notes that investors purchasing Shares directly from the Trust will receive a prospectus.
In addition, the Information Bulletin will reference that the Trust is subject to various fees and expenses as described in the Registration Statement. The Information Bulletin will disclose that information about the Shares of the Trust is publicly available on the Trust's website.
The Information Bulletin will also discuss any relief, if granted, by the Commission or the staff from any rules under the Act.
The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5)
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Rule 8.201-E. The Exchange has in place surveillance procedures that are adequate to properly monitor trading in the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares with other markets that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in the Shares from such markets. In addition, the Exchange may obtain information regarding trading in the Shares from markets that are members of ISG or with which the Exchange has in place a CSSA. Also, pursuant to NYSE Arca Rule 8.201-E(g), the Exchange is able to obtain information regarding trading in the Shares and the underlying Ether or any Ether derivative through ETP Holders acting as registered Market Makers, in connection with such ETP Holders' proprietary trades which they effect on any relevant market.
The proposed rule change is also designed to prevent fraudulent and manipulative acts and practices because, although the Digital Asset Trading Platform Market is not inherently resistant to fraud and manipulation, the Index serves as a means sufficient to mitigate the impact of instances of fraud and manipulation on a reference price for Ether. Specifically, the Index provides a better benchmark for the price of Ether than the Digital Asset Trading Platform Market price because it (1) tracks the Digital Asset Trading Platform Market price through trading activity at U.S.-Compliant Trading Platforms; (2) mitigates the impact of instances of fraud, manipulation and other anomalous trading activity in real-time through systematic adjustments; (3) is constructed and maintained by an expert third-party index provider, allowing for prudent handling of non-market-related events; and (4) mitigates the impact of instances of fraud, manipulation and other anomalous trading activity concentrated on any one specific trading platform through a cross-trading platform composite index rate. ETHE has used the Index to price the Shares for more than six years, and the Index has proven its ability to (i) mitigate the effects of fraud, manipulation and other anomalous trading activity from impacting the Ether reference rate, (ii) provide a real-time, volume-weighted fair value of Ether and (iii) appropriately handle and adjust for non-market related events, such that efforts to manipulate the price of Ether would have had a negligible
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that there is a considerable amount of Ether price and market information available on public websites and through professional and subscription services. Investors may obtain, on a 24-hour basis, Ether pricing information based on the spot price for Ether from various financial information service providers. The closing price and settlement prices of Ether are readily available from the Digital Asset Trading Platforms and other publicly available websites. In addition, such prices are published in public sources, or on-line information services such as Bloomberg and Reuters. The NAV per Share will be calculated daily and made available to all market participants at the same time. The Trust will provide website disclosure of its NAV daily. One or more major market data vendors will disseminate for the Trust on a daily basis information with respect to the most recent NAV per Share and Shares outstanding. In addition, if the Exchange becomes aware that the NAV per Share is not disseminated to all market participants at the same time, it will halt trading in the Shares until such time as the NAV is available to all market participants. Quotation and last-sale information regarding the Shares will be disseminated through the facilities of the CTA. The IIV will be widely disseminated on a per Share basis every 15 seconds during the NYSE Arca Core Trading Session (normally 9:30 a.m., E.T., to 4:00 p.m., E.T.) by one or more major market data vendors. The Exchange represents that the Exchange may halt trading during the day in which an interruption to the dissemination of the IIV or the value of the Index occurs. If the interruption to the dissemination of the IIV or the value of the Index persists past the trading day in which it occurred, the Exchange will halt trading no later than the beginning of the trading day following the interruption.
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a CSSA. In addition, as noted above, investors will have ready access to information regarding the Trust's NAV, IIV, and quotation and last sale information for the Shares.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed rule change will facilitate the listing and trading of an additional type of exchange-traded product, which will enhance competition among market participants, to the benefit of investors and the marketplace.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to toestablish fees for the NYSE Arca Aggregated Lite data feed. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend the NYSE Arca Equities Proprietary Market Data Fees Schedule (“Fee Schedule”) and establish fees for the NYSE Arca Aggregated Lite (“NYSE Arca Agg Lite”) data feed that would be effective May 13, 2024.
In summary, the NYSE Arca Agg Lite is a NYSE Arca-only frequency-based depth of book market data feed of the NYSE Arca's limit order book for up to ten (10) price levels on both the bid and offer sides of the order book for securities traded on the Exchange and for which the Exchange reports quotes and trades under the Consolidated Tape Association (“CTA”) Plan or the Nasdaq/UTP Plan. The NYSE Arca Agg Lite is a compilation of limit order data that the Exchange provides to vendors and subscribers. The NYSE Arca Agg Lite includes depth of book order data as well as security status messages. The security status message informs subscribers of changes in the status of a specific security, such as trading halts, short sale restriction, etc. In addition, the NYSE Arca Agg Lite includes order imbalance information prior to the opening and closing of trading.
The Exchange operates in a highly competitive market. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
While Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.”
To reflect the value of NYSE Arca's market data, the Exchange proposes to establish the fees listed below for the NYSE Arca Agg Lite data feed, operative on May 13, 2024. The Exchange proposes to charge fees for the same categories of market data use as its affiliated exchanges (namely, NYSE, NYSE American and NYSE National) currently charge. The Exchange believes that adopting the same fee structure as its affiliated exchanges would reduce administrative burdens on market data subscribers that also currently subscribe to market data feeds from the Exchange's affiliates.
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By targeting this proposed fee waiver to Redistributors that provide external distribution of NYSE Arca Agg Lite, the Exchange believes that this would provide an incentive for Redistributors to make the NYSE Arca Agg Lite market data product available to its customers. Specifically, if a data recipient is interested in subscribing to NYSE Arca Agg Lite and relies on a Redistributor to obtain market data products from the Exchange, that data recipient would need its Redistributor to subscribe to and redistribute NYSE Arca Agg Lite. The Exchange believes that this proposed fee waiver for Redistributors of NYSE Arca Agg Lite would provide an incentive for Redistributors to make NYSE Arca Agg Lite available to their customers, which will increase the availability of the Exchange's market data products to a larger potential population of data recipients.
Further, the Exchange proposes to adopt a credit that would be applicable to Redistributors that provide external distribution of NYSE Arca Agg Lite to Professional and Non-Professional Users. As proposed, such Redistributors would receive a credit equal to the amount of the monthly Professional User and Non-Professional User Fees for such external distribution, up to a maximum of the combination of the Access Fee and Redistribution Fee for NYSE Arca Agg Lite that the Redistributor would otherwise be required to pay to the Exchange. For example, a Redistributor that reports external Professional Users and Non-Professional Users in a month totaling $1,750 or more would receive a maximum credit of $1,750 for that month, which could effectively reduce its monthly fee for access and redistribution to zero. If that same Redistributor were to report external User quantities in a month totaling $600 of monthly usage, that Redistributor would receive a credit of $600. The Exchange believes the proposed credit would provide Redistributors with an incentive to increase their redistribution of NYSE Arca Agg Lite because the credit they would be eligible to receive would increase if they report additional external User quantities.
The Exchange proposes to establish an enterprise license that will reduce Exchange fees and administrative costs for subscribers that disseminate NYSE Arca Agg Lite. Subscribers that are broker-dealers will be able to distribute the NYSE Arca Agg Lite data feed for display usage to an unlimited number of non-professional users for a monthly fee of $35,000, with an opportunity to lower that fee to $31,500 per month if they contract for twelve months of service in advance. Alternatively, subscribers that are broker-dealers will be able to distribute the NYSE Arca Agg Lite data feed for display usage to an unlimited number of recipients (professional users and non-professional users) for a monthly fee of $110,000, with an opportunity to lower that fee to $99,000 per month if they contract for twelve months of service in advance.
As proposed, the NYSE Arca Agg Lite data feed may be distributed pursuant to the proposed market data enterprise license only for display usage and in the context of a brokerage relationship with a broker-dealer through such broker-dealer's own devices. Purchase of an enterprise license would eliminate per User subscriber fees for NYSE Arca Agg Lite. Further, the Exchange proposes to waive the Access Fee and the Redistribution Fee for NYSE Arca Agg lite for Redistributors that pay either the Non-Professional Enterprise Fee or the Professional and Non-Professional Enterprise Fee. The Exchange believes the proposed fee waiver would provide an incentive for Redistributors to subscribe to the NYSE Arca Agg Lite market data product at the enterprise level to reduce the fees it would pay to the Exchange and without having to report the number of users that receive the data feed from the Redistributor.
Subscribers that intend to purchase a market data enterprise license for at least twelve months may elect to purchase this product in advance for a monthly fee of $31,500 for distribution of NYSE Arca Agg Lite to an unlimited number of non-professional users, or $99,000 per month for distribution to an unlimited number of professional users and non-professional users. This feature is intended to simplify cost projections and budgeting for both subscribers and the Exchange. Subscribers that elect not to purchase this particular feature will nevertheless be able to obtain all of the market data information offered by NYSE Arca Agg Lite by paying the standard fee of $35,000 per month for distribution of NYSE Arca Agg Lite to an unlimited number of non-professional users, or $110,000 per month for distribution to an unlimited number of professional users and non-professional users. Subscribers that elect to pay the monthly fee will be able to switch to the annual fee at any time, and those that elect to purchase the annual contract would be able to change to the monthly contract, with notice, at the end of the twelve-month period.
The Exchange believes that the proposed market data enterprise license will reduce exchange fees, lower administrative costs for subscribers, and help expand the availability of market information to investors, and thereby increase participation in financial markets.
The Exchange proposes to establish non-display fees for the NYSE Arca Agg Lite data feed that are based on the non-display use categories charged by NYSE, NYSE American, NYSE National, the CTA, and the UTP Plan for non-display use.
Under the proposal, for Non-Display Use of NYSE Arca Agg Lite, there would be three categories of, and fees applicable, to, data recipients. One, two, or three categories of Non-Display Use may apply to a data recipient.
• As proposed, the Category 1 Fee would be $4,500 per month and would apply when a data recipient's Non-Display Use of the NYSE Arca Agg Lite data feed is on its own behalf, not on behalf of its clients.
• As proposed, Category 2 Fees would be $4,500 per month and would apply to a data recipient's Non-Display Use of the NYSE Arca Agg Lite data feed on behalf of its clients.
• As proposed, Category 3 Fees would be $4,500 per month and would apply to a data recipient's Non-Display Use of the NYSE Arca Agg Lite data feed for the purpose of internally matching buy and sell orders within an organization, including matching customer orders for a data recipient's own behalf and/or on behalf of its clients. This category would apply to Non-Display Use in trading platforms, such as, but not restricted to, alternative trading systems (“ATSs”), broker crossing networks, broker crossing systems not filed as ATSs, dark pools, multilateral trading facilities, exchanges and systematic internalization systems. A data recipient will be charged $4,500 per month for each platform on which it uses the Non-Display data internally to match buy and sell orders, up to a cap of $13,500 per month; even if the data recipient uses the NYSE Arca Agg Lite data feed for more than three platforms, it will not pay more than $13,500 for such Category 3 use per month.
The description of the three non-display use categories is set forth in the Fee Schedule in endnote 1 and that endnote would be referenced in the NYSE Arca Agg Lite data feed fees on the Fee Schedule. The text in the endnote would remain unchanged.
Data recipients that receive the NYSE Arca Agg Lite data feed for Non-Display Use would be required to complete and submit a Non-Display Use Declaration before they would be authorized to receive the feed. A firm subject to Category 3 Fees would be required to identify each platform that uses the NYSE Arca Agg Lite data feed for a Category 3 Non-Display Use basis, such as ATSs and broker crossing systems not registered as ATSs, as part of the Non-Display Use Declaration.
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The proposed Non-Display Use Declaration Late Fee applicable to NYSE Arca Agg Lite data feed would be set forth in endnote 2 on the Fee Schedule. As proposed, endnote 2 would be amended with the proposed addition of the following new text: “The Non-Display Declaration Late Fee will apply, beginning in 2025, to NYSE Arca Aggregated Lite data recipients that fail to complete and submit the annual Non-Display Use Declaration by the January 31st due date, and applies beginning February 1st and for each month thereafter until the data recipient has completed and submitted the annual Non-Display Use Declaration.”
In addition, if a data recipient's use of the NYSE Arca Agg Lite data feed changes at any time after the data recipient submits a Non-Display Use Declaration, the data recipient must inform the Exchange of the change by completing and submitting at the time of the change an updated declaration reflecting the change of use.
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The Exchange believes that providing a three-month fee waiver to NYSE Arca market data products listed on the Fee Schedule would enable potential Redistributors to determine whether a particular NYSE Arca market data product provides value to their business models before fully committing to expend development and implementation costs related to the receipt of that product, and is intended to encourage increased use of the Exchange's market data products by defraying some of the development and implementation costs Redistributors would ordinarily have to expend before using a product. The proposed three-month fee waiver would also provide Redistributors with time to begin onboarding new clients prior to being liable to the Access Fee and the Redistribution Fee, allowing time to choose how to allocate costs and increase revenues to defray costs associated with providing a new feed to its customers.
The Exchange is not required to make the NYSE Arca Agg Lite data feed available or to offer any specific pricing alternatives to any customers, nor is any firm required to purchase the NYSE Arca Agg Lite data feed. Firms that choose to purchase the NYSE Arca Agg Lite data feed do so for the primary goals of using it to increase their revenues, reduce their expenses, and in some instances to compete directly with the Exchange (including for order flow). Those firms are able to determine for themselves whether or not the NYSE Arca Agg Lite data feed or any other similar products are attractively priced.
The Exchange believes that subscribers would use the price level detail information available in the NYSE Arca Agg Lite data feed to make trading decisions that directly benefit the transaction services that the Exchange offers. The Exchange determined the level of the fees to charge for the NYSE Arca Agg Lite data feed based on the value of the Exchange's transaction services.
The Exchange believes the proposed rule change would provide an incentive both for data subscribers to subscribe to NYSE Arca Agg Lite and for Redistributors to subscribe to the product for purposes of providing external distribution of NYSE Arca Agg Lite. The Exchange believes that this proposed rule change also has the potential to attract new Redistributors for NYSE Arca Agg Lite.
The proposed fee structure is not novel as it is based on the fee structure currently in place for the NYSE ArcaBook feed. The Exchange is proposing fees for the NYSE Arca Agg Lite data feed that are based on the existing fee structure and rates that data recipients already pay for the NYSE ArcaBook feed. Specifically, the fees for the NYSE ArcaBook feed—which like the NYSE Arca Agg Lite data feed, includes depth of book, auction imbalances, and security status messages—consist of an Access Fee of $2,000 per month, a Professional User Fee (Per User) of $60 per month, a Non-Professional User Fee (Per User) that ranges between $3 per month to $10 per month, Non-Display Fees of $6,000 per month for each of Categories 1, 2 and 3, and a Redistribution Fee of $2,000 per month. The Exchange also charges a Non-Display Use Declaration Late Fee of $1,000 per month and a Multiple Data Feed Fee of $200 per month for NYSE ArcaBook.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
In adopting Regulation NMS, the Commission granted SROs and broker-dealers increased authority and flexibility to offer new and unique market data to the public. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues, and also recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
With respect to market data, the decision of the United States Court of Appeals for the District of Columbia Circuit in
In fact, the legislative history indicates that the Congress intended that the market system “evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed” and that the SEC wield its regulatory power “in those situations where competition may not be sufficient,” such as in the creation of a “consolidated transactional reporting system.”
The court agreed with the Commission's conclusion that “Congress intended that `competitive forces should dictate the services and practices that constitute the U.S. national market system for trading equity securities.' ”
More recently, the Commission confirmed that it applies a “market-based” test in its assessment of market data fees, and that under that test:
An exchange may demonstrate that its fees are constrained by competitive forces by showing that platform competition applies.
As the United States Supreme Court recognized in
To ensure sufficient participation, two-sided platforms must be sensitive to the prices that they charge each side. . . . Raising the price on side A risks losing participation on that side, which decreases the value of the platform to side B. If the participants on side B leave due to this loss in value, then the platform has even less value to side A—risking a feedback loop of declining demand. . . . Two-sided platforms therefore must take these indirect network effects into account before making a change in price on either side.
The Exchange and its affiliated exchanges have long maintained that they function as platforms between consumers of market data and consumers of trading services. Proving the existence of linkages between the two sides of this platform requires an in-depth economic analysis of both public data and confidential exchange data about particular customers' trading activities and market data purchases. Exchanges, however, are prohibited from publicly sharing details about these specific customer activities and purchases. For example, pursuant to Exchange Rule 7.41-E, transactions executed on the Exchange are processed anonymously.
Exchanges function as platforms for market data and transaction services mean that exchanges do not set fees for market data products without considering, and being constrained by, the effect the fees will have on the order-flow side of the platform. As the D.C. Circuit recognized in
As noted above, while Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.”
Further, low barriers to entry mean that new exchanges may rapidly and inexpensively enter the market and offer additional substitute platforms to compete with the Exchange. For example, since 2020, three new ones have entered the market: Long Term Stock Exchange (LTSE), which began operations as an exchange on August 28, 2020;
These low barriers enable existing exchange customers to disintermediate and start their own exchanges if they think the prices charged for exchange proprietary market data products are too high. This is precisely the rationale behind the creation of MEMX, which was formed by some of the largest and most well capitalized financial firms that are also Exchange customers (including Bank of America, BlackRock, Charles Schwab, Citadel, Citi, E*Trade, Fidelity, Goldman Sachs, J.P. Morgan, Jane Street, Morgan Stanley, TD Ameritrade, and others).
For example, one of MEMX's founding principles is that exchange proprietary market data prices are too high, and that MEMX will benefit its members by offering “[l]ower pricing on market data.”
The fact that this cycle is viable and repeatable by entities that both trade on and compete with existing exchanges confirms that barriers to entry are low and that these markets are competitive and contestable.
In sum, the fierce competition for order flow thus constrains any exchange from pricing its market data at a supracompetitive price and constrains the Exchange in setting its fees at issue here.
The proposed fees are therefore reasonable because in setting them, the Exchange is constrained by the availability of numerous substitute platforms offering market data products and trading. Such substitutes need not be identical, but only substantially similar to the product at hand.
More specifically, in setting fees for the NYSE Arca Agg Lite data feed, the Exchange is constrained by the fact that, if its pricing across the platform is unattractive to customers, customers have their pick of an increasing number of alternative platforms to use instead of the Exchange. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish reasonable fees. The existence of numerous alternative platforms to the Exchange's platform ensures that the Exchange cannot set unreasonable market data fees without suffering the negative effects of that decision in the fiercely competitive market for trading order flow.
Subscribing to the NYSE Arca Agg Lite is entirely optional. The Exchange is not required to make the NYSE Arca Agg Lite available to any customers, nor is any customer required to purchase the NYSE Arca Agg Lite market data feed. Unlike some other data products (
Further, in the case of products that are also redistributed through market data vendors such as Bloomberg and Refinitiv, the vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Vendors may elect not to make NYSE Arca Agg Lite available to its customers unless their customers request it, and customers will not elect to pay the proposed fees unless NYSE Arca Agg Lite can provide value by sufficiently increasing revenues or reducing costs in the customer's business in a manner that will offset the fees. All of these factors operate as constraints on pricing proprietary data products.
In setting the proposed fees for the NYSE Arca Agg Lite data feed, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition.
Even putting aside the facts that exchanges are platforms and that pricing decisions on the two sides of the platform are intertwined, the Exchange is constrained in setting the proposed market data fees by the availability of numerous substitute market data products. The Commission has been clear that substitute products need not be identical, but only substantially similar to the product at hand.
The NYSE Arca Aggregated Lite market data feed is subject to significant competitive forces that constrain its pricing. Specifically, the NYSE Arca Agg Lite data feed competes head-to-head with similar market data products currently offered by the four U.S. equities exchanges operated by Cboe Exchange, Inc.—Cboe BZX Exchange, Inc. (“BZX”), Cboe BYX Exchange, Inc. (“BYX”), Cboe EDGA Exchange, Inc. (“EDGA”), and Cboe EDGX Exchange, Inc. (“EDGX”), each of which offers a market data product called BZX Summary Depth, BYX Summary Depth, EDGA Summary Depth and EDGX Summary Depth, respectively (collectively, the “Cboe Summary Depth”).
The specific fees that the Exchange proposes for the NYSE Arca Agg Lite data feed are reasonable for the following additional reasons.
The Exchange believes the proposed fees for the NYSE Arca Agg Lite data feed are also reasonable when compared to fees for comparable products, such as the Cboe Summary Depth.
The Exchange believes that the proposed Non-Display Use fees reflect the significant value of the non-display data use to data recipients, which purchase such data on an entirely voluntary basis. Non-display data can be used by data recipients for a wide variety of profit-generating purposes, including proprietary and agency trading and smart order routing, as well as by data recipients that operate order matching and execution platforms that compete directly with the Exchange for order flow. The data also can be used for a variety of non-trading purposes that indirectly support trading, such as risk management and compliance. Although some of these non-trading uses do not directly generate revenues, they can nonetheless substantially reduce a recipient's costs by automating such functions so that they can be carried out in a more efficient and accurate manner and reduce errors and labor costs, thereby benefiting recipients. The Exchange believes that charging for non-trading uses is reasonable because data recipients can derive substantial value from such uses, for example, by automating tasks so that can be performed more quickly and accurately and less expensively than if they were performed manually.
Previously, the non-display use data pricing policies of many exchanges required customers to count, and the exchanges to audit the count of, the number of non-display devices used by a customer. As non-display use grew more prevalent and varied, however, exchanges received an increasing number of complaints about the impracticality and administrative burden associated with that approach. In response, the Exchange and its affiliated exchanges developed a non-display use pricing structure that does not require non-display devices to be counted or those counts to be audited, and instead looks merely at the three following categories of potential use of non-display data: use of the data on the customer's own behalf (Category 1), use
The Exchange believes that it is reasonable to segment the fee for non-display use into these three categories. As noted above, the uses to which customers can put the NYSE Arca Agg Lite data feed are numerous and varied, and the Exchange believes that charging separate fees for these separate categories of use is reasonable because it reflects the actual value the customer derives from the data, based upon how many categories of use the customer makes of the data. Segmenting the fees for non-display data in this way avoids the unreasonable result of customers that make only limited non-display use of the data paying the same fees as customers that use the data for numerous different revenue-generating and cost-saving purposes.
The Exchange believes that the proposed fees of $4,500 per month for each of Categories 1, 2, and 3 is reasonable. These fees are comparable to non-display use fees generally charged by exchanges. For example, the fees for Non-Display Use of NYSE ArcaBook for Categories 1, 2 and 3 is $6,000 per month.
The Exchange also believes that, regarding Category 3 fees, it is reasonable to charge $4,500 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is reasonable to cap such fees for Category 3 use at $13,500 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE Arca Agg Lite data feed for use by their trading platforms.
The proposed Non-Display Use fees for the NYSE Arca Agg Lite data feed are also reasonable because they take into account the extra value of receiving the data for Non-Display Use on an integrated basis. The Exchange believes that the proposed fees directly and appropriately reflect the significant value of using the NYSE Arca Agg Lite data feed on a non-display basis in a wide range of computer-automated functions relating to both trading and non-trading activities and that the number and range of these functions continue to grow through innovation and technology developments.
The Exchange believes that it is reasonable to impose a late fee in connection with the submission of the Non-Display Use Declaration. In order to correctly assess fees for the non-display use of the NYSE Arca Agg Lite data feed, the Exchange needs to have current and accurate information about the use of the NYSE Arca Agg Lite data feed. The failure of data recipients to submit the Non-Display Use Declaration on time leads to potentially incorrect billing and administrative burdens, including tracking and obtaining late Non-Display Use Declarations and correcting and following up on payments owed in connection with late Non-Display Use Declarations. The purpose of the late fee is to incent data recipients to submit the Non-Display Use Declaration promptly to avoid the administrative burdens associated with the late submission of Non-Display Use Declarations.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE Arca Agg Lite data feed are reasonable.
The Exchange believes the proposed fees for the NYSE Arca Agg Lite data feed are allocated fairly and equitably among the various categories of users of the feed, and any differences among categories of users are justified.
The Exchange also believes that, regarding Category 3 fees, it is equitable to charge $4,500 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is equitable to cap such fees for Category 3 use at $13,500 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE Arca Agg Lite data feed for use by their trading platforms.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE Arca Agg Lite data feed are equitably allocated.
The Exchange believes the proposed fees for the NYSE Arca Agg Lite data feed are not unfairly discriminatory because any differences in the
The Exchange also believes that, regarding Category 3 fees, it is not unreasonably discriminatory to charge $4,500 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is not unreasonably discriminatory to cap such fees for Category 3 use at $13,500 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE Arca Agg Lite data feed for use by their trading platforms.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE Arca Agg Lite data feed are not unfairly discriminatory.
The Exchange does not believe that the proposed fees will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange also believes that the proposed fees neither favor nor penalize one or more categories of market participants in a manner that would impose an undue market on competition. As shown above, to the extent that particular proposed fees apply to only a subset of subscribers (
In addition, the Exchange believes that the proposed fees do not impose a burden on competition or on other exchanges that is not necessary or appropriate because of the availability of numerous substitute market data products. Many other exchanges offer proprietary data feeds like the NYSE Arca Agg Lite data feed, supplying depth of book order data, security status updates, stock summary messages, and the exchange's best bid and offer at any given time, on a real-time basis. Because market data users can find suitable substitute feeds, an exchange that overprices its market data products stands a high risk that users may substitute another platform, in which case the platform would stand to lose both market data and trading fees. These competitive pressures ensure that no one exchange's market data fees can impose an unnecessary burden on competition, and the Exchange's proposed fees do not do so here.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to establish fees for the NYSE Aggregated Lite data feed. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend the NYSE Proprietary Market Data Fees Schedule (“Fee Schedule”) and establish fees for the NYSE Aggregated Lite (“NYSE Agg Lite”) data feed that would be effective May 13, 2024.
In summary, the NYSE Agg Lite is a NYSE-only frequency-based depth of book market data feed of the NYSE's limit order book for up to ten (10) price levels on both the bid and offer sides of the order book for securities traded on the Exchange and for which the Exchange reports quotes and trades under the Consolidated Tape Association (“CTA”) Plan or the Nasdaq/UTP Plan. The NYSE Agg Lite is a compilation of limit order data that the Exchange provides to vendors and subscribers. The NYSE Agg Lite includes depth of book order data as well as security status messages. The security status message informs subscribers of changes in the status of a specific security, such as trading halts, short sale restriction, etc. In addition, the NYSE Agg Lite includes order imbalance information prior to the opening and closing of trading.
The Exchange operates in a highly competitive market. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
While Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.”
To reflect the value of NYSE's market data, the Exchange proposes to establish the fees listed below for the NYSE Agg Lite data feed, operative on May 13, 2024. The Exchange proposes to charge fees for the same categories of market
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3.
By targeting this proposed fee waiver to Redistributors that provide external distribution of NYSE Agg Lite, the Exchange believes that this would provide an incentive for Redistributors to make the NYSE Agg Lite market data product available to its customers. Specifically, if a data recipient is interested in subscribing to NYSE Agg Lite and relies on a Redistributor to obtain market data products from the Exchange, that data recipient would need its Redistributor to subscribe to and redistribute NYSE Agg Lite. The Exchange believes that this proposed fee waiver for Redistributors of NYSE Agg Lite would provide an incentive for Redistributors to make NYSE Agg Lite available to their customers, which will increase the availability of the Exchange's market data products to a larger potential population of data recipients.
Further, the Exchange proposes to adopt a credit that would be applicable to Redistributors that provide external distribution of NYSE Agg Lite to Professional and Non-Professional Users. As proposed, such Redistributors would receive a credit equal to the amount of the monthly Professional User and Non-Professional User Fees for such external distribution, up to a maximum of the combination of the Access Fee and Redistribution Fee for NYSE Agg Lite that the Redistributor would otherwise be required to pay to the Exchange. For example, a Redistributor that reports external Professional Users and Non-Professional Users in a month totaling $3,250 or more would receive a maximum credit of $3,250 for that month, which could effectively reduce its monthly fee for access and redistribution to zero. If that same Redistributor were to report external User quantities in a month totaling $600 of monthly usage, that Redistributor would receive a credit of $600. The Exchange believes the proposed credit would provide Redistributors with an incentive to increase their redistribution of NYSE Agg Lite because the credit they would be eligible to receive would increase if they report additional external User quantities.
The Exchange proposes to establish an enterprise license that will reduce Exchange fees and administrative costs for subscribers that disseminate NYSE Agg Lite. Subscribers that are broker-dealers will be able to distribute the NYSE Agg Lite data feed for display usage to an unlimited number of non-professional users for a monthly fee of $20,000, with an opportunity to lower that fee to $18,000 per month if they contract for twelve months of service in advance. Alternatively, subscribers that are broker-dealers will be able to distribute the NYSE Agg Lite data feed for display usage to an unlimited number of recipients (professional users and non-professional users) for a monthly fee of $25,000, with an opportunity to lower that fee to $22,500 per month if they contract for twelve months of service in advance.
As proposed, the NYSE Agg Lite data feed may be distributed pursuant to the proposed market data enterprise license only for display usage and in the context of a brokerage relationship with a broker-dealer through such broker-dealer's own devices. Purchase of an enterprise license would eliminate per User subscriber fees for NYSE Agg Lite. Further, the Exchange proposes to waive the Access Fee and the Redistribution Fee for NYSE Agg lite for Redistributors that pay either the Non-Professional Enterprise Fee or the Professional and Non-Professional Enterprise Fee. The Exchange believes the proposed fee waiver would provide an incentive for Redistributors to subscribe to the NYSE Agg Lite market data product at the enterprise level to reduce the fees it would pay to the Exchange and without having to report the number of users that receive the data feed from the Redistributor.
Subscribers that intend to purchase a market data enterprise license for at least twelve months may elect to purchase this product in advance for a monthly fee of $18,000 for distribution of NYSE Agg Lite to an unlimited number of non-professional users, or $22,500 per month for distribution to an unlimited number of professional users and non-professional users. This feature is intended to simplify cost projections and budgeting for both subscribers and the Exchange. Subscribers that elect not to purchase this particular feature will nevertheless be able to obtain all of the market data information offered by NYSE Agg Lite by paying the standard fee of $20,000 per month for distribution of NYSE Agg Lite to an unlimited number of non-professional users, or $25,000 per month for distribution to an unlimited number of professional users and non-professional users. Subscribers that elect to pay the monthly fee will be able to switch to the annual fee at any time, and those that elect to purchase the annual contract would be able to change to the monthly contract, with notice, at the end of the twelve-month period.
The Exchange believes that the proposed market data enterprise license will reduce exchange fees, lower administrative costs for subscribers, and help expand the availability of market information to investors, and thereby increase participation in financial markets.
The Exchange proposes to establish non-display fees for the NYSE Agg Lite data feed that are based on the non-display use categories charged by NYSE Arca, NYSE American, NYSE National, the CTA, and the UTP Plan for non-display use.
Under the proposal, for Non-Display Use of NYSE Agg Lite, there would be three categories of, and fees applicable, to, data recipients. One, two, or three categories of Non-Display Use may apply to a data recipient.
• As proposed, the Category 1 Fee would be $4,500 per month and would apply when a data recipient's Non-Display Use of the NYSE Agg Lite data feed is on its own behalf, not on behalf of its clients.
• As proposed, Category 2 Fees would be $4,500 per month and would apply to a data recipient's Non-Display Use of the NYSE Agg Lite data feed on behalf of its clients.
• As proposed, Category 3 Fees would be $4,500 per month and would apply to a data recipient's Non-Display Use of the NYSE Agg Lite data feed for the purpose of internally matching buy and sell orders within an organization, including matching customer orders for a data recipient's own behalf and/or on behalf of its clients. This category would apply to Non-Display Use in trading platforms, such as, but not restricted to, alternative trading systems (“ATSs”), broker crossing networks, broker crossing systems not filed as ATSs, dark pools, multilateral trading facilities, exchanges and systematic internalization systems. A data recipient will be charged $4,500 per month for each platform on which it uses the Non-Display data internally to match buy and sell orders, up to a cap of $13,500 per month; even if the data recipient uses the NYSE Agg Lite data feed for more than three platforms, it will not pay more than $13,500 for such Category 3 use per month.
The description of the three non-display use categories is set forth in the Fee Schedule in endnote 1 and that endnote would be referenced in the NYSE Agg Lite data feed fees on the Fee Schedule. The text in the endnote would remain unchanged.
Data recipients that receive the NYSE Agg Lite data feed for Non-Display Use would be required to complete and submit a Non-Display Use Declaration before they would be authorized to receive the feed. A firm subject to Category 3 Fees would be required to identify each platform that uses the NYSE Agg Lite data feed for a Category 3 Non-Display Use basis, such as ATSs and broker crossing systems not registered as ATSs, as part of the Non-Display Use Declaration.
6.
The proposed Non-Display Use Declaration Late Fee applicable to NYSE Agg Lite data feed would be set forth in endnote 2 on the Fee Schedule. As proposed, endnote 2 would be amended with the proposed addition of the following new text: “The Non-Display Declaration Late Fee will apply, beginning in 2025, to NYSE Aggregated Lite data recipients that fail to complete and submit the annual Non-Display Use Declaration by the January 31st due date, and applies beginning February 1st and for each month thereafter until the data recipient has completed and submitted the annual Non-Display use Declaration.”
In addition, if a data recipient's use of the NYSE Agg Lite data feed changes at any time after the data recipient submits a Non-Display Use Declaration, the data recipient must inform the Exchange of the change by completing and submitting at the time of the change an updated declaration reflecting the change of use.
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The Exchange believes that providing a three-month fee waiver to NYSE market data products listed on the Fee Schedule would enable potential Redistributors to determine whether a particular NYSE market data product provides value to their business models before fully committing to expend development and implementation costs related to the receipt of that product, and is intended to encourage increased use of the Exchange's market data products by defraying some of the development and implementation costs Redistributors would ordinarily have to expend before using a product. The proposed three-month fee waiver would also provide Redistributors with time to begin onboarding new clients prior to being liable to the Access Fee and the Redistribution Fee, allowing time to choose how to allocate costs and increase revenues to defray costs associated with providing a new feed to its customers.
The Exchange is not required to make the NYSE Agg Lite data feed available or to offer any specific pricing alternatives to any customers, nor is any firm required to purchase the NYSE Agg Lite data feed. Firms that choose to purchase the NYSE Agg Lite data feed do so for the primary goals of using it to increase their revenues, reduce their expenses, and in some instances to compete directly with the Exchange (including for order flow). Those firms are able to determine for themselves whether or not the NYSE Agg Lite data feed or any other similar products are attractively priced.
The Exchange believes that subscribers would use the price level detail information available in the NYSE Agg Lite data feed to make trading decisions that directly benefit the transaction services that the Exchange offers. The Exchange determined the level of the fees to charge for the NYSE Agg Lite data feed based on the value of the Exchange's transaction services.
The Exchange believes the proposed rule change would provide an incentive both for data subscribers to subscribe to NYSE Agg Lite and for Redistributors to subscribe to the product for purposes of providing external distribution of NYSE Agg Lite. The Exchange believes that this proposed rule change also has the potential to attract new Redistributors for NYSE Agg Lite.
The proposed fee structure is not novel as it is based on the fee structure currently in place for the NYSE OpenBook feed. The Exchange is proposing fees for the NYSE Agg Lite data feed that are based on the existing fee structure and rates that data recipients already pay for the NYSE OpenBook feed. Specifically, the fees for the NYSE OpenBook feed—which like the NYSE Agg Lite data feed, includes depth of book and security status messages—consist of an Access Fee of $5,000 per month, a Professional User Fee (Per User) of $60 per month, a Non-Professional User Fee (Per User) of $15 per month, Non-Display Fees of $6,000 per month for each of Categories 1, 2 and 3, and a Redistribution Fee of $3,000 per month. The Exchange also charges a Non-Display Use Declaration Late Fee of $1,000 per month and a Multiple Data Feed Fee of $200 per month for NYSE OpenBoook.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
In adopting Regulation NMS, the Commission granted SROs and broker-dealers increased authority and flexibility to offer new and unique market data to the public. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues, and also recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
With respect to market data, the decision of the United States Court of Appeals for the District of Columbia Circuit in
In fact, the legislative history indicates that the Congress intended that the market system “evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed” and that the SEC wield its regulatory power “in those situations where competition may not be sufficient,” such as in the creation of a “consolidated transactional reporting system.”
The court agreed with the Commission's conclusion that “Congress intended that `competitive forces should dictate the services and practices that constitute the U.S. national market system for trading equity securities.' ”
More recently, the Commission confirmed that it applies a “market-based” test in its assessment of market data fees, and that under that test:
An exchange may demonstrate that its fees are constrained by competitive forces by showing that platform competition applies.
As the United States Supreme Court recognized in
To ensure sufficient participation, two-sided platforms must be sensitive to the prices that they charge each side. . . . Raising the price on side A risks losing participation on that side, which decreases the value of the platform to side B. If the participants on side B leave due to this loss in value, then the platform has even less value to side A—risking a feedback loop of declining demand. . . . Two-sided platforms therefore must take these indirect network effects into account before making a change in price on either side.
The Exchange and its affiliated exchanges have long maintained that they function as platforms between consumers of market data and consumers of trading services. Proving the existence of linkages between the two sides of this platform requires an in-depth economic analysis of both public data and confidential exchange data about particular customers' trading activities and market data purchases. Exchanges, however, are prohibited from publicly sharing details about these specific customer activities and purchases. For example, pursuant to Exchange Rule 7.41, transactions executed on the Exchange are processed anonymously.
Exchanges function as platforms for market data and transaction services mean that exchanges do not set fees for market data products without considering, and being constrained by, the effect the fees will have on the order-flow side of the platform. As the D.C. Circuit recognized in
As noted above, while Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.”
Further, low barriers to entry mean that new exchanges may rapidly and inexpensively enter the market and offer additional substitute platforms to compete with the Exchange. For example, since 2020, three new ones have entered the market: Long Term Stock Exchange (LTSE), which began operations as an exchange on August 28, 2020;
These low barriers enable existing exchange customers to disintermediate and start their own exchanges if they think the prices charged for exchange proprietary market data products are too high. This is precisely the rationale behind the creation of MEMX, which was formed by some of the largest and most well capitalized financial firms that are also Exchange customers (including Bank of America, BlackRock, Charles Schwab, Citadel, Citi, E*Trade, Fidelity, Goldman Sachs, J.P. Morgan, Jane Street, Morgan Stanley, TD Ameritrade, and others).
For example, one of MEMX's founding principles is that exchange proprietary market data prices are too high, and that MEMX will benefit its members by offering “[l]ower pricing on market data.”
The fact that this cycle is viable and repeatable by entities that both trade on and compete with existing exchanges confirms that barriers to entry are low and that these markets are competitive and contestable.
In sum, the fierce competition for order flow thus constrains any exchange from pricing its market data at a supracompetitive price and constrains the Exchange in setting its fees at issue here.
The proposed fees are therefore reasonable because in setting them, the Exchange is constrained by the availability of numerous substitute platforms offering market data products and trading. Such substitutes need not be identical, but only substantially similar to the product at hand.
More specifically, in setting fees for the NYSE Agg Lite data feed, the Exchange is constrained by the fact that, if its pricing across the platform is unattractive to customers, customers have their pick of an increasing number of alternative platforms to use instead of the Exchange. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish reasonable fees. The existence of numerous alternative platforms to the Exchange's platform ensures that the Exchange cannot set unreasonable market data fees without suffering the negative effects of that decision in the fiercely competitive market for trading order flow.
Subscribing to the NYSE Agg Lite is entirely optional. The Exchange is not required to make the NYSE Agg Lite available to any customers, nor is any customer required to purchase the NYSE Agg Lite market data feed. Unlike some other data products (
Further, in the case of products that are also redistributed through market data vendors such as Bloomberg and Refinitiv, the vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Vendors may elect not to make NYSE Agg Lite available to its customers unless their customers request it, and customers will not elect to pay the proposed fees unless NYSE Agg Lite can provide value by sufficiently increasing revenues or reducing costs in the customer's business in a manner that will offset the fees. All of these factors operate as constraints on pricing proprietary data products.
In setting the proposed fees for the NYSE Agg Lite data feed, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition.
Even putting aside the facts that exchanges are platforms and that pricing decisions on the two sides of the platform are intertwined, the Exchange is constrained in setting the proposed market data fees by the availability of numerous substitute market data products. The Commission has been clear that substitute products need not be identical, but only substantially similar to the product at hand.
The NYSE Aggregated Lite market data feed is subject to significant competitive forces that constrain its pricing. Specifically, the NYSE Agg Lite data feed competes head-to-head with similar market data products currently offered by the four U.S. equities exchanges operated by Cboe Exchange, Inc.—Cboe BZX Exchange, Inc. (“BZX”), Cboe BYX Exchange, Inc. (“BYX”), Cboe EDGA Exchange, Inc. (“EDGA”), and Cboe EDGX Exchange, Inc. (“EDGX”), each of which offers a market data product called BZX Summary Depth, BYX Summary Depth, EDGA Summary Depth and EDGX Summary Depth, respectively (collectively, the “Cboe Summary Depth”).
The specific fees that the Exchange proposes for the NYSE Agg Lite data
The Exchange believes the proposed fees for the NYSE Agg Lite data feed are also reasonable when compared to fees for comparable products, such as the Cboe Summary Depth.
The Exchange believes that the proposed Non-Display Use fees reflect the significant value of the non-display data use to data recipients, which purchase such data on an entirely voluntary basis. Non-display data can be used by data recipients for a wide variety of profit-generating purposes, including proprietary and agency trading and smart order routing, as well as by data recipients that operate order matching and execution platforms that compete directly with the Exchange for order flow. The data also can be used for a variety of non-trading purposes that indirectly support trading, such as risk management and compliance. Although some of these non-trading uses do not directly generate revenues, they can nonetheless substantially reduce a recipient's costs by automating such functions so that they can be carried out in a more efficient and accurate manner and reduce errors and labor costs, thereby benefiting recipients. The Exchange believes that charging for non-trading uses is reasonable because data recipients can derive substantial value from such uses, for example, by automating tasks so that can be performed more quickly and accurately and less expensively than if they were performed manually.
Previously, the non-display use data pricing policies of many exchanges required customers to count, and the exchanges to audit the count of, the number of non-display devices used by a customer. As non-display use grew more prevalent and varied, however,
The Exchange believes that it is reasonable to segment the fee for non-display use into these three categories. As noted above, the uses to which customers can put the NYSE Agg Lite data feed are numerous and varied, and the Exchange believes that charging separate fees for these separate categories of use is reasonable because it reflects the actual value the customer derives from the data, based upon how many categories of use the customer makes of the data. Segmenting the fees for non-display data in this way avoids the unreasonable result of customers that make only limited non-display use of the data paying the same fees as customers that use the data for numerous different revenue-generating and cost-saving purposes.
The Exchange believes that the proposed fees of $4,500 per month for each of Categories 1, 2, and 3 is reasonable. These fees are comparable to non-display use fees generally charged by exchanges. For example, the fees for Non-Display Use of NYSE OpenBook for Categories 1, 2 and 3 is $6,000 per month.
The Exchange also believes that, regarding Category 3 fees, it is reasonable to charge $4,500 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is reasonable to cap such fees for Category 3 use at $13,500 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE Agg Lite data feed for use by their trading platforms.
The proposed Non-Display Use fees for the NYSE Agg Lite data feed are also reasonable because they take into account the extra value of receiving the data for Non-Display Use on an integrated basis. The Exchange believes that the proposed fees directly and appropriately reflect the significant value of using the NYSE Agg Lite data feed on a non-display basis in a wide range of computer-automated functions relating to both trading and non-trading activities and that the number and range of these functions continue to grow through innovation and technology developments.
The Exchange believes that it is reasonable to impose a late fee in connection with the submission of the Non-Display Use Declaration. In order to correctly assess fees for the non-display use of the NYSE Agg Lite data feed, the Exchange needs to have current and accurate information about the use of the NYSE Agg Lite data feed. The failure of data recipients to submit the Non-Display Use Declaration on time leads to potentially incorrect billing and administrative burdens, including tracking and obtaining late Non-Display Use Declarations and correcting and following up on payments owed in connection with late Non-Display Use Declarations. The purpose of the late fee is to incent data recipients to submit the Non-Display Use Declaration promptly to avoid the administrative burdens associated with the late submission of Non-Display Use Declarations.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE Agg Lite data feed are reasonable.
The Exchange believes the proposed fees for the NYSE Agg Lite data feed are allocated fairly and equitably among the various categories of users of the feed, and any differences among categories of users are justified.
The Exchange also believes that, regarding Category 3 fees, it is equitable to charge $4,500 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is equitable to cap such fees for Category 3 use at $13,500 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE Agg Lite data feed for use by their trading platforms.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE Agg Lite data feed are equitably allocated.
The Exchange believes the proposed fees for the NYSE Agg Lite data feed are not unfairly discriminatory because any differences in the application of the fees are based on meaningful distinctions between customers, and those meaningful distinctions are not unfairly discriminatory between customers.
The Exchange also believes that, regarding Category 3 fees, it is not unreasonably discriminatory to charge $4,500 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is not unreasonably discriminatory to cap such fees for Category 3 use at $13,500 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE Agg Lite data feed for use by their trading platforms.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE Agg Lite data feed are not unfairly discriminatory.
The Exchange does not believe that the proposed fees will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange also believes that the proposed fees neither favor nor penalize one or more categories of market participants in a manner that would impose an undue market on competition. As shown above, to the extent that particular proposed fees apply to only a subset of subscribers (
In addition, the Exchange believes that the proposed fees do not impose a burden on competition or on other exchanges that is not necessary or appropriate because of the availability of numerous substitute market data products. Many other exchanges offer proprietary data feeds like the NYSE Agg Lite data feed, supplying depth of book order data, security status updates, stock summary messages, and the exchange's best bid and offer at any given time, on a real-time basis. Because market data users can find suitable substitute feeds, an exchange that overprices its market data products stands a high risk that users may substitute another platform, in which case the platform would stand to lose both market data and trading fees. These competitive pressures ensure that no one exchange's market data fees can impose an unnecessary burden on competition, and the Exchange's proposed fees do not do so here.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (“PRA”) (44 U.S.C. 3501
Rule 15g-4 requires brokers and dealers effecting transactions in penny stocks for or with customers to disclose the amount of compensation received by the broker-dealer in connection with the transaction. The purpose of the rule is to increase the level of disclosure to investors concerning penny stocks generally and specific penny stock transactions.
The Commission estimates that approximately 170 broker-dealers will each spend an average of approximately 87.0833333 hours annually to comply with this rule. Thus, the total time burden is approximately 14,804 hours per year.
Written comments are invited on: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted by August 2, 2024.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number.
Please direct your written comments to: David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o John Pezzullo, 100 F Street NE, Washington, DC 20549, or send an email to:
Pursuant to Section 19(b)(1)
The Exchange proposes to establish fees for the NYSE American Aggregated Lite data feed. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend the NYSE American LLC Equities Proprietary Market Data Fees Schedule
In summary, the NYSE American Agg Lite is a NYSE American-only frequency-based depth of book market data feed of the NYSE American's limit order book for up to ten (10) price levels on both the bid and offer sides of the order book for securities traded on the Exchange and for which the Exchange reports quotes and trades under the Consolidated Tape Association (“CTA”) Plan or the Nasdaq/UTP Plan. The NYSE American Agg Lite is a compilation of limit order data that the Exchange provides to vendors and subscribers. The NYSE American Agg Lite includes depth of book order data as well as security status messages. The security status message informs subscribers of changes in the status of a specific security, such as trading halts, short sale restriction, etc. In addition, the NYSE American Agg Lite includes order imbalance information prior to the opening and closing of trading.
The Exchange operates in a highly competitive market. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
While Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.”
To reflect the value of NYSE American's market data, the Exchange proposes to establish the fees listed below for the NYSE American Agg Lite data feed, operative on May 13, 2024. The Exchange proposes to charge fees for the same categories of market data use as its affiliated exchanges (namely, NYSE, NYSE Arca and NYSE National) currently charge. The Exchange believes that adopting the same fee structure as its affiliated exchanges would reduce administrative burdens on market data subscribers that also currently subscribe to market data feeds from the Exchange's affiliates.
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By targeting this proposed fee waiver to Redistributors that provide external distribution of NYSE American Agg Lite, the Exchange believes that this would provide an incentive for Redistributors to make the NYSE American Agg Lite market data product available to its customers. Specifically, if a data recipient is interested in subscribing to NYSE American Agg Lite and relies on a Redistributor to obtain market data products from the Exchange, that data recipient would need its Redistributor to subscribe to and redistribute NYSE American Agg Lite. The Exchange believes that this proposed fee waiver for Redistributors of NYSE American Agg Lite would provide an incentive for Redistributors to make NYSE American Agg Lite available to their customers, which will increase the availability of the Exchange's market data products to a larger potential population of data recipients.
Further, the Exchange proposes to adopt a credit that would be applicable to Redistributors that provide external distribution of NYSE American Agg Lite to Professional and Non-Professional Users. As proposed, such Redistributors would receive a credit equal to the amount of the monthly Professional User and Non-Professional User Fees for such external distribution, up to a maximum of the combination of the Access Fee and Redistribution Fee for NYSE American Agg Lite that the Redistributor would otherwise be required to pay to the Exchange. For
4.
The Exchange proposes to establish an enterprise license that will reduce Exchange fees and administrative costs for subscribers that disseminate NYSE American Agg Lite. Subscribers that are broker-dealers will be able to distribute the NYSE American Agg Lite data feed for display usage to an unlimited number of recipients (professional users and non-professional users) for a monthly fee of $550, with an opportunity to lower that fee to $500 per month if they contract for twelve months of service in advance.
As proposed, the NYSE American Agg Lite data feed may be distributed pursuant to the proposed market data enterprise license only for display usage and in the context of a brokerage relationship with a broker-dealer through such broker-dealer's own devices. Purchase of an enterprise license would eliminate per User subscriber fees for NYSE American Agg Lite. Further, the Exchange proposes to waive the Access Fee and the Redistribution Fee for NYSE American Agg lite for Redistributors that pay the Professional and Non-Professional Enterprise Fee. The Exchange believes the proposed fee waiver would provide an incentive for Redistributors to subscribe to the NYSE American Agg Lite market data product at the enterprise level to reduce the fees it would pay to the Exchange and without having to report the number of users that receive the data feed from the Redistributor.
Subscribers that intend to purchase a market data enterprise license for at least twelve months may elect to purchase this product in advance for a monthly fee of $500 per month for distribution to an unlimited number of professional users and non-professional users. This feature is intended to simplify cost projections and budgeting for both subscribers and the Exchange. Subscribers that elect not to purchase this particular feature will nevertheless be able to obtain all of the market data information offered by NYSE American Agg Lite by paying the standard fee of $550 per month for distribution to an unlimited number of professional users and non-professional users. Subscribers that elect to pay the monthly fee will be able to switch to the annual fee at any time, and those that elect to purchase the annual contract would be able to change to the monthly contract, with notice, at the end of the twelve-month period.
The Exchange believes that the proposed market data enterprise license will reduce exchange fees, lower administrative costs for subscribers, and help expand the availability of market information to investors, and thereby increase participation in financial markets.
5.
The Exchange proposes to establish non-display fees for the NYSE American Agg Lite data feed that are based on the non-display use categories charged by NYSE, NYSE Arca, NYSE National, the CTA, and the UTP Plan for non-display use.
Under the proposal, for Non-Display Use of NYSE American Agg Lite, there would be three categories of, and fees applicable, to, data recipients. One, two, or three categories of Non-Display Use may apply to a data recipient.
• As proposed, the Category 1 Fee would be $1,000 per month and would apply when a data recipient's Non-Display Use of the NYSE American Agg Lite data feed is on its own behalf, not on behalf of its clients.
• As proposed, Category 2 Fees would be $1,000 per month and would apply to a data recipient's Non-Display Use of the NYSE American Agg Lite data feed on behalf of its clients.
• As proposed, Category 3 Fees would be $1,000 per month and would apply to a data recipient's Non-Display Use of the NYSE American Agg Lite data feed for the purpose of internally matching buy and sell orders within an organization, including matching customer orders for a data recipient's own behalf and/or on behalf of its clients. This category would apply to Non-Display Use in trading platforms, such as, but not restricted to, alternative trading systems (“ATSs”), broker crossing networks, broker crossing systems not filed as ATSs, dark pools, multilateral trading facilities, exchanges and systematic internalization systems. A data recipient will be charged $1,000 per month for each platform on which it uses the Non-Display data internally to match buy and sell orders, up to a cap of $3,000 per month; even if the data recipient uses the NYSE American Agg Lite data feed for more than three platforms, it will not pay more than $3,000 for such Category 3 use per month.
The description of the three non-display use categories is set forth in the Fee Schedule in endnote 1 and that endnote would be referenced in the NYSE American Agg Lite data feed fees on the Fee Schedule. The text in the endnote would remain unchanged.
Data recipients that receive the NYSE American Agg Lite data feed for Non-Display Use would be required to complete and submit a Non-Display Use Declaration before they would be authorized to receive the feed. A firm subject to Category 3 Fees would be required to identify each platform that uses the NYSE American Agg Lite data feed for a Category 3 Non-Display Use basis, such as ATSs and broker crossing systems not registered as ATSs, as part of the Non-Display Use Declaration.
6.
The proposed Non-Display Use Declaration Late Fee applicable to NYSE American Agg Lite data feed would be set forth in endnote 2 on the Fee Schedule. As proposed, endnote 2 would be amended with the proposed addition of the following new text: “The Non-Display Declaration Late Fee will apply, beginning in 2025, to NYSE American Aggregated Lite data recipients that fail to complete and submit the annual Non-Display Use Declaration by the January 31st due date, and applies beginning February 1st and for each month thereafter until the data recipient has completed and submitted the annual Non-Display use Declaration.”
In addition, if a data recipient's use of the NYSE American Agg Lite data feed changes at any time after the data recipient submits a Non-Display Use Declaration, the data recipient must inform the Exchange of the change by completing and submitting at the time of the change an updated declaration reflecting the change of use.
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The Exchange believes that providing a three-month fee waiver to NYSE American market data products listed on the Fee Schedule would enable potential Redistributors to determine whether a particular NYSE American market data product provides value to their business models before fully committing to expend development and implementation costs related to the receipt of that product, and is intended to encourage increased use of the Exchange's market data products by defraying some of the development and implementation costs Redistributors would ordinarily have to expend before using a product. The proposed three-month fee waiver would also provide Redistributors with time to begin onboarding new clients prior to being liable to the Access Fee and the Redistribution Fee, allowing time to choose how to allocate costs and increase revenues to defray costs associated with providing a new feed to its customers.
The Exchange is not required to make the NYSE American Agg Lite data feed available or to offer any specific pricing alternatives to any customers, nor is any firm required to purchase the NYSE American Agg Lite data feed. Firms that choose to purchase the NYSE American Agg Lite data feed do so for the primary goals of using it to increase their revenues, reduce their expenses, and in some instances to compete directly with the Exchange (including for order flow). Those firms are able to determine for themselves whether or not the NYSE American Agg Lite data feed or any other similar products are attractively priced.
The Exchange believes that subscribers would use the price level detail information available in the NYSE American Agg Lite data feed to make trading decisions that directly benefit the transaction services that the Exchange offers. The Exchange determined the level of the fees to charge for the NYSE American Agg Lite data feed based on the value of the Exchange's transaction services.
The Exchange believes the proposed rule change would provide an incentive both for data subscribers to subscribe to NYSE American Agg Lite and for Redistributors to subscribe to the product for purposes of providing external distribution of NYSE American Agg Lite. The Exchange believes that this proposed rule change also has the potential to attract new Redistributors for NYSE American Agg Lite.
The proposed fee structure is not novel as it is based on the fee structure currently in place for the NYSE American OpenBook feed. The Exchange is proposing fees for the NYSE American Agg Lite data feed that are based on the existing fee structure and rates that data recipients already pay for the NYSE American OpenBook feed. Specifically, the fees for the NYSE
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
In adopting Regulation NMS, the Commission granted SROs and broker-dealers increased authority and flexibility to offer new and unique market data to the public. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues, and also recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
With respect to market data, the decision of the United States Court of Appeals for the District of Columbia Circuit in
In fact, the legislative history indicates that the Congress intended that the market system “evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed” and that the SEC wield its regulatory power “in those situations where competition may not be sufficient,” such as in the creation of a “consolidated transactional reporting system.”
The court agreed with the Commission's conclusion that “Congress intended that `competitive forces should dictate the services and practices that constitute the U.S. national market system for trading equity securities.' ”
More recently, the Commission confirmed that it applies a “market-based” test in its assessment of market data fees, and that under that test:
the Commission considers whether the exchange was subject to significant competitive forces in setting the terms of its proposal for [market data], including the level of any fees. If an exchange meets this burden, the Commission will find that its fee rule is consistent with the Act unless there is a substantial countervailing basis to find that the terms of the rule violate the Act or the rules thereunder.
An exchange may demonstrate that its fees are constrained by competitive forces by showing that platform competition applies.
As the United States Supreme Court recognized in
To ensure sufficient participation, two-sided platforms must be sensitive to the prices that they charge each side. . . . Raising the price on side A risks losing participation on that side, which decreases the value of the platform to side B. If the participants on side B leave due to this loss in value, then the platform has even less value to side A—risking a feedback loop of declining demand. . . . Two-sided platforms therefore must take these indirect network effects into account before making a change in price on either side.
The Exchange and its affiliated exchanges have long maintained that they function as platforms between consumers of market data and consumers of trading services. Proving the existence of linkages between the two sides of this platform requires an in-depth economic analysis of both public data and confidential exchange data about particular customers' trading activities and market data purchases. Exchanges, however, are prohibited from publicly sharing details about these specific customer activities and purchases. For example, pursuant to Exchange Rule 7.41E, transactions executed on the Exchange are processed anonymously.
Exchanges function as platforms for market data and transaction services mean that exchanges do not set fees for market data products without considering, and being constrained by, the effect the fees will have on the order-flow side of the platform. As the D.C. Circuit recognized in
As noted above, while Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.”
Further, low barriers to entry mean that new exchanges may rapidly and inexpensively enter the market and offer additional substitute platforms to compete with the Exchange. For example, since 2020, three new ones have entered the market: Long Term Stock Exchange (LTSE), which began operations as an exchange on August 28, 2020;
These low barriers enable existing exchange customers to disintermediate and start their own exchanges if they think the prices charged for exchange proprietary market data products are too high. This is precisely the rationale behind the creation of MEMX, which was formed by some of the largest and most well capitalized financial firms that are also Exchange customers (including Bank of America, BlackRock, Charles Schwab, Citadel, Citi, E*Trade, Fidelity, Goldman Sachs, J.P. Morgan, Jane Street, Morgan Stanley, TD Ameritrade, and others).
For example, one of MEMX's founding principles is that exchange proprietary market data prices are too high, and that MEMX will benefit its members by offering “[l]ower pricing on market data.”
The fact that this cycle is viable and repeatable by entities that both trade on and compete with existing exchanges confirms that barriers to entry are low and that these markets are competitive and contestable.
In sum, the fierce competition for order flow thus constrains any exchange from pricing its market data at a supracompetitive price and constrains the Exchange in setting its fees at issue here.
The proposed fees are therefore reasonable because in setting them, the Exchange is constrained by the availability of numerous substitute platforms offering market data products and trading. Such substitutes need not be identical, but only substantially similar to the product at hand.
More specifically, in setting fees for the NYSE American Agg Lite data feed, the Exchange is constrained by the fact that, if its pricing across the platform is unattractive to customers, customers have their pick of an increasing number of alternative platforms to use instead of the Exchange. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish reasonable fees. The existence of numerous alternative platforms to the Exchange's platform ensures that the Exchange cannot set unreasonable market data fees without suffering the negative effects of that decision in the fiercely competitive market for trading order flow.
Subscribing to the NYSE American Agg Lite is entirely optional. The Exchange is not required to make the NYSE American Agg Lite available to any customers, nor is any customer required to purchase the NYSE American Agg Lite market data feed. Unlike some other data products (
Further, in the case of products that are also redistributed through market data vendors such as Bloomberg and Refinitiv, the vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Vendors may elect not to make NYSE American Agg Lite available to its customers unless their customers request it, and customers will not elect to pay the proposed fees unless NYSE American Agg Lite can provide value by sufficiently increasing revenues or reducing costs in the customer's business in a manner that will offset the fees. All of these factors operate as constraints on pricing proprietary data products.
In setting the proposed fees for the NYSE American Agg Lite data feed, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition.
Even putting aside the facts that exchanges are platforms and that pricing decisions on the two sides of the platform are intertwined, the Exchange is constrained in setting the proposed market data fees by the availability of numerous substitute market data products. The Commission has been clear that substitute products need not be identical, but only substantially similar to the product at hand.
The NYSE American Aggregated Lite market data feed is subject to significant competitive forces that constrain its pricing. Specifically, the NYSE American Agg Lite data feed competes head-to-head with similar market data products currently offered by the four U.S. equities exchanges operated by Cboe Exchange, Inc.—Cboe BZX Exchange, Inc. (“BZX”), Cboe BYX Exchange, Inc. (“BYX”), Cboe EDGA Exchange, Inc. (“EDGA”), and Cboe EDGX Exchange, Inc. (“EDGX”), each of which offers a market data product called BZX Summary Depth, BYX Summary Depth, EDGA Summary Depth and EDGX Summary Depth, respectively (collectively, the “Cboe Summary Depth”).
The specific fees that the Exchange proposes for the NYSE American Agg Lite data feed are reasonable for the following additional reasons.
The Exchange believes the proposed fees for the NYSE American Agg Lite data feed are also reasonable when compared to fees for comparable products, such as the Cboe Summary Depth.
The Exchange believes that the proposed Non-Display Use fees reflect the significant value of the non-display data use to data recipients, which purchase such data on an entirely voluntary basis. Non-display data can be used by data recipients for a wide variety of profit-generating purposes, including proprietary and agency trading and smart order routing, as well as by data recipients that operate order matching and execution platforms that compete directly with the Exchange for order flow. The data also can be used for a variety of non-trading purposes that indirectly support trading, such as risk management and compliance. Although some of these non-trading uses do not directly generate revenues, they can nonetheless substantially reduce a recipient's costs by automating such functions so that they can be carried out in a more efficient and accurate manner and reduce errors and labor costs, thereby benefiting recipients. The Exchange believes that charging for non-trading uses is reasonable because data recipients can derive substantial value from such uses, for example, by automating tasks so that can be performed more quickly and accurately and less expensively than if they were performed manually.
Previously, the non-display use data pricing policies of many exchanges required customers to count, and the exchanges to audit the count of, the number of non-display devices used by a customer. As non-display use grew more prevalent and varied, however, exchanges received an increasing number of complaints about the impracticality and administrative burden associated with that approach. In response, the Exchange and its affiliated exchanges developed a non-display use pricing structure that does not require non-display devices to be counted or those counts to be audited, and instead looks merely at the three following categories of potential use of non-display data: use of the data on the customer's own behalf (Category 1), use on behalf of clients (Category 2), and use to internally match buy and sell orders within an organization (Category 3).
The Exchange believes that it is reasonable to segment the fee for non-display use into these three categories. As noted above, the uses to which customers can put the NYSE American Agg Lite data feed are numerous and varied, and the Exchange believes that charging separate fees for these separate categories of use is reasonable because it reflects the actual value the customer derives from the data, based upon how many categories of use the customer makes of the data. Segmenting the fees for non-display data in this way avoids the unreasonable result of customers that make only limited non-display use of the data paying the same fees as customers that use the data for numerous different revenue-generating and cost-saving purposes.
The Exchange believes that the proposed fees of $1,000 per month for each of Categories 1, 2, and 3 is reasonable. These fees are comparable to non-display use fees generally charged by exchanges. For example, the fees for Non-Display Use of NYSE American OpenBook for Categories 1, 2 and 3 is $2,000 per month.
The Exchange also believes that, regarding Category 3 fees, it is reasonable to charge $1,000 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is reasonable to cap such fees for Category 3 use at $3,000 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE American Agg Lite data feed for use by their trading platforms.
The proposed Non-Display Use fees for the NYSE American Agg Lite data feed are also reasonable because they take into account the extra value of receiving the data for Non-Display Use on an integrated basis. The Exchange believes that the proposed fees directly and appropriately reflect the significant value of using the NYSE American Agg Lite data feed on a non-display basis in a wide range of computer-automated functions relating to both trading and non-trading activities and that the number and range of these functions continue to grow through innovation and technology developments.
The Exchange believes that it is reasonable to impose a late fee in connection with the submission of the Non-Display Use Declaration. In order to correctly assess fees for the non-display use of the NYSE American Agg Lite data feed, the Exchange needs to have current and accurate information about the use of the NYSE American Agg Lite data feed. The failure of data recipients to submit the Non-Display Use Declaration on time leads to potentially incorrect billing and administrative burdens, including tracking and obtaining late Non-Display Use Declarations and correcting and following up on payments owed in connection with late Non-Display Use Declarations. The purpose of the late fee is to incent data recipients to submit the Non-Display Use Declaration promptly to avoid the administrative burdens associated with the late submission of Non-Display Use Declarations.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE American Agg Lite data feed are reasonable.
The Exchange believes the proposed fees for the NYSE American Agg Lite data feed are allocated fairly and equitably among the various categories of users of the feed, and any differences among categories of users are justified.
The Exchange also believes that, regarding Category 3 fees, it is equitable to charge $1,000 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is equitable to cap such fees for Category 3 use at $3,000 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE American Agg Lite data feed for use by their trading platforms.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE American Agg Lite data feed are equitably allocated.
The Exchange believes the proposed fees for the NYSE American Agg Lite data feed are not unfairly discriminatory because any differences in the application of the fees are based on meaningful distinctions between customers, and those meaningful distinctions are not unfairly discriminatory between customers.
The Exchange also believes that, regarding Category 3 fees, it is not unreasonably discriminatory to charge $1,000 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is not unreasonably discriminatory to cap such fees for Category 3 use at $3,000 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE American Agg Lite data feed for use by their trading platforms.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE American Agg Lite data feed are not unfairly discriminatory.
The Exchange does not believe that the proposed fees will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange also believes that the proposed fees neither favor nor penalize one or more categories of market participants in a manner that would impose an undue market on competition. As shown above, to the extent that particular proposed fees apply to only a subset of subscribers (
In addition, the Exchange believes that the proposed fees do not impose a burden on competition or on other exchanges that is not necessary or appropriate because of the availability of numerous substitute market data products. Many other exchanges offer proprietary data feeds like the NYSE American Agg Lite data feed, supplying depth of book order data, security status updates, stock summary messages, and the exchange's best bid and offer at any given time, on a real-time basis. Because market data users can find suitable substitute feeds, an exchange that overprices its market data products stands a high risk that users may substitute another platform, in which case the platform would stand to lose both market data and trading fees. These competitive pressures ensure that no one exchange's market data fees can impose an unnecessary burden on competition, and the Exchange's proposed fees do not do so here.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend the NYSE Proprietary Market Data Fee Schedule to establish an Access Fee for the NYSE Pillar Depth data feed. The Exchange proposes to implement the proposed fee change on May 13, 2024. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend the NYSE Proprietary Market Data Fee Schedule (“Fee Schedule”). Specifically, the Exchange proposes to establish an Access Fee for the NYSE Pillar Depth (“Pillar Depth”) data feed, effective May 13, 2024. The proposed fee for Pillar Depth would be $250 per month, provided that the market data recipient separately pays the applicable fees for the five existing market data products underlying the Pillar Depth data feed, consistent with the existing fee structures for those market data products.
The Pillar Depth data feed is a frequency-based depth of book market data feed that provides a consolidated view of the ten (10) best price levels on both the bid and offer sides across the NYSE Group's combined limit order books for securities traded on the NYSE Group equities markets,
The Exchange, NYSE American, NYSE Arca, NYSE Chicago and NYSE National are the exclusive distributors of the five Aggregated Lite feeds from which certain data elements are taken to create the Pillar Depth data feed. By contrast, the Exchange would not be the exclusive distributor of the aggregated and consolidated information that comprises the Pillar Depth data feed. Any entity that receives, or elects to receive, the five underlying Aggregated Lite data feeds would be able, if it so chooses, to create a data feed with the same information included in Pillar Depth and sell and distribute it to its clients so that it could be received by those clients as quickly as the Pillar Depth data feed would be received by those same clients.
As proposed, the Exchange would charge a $250 per month Access Fee for Pillar Depth, which reflects the value of the aggregation and consolidation function that the Exchange performs in creating Pillar Depth. To obtain Pillar Depth, a market data recipient would need to pay any applicable fees for the five data feeds underlying Pillar Depth, consistent with the existing fee schedules for those market data products as previously filed with the Commission and which may be amended from time to time, including any applicable Access, Redistribution, Professional User, Non-Professional User, Non-Display or Enterprise fees. The Exchange proposes to denote the requirement for market data recipients to pay the applicable fees for the five data feeds underlying Pillar Depth in proposed footnote 3 on the Fee Schedule.
When subscribing to Pillar Depth, the underlying data feeds would be delivered in the Pillar Depth consolidated format, as described above, but charged for as if the recipient were receiving the underlying feeds directly. The Exchange notes that if a subscriber chooses to receive the five underlying feeds both separately and in the Pillar Depth format, such subscriber may be subject to additional Professional User or Non-Professional User fees to reflect the distribution of both Pillar Depth (which incorporates the five underlying data feeds) and any separate dissemination of the underlying data feeds. The Exchange believes that the proposed fees for Pillar Depth would not be lower than the cost to a vendor of creating a comparable product, including the cost of receiving the underlying data feeds.
The Exchange notes that another market participant seeking to distribute a competing product to Pillar Depth might engage in a different analysis of assessing the cost of a competing product, which may incorporate passing through fees associated with co-location at the Mahwah, New Jersey data center. However, the incremental co-location cost to a particular vendor might be inconsequential if such vendor is already co-located and is able to allocate its co-location costs over numerous product and customer relationships. The Exchange therefore believes that a vendor could create and offer a product similar to Pillar Depth on a cost-competitive basis.
The proposed rule change is intended to encourage market participants to
The Exchange notes that the proposed change is not otherwise intended to address any other issues, and the Exchange is not aware of any problems that member organizations or others would have in complying with the proposed rule change.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
In adopting Regulation NMS, the Commission granted SROs and broker-dealers increased authority and flexibility to offer new and unique market data to the public. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues, and also recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
With respect to market data, the decision of the United States Court of Appeals for the District of Columbia Circuit in
In fact, the legislative history indicates that the Congress intended that the market system “evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed” and that the SEC wield its regulatory power “in those situations where competition may not be sufficient,” such as in the creation of a “consolidated transactional reporting system.”
The court agreed with the Commission's conclusion that “Congress intended that `competitive forces should dictate the services and practices that constitute the U.S. national market system for trading equity securities.' ”
More recently, the Commission confirmed that it applies a “market-based” test in its assessment of market data fees, and that under that test:
An exchange may demonstrate that its fees are constrained by competitive forces by showing that platform competition applies.
As the United States Supreme Court recognized in
To ensure sufficient participation, two-sided platforms must be sensitive to the prices that they charge each side. . . . Raising the price on side A risks losing participation on that side, which decreases the value of the platform to side B. If the participants on side B leave due to this loss in value, then the platform has even less value to side A—risking a feedback loop of declining demand. . . . Two-sided platforms therefore must take these indirect network effects into account before making a change in price on either side.
The Exchange and its affiliated exchanges have long maintained that they function as platforms between consumers of market data and consumers of trading services. Proving the existence of linkages between the two sides of this platform requires an in-depth economic analysis of both public data and confidential exchange data about particular customers' trading activities and market data purchases. Exchanges, however, are prohibited from publicly sharing details about these specific customer activities and purchases. For example, pursuant to Exchange Rule 7.41, transactions executed on the Exchange are processed anonymously.
Exchanges function as platforms for market data and transaction services mean that exchanges do not set fees for market data products without considering, and being constrained by, the effect the fees will have on the order-flow side of the platform. As the D.C. Circuit recognized in
As noted above, while Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same
Further, low barriers to entry mean that new exchanges may rapidly and inexpensively enter the market and offer additional substitute platforms to compete with the Exchange. For example, since 2020, three new ones have entered the market: Long Term Stock Exchange (LTSE), which began operations as an exchange on August 28, 2020;
These low barriers enable existing exchange customers to disintermediate and start their own exchanges if they think the prices charged for exchange proprietary market data products are too high. This is precisely the rationale behind the creation of MEMX, which was formed by some of the largest and most well capitalized financial firms that are also Exchange customers (including Bank of America, BlackRock, Charles Schwab, Citadel, Citi, E*Trade, Fidelity, Goldman Sachs, J.P. Morgan, Jane Street, Morgan Stanley, TD Ameritrade, and others).
For example, one of MEMX's founding principles is that exchange proprietary market data prices are too high, and that MEMX will benefit its members by offering “[l]ower pricing on market data.”
The fact that this cycle is viable and repeatable by entities that both trade on and compete with existing exchanges confirms that barriers to entry are low and that these markets are competitive and contestable.
In sum, the fierce competition for order flow thus constrains any exchange from pricing its market data at a supracompetitive price and constrains the Exchange in setting its fees at issue here.
More specifically, in setting fees for the Pillar Depth data feed, the Exchange is constrained by the fact that, if its pricing across the platform is unattractive to customers, customers have their pick of an increasing number of alternative platforms to use instead of the Exchange. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish reasonable fees. The existence of numerous alternative platforms to the Exchange's platform ensures that the Exchange cannot set unreasonable market data fees without suffering the negative effects of that decision in the fiercely competitive market for trading order flow.
More specifically, the Exchange believes that the proposed $250 per month Access Fee for Pillar Depth is reasonable because it represents the value for the data aggregation and consolidation function that the Exchange performs. The Exchange further believes that requiring market data recipients to separately pay for the five underlying data feeds to Pillar Depth is reasonable because by design, Pillar Depth represents an aggregated and consolidated version of those existing five data feeds. The Exchange notes that it is not seeking with this filing to establish fees relating to the underlying five Aggregated Lite data feeds, as those fees have been established consistent with Section 19(b)(3)(A) of the Act
The Exchange notes that its proposed fee structure is similar to the fee structure for the NYSE BQT data feed.
The Exchange notes that Pillar Depth is entirely optional. The Exchange is not required to make the proprietary data products that are the subject of this proposed rule change available or to offer any specific pricing alternatives to any customers, nor is any firm or investor required to purchase the Exchange's data products. Unlike some other data products (
Further, in the case of products that are also redistributed through market data vendors such as Bloomberg and Refinitiv, the vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Vendors may elect not to make Pillar Depth available to its customers unless their customers request it, and customers will not elect to pay the proposed fees unless Pillar Depth can provide value by sufficiently increasing revenues or reducing costs in the customer's business in a manner that will offset the fees. All of these factors operate as constraints on pricing proprietary data products.
In setting the proposed fees for Pillar Depth, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish reasonable fees. The existence of alternatives to the Exchange's platform ensures that the Exchange cannot set unreasonable market data fees without suffering the negative effects of that decision in the fiercely competitive market for trading order flow.
The proposed fees are therefore reasonable because in setting them, the Exchange is constrained by the availability of numerous substitute platforms offering market data products and trading. Such substitutes need not be identical, but only substantially similar to the product at hand.
The four U.S. equities exchanges operated by Cboe Exchange, Inc.—Cboe BZX Exchange, Inc. (“BZX”), Cboe BYX Exchange, Inc. (“BYX”), Cboe EDGA Exchange, Inc. (“EDGA”), and Cboe EDGX Exchange, Inc. (“EDGX”), currently offer a market data product called the Cboe One Premium Feed,
In addition, the fees that are the subject of this rule filing are constrained by competition. As explained below in the Exchange's Statement on Burden on Competition, the existence of alternatives to these data products further ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect such alternatives. That is, the Exchange competes with other exchanges (and their affiliates) that provide similar market data products. If another exchange (or its affiliate) were to charge less to consolidate and distribute its similar product than the Exchange charges to consolidate and distribute Pillar Depth, prospective users likely would not subscribe to, or would cease subscribing to, Pillar Depth. In addition, the Exchange would compete with unaffiliated market data vendors who would be in a position to consolidate and distribute the same data that comprises the Pillar Depth data feed into the vendor's own comparable market data product. If the third-party vendor is able to provide the exact same data for a lower cost, prospective users would avail themselves of that lower cost and elect not to take Pillar Depth.
The Exchange believes that the proposed fee is equitable and non-discriminatory in that it would apply uniformly to all recipients of Exchange data. The Exchange also believes the proposed fee is competitive with those charged by other venues and, therefore, reasonable and equitably allocated to recipients. The Exchange also notes that the proposed fee is not designed to permit unfair discrimination because all market data recipients that subscribe to Pillar Depth would be charged the same fee. The Exchange further believes that the proposed Pillar Depth fee structure is equitable and not unfairly discriminatory because all vendors and subscribers that elect to purchase Pillar Depth would be charged the same fees. In addition, vendors and subscribers that do not wish to purchase Pillar Depth may separately purchase the five individual underlying products, and if they so choose, perform a similar aggregation and consolidation function that the Exchange performs in creating Pillar Depth. To enable such competition, the Exchange is offering Pillar Depth on terms that a subscriber of those five feeds could offer a competing product if it so chooses.
For these reasons, the Exchange believes that the proposed fees are reasonable, equitable, and not unfairly discriminatory.
In accordance with Section 6(b)(8)
In addition, the Exchange believes that the proposed fees do not impose a burden on competition or on other exchanges that is not necessary or appropriate because of the availability of numerous substitute market data products. Specifically, as described above, Pillar Depth would compete with the Cboe One Premium Feed.
As such, in establishing the proposed fees, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition. The Exchange believes that it has considered all relevant factors and has not
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission” or “SEC”).
Notice.
Notice of an application for an order pursuant to section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 18(a)(2), 18(c), and 18(i) of the Act, pursuant to sections 6(c) and 23(c) of the Act for an exemption from rule 23c-3 under the Act, and pursuant to section 17(d) of the Act and rule 17d-1 thereunder.
Applicants request an order to permit certain registered closed-end investment companies to issue multiple classes of shares and to impose early withdrawal charges and asset-based distribution and/or service fees.
Eagle Point Enhanced Income Trust, Eagle Point Institutional Income Fund, Eagle Point Credit Management LLC, and Eagle Point Enhanced Income Management LLC
The application was filed on March 4, 2024, and amended on April 9, 2024.
An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing on any application by emailing the SEC's Secretary at
The Commission:
Trace W. Rakestraw, Senior Special Counsel, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
For Applicants' representations, legal analysis, and conditions, please refer to Applicants' application, dated April 9, 2024, which may be obtained via the Commission's website by searching for the file number at the top of this document, or for an Applicant using the Company name search field on the SEC's EDGAR system. The SEC's EDGAR system may be searched at
For the Commission, by the Division of Investment Management, under delegated authority.
On September 20, 2023, The Nasdaq Stock Market LLC (“Nasdaq” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
On November 15, 2023, pursuant to Section 19(b)(2) of the Act,
On May 24, 2024, the Exchange withdrew the proposed rule change (File No. SR-NASDAQ-2023-035).
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Small Business Administration.
Amendment 3.
This is an amendment of the Presidential declaration of a major disaster for the State of Texas (FEMA-4781-DR), dated 05/17/2024.
Issued on 05/27/2024.
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
The notice of the President's major disaster declaration for the State of TEXAS, dated 05/17/2024, is hereby amended to include the following areas as adversely affected by the disaster:
All other information in the original declaration remains unchanged.
U.S. Small Business Administration.
Notice.
This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of Maine (FEMA-4785-DR), dated 05/24/2024.
Issued on 05/24/2024.
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
Notice is hereby given that as a result of the President's major disaster declaration on 05/24/2024, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications online using the MySBA Loan Portal
The following areas have been determined to be adversely affected by the disaster:
The number assigned to this disaster for physical damage is 20366B and for economic injury is 203670.
Small Business Administration.
Notice.
This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of WEST VIRGINIA (FEMA-4787-DR), dated 05/24/2024.
Issued on 05/24/2024.
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
Notice is hereby given that as a result of the President's major disaster declaration on 05/24/2024, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications online using the MySBA Loan Portal
The following areas have been determined to be adversely affected by the disaster:
The number assigned to this disaster for physical damage is 203706 and for economic injury is 203710.
Small Business Administration.
Notice.
This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of NEBRASKA (FEMA-4786-DR), dated 05/24/2024.
Issued on 05/24/2024.
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
Notice is hereby given that as a result of the President's major disaster declaration on 05/24/2024, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications online using the MySBA Loan Portal
The following areas have been determined to be adversely affected by the disaster:
The
The number assigned to this disaster for physical damage is 20368B and for economic injury is 203690.
Small Business Administration.
Notice.
This is a notice of an Administrative declaration of a disaster for the State of South Carolina dated 05/28/2024.
Issued on 05/28/2024.
Visit the MySBA Loan Portal at
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
Notice is hereby given that as a result of the Administrator's disaster declaration, applications for disaster loans may be submitted online using the MySBA Loan Portal
The following areas have been determined to be adversely affected by the disaster:
The Interest Rates are:
The number assigned to this disaster for physical damage is 20305B and for economic injury is 203060.
The States which received an EIDL Declaration are South Carolina, North Carolina.
Small Business Administration.
Amendment 1.
This is an amendment of the Presidential declaration of a major disaster for Public Assistance Only for the State of OKLAHOMA (FEMA-4776-DR), dated 05/16/2024.
Issued on 05/17/2024.
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
The notice of the President's major disaster declaration for Private Non-Profit organizations in the State of OKLAHOMA, dated 05/16/2024, is hereby amended to include the following areas as adversely affected by the disaster.
All other information in the original declaration remains unchanged.
Federal Aviation Administration, DOT.
Acceptance of Chicago Executive Airport noise exposure map.
The Federal Aviation Administration (FAA) announces its determination that the noise exposure map submitted by Chicago Executive Airport is in compliance with applicable statutory and regulatory requirements.
The effective date of the FAA's determination on the noise exposure map is May 28, 2024.
Craig Pullins, 2300 Devon Avenue, Suite 312, Des Plaines, Illinois 60018. 847-294-7354.
The FAA determined the noise exposure map submitted by Chicago Executive Airport, is in compliance with applicable statutory and regulatory requirements, effective May 28, 2024. Under title 49, United States Code (U.S.C.) section 47503, an airport operator may submit to the FAA, noise exposure maps depicting non-compatible uses as of the date such map is submitted, a description of estimated aircraft operations during a forecast period that is at least five years in the future and how those operations will affect the map. A noise exposure map must be prepared in accordance with title 14, Code of Federal Regulations (CFR) part
The FAA completed its review of the noise exposure map and supporting documentation submitted by the Cities of Wheeling & Prospect Heights and determined the noise exposure map and accompanying documentation are in compliance with applicable requirements.
The documentation that constitutes the Noise Exposure Map includes: Figure 2-1 Airport Location Map; Figure 2-2 Airport Diagram; Table 2-1 Airport Facilities; Table 2-3 Published Arrival Procedures; Table 2-4 Published Departure Procedures; Figure 4-1 Land Use; Table 5-1 2022 and 2027 Annual Aircraft Operations; Table 5-2 2022 and 2027 AEDT Operations and Fleet; Table 5-3 2022 and 2027 AEDT Aircraft Percent Time of Day; Table 5-4 2022 Overall Runway Use; Table 5-5 2022 Modeled Runway Use by Aircraft Category; Table 5-6 2027 Modeled Runway Use by Aircraft Category; Table 5-7 Modeled Flight Track Use by Aircraft Category—Departures; Table 5-8 Modeled Flight Track Use by Aircraft Category—Arrivals; Figure 5-1 AEDT Modeled Aircraft Flight Tracks—Runway 16; Figure 5-2 AEDT Modeled Aircraft Flight Tracks—Runway 34; Figure 5-3 AEDT Modeled Aircraft Flight Tracks—Runway 12; Figure 5-4 AEDT Modeled Aircraft Flight Tracks—Runway 30; Figure 5-5 AEDT Modeled Aircraft Flight Tracks—Runway 6; Figure 5-6 AEDT Modeled Aircraft Flight Tracks—Runway 24; Figure 5-7 AEDT Modeled Aircraft Flight Tracks—All Runways; Table 6-1 Land Use Within the 2022 DNL Contours; Table 6-2 Population and Housing Units Within the 2022 DNL Contours; Figure 6-1 2022 DNL Contours; Table 6-3 Land Use Within the 2027 DNL Contours; Table 6-4 Population and Housing Units Within the 2027 DNL Contours; Table 6-5 Change in Land Use from 2022 to 2027; Table 6-6 Change in Population and Housing Units From 2022 to 2027; Figure 6-2 2027 DNL Contours; Figure 6-3 2022 and 2027 DNL Contours—North of PWK; Figure 6-4 2022 and 2027 DNL Contours—South of PWK; Appendix G 2022 Noise Exposure Map; Appendix G 2022 Aircraft Flight Tracks—Arrivals; Appendix G 2022 Aircraft Flight Tracks—Departures; Appendix G 2027 Noise Exposure Map; Appendix G 2027 Aircraft Flight Tracks—Arrivals; Appendix G 2027 Aircraft Flight Tracks—Departures required by 14 CFR 150.101 and 49 U.S.C. 47503 and 47506. This determination is effective on May 28, 2024. FAA's determination on an airport's noise exposure map is limited to a finding that the noise exposure map was developed in accordance with the 49 U.S.C. 47503 and 47506 and procedures contained in 14 CFR part 150, appendix A. FAA's acceptance of an NEM does not constitute approval of the applicant's data, information or plans, or a commitment to approve a noise compatibility program or to fund the implementation of that program. If questions arise concerning the precise relationship of specific properties within noise exposure contours depicted on a noise exposure map, it should be noted that the FAA is not involved in any way in determining the relative locations of specific properties with regard to the depicted noise contours or in interpreting the noise exposure maps to resolve questions concerning, for example, which properties should be covered by the provisions of 49 U.S.C. 47506.
These functions are inseparable from the ultimate land use control and planning responsibilities of local government. These local responsibilities are not changed in any way under 14 CFR part 150 or through FAA review and acceptance of a noise exposure map. Therefore, the responsibility for the detailed overlaying of noise exposure contours onto the map depicting properties on the surface rests exclusively with the airport operator that submitted a noise exposure map or with those public and planning agencies with which consultation is required under 49 U.S.C. 47503. The FAA relied on the certification by the airport operator, under of 14 CFR 150.21 that the required consultations and opportunity for public review has been accomplished during the development of the noise exposure maps. Copies of the noise exposure map and supporting documentation and the FAA's evaluation of the noise exposure maps are available for examination at the following locations:
Federal Aviation Administration Chicago Airports District Office, 2300 Devon Avenue, Suite 312, Des Plaines, IL 60018, and Chicago Executive Airport at 1020 S. Plant Road, Wheeling, IL 60090. Questions may be directed to the individual listed in the
Issued in Des Plaines, Illinois on May 28, 2024.
Federal Highway Administration (FHWA), DOT.
Notice of request for reinstatement of a previously approved information collection.
The FHWA has forwarded the information collection request described in this notice to the Office of Management and Budget (OMB) to reinstate an information collection. We are required to publish this notice in the
Please submit comments by July 3, 2024.
You may submit comments identified by DOT Docket ID Number 0044 by any of the following methods:
Jazmyne Lewis, (202) 366-2826, Office of Administration, Federal Highway Administration, Department of
We published a
Feedback collected under this generic clearance will provide useful information, but it will not yield data that can be generalized to the overall population. This type of generic clearance for qualitative information will not be used for quantitative information collections that are designed to yield reliably actionable results, such as monitoring trends over time or documenting program performance. Such data uses require more rigorous designs that address: The target population to which generalizations will be made, the sampling frame, the sample design (including stratification and clustering), the precision requirements or power calculations that justify the proposed sample size, the expected response rate, methods for assessing potential non-response bias, the protocols for data collection, and any testing procedures that were or will be undertaken prior to fielding the study. Depending on the degree of influence the results are likely to have, such collections may still be eligible for submission for other generic mechanisms that are designed to yield quantitative results. Below we provide FHWA's projected average estimates for the next three years:
Federal Highway Administration (FHWA), Department of Transportation (DOT).
Notice of limitation on claims for judicial review of actions by the California Department of Transportation (Caltrans).
The FHWA, on behalf of Caltrans, is issuing this notice to announce actions taken by Caltrans, that are final. The actions relate to a proposed highway project, on Interstate 80 (I-80) and United States Route 50 (US-50) in the Counties of Solano, Yolo, and Sacramento, State of California. Those actions grant licenses, permits, and approvals for the project.
By this notice, the FHWA, on behalf of Caltrans, is advising the public of final agency actions subject to 23 U.S.C. 139(l)(1). A claim seeking judicial review of the Federal agency actions on the highway project will be barred unless the claim is filed on or before October 31, 2024. If the Federal law that authorizes judicial review of a claim provides a time period of less than 150 days for filing such claim, then that shorter time period still applies.
For Caltrans: Robert Wall, Branch Chief, Caltrans North Region Office of Environmental Management, California Department of Transportation, District 3, 703 B Street, Marysville, CA 95901 Office Hours 8 a.m.-5 p.m., Pacific time, Telephone (707) 834-2471 or email
Effective July 1, 2007, the Federal Highway Administration (FHWA) assigned, and the California Department of Transportation (Caltrans) assumed, environmental responsibilities for this project pursuant to 23 U.S.C. 327. Notice is hereby given that Caltrans, has taken final agency actions subject to 23 U.S.C. 139(l)(1) by issuing licenses, permits, and approvals for the following highway project in the State of California: Caltrans, in collaboration with stakeholders, proposes to construct improvements consisting of a High Occupancy Toll (HOT) 3+ lane in each direction with direct connectors, pedestrian/bicycle facilities, park-n-ride, and Intelligent Transportation System (ITS) elements along I-80 and US-50 from Kidwell Road near the eastern Solano County boundary (near Dixon), through Yolo County to West El Camino Avenue near the I-80/Interstate 5 (I-5) interchange, and to the US-50/I-5 interchange in Sacramento County. The purpose of the project, EA 03-3H900, is to ease congestion and improve freeway operation to support reliable transport of goods and services throughout the region. The total length of the project is 20.8 miles. The actions by the Federal agencies, and the laws under which such actions were taken, are described in the Final Environmental Assessment (FEA) and the Finding of No Significant Impact (FONSI) for the project, approved on April 30, 2024, and in other documents in the project records. The FEA, FONSI, and other project records are available by contacting Caltrans at the address provided above. The FEA and FONSI can be viewed and downloaded from the project website at:
This notice applies to all Federal agency decisions as of the issuance date of this notice and all laws under which such actions were taken, including but not limited to:
Office of Foreign Assets Control, Treasury.
Notice.
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing the updated identifying information on its Specially Designated Nationals and Blocked Persons List (SDN List) for one individual whose property and interest in property subject to U.S. jurisdiction are blocked pursuant to Executive Order (E.O.) 13694, as amended by E.O. 13757.
OFAC: Bradley T. Smith, Director, tel.: 202-622-2490; Associate Director for Global Targeting, tel.: 202-622-2420; Assistant Director for Licensing, tel.: 202-622-2480; Assistant Director for Regulatory Affairs, tel.: 202-622-4855; or the Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490.
The SDN List and additional information concerning OFAC sanctions programs are available on OFAC's website (
On May 28, 2024, OFAC amended the SDN List entry of the following individual to update identifying information. The listing below reflects the individual's amended entry on the SDN List.
1. KOVALEVSKIJ, Nikita Gennadievitch (a.k.a. KOVALEVSKY, Nikita), Finland; DOB 21 Nov 1978; nationality Finland; Gender Male; Passport 2111702697 (individual) [CYBER2] (Linked To: OPTIMA FREIGHT OY).
1. KOVALEVSKIJ, Nikita Gennadievitch (a.k.a. KOVALEVSKY, Nikita; a.k.a. MURAVJOV, Nikita), Leineläntie 1 B 49, Vantaa 01340, Finland; DOB 21 Nov 1978; POB Moscow; nationality Finland; alt. nationality Russia; citizen Finland; alt. citizen Russia; Gender Male; Passport FP4892455 (Finland) issued 08 Dec 2021 expires 08 Dec 2026; alt. Passport 53 1216997 (Russia); alt. Passport FP3994119 (Finland); National ID No. 211178-2697 (Finland) issued 08 Dec 2021 expires 08 Dec 2026 (individual) [CYBER2] (Linked To: OPTIMA FREIGHT OY).
Veterans Health Administration, Department of Veterans Affairs.
Notice.
In compliance with the Paperwork Reduction Act (PRA) of 1995, this notice announces that the Veterans Health Administration (VHA), Department of Veterans Affairs (VA), will submit the collection of information abstracted below to the Office of Management and Budget (OMB) for review and comment. The PRA submission describes the nature of the information collection and its expected cost and burden, and it includes the actual data collection instrument.
Comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice by clicking on the following link
VA PRA information: Maribel Aponte, 202-461-8900,
This collection of information is required to properly administer health benefits to eligible Veterans.
a. VA Form 10-10EZ, Application for Health Benefits, is used to collect Veteran information during the initial application process for VA medical care, nursing home, domiciliary, dental benefits, etc.
b. VA Form 10-10EZR, Health Benefits Update Form, is used to update a Veteran's personal information, such as marital status, address, health insurance and financial information, for renewal of health benefits.
c. VA Form 10-10HS, Request for Hardship Determination, is used to collect information from Veterans who are in a copay required status for hospital care and medical services, but due to a loss of income project that their income for the current year will be substantially below the VA means test limits.
These forms collect information to enroll a Veteran for health benefits, establish basic eligibility, determine TERA benefit eligibility, identify 3rd party health insurance coverage, identify prescription copayment, provide for income verification, and serve as a mechanism to make changes upon admission for benefits or yearly financial updates.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
In compliance with the Paperwork Reduction Act (PRA) of 1995, this notice announces that the Veterans Benefits Administration, Department of Veterans Affairs, will submit the collection of information abstracted below to the Office of Management and Budget (OMB) for review and comment. The PRA submission describes the nature of the information collection and its expected cost and burden and it includes the actual data collection instrument.
Comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice by clicking on the following link
VA PRA information: Maribel Aponte, 202-461-8900,
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The
Securities and Exchange Commission.
Final rule.
The Securities and Exchange Commission (“Commission” or “SEC”) is adopting rule amendments that will require brokers and dealers (or “broker-dealers”), investment companies, investment advisers registered with the Commission (“registered investment advisers”), funding portals, and transfer agents registered with the Commission or another appropriate regulatory agency (“ARA”) as defined in the Securities Exchange Act of 1934 (“transfer agents”) to adopt written policies and procedures for incident response programs to address unauthorized access to or use of customer information, including procedures for providing timely notification to individuals affected by an incident involving sensitive customer information with details about the incident and information designed to help affected individuals respond appropriately. In addition, the amendments extend the application of requirements to safeguard customer records and information to transfer agents; broaden the scope of information covered by the requirements for safeguarding customer records and information and for properly disposing of consumer report information; impose requirements to maintain written records documenting compliance with the amended rules; and conform annual privacy notice delivery provisions to the terms of an exception provided by a statutory amendment to the Gramm-Leach-Bliley Act (“GLBA”).
Emily Hellman, James Wintering, Special Counsels; Edward Schellhorn, Branch Chief; Devin Ryan, Assistant Director; John Fahey, Deputy Chief Counsel; Emily Westerberg Russell, Chief Counsel; Office of Chief Counsel, Division of Trading and Markets, (202) 551-5550; Kevin Schopp, Senior Special Counsel; Moshe Rothman, Assistant Director; Office of Clearance and Settlement, Division of Trading and Markets, (202) 551-5550, Susan Ali and Andrew Deglin, Counsels; Michael Khalil and Y. Rachel Kuo, Senior Counsels; Blair Burnett and Bradley Gude, Branch Chiefs; or Brian McLaughlin Johnson, Assistant Director, Investment Company Regulation Office, Division of Investment Management, (202) 551-6792, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.
The Commission is adopting amendments to 17 CFR 248.1 through 248.100 (“Regulation S-P”) under Title V of the GLBA [15 U.S.C. 6801 through 6827], the Fair Credit Reporting Act (“FCRA”) [15 U.S.C. 1681 through 1681x], the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. 78a
Regulation S-P is a set of privacy rules adopted pursuant to the GLBA and the Fair and Accurate Credit Transactions Act of 2003 (“FACT Act”) that govern the treatment of nonpublic personal information about consumers by certain financial institutions.
The final Regulation S-P amendments are needed to provide enhanced protection of customer or consumer information and help ensure that customers of covered institutions receive timely and consistent notifications in the event of unauthorized access to or use of their information.
In March 2023, the Commission proposed amendments to Regulation S-P.
The Commission also proposed other amendments to Regulation S-P to enhance the protection of customers' nonpublic personal information. The proposed amendments included provisions to expand the scope of the protections of the safeguards and disposal rules, including extending the safeguards rule to transfer agents. The proposed amendments also included requirements for covered institutions to maintain written records documenting compliance with the proposed amended rules. Finally, the Commission proposed amendments to conform annual privacy notice delivery provisions to the terms of an exception provided by a statutory amendment to the GLBA.
The Commission received comment letters on the proposal from a variety of commenters, including financial services firms and their service providers, law firms, investor advocacy groups, professional and trade associations, public policy research institutes, academics, and interested individuals.
Comments on specific aspects of the proposed amendments focused on a few key themes. First, commenters urged the Commission to take a more holistic regulatory approach to harmonize the proposed amendments with other Commission rules and proposals to avoid creating redundant, overlapping, or conflicting obligations for covered institutions.
For example, covered institutions may be required to adopt written policies and procedures on similar issues under other provisions of the Federal securities laws.
Commenters also questioned the need for the proposed amendments in light of existing State laws that also address data breaches and raised concerns about differences between the proposed amendments and State regulatory requirements. One commenter stated that the proposed amendments were not needed because existing State laws already require firms to provide notice to individuals in the event of a data breach.
As discussed more fully later in this section, while we recognize that existing State laws require covered institutions to notify State residents of data breaches in some cases, State laws are not consistent on this point and exclude some entities from certain requirements.
Commenters also raised concerns with differences between the proposed amendments and other Federal regulators' safeguarding standards that also include a requirement for a data breach response plan or program.
We recognize, however, that there are some areas of divergence between the final amendments and other Federal regulators' GLBA safeguarding standards, and we discuss the basis for each provision of the final rules below, including cases where the amendments differ from analogous requirements under State law or other Federal regulations.
Many commenters also urged the Commission to coordinate with other Federal agencies, particularly on reporting deadlines.
We are adopting amendments to Regulation S-P substantially as proposed, with some changes in response to comments. The principal elements of the final amendments, as discussed in more detail below, are as follows:
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Since Regulation S-P was first adopted in 2000, evolving digital communications and information storage tools and other technologies have made it easier for firms to obtain, share, and maintain individuals' personal information. This increases the risk of customers' information being accessed or used without authorization, for example in a cyberattack or if customer information is improperly disposed of or stolen. In particular, as a frequently-targeted industry, the financial sector has observed increased exposure to cyberattacks that threaten not only the financial firms themselves, but also their customers, especially considering that customer records and other information that covered
As set forth in the proposal, security incidents may result in, among other things, misuse, exposure or theft of a customer's nonpublic personal information, and potentially leave affected individuals vulnerable to having their information further compromised. Threat actors can use customer information to cause harm in a number of ways, such as by stealing customer identities to sell to other threat actors on the dark web, publishing customer information on the dark web, using customer identities to carry out fraud themselves, or taking over a customer's account for malevolent purposes.
To help protect against harms that may result from a security incident involving customer information, the Commission proposed and is adopting amendments to the safeguards rule largely as proposed, with certain modifications to the notification requirement as discussed further below.
In this regard, requiring covered institutions to have incident response programs will help mitigate the risk of harm to affected individuals stemming from incidents where a customer's information has been accessed or used without authorization. For example, incident response programs will help covered institutions to be better prepared to respond to such incidents, and providing notice to affected individuals will aid those individuals in taking protective measures that could mitigate harm that might otherwise result from unauthorized access to or use of their information. Further, a reasonably designed incident response program will help facilitate more consistent and systematic responses to customer information security incidents and help avoid inadequate responses based on a covered institution's initial impressions of the scope of the information involved in the compromise. Requiring the incident response program to address any incident involving customer information can help a covered institution better contain and control these incidents and facilitate a prompt recovery.
As proposed, the amendments will require that a covered institution's incident response program include policies and procedures containing certain general elements but will not prescribe specific steps a covered institution must undertake when carrying out incident response activities, thereby enabling covered institutions to create policies and procedures best suited to their particular circumstances. Specifically, a covered institution's incident response program will be required to have written policies and procedures to:
(i) Assess the nature and scope of any incident involving unauthorized access to or use of customer information and identify the customer information systems and types of customer information that may have been accessed or used without authorization;
(ii) Take appropriate steps to contain and control the incident to prevent further unauthorized access to or use of customer information;
(iii) Notify each affected individual whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization in accordance with the notification obligations discussed below,
The Commission received multiple comments regarding the proposed requirement for an incident response program generally.
Covered institutions need the flexibility to develop policies and procedures suited to their size and
Two commenters opposed the scope of the proposed incident response program.
We are adopting as proposed final rules which require the incident response program's assessment and containment and control components to cover a broader scope of information than the notification requirements. The scope of information covered by the assessment and containment and control requirements is designed to help ensure all information covered by the requirements of the GLBA
The final amendments will require that the incident response program include procedures for: (1) assessing the nature and scope of any incident involving unauthorized access to or use of customer information, and (2) identifying the customer information systems and types of customer information that may have been accessed or used without authorization.
The assessment requirement is designed to require a covered institution to identify both the customer information systems and types of customer information that may have been accessed or used without authorization during the incident, as well as the specific customers affected, which would be necessary to fulfill the obligation to notify affected individuals.
The final amendments will require that the response program have procedures for taking appropriate steps to contain and control a security incident, in order to prevent further unauthorized access to or use of customer information.
As set forth in the proposal, the objective of containment and control is to prevent additional damage from unauthorized activity and to reduce the immediate impact of an incident by removing the source of the unauthorized activity.
As part of their incident response programs, covered institutions will be required under the final amendments to provide a clear and conspicuous notice to affected individuals under certain circumstances.
We are adopting as proposed, a requirement for a covered institution to notify each affected individual whose sensitive customer information was, or was reasonably likely to have been, accessed or used without authorization, unless the covered institution has determined, after a reasonable investigation of the incident, that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience. The covered institution will be required to provide a clear and conspicuous notice to each affected individual by a means designed to ensure that the individual can reasonably be expected to receive actual notice in writing. Also as proposed, the final amendments require the notice to be provided as soon as practicable, but not later than 30 days, after the covered institution becomes aware that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred. Lastly, in a modification from the proposal, the final amendments provide for an incrementally longer period of time than the proposal for a covered institution to delay providing notice to affected individuals in cases where the Attorney General has determined that providing the notice would pose a substantial risk to national security or public safety. These requirements are discussed in detail below.
We are adopting as proposed a requirement for a covered institution to provide notice to individuals whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization, unless, after a reasonable investigation of the facts and circumstances of the incident of unauthorized access to or use of sensitive customer information, it determines that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience.
While the incident response program is generally required to address information security incidents involving any form of customer information,
Whether an investigation is reasonable will depend on the particular facts and circumstances of the unauthorized access or use. For example, unauthorized access or use that is the result of intentional intrusion by a threat actor may warrant more extensive investigation than inadvertent unauthorized access or use by an employee. The investigation may occur in parallel with an initial assessment and scoping of the incident and may build upon information generated from those activities. The scope of the investigation generally should be refined by using available data and the results of ongoing incident response activities. Information related to the nature and scope of the incident may be relevant to determining the extent of the investigation, such as whether the incident is the result of internal unauthorized access or use of sensitive customer information or an external intrusion, the duration of the incident, what accounts have been compromised and at what privilege level, and whether and what type of customer information may have been copied, transferred, or retrieved without authorization.
A covered institution cannot avoid its notification obligations in cases where
As further described below,
Several commenters proposed alternative notification standards, some expanding the circumstances requiring customer notification, and others suggesting a narrower notification regime.
By contrast, with regard to narrowing the standard, some commenters suggested eliminating the presumption of notification altogether, such that covered institutions would have a notification obligation only after having affirmatively determined, following an investigation, a likelihood of a breach or resulting harm to customers.
We considered the alternative approaches suggested by commenters but determined that adopting the standard as proposed strikes an appropriate balance in accommodating the relevant competing concerns. The suggestions to expand the circumstances requiring notification (either by requiring notification regardless of the risk of harm, or by expanding notification to include cases where it is “reasonably possible” that an
Additionally, we are not adopting a commenter's recommendation that the Commission require covered institutions to provide notices to the Commission when they are required to send notices to affected individuals, as one commenter suggested.
Conversely, the narrower alternative standards suggested by commenters (
Regarding commenters' concerns about harmonizing Regulation S-P with State law requirements, State law notification standards vary widely such that broad harmonization would be impracticable, and a benefit of the final amendments is that they provide a consistent minimum Federal notification standard to protect affected individuals in an environment of enhanced risk. This will, for example, provide additional protections for customers in States whose laws do not mandate notification without an affirmative determination of harm or provide an outside time by which notification must be provided.
Relatedly, some commenters suggested eliminating or narrowing the concept of “affected individuals” entitled to notification in situations where a covered institution is unable to identify which specific individuals' sensitive customer information has been accessed or used without authorization. Instead of the proposed requirement that the covered institution must provide notice to all individuals whose sensitive customer information resides in the customer information system that was, or was reasonably likely to have been, accessed or used without authorization, commenters urged narrowing notification to individuals whose sensitive customer information was, or was reasonably likely to have been, accessed or used without authorization based on the covered institution's reasonable investigation.
For similar reasons to those discussed above,
Contrary to the concerns expressed by some commenters, under the proposed and final amendments, a covered institution would not need to provide notice in connection with files or data residing on a system where it knows that information was not used or accessed.
The notification standard should help to improve security outcomes by incentivizing covered institutions to conduct more thorough investigations after an incident occurs because the rule does not permit a covered institution to rebut the presumption of notification without conducting a reasonable investigation. Further, the rule's requirement that a covered institution provide notice to all affected individuals where it is unable to identify which specific individuals' sensitive customer information has been accessed or used without authorization should incentivize covered institutions to establish procedures (for themselves and their service providers) that provide robust protections for sensitive customer information. For example, it may encourage covered institutions to employ a principle of least privilege, so that users' access rights to sensitive customer information on a particular information system are limited to the information strictly required to do their jobs.
For a covered institution's customer notification procedures to remain reasonably designed to notify each affected individual whose sensitive customer information was reasonably likely to have been compromised, as required by the final amendments, the covered institution's policies and procedures generally should be designed to include revisiting notification determinations whenever the covered institution becomes aware of new facts that are potentially relevant to the determination.
As discussed in more detail below, the scope of the final amendments will apply to customer information in a covered institution's possession or that is handled or maintained on the covered institution's behalf, regardless of whether such information pertains to (a) individuals with whom the covered institution has a customer relationship or (b) to the customers of other financial institutions where such information has been provided to the covered institution.
Where a covered institution experiences an incident involving sensitive customer information related to the customers of another covered institution, commenters generally suggested that the covered institution that has the customer relationship with the customer whose information was affected should be responsible for providing the required notice.
After considering comments, we are modifying the proposal to avoid requiring multiple covered institutions to notify the same affected individuals about a given incident. In an effort to minimize duplicative notices, rather than requiring the covered institution with the customer relationship to send the notice as some commenters suggested, the final amendments only require a covered institution to provide notice where unauthorized access to or use of sensitive customer information has occurred at the covered institution or one of its service providers that is not itself a covered institution.
Moreover, in another modification from the proposal, the final amendments also provide that a covered institution that is required to notify affected individuals may satisfy that obligation by ensuring that the notice is provided.
As discussed above, covered institutions will be required to notify customers when “sensitive customer information” was, or is reasonably likely to have been, accessed or used without authorization, subject to a reasonable investigation. As proposed and as adopted, the final amendments define the term “sensitive customer information” to mean “any component of customer information alone or in conjunction with any other information, the compromise of which could create a reasonably likely risk of substantial harm or inconvenience to an individual identified with the information.”
One commenter supported our proposed definition of sensitive customer information and emphasized the benefits of a broad definition.
Conversely, a number of commenters asserted that the proposed definition was too broad and could lead to over-notification, suggesting that the definition be narrowed to focus on information whose exposure would be more likely to lead to tangible economic harms.
After considering these comments, we are adopting the definition of “sensitive customer information” as proposed. We recognize that this definition is broader than that used by some States and the Banking Agencies' Incident Response Guidance.
Given the varied and evolving nature of security practices across covered institutions, it would be impractical to provide an exhaustive list of data elements whose exposure could put affected individuals at risk of substantial harm or inconvenience. Further, while we are mindful of concerns about overbreadth and potential over-notification, those concerns are tempered by the definition's harm component and the ability of covered entities to rebut the notification presumption following a reasonable investigation and determination. Given these considerations, we are not broadening the definition of sensitive customer information to encompass information whose exposure does not pose a reasonably likely risk of substantial harm or inconvenience. Nor do we agree that the definition's use of the verb “compromise,” which is commonly used to mean “to expose or make liable to danger,” is ambiguous in this context or inconsistent with other Federal authorities.
Finally, several commenters suggested we include an exception or safe harbor in the definition of sensitive customer information for encrypted information.
After considering these comments, we are not excepting encrypted information from the rule's definition of sensitive customer information because the rule
The GLBA directs the Commission and other Federal financial regulators to, among other things, establish appropriate standards requiring financial institutions subject to their jurisdiction to protect against unauthorized access to or use of customer records or information which could result in “substantial harm or inconvenience” to any customer, without defining what constitutes a substantial harm or inconvenience under the statute.
Commenters raised various concerns with the proposed definition. Some commenters proposed expanding the definition to include a broader array of harms requiring notification.
Alternatively, a number of commenters suggested that the proposed standard was ambiguous and urged narrowing the definition to reduce the types of injuries that would require notification.
After considering comments, we have determined, consistent with the approach of the Banking Agencies, not to define the term “substantial harm or inconvenience.” As the range of commenter concerns discussed above reflects, commenters found the proposed definition simultaneously too broad and too narrow, suggesting it could consequently lead to both under-notification and over-notification. Eliminating the proposed definition avoids this result without diminishing investor protection.
Determining whether a given harm or inconvenience rises to the level of a substantial harm or a substantial inconvenience would depend on the particular facts and circumstances surrounding an incident. As stated in the Proposing Release, we do not intend for covered institutions to design programs and incur costs to protect customers from harms of such trivial significance that the customer would be unconcerned with remediating them.
Consistent with the proposal, the final amendments require covered institutions to provide notices to affected individuals as soon as practicable, but not later than 30 days, after becoming aware that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred, except under the limited circumstances discussed below.
A few commenters expressed support for the proposed notification timing requirements.
In contrast, some commenters objected to the proposed notification timing requirements because, in their view, it provided an insufficient amount of time to notify affected individuals.
Some commenters also suggested that the proposed timing requirements would lead to covered institutions delivering unnecessary or incomplete notifications to customers, which would have the result of confusing or desensitizing customers to such notifications.
Several commenters suggested alternatives to the proposed timing requirements.
Some commenters suggested that the trigger for notification should be the completion of a reasonable investigation and conclusion of the incident response process following the actual or reasonably likely unauthorized access to or use of sensitive customer information, rather than the proposal's trigger of a covered institution “becoming aware” of a breach of customer information.
After considering comments and alternatives suggested by commenters, we are adopting the final amendments as proposed. We considered the concern raised by commenters that it may be logistically challenging for covered institutions to provide notice to affected individuals within the proposed rule's notification timing requirements, particularly for more complex data breach incidents.
In addition, the final amendments adopt the proposed 30-day outside date. We disagree that the rule should not include a specified notification deadline, as such an approach would diminish the goal of providing customers (regardless of State residency) with early and consistent notification of data breaches so that they may take remedial action because many States do not have any specific deadline for sending notices or provide deadlines exceeding 30 days.
We understand that there are a number of steps a covered institution may have to take after becoming aware of a data breach incident to determine if it has met the standard for providing notice. In the context of the final amendments, 30 days should be sufficient to conduct an initial assessment and notify affected individuals. While a covered institution may still be working towards remediating the breach after the 30-day timeframe, the final amendments require a covered institution to notify affected customers within the 30-day timeframe so that affected individuals may take measures to protect themselves. The final amendments remove the specific requirement in the proposal that the notice describe what has been done to protect the sensitive customer information from further
In addition, with regard to the commenter concern that it may be logistically challenging to provide a notice within the rule's timing requirements in cases where a ransomware attack has denied the covered institution access to its systems,
Consistent with the proposal, the final amendments will require that covered institutions provide notices “as soon as practicable,” but not more than 30 days, after becoming aware that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred. The amount of time that would constitute “as soon as practicable” may vary based on several factors, such as the time required to assess, contain, and control the incident.
The 30-day outside timeframe under both the proposed and final rules begins following an incident involving customer information. This is consistent with the scope of the incident response program, which is required to address unauthorized access to or use of customer information. The outside timeframe does not begin from the time that the covered institution determines that an incident involved “sensitive customer information,” as suggested by one commenter.
The final amendments will allow covered institutions to delay providing notice if the Attorney General determines that the notice required under the final amendments poses a substantial risk to national security or public safety, and notifies the Commission of such determination in writing, in which case the covered institution may delay such notice for a time period specified by the Attorney General, up to 30 days following the date when such notice was otherwise required to be provided.
In another change from the proposal, the notice may be delayed for an additional period of up to 30 days if the Attorney General determines that the notice continues to pose a substantial risk to national security or public safety and notifies the Commission of such determination in writing. In a further change in response to comments, in extraordinary circumstances, notice may be delayed for a final additional period of up to 60 days if the Attorney General determines that notice continues to pose a substantial risk to national security and notifies the Commission of such determination in writing. Beyond the final 60-day delay, if the Attorney General indicates that further delay is necessary, the Commission will consider additional requests for delay and may grant such delay through a Commission exemptive order or other action. By contrast, the proposed rules would have allowed a covered institution to delay notice only for an aggregate period of 30 days following a written request from the Attorney General to the covered institution, upon the expiration of which the covered institution would have been required to provide notice immediately. The modification to the proposed rule is designed to respond to concerns raised by commenters.
One commenter stated that a delay in notifying affected individuals for law enforcement activity may cause harm to
Other commenters, however, urged the Commission to expand the proposed law enforcement exception because, in their view, the proposed exception was too narrowly drawn.
In addition to concerns regarding the scope of the proposed law enforcement exception, several commenters opposed the length of time that a covered institution would be permitted to delay notice under the proposed rule.
In response to commenters' concerns, we have broadened both the scope and timing requirements of the delay in the final amendments. The final amendments will allow covered institutions to delay notice in cases where disclosure would pose a substantial risk to national security or public safety, contingent on a written notification by the Attorney General to the Commission.
With respect to commenters who recommended that other Federal agencies, State and local law enforcement agencies, and foreign law enforcement authorities also be permitted to trigger a delay or suggested that the perceived limited nature of this delay would cause conflict with State authorities, the rule does not preclude any such entity from requesting that the Attorney General determine that the disclosure poses a substantial risk to national security or public safety and communicate that determination to the Commission. Designating a single law enforcement agency as the point of contact for both the covered institution and the Commission on such delays is critical to ensuring that the rule is administrable. Some commenters stated concerns about the feasibility and process of reaching out to the Attorney General to request a delay, urging the Commission to expand the delay to apply to requests made by other law enforcement agencies in addition to the Attorney General. The FBI, in coordination with the Department of Justice, has since provided guidance on how firms can request disclosure delays for national security or public safety reasons in connection with the Public Company Cybersecurity Rules.
The final amendments also will expand the amount of time that a covered institution can delay notice under this provision. However, we are not persuaded, as some commenters suggested, that the rules should not incorporate a timing component at all because such an approach would diminish the goal of providing customers (regardless of State residency) with timely and consistent notification of data breaches so that they may take remedial action. This includes permitting, in extraordinary circumstances, a delay for a final additional period of up to 60 days—following two previous 30-day extensions—if the Attorney General determines that disclosure continues to pose a substantial risk to national security and notifies the Commission of such determination in writing. We are providing for this additional delay period in the final amendments, beyond what was originally proposed, and in addition to the two 30-day delays that may precede it, in recognition that, in extraordinary circumstances, national security concerns may justify additional delay beyond that warranted by public safety concerns, due to the relatively more critical nature of national security concerns.
The final amendments, consistent with the proposal, require that notices include key information with details about the incident, the breached data, and how affected individuals can respond to the breach to protect themselves. This requirement is designed to help ensure that covered institutions provide basic information to affected individuals that will help them avoid or mitigate substantial harm or inconvenience. In a modification from the proposal, however, the final amendments will not require the notice to “[d]escribe what has been done to protect the sensitive customer information from further unauthorized access or use.”
Some of the information required by the final amendment, including information regarding a description of the incident, and the type of sensitive customer information accessed or used without authorization, will provide affected individuals with basic information to help them understand the scope of the incident and its potential ramifications. As proposed, the final amendments will require covered institutions to include contact information sufficient to permit an affected individual to contact the covered institution to inquire about the incident, including a telephone number (which should be a toll-free number if available), an email address or equivalent method or means, a postal address, and the name of a specific office to contact for further information and assistance, so that affected individuals can easily seek additional information from the covered institution. All of this information may help affected individuals assess the risk posed by the incident and whether to take additional measures to protect against harm from unauthorized access or use of their information.
Similarly, as proposed, the final amendments will require information regarding the date of the incident, the estimated date of the incident, or the date range within which the incident occurred, if such information is reasonably possible to determine at the time the notice is provided. This requirement reflects the reality that a covered institution may have difficulty determining a precise date range for certain incidents because it may only discover an incident well after an initial time of access.
In addition, as proposed, the final amendments will require that covered institutions include certain information to assist affected individuals in evaluating how they should respond to the incident. Specifically, if the affected individual has an account with the covered institution, the final amendments will require the notice to recommend that the customer review account statements and immediately report any suspicious activity to the covered institution. The final amendments will also require the notice to explain what a fraud alert is and how an affected individual may place a fraud alert in credit reports. Further, the final amendments will require that the notice recommend that the affected individual periodically obtain credit reports from each nationwide credit reporting company and that the individual have information relating to fraudulent transactions deleted. The notice must also explain how a credit report can be obtained free of charge. Lastly, the final amendments require that notices include information regarding FTC and usa.gov guidance on steps an affected individual can take to protect against identity theft, a statement encouraging the individual to report any incidents of identity theft to the FTC, and the FTC's website address. These specific requirements are designed to give affected individuals resources and additional information to help them evaluate how they should respond to the incident.
As proposed, under the final rules covered institutions will be required to provide the information specified in the final amendments in each required notice. While we recognize that relevant information may vary based on the facts and circumstances of the incident, customers will benefit from the same minimum set of basic information in all notices. Accordingly, the final amendments will permit covered institutions to include additional information but will not permit omission of the prescribed information. In addition, the final amendments will require covered institutions to provide notice in a clear and conspicuous manner and by means designed to ensure that the customer can reasonably be expected to receive actual notice in writing.
Several commenters broadly supported the proposed notice contents and format requirements.
Conversely, a few commenters opposed certain aspects of the notice content and format requirements.
After considering comments, we are removing the specific requirement in the proposal that the notice “[d]escribe what has been done to protect the sensitive customer information from further unauthorized access or use.” We agree that this information has the potential to advantage threat actors and does not provide actionable information for affected individuals. Accordingly, the provision has been removed from the final amendments, which should reduce the perceived risk of providing a roadmap for threat actors compared with the proposal. Covered institutions may, however, voluntarily disclose details related to the incident's remediation status.
The final amendments do not modify the proposed requirement for covered institutions to provide information about the date of the incident, as suggested by one commenter.
Similarly, the final amendments do not modify the requirement for notices to include the prescribed contact information sufficient to permit an affected individual to contact the covered institution to inquire about the incident. We understand that covered institutions communicate with their customers using many different methods and formats. However, providing a telephone number, an email address or equivalent method or means (
Lastly, the final amendments do not prescribe a specific format for the notice to affected customers. We agree with the commenter that asserted that such flexibility will make it easier for covered institutions to provide notices that meet the requirements of the final amendments while also meeting the requirements of other notice obligations, such as certain State requirements, and thereby mitigates commenter concerns about the potential for more than one notice covering a given incident.
The final amendments require that each covered institution's incident response program include the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence on and monitoring, of service providers, including to ensure that the covered institution satisfies the customer notification requirements set forth in paragraph (a)(4) of the final amendments.
However, the Commission is adopting as proposed final amendments that provide that a covered institution, as part of its incident response program, may enter into a written agreement with its service provider to notify affected individuals on the covered institution's behalf in accordance with paragraph (a)(4) of the final amendments.
Finally, the Commission is also defining a “service provider” at adoption to mean any person or entity that receives, maintains, processes, or otherwise is permitted access to customer information through its provision of services directly to a covered institution.
In a change from the proposed rule, the Commission is adopting the final amendments without requiring covered institutions to enter into a written contract with their service providers.
Two commenters expressed varying degrees of support for requiring a written contract between a covered institution and its service providers.
Several commenters opposed this proposed requirement.
Eliminating the written contract requirement from the final amendments, while enhancing the policies and procedures obligation, strikes an appropriate balance between providing covered institutions with greater flexibility in achieving compliance with the requirements of this rule within the context of their service provider relationships, while also helping to ensure the investor protections afforded by the final amendments are maintained when covered institutions utilize service providers.
In particular, as adopted, the enhanced policies and procedures obligations will enable covered institutions to identify and utilize the most appropriate means for their business of achieving compliance with the final amendments through policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of their service providers. Providing this flexibility will help address commenters' concerns about imposing a written contractual agreement for covered institutions, particularly those that are small entities, which may not have sufficient negotiating power or leverage to demand specific contractual provisions from a large third-party service provider. At the same time, the enhanced policies and procedures requirements will provide for effective safeguarding of customer information when it is received, maintained, processed, or otherwise accessed by a service provider, as well as timely notice to customers affected by a breach at a covered institution's service provider, by requiring that the policies and procedures be reasonably designed to: (1) require oversight, including through due diligence and monitoring, of service providers, including to ensure that the covered institution notifies affected individuals as required in paragraph (a)(4) and (2) ensure service providers take appropriate measures to protect against the unauthorized access to or use of customer information and provide covered institutions with timely notification of a breach so that the covered institution can carry out their incident response program.
While the final amendments thus provide increased flexibility as to a covered institution's means of overseeing its service providers, the modification the Commission is making at adoption does not lower the standard of a covered institution's substantive oversight obligations. Some covered institutions may find that such oversight can be accomplished more easily and less expensively through less formal arrangements in certain circumstances, based on the covered institution's relationship with its service provider, as well as the scope of the services that are now or will be provided over the course of the relationship.
Further, while it may be helpful to a covered institution in achieving compliance with the final amendments to receive “reasonable assurances” from its service providers that they have taken appropriate measures to both protect customer information and provide timely notification to the covered institution in the event of a relevant breach of the service provider's customer information systems, reliance solely on such assurances may be insufficient depending on the facts and circumstances, for example when a covered institution knows, or has reason to know, that such assurance is inaccurate. Instead, the final rules require the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of the service provider to ensure the covered institution will be able to satisfy the obligations of paragraph (a)(4). Further, covered institutions generally should consider reviewing and updating these policies and procedures periodically throughout their relationship with a service provider, including updates designed to address any information learned during the course of their monitoring.
The final amendments provide covered institutions with flexibility in overseeing their service provider relationships, while helping to ensure the additional investor protections intended by these final amendments are
Further, as stated above, we are modifying the proposed rule to state that upon a covered institution's receipt of a service provider's notification, the covered institution must initiate its incident response program required by paragraph (a)(3) of the rule.
Finally, some commenters asked that we consider making any new obligations with respect to a written contract requirement forward-looking so as not to disrupt contracts already in existence by requiring renegotiation, and that we should further extend the compliance date to address this.
As described above, the final amendments require that a covered institution's policies and procedures be reasonably designed to ensure service providers take appropriate measures to provide covered institutions with notice “as soon as possible, but no later than 72 hours after becoming aware of a breach in security has occurred resulting in unauthorized access to a customer information system maintained by the service provider.”
Commenters addressed both the notification deadline and the triggering event for notifications to be provided by service providers to covered institutions in the event of a relevant breach involving unauthorized access to a customer information system maintained by the service provider. As to the notification deadline, one commenter supported requiring service providers to notify a covered institution within 48 hours of a breach impacting the covered institution or affected individuals, stating its understanding is that this is “not an uncommon arrangement” today between covered institutions and service providers maintaining their nonpublic personal information (
In contrast, some commenters recommended modifying the proposal to remove any specified duration for a reporting deadline.
As to the triggering event requiring service providers to notify covered institutions of a relevant breach, one commenter urged the Commission to shift from the service provider “becoming aware” of a breach that entailed unauthorized access to customer information, to the service provider “determining” that such a breach had occurred.
Other commenters suggested narrowing the scope of incidents that would trigger required notice by service providers to a covered institution.
After consideration, the Commission is extending the deadline for providing notification from 48 to 72 hours. Although we appreciate that the 48-hour standard in the proposed amendments may not be an uncommon arrangement between covered institutions and their service providers in the market today, extending this deadline by 24 hours will provide service providers with additional time to conduct more effective investigations of a breach at the service provider, resulting in more relevant and accurate notifications to the covered institution. Further, the 72-hour standard brings this notification deadline in alignment with other existing regulatory standards, which should reduce costs to service providers and covered institutions without sacrificing the investor protection benefits of the rule.
The Commission disagrees that there should be no specified notification deadline and that covered institutions and service providers should be able to negotiate the appropriate timing for such notification. As discussed above, upon receipt of the breach notification from the service provider, a covered institution must initiate its incident response program adopted pursuant to paragraph (a)(3) of the final amendments.
Further, the Commission is adopting as proposed the “becoming aware of” standard for triggering a service provider's breach notifications to a covered institution. This standard is
The Commission also is not limiting the scope of incidents to be reported to covered institutions to only those involving “sensitive customer information” or alternatively to breaches that result in unauthorized access to “customer information” maintained by the service provider rather than those that result in unauthorized access to a service provider's “customer information system.” Under the final amendments, a covered institution's incident response program must be reasonably designed to “detect, respond to, and recover from unauthorized access to or use of customer information,” and must include provisions to assess such incidents to “identify the
The Commission is adopting as proposed language that permits covered institutions, as part of their incident response programs, to enter into a written agreement with their service providers to notify affected individuals on the covered institution's behalf.
One commenter stated that it is appropriate to permit a covered institution to enter into a written agreement with its service provider to notify affected individuals on the covered institution's behalf, so long as the notification is actually ultimately provided to customers in a manner that satisfies the covered institution's notice obligations.
At the same time, the Commission is adopting a new paragraph (a)(5)(iii) to specify that even where a covered institution uses a service provider, the obligation to ensure that affected individuals are notified in accordance with the rule rests with the covered institution.
In addition, where the covered institution has entered into a written agreement with its service provider to provide notice on the covered institution's behalf pursuant to paragraph (a)(5)(ii), and the covered institution determines that the service provider has not provided such notifications in a manner that satisfies the conditions of paragraph (a)(4), the covered institution must still ensure that notification is provided to the customer, and the covered institution's policies and procedures generally should be designed to address these instances. To accomplish this, the covered institution generally should conduct timely due diligence to identify any lack of notification by the service provider to the customer and remedy the matter in advance of the deadline set out in paragraph (a)(4).
The Commission is adopting the definition of “service provider” to mean “any person or entity that receives, maintains, processes, or otherwise is permitted access to customer information through its provision of services directly to a covered institution.”
A number of commenters addressed the scope of the proposed definition. Several commenters suggested narrowing the scope of the service provider definition by revising it to exclude affiliates or other GLBA regulated entities.
As stated above, we are modifying the definition of service provider from the proposal to remove reference to third parties in response to commenters to incorporate into rule text the Commission's intended scope of the “service provider' definition, as discussed in the Proposing Release.
Further, it would not be appropriate to narrow the service provider definition to only address those persons or entities that operate as “higher-risk service providers” that receive, maintain, process, or are otherwise permitted access to
The Commission also acknowledges the request to clarify the scope of what is included within the service provider definition, including “whether service providers would include financial counterparties such as brokers, clearing and settlement firms, and custodial banks.” In alignment with the service provider definition we are adopting, covered institutions should make this determination based on the facts and circumstances about the substance of the relationship with the covered institution, rather than the form of the entity in question. Where financial counterparties receive, maintain, or otherwise are permitted access to customer information through the provision of services directly to the covered institution, they meet the service provider definition as adopted.
We are adopting amendments to rule 248.30 that define the scope of information covered by the safeguards and disposal rules. These amendments will broaden and more closely align the scope of both rules by applying them to the information of not only a covered institution's own customers, but also the customers of other financial institutions that has been provided to the covered institution.
Specifically, the amendments:
• Adopt a new definition of “customer information” defining the scope of information covered by both the safeguards and disposal rules. These amendments provide greater specificity regarding what constitutes customer information that must be protected under the safeguards rule. They also expand the scope of the disposal rule, which currently applies only to consumer information (defined as “consumer report information” in the
• Provide that customer information protected under both the safeguards and disposal rules includes both customer information in the possession of a covered institution as well as customer information handled or maintained on its behalf.
• Provide that both customer and consumer information include information that pertains to individuals with whom the covered institution has a customer relationship, as well as to the customers of other financial institutions where such information has been provided to the covered institution. We are adopting this expansion as proposed but, as discussed below, have reorganized the rule provisions effectuating the change in response to comments.
Currently, Regulation S-P's protections under the safeguards rule and disposal rule apply to different, and at times overlapping, sets of information.
To align more closely the information protected by both rules, as proposed, we are amending rule 248.30 by replacing the term “customer records and information” in the safeguards rule with a newly defined term “customer information” and by adding customer information to the coverage of the disposal rule. For covered institutions other than transfer agents, the term “customer information” will mean, as proposed, “any record containing nonpublic personal information as defined in section 248.3(t) about a customer of a financial institution, whether in paper, electronic, or other form.”
Commenters did not object to the proposed definition of “customer information.” As discussed in the Proposing Release, the customer information definition in the coverage of the safeguards rule is intended to be consistent with the objectives of the GLBA, which focuses on protecting “nonpublic personal information” of those who are “customers” of financial institutions.
Additionally, adding customer information to the coverage of the disposal rule is also consistent with the objectives of the GLBA. Under the GLBA, an institution has a “continuing obligation” to protect the security and confidentiality of customers' nonpublic personal information.
One commenter sought clarification regarding the proposal's coverage of customer information handled or maintained on behalf of a covered institution. This commenter stated that proposed paragraph (a) of rule 248.30, which set out the scope of information collectively covered under the safeguards and disposal rules, could be interpreted to limit the application of the rules to customer information in the possession of the covered institution, while proposed paragraph (e)(5) defined customer information to include information that is handled or maintained on behalf of the covered institution. The proposal included both customer information in the possession of a covered institution as well as customer information handled or maintained on its behalf in both the safeguards and disposal rules. This is because rule 248.30 provided the rules applied to “customer information” and, as the commenter observed, the proposal defined customer information to include “any record containing
In response to this comment, we have removed the dedicated scope paragraph (a) from the proposed rule and moved all the requirements for customer information and consumer information into the definitions of those terms, now in renumbered paragraphs (d)(5)(1) and (d)(1) respectively. Accordingly, and substantively as proposed, the definition of consumer information covers information that a covered institution maintains or otherwise possesses for a business purpose, and the customer information definition covers information in the possession of a covered institution or that is handled or maintained by the covered institution or on its behalf.
We also are adopting the requirement, substantively as proposed, that both the safeguards rule and the disposal rule apply to the information specified in those definitions regardless of whether such information pertains to (a) individuals with whom the covered institution has a customer relationship or (b) the customers of other financial institutions where such information has been provided to the covered institution.
Comments were mixed on expanding the safeguards and disposal rules to cover nonpublic personal information received by covered institutions from third party financial institutions. Some commenters supported the expansion.
After considering comments, the final amendments provide that the safeguards rule and disposal rule apply to both nonpublic personal information that a covered institution collects about its own customers and to nonpublic personal information it receives from another financial institution about that institution's customers. Currently, in contrast, Regulation S-P defines “customer” as “a consumer who has a customer relationship with you.” The safeguards rule, therefore, only protects the “records and information” of individuals who are customers of the particular institution and not others, such as individuals who are customers of another financial institution. The disposal rule, on the other hand, requires proper disposal of certain records about individuals without regard to whether the individuals are customers of the particular institution. The final amendments better align the scope of the safeguards and disposal rules by requiring that a covered institution protect the information of individuals even if those individuals are not customers of that particular institution but customers of another financial institution.
The amendments also are designed to help ensure that the nonpublic personal information of covered institution customers is better protected from unauthorized disclosure on an ongoing basis, regardless of what entity is maintaining or handling that information.
As discussed in more detail below, the final amendments, which are the same as proposed except for the modifications to the structure of the rules discussed above,
As proposed, the final amendments also account for the fact that transfer agents' clients generally are the issuers whose securities are held by investors, not the individual investors themselves, by defining “customer” with respect to a transfer agent registered with the Commission or another appropriate regulatory agency as any natural person who is a securityholder of an issuer for which the transfer agent acts or has acted as a transfer agent. Some commenters supported extending these rules to all transfer agents. These commenters stated that doing so would: (i) be consistent with current market practice; (ii) benefit investors; and (iii) create a single, equal standard for all transfer agents.
We received some comments in support of our proposed extension of scope to include transfer agents. One commenter stated that extending the protections of the safeguards rule and the disposal rule to all transfer agents would benefit the public and protect investors, due to the sensitive information they possess, and would equalize the standards that are applicable to transfer agents.
Similarly, one commenter supported including transfer agents and requiring breach notifications,
Other comments, however, objected to scoping transfer agents into the Safeguards Rule. For example, one commenter suggested that applying the rules to all transfer agents could subject transfer agents registered with an appropriate regulatory agency that is not the Commission to conflicting data security requirements from those regulators, resulting in regulatory confusion.
The Commission does not agree that extending the rules to all transfer agents would result in regulatory confusion. As discussed above, the GLBA and FACT Act oblige us to adopt regulations, to the extent possible, that are consistent and comparable with those adopted by the Banking Agencies, the CFPB, and the FTC.
Moreover, the Commission is not exempting from the safeguards rule transfer agents that do not engage in paying agent services. The population of transfer agents that maintain sensitive, detailed and individualized information related to securityholders is not limited to those transfer agents that engage in paying agent services. Providing the exemption suggested by this commenter would deprive securityholders whose sensitive customer information is maintained by a non-paying agent transfer agent of the important protections afforded under the final amendments.
The Commission does not agree that extending the rules to all transfer agents would exceed the scope of the Commission's authority. As discussed in the proposal, when the Commission initially proposed and adopted the disposal rule, it did so to implement the congressional directive in section 216 of the FACT Act to adopt regulations to require any person who maintains or possesses a consumer report or consumer information derived from a consumer report for a business purpose to properly dispose of the information.
The Commission, however, has broad authority under Section 17A of the Exchange Act that is independent of either the FACT Act or the GLBA, to prescribe rules and regulations for transfer agents as necessary or appropriate in the public interest, for the protection of investors, for the safeguarding of securities and funds, or otherwise in furtherance of the purposes of Title I of the Exchange Act.
The FTC has not adopted disposal and privacy rules to govern transfer agents registered with an appropriate regulatory agency that is not the Commission. The Commission is exercising its authority under section 17A(d)(1) of the Exchange Act to extend the safeguards rule to apply to any transfer agent registered with either the Commission or another appropriate regulatory agency and to extend the disposal rule to apply to transfer agents registered with another appropriate regulatory agency. The Commission does so to address the risks of market disruptions and investor harm posed by
As explained in the proposal, transfer agents are subject to many of the same risks of data system breach or failure that other market participants face.
At the same time, the scope and volume of funds and securities that are processed or held by transfer agents have increased dramatically since Regulation S-P was first adopted.
Moreover, contrary to some commenters' statements, transfer agents do maintain personal information about individual securityholders that could be used to take or transfer assets of securityholders or otherwise lead to further complications for securityholders. As stated in the proposal, transfer agents may obtain, share, and maintain personal information on behalf of securityholders who hold securities in registered form (
For these reasons, the Commission is extending the safeguards rule and disposal rule to cover
As stated above, the final amendments include a definition of customer that is specific to transfer agents, which is being adopted as proposed, except for a clarification noted below. For a transfer agent, customer means any natural person who is a securityholder of an issuer for which the transfer agent acts or has acted as a transfer agent.
Some commenters supported this definition and approach of treating securityholders of an issuer as a transfer agent's customer, while other commenters did not. One commenter stated that this approach would close a “regulatory gap”—despite possessing and maintaining sensitive information about securityholders, no transfer agents are currently subject to the safeguards rule, and only transfer agents registered with the Commission are subject to the disposal rule.
The Commission agrees that customer information held by a covered institution must be protected, regardless of how that customer information comes into the covered institution's possession. As discussed in the proposal and above, transfer agents obtain, share, and maintain personal information on behalf of securityholders who hold securities in registered form (
Contrary to some commenters' statements, adopting a transfer agent-specific definition of customer does not indicate that the safeguards rule and disposal rule are not well-suited for transfer agents. Rather, it helps ensure that the rule is appropriately tailored to address transfer agents and the specific type of customer information they collect and maintain. Tailoring specific rule provisions to specific types of entities to address their unique functions, structures, and businesses does not render the rule inappropriate to the entity for which the provisions are being tailored, nor is it an approach that is unique to transfer agents or to Regulation S-P. For example, since the adoption of Exchange Act Rule 17Ad-12, transfer agents have been required to safeguard any funds and securities, including securityholder funds and securities, in the transfer agent's possession or control.
Finally, two commenters stated that the Commission should propose a rule specific to transfer agents as part of the existing rules that apply specifically to transfer agents.
The Commission is not taking the approach suggested by the commenters. The final amendments will accomplish a similar result to a transfer agent-specific rule, while helping to ensure consistent requirements among covered institutions. Further, the commenters did not explain how such a rule would differ from the final amendments, other than being in a different set of Commission regulations, or how such a rule would be a material improvement over the approach being adopted as proposed. The Commission does not agree that adopting something different from the final amendments is necessary to achieve the “Commission's privacy and cybersecurity goals in a manner specific to the business and role of transfer agents.”
Some commenters raised concerns about potential conflicts with, or duplication, of State law requirements. One commenter stated that securityholders of issuers are not customers of the transfer agent and imposing obligations on them creates conflicting and duplicative requirements to those already in place through State laws to safeguard securityholders' personal information.
While we acknowledge the commenters' concerns, the final amendments permit transfer agents and issuers to develop arrangements to address them. Nothing in the final amendments will prohibit or limit transfer agents' ability to enter into or modify their contracts with issuer clients in a manner that allows the transfer agent to comply with applicable legal requirements. Indeed, some transfer agents already send customer notices on behalf of their issuer clients. As one commenter stated in requesting that the Commission permit covered institutions to have their service providers send breach notices to affected individuals on their behalf, it is a common practice today for investment companies to have their transfer agents assume responsibility for sending affected customers breach notices.
As explained in the proposal, the Commission understands that State laws generally require persons or entities that own or license computerized data that includes private information to notify residents of the State when a data breach results in the compromise of their private information.
One commenter stated that the proposal would equalize standards governing transfer agents, and in doing so, promote investor protection.
We acknowledge that due to existing State law provisions, individuals affected by a breach at a transfer agent may receive notice from the issuer and the transfer agent with respect to the same breach. Moreover, transfer agents subject to the Banking Agencies' Incident Response Guidance may send notices under those provisions as well, and it is possible that an issuer may also send notices to securityholders, pursuant to State law or other
Regardless, we do not agree that individuals who receive a notice from both a transfer agent and the issuer with respect to the same breach or who are contacted by a transfer agent on behalf of another institution will be confused. Any potential confusion could be ameliorated through a clear description of the specific incident that would allow an individual to determine whether it is covered by a notice from any covered institution.
The final amendments will, as proposed, contain a number of amendments to Regulation S-P that result in the continuation of the same regulatory treatment for notice-registered broker-dealers as they were subject to under the existing safeguards rule and disposal rule.
No comments were received regarding the treatment of notice-registered broker-dealers under the safeguards rule and the disposal rule. For the reasons outlined in the Proposing Release, the Commission is adopting the amendments as proposed.
We are adopting amendments to require covered institutions to make and maintain written records documenting compliance with the requirements of the safeguards rule and of the disposal rule as outlined in the table below (collectively, “recordkeeping requirements”).
These recordkeeping requirements should aid covered institutions in periodically reassessing the effectiveness of their safeguarding and disposal programs by helping to ensure that those institutions have the records needed to perform that assessment. Additionally, maintenance of these records for sufficiently long periods of time and in accessible locations will help the Commission and its staff to monitor compliance with the requirements of the amended rules. We received one comment broadly in support of these recordkeeping requirements.
The text of the proposed recordkeeping rules were worded differently for different covered institutions. For example, the proposed recordkeeping rule text for broker-dealers and transfer agents detailed the specific records to be kept whereas the proposed rule for advisers stated that advisers would be required to make and keep true, accurate and current a copy of the written records documenting compliance with the requirements of the safeguards and disposal rules.
The records that will be required under these amendments are:
• Written policies and procedures required to be adopted and implemented pursuant to final rule 248.30(a)(1), which requires policies and procedures to address administrative, technical, and physical safeguards for the protection of customer information;
• Written documentation of any detected unauthorized access to or use of customer information, as well as any response to, and recovery from such unauthorized access to or use of customer information required by final rule 248.30(a)(3);
• Written documentation of any investigation and determination made regarding whether notification to affected individuals is required pursuant to final rule 248.30(a)(4), including the basis for any determination made, any written documentation from the Attorney General related to a delay in notice, as well as a copy of any notice transmitted following such determination;
• Written policies and procedures required to be adopted and implemented pursuant to final rule 248.30(a)(5)(i), which requires policies and procedures to oversee, monitor, and conduct due diligence on service providers, including to ensure that the covered institution is notified when a breach in security has occurred at the service provider;
• Written documentation of any contract or agreement between a covered institution and a service provider entered into pursuant to final rule 248.30(a)(5); and
• Written policies and procedures required to be adopted and implemented pursuant to final rule 248.30(b)(2), which requires policies and procedures to address the proper disposal of consumer information and customer information.
The records that will be required include records of policies and procedures under the safeguards rule that address administrative, technical, and physical safeguards for the protection of customer information.
The disposal rule, as amended, will require that every covered institution adopt and implement written policies and procedures that address the proper disposal of consumer information and customer information.
Currently, Regulation S-P generally requires broker-dealers, investment companies, and registered investment advisers to provide customers with annual notices informing them about the institutions' privacy practices (“annual privacy notice”).
We are adopting as proposed amendments to the annual notice provision requirement of Regulation S-P to include the exception to the annual notice delivery added by the statutory exception Congress enacted in the FAST Act. The statutory exception states that a financial institution that meets the requirements for the annual privacy notice exception will not be required to provide annual privacy notices “until such time” as that financial institution fails to comply with the conditions to the exception, but does not specify a date by which the annual privacy notice delivery must resume.
As stated in the Proposing Release, certain staff letters and other staff statements addressing Regulation S-P and other matters covered by the final amendments may be withdrawn or rescinded in connection with this adoption. Upon the compliance date of these rules, staff letters and other staff statements, or portions thereof, will be withdrawn or rescinded to the extent that they are moot, superseded, or otherwise inconsistent with the rules. This may include the letters and statements below. To the extent any staff statement is inconsistent or conflicts with the requirements of the rules, even if not specifically identified below, that statement is superseded.
The Commission is providing an 18-month compliance period after the date of publication in the
We proposed a 12-month transition period from the effective date for all covered institutions, regardless of asset size, and we solicited comment on whether the compliance period should be shorter or longer, and whether it should be the same for all covered institutions. Commenters that addressed this aspect of the proposal urged the Commission to provide additional time, generally suggesting a two-year or three-year period to provide time for covered institutions to prepare to comply with the rule's requirements.
We have taken commenter concerns into account in determining the compliance schedule,
Pursuant to the Congressional Review Act,
The Commission is mindful of the economic effects, including the benefits and costs, of the adopted amendments. Section 3(f) of the Exchange Act, section 2(c) of the Investment Company Act, and section 202(c) of the Investment Advisers Act provide that when engaging in rulemaking that requires us to consider or determine whether an action is necessary or appropriate in or consistent with the public interest, to also consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation. Section 23(a)(2) of the Exchange Act also requires us to consider the effect that the rules will have on competition and prohibits us from adopting any rule that would impose a burden on competition not necessary or appropriate in furtherance of the Exchange Act. The analysis below addresses the likely economic effects of the final amendments, including the anticipated and estimated benefits and costs of the amendments and their likely effects on efficiency, competition, and capital formation. The Commission also discusses the potential economic effects of certain alternatives to the approaches taken in this adoption.
The final amendments require every broker-dealer,
The final amendments will affect covered institutions as well as customers who will receive the required notices. The final amendments will also have indirect effects on service providers that receive, maintain, process, or otherwise are permitted access to customer information on behalf of covered institutions: under the final amendments, unauthorized access to or use of sensitive customer information via service providers will fall under the customer notification requirement. The final amendments require that a covered institution's incident response program include the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of service providers.
The main economic effects of the final amendments will result from the notification and incident response program requirements applicable to all covered institutions.
The main economic benefits of the final notification and incident response program requirements, as well as the extension of Regulation S-P to include all transfer agents, will result from enhanced protection of customer information. Customers will directly benefit from the opportunity to take appropriate mitigating actions to protect their accounts and information in the event of unauthorized access to or use of their sensitive information. Direct benefits will result from covered institutions allocating additional resources towards policies and procedures, information safeguards, and cybersecurity to comply with the final requirements. There may lastly be indirect benefits from covered institutions undertaking these actions to the extent they seek to avoid reputational harm resulting from the mandated notifications. These additional resources will contribute to reducing the exposure of covered institutions, and of the broader financial system, to incidents resulting in unauthorized access to or use of customer information.
We anticipate that the economic benefits and costs of the final notification requirements will—in the aggregate—be limited because all States already require some form of customer notification of certain data breaches,
For these reasons, the final requirements will improve customers' knowledge of when their sensitive information has been compromised. Specifically, we expect that the adopted Federal minimum standard for notifying customers of certain types of data breaches, along with the preparation of written policies and procedures for incident response, will result in more customers being notified of these data breaches as well as faster notifications for some customers, and that both of these effects will improve customers' ability to act to protect their personal information. Moreover, such improved notification will—in many cases—become public and impose additional reputational costs on covered institutions that fail to safeguard customers' sensitive information. We expect that these potential additional reputational costs will increase the disciplining effect on covered institutions, incentivizing them to improve customer information safeguards and reduce their exposure to data breaches, thereby improving the resilience of the financial system more broadly.
To the extent that a covered institution does not have policies and procedures to safeguard customer information and respond to unauthorized access to or use of customer information, it will bear the costs to develop and implement the
As adopting policies and procedures involves fixed costs, doing so is very likely to impose a proportionately larger compliance cost on smaller covered institutions as compared to larger covered institutions.
Many of the benefits and costs discussed below are difficult to quantify. Doing so would involve estimating the losses likely to be incurred by a customer in the absence of mitigation measures, the efficacy of mitigation measures implemented with a given delay, and the expected delay before notification can be provided under the final amendments. In general, data needed to arrive at such estimates are not available to the Commission. Thus, while we have attempted to quantify economic effects where possible, much of the discussion of economic effects is qualitative in nature.
In a market with complete information, customers are able to perfectly observe the quality of the goods and services being provided and the processes and service provider relationships by which they are being provided. Fully informed customers can then decide what level of quality of good or service to consume, based on their own personal preferences. In this context, one element of a financial service's quality is the customer information safeguards of the firm providing the service, which capture the likelihood of a customer's information being exposed in the event of a breach, as well as the firm's response to such a breach if it were to occur.
In the context of covered institutions—firms whose services frequently involve custody of highly sensitive customer information—the assumption of complete information is unrealistic. Customers have little visibility into the internal processes of a firm and those of its service providers, so it is impractical for them to directly observe the level of customer information safeguards that a firm is employing.
The information asymmetry can lead to three inefficiencies. First, the information asymmetry about specific information breaches that have occurred prevents individual customers whose information has been compromised from taking timely actions (
We expect the final amendments may mitigate the inefficiencies described above in several ways. First, by helping facilitate timely and informative notices to customers when their information is compromised, the amendments may mitigate information asymmetries around the compromise of information and improve customers' ability to take appropriate remedial actions. Second, by revealing when such events occur, the amendments may help customers draw inferences about a covered institution's efforts toward protecting customer information, which might help inform their choice of covered institution and reduce the probability of customers inadvertently choosing a firm that is less likely to meet their preferences or needs.
The effectiveness of the final amendments at mitigating these problems will depend on several factors. First, the effectiveness of the amendments will depend on the degree to which breach notification provides customers with sufficient actionable information in a sufficient timeframe to help them mitigate the effects of the compromise of sensitive customer information. Second, it will depend on customers' ability to draw inferences on a covered institution's protection of customer information based on the notifications they receive, or the absence thereof.
Some commenters supported generally the economic rationale in the Proposing Release.
Other commenters disagreed with the economic rationale in the Proposing Release and stated that covered institutions' level of customer information safeguards and/or breach notification practices were already adequate, and that existing regulation made the amendments unnecessary.
In particular, the variety of practices and State law requirements that could lead to different notification outcomes under existing requirements provides a further rationale for the rule and motivated specific differences in the final amendments relative to State laws. We discuss the effects of these differences in detail below,
Other commenters stated that the analysis in the Proposing Release underestimated the costs of the amendments.
The baseline against which the costs, the benefits, and the effects on efficiency, competition, and capital formation of the final amendments are measured consists of current requirements for customer notification and information safeguards, current practice as it relates to customer notification and information safeguards, and the current market structure and regulatory framework. The economic analysis appropriately considers existing regulatory requirements, including recently adopted Commission rules as well as State, Federal, and foreign laws and regulations, as part of the economic baseline against which the costs and benefits of the final amendments are measured.
Several commenters requested that the Commission consider interactions between the economic effects of the proposal and other recent Commission proposals.
The parties directly affected by the final amendments, the “covered institutions,”
Over the last two decades, the widespread adoption of digitization and the migration toward internet-based products and services has radically changed the manner in which firms interact with customers. This trend has also applied to the financial services industry.
Certain recent changes in the industry, including changes discussed by commenters, have continued the trend toward digitization and the importance of cybersecurity. For example, the shift to remote work has brought new cybersecurity challenges. One commenter stated that 91 percent of data security professionals saw negative risk implications from remote and hybrid work.
The financial sector is one of the biggest spenders on cybersecurity measures: a recent survey found that financial firms spent an average of approximately 13.6 percent of their technology budget on cybersecurity in 2023, compared to an overall average across industries of 11.6 percent.
Before adopting these amendments, the Commission did not require covered institutions to notify customers (or the Commission) in the event of a data breach, and so statistics relating to data breaches that occurred at covered institutions were not readily available. However, data compiled from notifications required under various State laws indicate that in 2022 the number of data breaches reported in the U.S. was 1,802—a 3 percent decrease over 2021, but a 63 percent increase over 2020.
The average total cost of a data breach for a U.S. firm in 2023 was estimated to be $9.48 million by one report.
Some commenters supported the Proposing Release's assessment that data breaches are an important risk currently faced by covered institutions and their customers.
Two features of the existing regulatory framework are most relevant to the amendments: existing regulations that require covered institutions to notify customers in the event that their information is compromised; and existing regulations and guidelines that affect covered institutions' practices for safeguarding customers' information. While the relevance of the former is obvious, the latter is potentially more significant: regulations aimed at improving firms' practices for safeguarding customer information reduce the need for data breach notifications in the first place. In this section, we summarize these two aspects of the regulatory framework as well as existing annual notice delivery requirements.
All 50 States and the District of Columbia impose some form of data breach notification requirement under State law. These laws vary in detail from State to State but have certain common features. State laws trigger data breach notification obligations when some type of “personal information” of a State's resident is either accessed or acquired in an unauthorized manner, subject to various common exceptions. For the vast majority of States (46), a notification obligation is triggered only when there is unauthorized acquisition, while a handful of States (5) require notification whenever there is unauthorized access.
Generally, States can be said to adopt either a basic or an enhanced definition of personal information. A typical example of a basic definition specifies personal information as the customer name linked to one or more pieces of nonpublic information such as Social Security number, driver's license number (or other State identification number), or financial account number together with any required credentials to permit access to said account.
One commenter stated that all States provided an exception to the notification requirement if the data compromised were encrypted.
Most States (43) provide an exception to the notification requirement if, following a breach of security, the entity investigates and determines that there is no reasonable likelihood that the individual whose personal information was breached has experienced or will experience certain harms (“no-harm exception”).
In general, State laws provide a general principle for timing of notification (
One commenter stated that, where State laws have a 30-day notice requirement, the 30-day periods generally do not begin to run until a determination has been made that the incident affected residents of that State that will require notice, and that the Commission's proposed 30-day requirement would be triggered much sooner in the process.
One commenter stated that most State data breach notification laws did not specify a number of days to report a breach, and that of the States that did have a specific timeframe, many had an exception allowing for compliance with the GLBA in lieu of adherence to their timeframes.
Additionally, one commenter stated the establishment of a Federal minimum standard for data breach notification would satisfy State notice laws that provide exemptions for firms subject to such a requirement.
Some commenters stated that different State laws currently have different requirements as to what content must be included in a notice to customers.
States also differ in their requirements regarding the method that must be used to notify affected individuals.
All States allow, under some conditions, for substitute notification instead of the required methods of notification discussed above. The most common conditions include a specified large number of individuals to notify and/or a minimum dollar cost to notify the affected individuals. These conditions vary widely across States.
Some data breach incidents involve service providers. Covered institutions may use service providers to perform certain business activities and functions, such as trading and order management, information technology functions, and cloud computing services. As a result of this outsourcing, service providers may receive, maintain, or process customer information, or be permitted to access it, and therefore a security incident at the service provider could expose information at or belonging to the covered institution. In general, State laws require persons and entities that maintain computerized data for other entities, but do not own or license that data, to notify the data-owning entity in the event of a data breach (so as to allow that entity to notify affected individuals).
Some commenters opposed the proposed provision that would have required service providers to notify covered institutions of a breach of sensitive customer information within 48 hours.
In general, State laws provide a window for notification of the entity that owns or licenses the data by the entity that maintains the data.
Some of the service providers that will be affected by the final amendments are covered institutions themselves.
Regulation S-P, prior to the adoption of the amendments, required all covered institutions to adopt written policies and procedures reasonably designed to: “(i) insure [sic] the security and confidentiality of customer records and information; (ii) protect against any anticipated threats or hazards to the security or integrity of customer records and information; and (iii) protect against unauthorized access to or use of customer records and information that could result in substantial harm or inconvenience to any customer.”
Covered institutions that hold transactional accounts for consumers may also be subject to Regulation S-ID.
In addition, broker-dealers that operate alternative trading systems exceeding specified volume thresholds are SCI entities subject to Regulation SCI and required, among other things, to have certain policies and procedures reasonably designed to ensure that their market systems have adequate levels of capacity, integrity, resiliency, availability, and security and take appropriate corrective action when “SCI events” occur.
The safeguards rule of Regulation S-P did not, before this adoption, apply to transfer agents. In addition, the disposal rule did not apply to transfer agents registered with a regulatory agency other than the Commission.
Some covered institutions may also be subject to other regulators' rules and guidelines implicating customer information safeguards. Transfer agents supervised by one of the Banking Agencies may be subject to the Banking Agencies' Incident Response Guidance and to the Banking Agencies' Safeguards Guidance, for example.
The Banking Agencies' Safeguards Guidance requires certain financial institutions to implement a comprehensive written information security program that includes administrative, technical, and physical safeguards appropriate to the size and complexity of the entity and the nature and scope of its activities.
Private funds may be subject to the FTC's recently amended FTC Safeguards Rule, which contains data security requirements to protect customer financial information.
In addition, many entities covered by this rule may be subject to other, more general information protection requirements.
A variety of guidance is available to institutions seeking to address information security risk, particularly through the development of policies and procedures. These include NIST and CISA voluntary standards, both of which include assessment, containment, and notification elements similar to those included in these amendments.
Under the baseline,
The types of information required to be included in the initial, annual, and revised privacy notices are identical. Each privacy notice must describe the categories of information the institution shares and the categories of affiliates and non-affiliates with which it shares nonpublic personal information.
The final amendments will affect five categories of covered institutions: broker-dealers other than notice-registered broker-dealers, funding portals, registered investment advisers, investment companies, and transfer agents registered with the Commission or another appropriate regulatory agency. These institutions compete in several distinct markets and offer a wide range of services, including effecting customers' securities transactions, providing liquidity, pooling investments, transferring ownership in securities, advising on financial matters, managing portfolios, and consulting to pension funds. Many of the larger covered institutions belong to more than one category (
Broker-dealers include both brokers (persons engaged in the business of effecting transactions in securities for the account of others),
Based on an analysis of FOCUS filings and Form BD filings, there were 3,476 registered broker-dealers during the third quarter of 2023.
Funding portals act as intermediaries in facilitating securities-based crowdfunding transactions that are subject to Regulation Crowdfunding.
Funding portals are registered with the Commission and are members of FINRA.
As of December 31, 2023, there were 92 registered funding portals that were members of FINRA (excluding funding portals that had withdrawn their registration and FINRA membership).
Registered investment advisers provide a variety of services to their clients, including financial planning advice, portfolio management, pension consulting, selecting other advisers, publication of periodicals and newsletters, security rating and pricing, market timing, and conducting educational seminars.
Based on Form ADV filings received up to October 5, 2023, there are 15,565 investment advisers registered with the Commission with a total of more than 51 million individual clients and $114 trillion in assets under management.
Figure 6 plots the cumulative distribution of the number of individual clients handled by investment advisers registered with the Commission. The distribution is highly skewed: 13 advisers each reported having more than one million clients while 95 percent of advisers reported having fewer than 2,000 clients. Many such advisers are quite small, with half reporting fewer than 62 clients.
Similarly, most investment advisers registered with the Commission are limited geographically. These advisers must generally make a “notice filing” with a State in which they have a place of business or six or more clients.
Investment companies are companies that issue securities and are primarily engaged in the business of investing in securities. Investment companies invest money they receive from investors on a collective basis, and each investor shares in the profits and losses in proportion to that investor's interest in the investment company. Investment companies subject to the final amendments include registered open-end and closed-end funds, business development companies (“BDCs”), Unit Investment Trusts (“UITs”), employee securities' companies (“ESCs”), and management company separate accounts (“MCSAs”). Because they are not operating companies, investment companies do not have “customers” as such, and thus are unlikely to possess significant amounts of nonpublic “customer” information in the conventional sense. They may, however, have access to nonpublic information about their investors.
Table 4 summarizes the investment company universe that will be subject to the final amendments. In total, as of September 30, 2023, there were 13,766 investment companies, including 12,183 open-end management investment companies, 682 closed-end managed investment companies, 702 UITs,
Transfer agents maintain records of security ownership and are responsible for processing changes of ownership (“transfers”), communicating information from the firm to its security-holders (
Despite the prevalence of securities held in street name, a large number of individuals nonetheless hold securities directly through a transfer agent. Securities held directly may be held either in the form of a physical stock certificate or in book-entry form through the Direct Registration System (“DRS”). In either case, the transfer agent would need to maintain sensitive information about the individuals who own the securities. For example, to handle a request for replacement certificate, the transfer agent would need to confirm the identity of the individual making such a request and to maintain a record of such confirmation. Similarly, to effect DRS transfers, a transfer agent would need to provide a customer's identification information in the message to the DRS.
In 2023, there were 251 transfer agents registered with the Commission, with an additional 64 registered with the Banking Agencies.
On average, each transfer agent reported around 1 million individual accounts, with the largest reporting 61 million.
The final amendments require that a covered institution's incident response program include the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of service providers. These policies and procedures must be reasonably designed to ensure service providers take appropriate measures to protect against unauthorized access to or use of customer information and to notify covered institutions of an applicable breach in security.
Covered institutions' relationships with a wide range of service providers will be affected. Specialized service providers with offerings geared toward outsourcing of covered institutions' core functions will generally fall under the requirements. Those offering customer relationship management, customer billing, portfolio management, customer portals (
In the Proposing Release, we stated that the financial services industry is increasingly relying on service providers through various forms of outsourcing.
The final amendments can be divided into four main components. First, they create a requirement for covered institutions to adopt policies and procedures for the protection of customer information. The policies and procedures must include an incident response program to address unauthorized access to or use of customer information, including by providing notification to individuals affected by an incident during which their sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization. The response program must also include the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight of service providers, including to ensure service providers take appropriate measures to protect against unauthorized access to or use of customer information. Second, the amendments define the information covered by the safeguards rule and the disposal rule,
Some commenters criticized, generally, the discussion of benefits and costs in the Proposing Release. One commenter stated that the Commission should “undertake a more expansive, accurate, and quantifiable assessment of the specific and cumulative costs, burdens, and economic effects that would be placed on investment advisers by the proposed requirements, as well as of the potential unintended consequences for their clients.”
In response to these commenters, we have supplemented the analysis of the benefits and the costs of the final amendments regarding the timing requirement for notification of customers affected by a breach, including by providing more details on how the requirements differ from the baseline;
Several commenters stated that the Commission should consider the cumulative costs of implementing the proposed amendments and other recent Commission rules and proposed rules.
Consistent with its long-standing practice, the Commission's economic analysis in each adopting release
Covered institutions subject to the final amendments in this rulemaking may be subject to one or more of the other adopted rules commenters named depending on whether those institutions' activities fall within the scope of the other rules. Specifically, the rules and amendments in the February 2024 Form PF Adopting Release, and those rules and amendments in the Private Fund Advisers Adopting Release for which the compliance dates have not already passed, apply to advisers to private funds: as private fund advisers are a subset of the covered institutions affected by the amendments, only a subset of covered institutions face compliance costs associated with these recent rules and amendments.
In this section, we discuss the effects of written policies and procedures requirements in the final amendments, focusing on those relating to the incident response program required under the final amendments. Specifically, while the final amendments require covered institutions to develop, implement, and maintain written policies and procedures that address administrative, technical, and physical safeguards for the protection of customer information,
We expect that requiring written policies and procedures for the response program will improve the effectiveness of response programs in multiple ways, which will benefit covered institutions and their customers. Written policies and procedures are a practical prerequisite for organizations to implement standard operating procedures and have been recognized as effective at improving outcomes in critical environments.
We do not anticipate that the final requirement for written policies and procedures will result in substantial new benefits from its application to large covered institutions, those with a national presence, or those already subject to comparable Federal regulations. As stated above,
For the same reasons, this requirement is unlikely to impose significant new costs for these institutions. As discussed below, we estimate that certain costs associated with developing and implementing policies and procedures to comply with the final amendments will be, on average, $15,445 per year per covered institution.
We expect that the final written policies and procedures requirements will have more substantial benefits and costs for smaller covered institutions without a national presence, such as small registered investment advisers and broker-dealers who cater to a clientele based on geography, as compared to larger covered institutions. Before this adoption, some of these covered institutions may have had lower incentives to develop and implement written policies and procedures for a response program and may therefore have been less likely to have such policies and procedures in place for several reasons. First, the incentives to develop and implement policies and procedures for a response program may vary for covered institutions of different sizes. Some smaller covered institutions may already prioritize response programs, for example because the firm views reputational costs of a cybersecurity breach or other type of unauthorized access to or use of customer information as posing the potential for serious harm to the firm. However, for other smaller covered institutions, the firm and its managers may view response programs as lower priority because, for example, the potential reputational cost of an unauthorized access to or use of customer information may be relatively smaller than it would be for a larger firm. This would be the case to the extent that the firm and its managers perceive that the firm has a lower franchise value (the present value of the future profits that a firm is expected to earn as a going concern) and lower brand equity (the value of potential customers' perceptions of the firm). Thus, the costs of potential reputational harm may be perceived to be lower than at larger firms. Moreover, the cost of developing and implementing written policies and procedures for a response program is proportionately large compared to larger covered institutions since it involves fixed costs.
Second, some covered institutions could potentially have, before this adoption, complied effectively with the relevant State data breach notification laws without adopting written policies and procedures to deal with customer notification: they may only have needed to consider—on an ad hoc basis—the notification requirements of the small number of States in which their customers reside.
We expect that for such covered institutions, the final amendments will likely impose additional compliance costs related to written policies and procedures for safeguarding customer information.
Some commenters stated that many covered institutions already had policies and procedures in place.
Two commenters discussed how the proposed amendments would affect an entity that is dually registered as an investment adviser and broker-dealer. One commenter stated that it appreciated the approach of the proposal, which applies uniformly to the two types of covered institutions and would allow for streamlining of processes.
In the remainder of this section, we first consider the benefits and costs associated with requiring covered institutions to have a response program generally. We then analyze the benefits and the costs of the notification requirements vis-à-vis the notification requirements already in force under the various existing State laws. We conclude this section with an analysis of the benefits and costs of the response program's service provider provisions.
The final amendments require covered institutions' written policies and procedures to include a response program “reasonably designed to detect, respond to, and recover from unauthorized access to or use of
The question of how best to structure the response to an incident resulting in unauthorized access to or use of customer information has received considerable attention from firms, IT consultancies, government agencies, standards bodies, and industry groups, resulting in numerous reports with recommendations and summaries of best practices.
While some commenters suggested that some specific provisions of the amendments be better aligned with existing regulation,
Similar to the written policies and procedures requirement, we expect the benefits and the costs of the response program requirements to vary across covered institutions. In general, costs will be larger for entities that do not have any related incident response programs or related policies and procedures. For those entities, costs may include needing to familiarize themselves with the new requirements, initial set-up costs for new systems to monitor when customers need to be notified, new notification systems, and development and implementation of new policies and procedures associated with response programs. Therefore, on the one hand, the effects of the requirements are likely to be small for covered institutions with a national presence who are likely to already have such programs in place.
In addition to helping ensure that customers are notified when their data are breached,
We lack data on efficacy of incident assessment, incident containment, or customer notification that would allow us to quantify the economic benefits of the final requirements, and no commenter suggested such data. Similarly, we lack data, and no commenter suggested such data, that would allow us to quantify the indirect economic costs, such as reputational cost of any potential increase in the frequency of customer notification or the indirect costs of customer information protection improvements that may be undertaken to avoid such reputational costs. In the aggregate, however, considering the amendments in the context of the baseline, these benefits and costs are likely to be limited. As we have discussed above,
In support of the proposed response program requirement, some commenters stated that response programs had benefits beyond the notification of affected individuals. One commenter stated that effective cybersecurity practices and system safeguards, including incident response and notification, were critical for the financial markets and services industry and the regulators tasked with oversight of this sector.
The final requirements provide for a Federal minimum standard for data breach notification, applicable to the sensitive customer information of all customers of covered institutions (including customers of other financial institutions whose information has been provided to a covered institution),
As discussed above, all 50 States and the District of Columbia already have data breach notification laws that apply, in varying ways, to compromises of their residents' information.
Unfortunately, with the data available, it is not practicable to decompose the marginal contributions of the various State law provisions to the overall “strength” of State data breach laws. Consequently, it is not possible for us to quantify on a state-by-state basis the benefits of the adopted Federal minimum standard to customers residing in the various States. In considering the benefits of the final notification requirement, we limit consideration to the “strength” of individual provisions of the final amendments vis-à-vis the corresponding provisions under State laws and consider the number of customers that might potentially benefit from each.
Similarly—albeit to a somewhat lesser extent—the costs to covered institutions will also vary depending on the geographical distribution of each covered institution's customers. Generally, the costs associated with the final amendments will be greater for covered institutions whose customers reside in States with less informative customer notification laws than for those whose customers reside in States with broader and more informative notification laws. In particular, smaller covered institutions whose customers are concentrated in States where State data breach laws result in less informative customer notification are likely to face higher costs since they may have to issue additional notices to comply with the amendments. The costs
Although some commenters stated that a Federal notification requirement was not needed given existing State law requirements,
In the rest of this section, we consider key provisions of the final notification requirements, their potential benefits to customers (vis-à-vis existing State notification laws), and their costs.
A number of State data breach laws provide exceptions to notification for entities subject to and in compliance with the GLBA. These “GLBA Safe Harbors” may result in customers not receiving any data breach notification from registered investment advisers, broker-dealers, funding portals, investment companies, or transfer agents. The final amendments will help ensure customers receive notice of breach in cases where they may not currently because notice is not required under State law.
Based on an analysis of State laws, we found that 19 States provide a GLBA Safe Harbor.
Changing the effect of the GLBA Safe Harbors is not likely to impose significant direct compliance costs on most covered institutions. For the reasons outlined above, many covered institutions have customers residing in States without a GLBA Safe Harbor and we therefore expect them to have existing procedures for notifying customers under State law. Additionally, some jurisdictions require notification policies or actual notification as condition of the safe harbor.
One commenter agreed that some State laws provided exemptions from their notice requirements under the GLBA but disagreed that this implied benefits for the amendments, stating that the proposed amendments would not preempt State notification requirements and would instead add another variation on existing requirements to be accounted for by covered institutions, with limited real benefits to affected individuals.
The final amendments require covered institutions to provide notice to customers in the event of some data breaches as soon as practicable, but not later than 30 days, after becoming aware that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred.
Even though the timing language in State laws without specific deadlines generally suggests that notices must be prompt, we have evidence that the notices are frequently sent significantly later than 30 days after the affected institution learns of the breach. The Proposing Release references data from California and Washington, which we explain in more detail below. California requires that such notice be given “in the most expedient time possible and without unreasonable delay.”
In addition, because the final amendments will not provide for broad exceptions to the 30-day notification requirement,
Tighter notification deadlines should increase customers' ability to take effective measures to counter threats resulting from their sensitive information being compromised. Such measures may include placing holds on credit reports or engaging in more active monitoring of account and credit report activity.
In practice, however, when it takes a long time to discover a data breach, a relatively short delay between discovery and customer notification may have little impact on customers' ability to take effective countermeasures.
While we do not expect that the 30-day outside timeframe for customer notification will impose significant direct costs relative to a longer timeframe (or relative to having no fixed timeframe), the shorter outside timeframe might potentially lead to indirect costs arising from notification potentially interfering with incident containment efforts. Based on data from the Washington Attorney General's Office for the fiscal year of 2022, “containment” of data breaches generally occurs quickly—7.6 days on average.
Some commenters opposed the proposed timeframe for customer notifications.
A different commenter instead stated that the final required timeframe should not be longer than 30 days, citing an article stating that “an analysis of the current State data breach notification laws shows that requiring notification within thirty days of a breach to affected consumers would be appropriate.”
After considering these comments, we are adopting the notification timeframe as proposed. Under the final amendments, covered institutions will be required to provide notice to affected customers as soon as practicable, but not later than 30 days, after becoming aware that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred. Commenters stated that this notification timeframe may result in customers receiving notices that are less accurate or receiving some notices that are unnecessary. The final amendments' notification timeframe may, in some cases, result in customers receiving less informative notices than they would have received under a longer notification timeframe, since covered institutions will have less time to understand the incident before sending the notice. This 30-day timeframe may also result in instances where a notification will be sent but, had the covered institution been able to fully investigate the breach in the prescribed timeframe, the covered institution would have been able to determine that notification was not required.
In some circumstances, requiring customers to be notified within 30 days may hinder law enforcement investigation of an incident by potentially making an attacker aware of the attack's detection.
Because we do not have data on the frequency with which an investigation will rise to the level of meeting the final amendments' conditions for delayed notification, and because we do not have data on the scope of the effect on national security or public safety of breaches being revealed to the attackers, nor did commenters identify such data, we are unable to precisely estimate the costs and benefits of this provision. However, we expect that such events will be relatively rare.
In the final amendments, “sensitive customer information” is defined more broadly than in most State laws, yielding a customer notification trigger that is broader in scope than the various State law notification triggers included under the baseline.
In the final amendments, “sensitive customer information” is defined as “any component of customer information alone or in conjunction with any other information, the compromise of which could create a reasonably likely risk of substantial harm or inconvenience to an individual identified with the information.”
The definitions of information triggering notice requirements under State laws are generally much more circumscribed and can be said to fall into one of two types: basic and enhanced. Basic definitions are used by 14 States, which account for 21 percent of the U.S. population.
States adopting enhanced definitions for information triggering notice requirements extend the basic definition to include username/password and username/security question combinations.
The broader scope of information triggering a notice requirement under the final amendments will benefit customers. As discussed above, many pieces of information not covered under State data breach laws could, when compromised, cause substantial harm or inconvenience. Under the amendments, data breaches involving such information might require customer notification in cases where State law does not, and thus potentially increase customers' ability to take actions to mitigate the effects of such breaches. At the same time, there is some risk that the broader minimum standard will lead to notifications resulting from data compromises that—while troubling—are ultimately less likely to cause substantial harm or inconvenience.
The broader minimum standard for notification is likely to result in higher costs for covered institutions. There will be increased administrative costs related to preparing and distributing notices for covered institutions who will send out additional notices as a result of the scope of information triggering a notice requirement under the final amendments. As discussed below, we estimate that certain costs associated with the preparation and distribution of notices will be, on average, $5,178 per year per covered institution.
In addition, it is possible that covered institutions have developed processes and systems designed to provide enhanced information safeguards for the specific types of information enumerated in the various State laws. For example, it is likely that IT systems deployed by financial institutions only retain information such as passwords or answers to security questions in hashed form, reducing the potential for such information to be compromised. Similarly, it is likely that such systems limit access to information such as Social Security numbers to a limited set of employees. It may be costly for covered institutions to upgrade these systems to expand the scope of enhanced information safeguards.
Furthermore, because the definition of sensitive customer information is based on a determination that the compromise of this information could create a “reasonably likely risk of substantial harm or inconvenience to an individual identified with the information,”
Some commenters opposed the proposed amendments' definition of sensitive customer information, suggesting either a better alignment with existing regulation,
The final amendments include a requirement for a covered institution to provide notice to individuals whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization, unless, after a reasonable investigation of the facts and circumstances of the incident of unauthorized access to or use of sensitive customer information, the covered institution has determined that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience.
Currently, 20 States' notification laws do not include a presumption of notification.
The increased sensitivity of the notification trigger resulting from the presumptions of notification will result in additional costs for covered institutions, who will bear higher reputational costs (including indirect costs of customer information protection improvements that may be undertaken to avoid such reputational costs) as well as some additional direct compliance costs (
Some commenters disagreed with the proposed requirement that if a covered institution were unable to determine which customers were affected by a data breach, it would have had to notify all individuals whose sensitive customer information resided in the customer information system that was, or was reasonably likely to have been, accessed or used without authorization.
Another commenter disagreed with the proposed requirement that a covered institution would have had to notify customers whose information was compromised unless the covered institution could determine that the event would not result in a risk of substantial harm or inconvenience for these individuals, suggesting instead that the standard be harmonized further with the Banking Agencies' Incident Response Guidance and with many State laws so as to require notification only if the covered institution affirmatively could find risk of harm.
After considering these comments, we have determined that the presumptions of notification should be included in the final amendments. On the one hand, we acknowledge, as commenters stated,
On the other hand, adopting these presumptions of notification will allow potentially affected customers to take appropriate mitigating actions. In support of the proposed presumption of notification, another commenter stated that any risk that a presumption to notify individuals could lead to a volume of notices that would inure affected individuals to the notices and result in their not taking proactive action would be outweighed by the risk that individuals would not be notified at all and would not have the opportunity to decide for themselves whether to take action.
The proposed amendments included a list of information that would have had to be included in a customer notice.
The main benefit of requiring specific content to be included in the notice is to help ensure that customers residing in different States receive similar information when their information is compromised in the same breach. Because State law requirements differ in terms of required content, covered institutions may send different notices to different individuals.
The final amendments provide that the notice must include a description of the incident, including the information that was breached and the approximate date at which it occurred, as well as contact information where customers can inquire about the incident. In addition, the notice must include information on recommended actions affected customers can take. We expect that these required items will help customers take appropriate mitigating action to protect themselves from further effect of the breach. Including these elements might require some covered institutions to modify their existing processes for notification, which will incur some costs.
The first required item is a general description of the incident and the type of sensitive customer information that was or is reasonably believed to have been accessed or used without authorization.
The second item required by the final amendments is the date of the incident, the estimated date of the incident, or the date range within which the incident occurred, if the information is reasonably possible to determine at the time the notice is provided.
There are 13 States requiring the notice to include an approximate date (or date range) for the breach, and 38 States without such a requirement.
The third item required by the final amendments is “contact information sufficient to permit an affected individual to contact the covered institution to inquire about the incident, including the following: a telephone number (which should be a toll-free number if available), an email address or equivalent method or means, a postal address, and the name of a specific office to contact for further information and assistance.”
The final amendments also require the notice to include a recommendation that the customer review account statements and immediately report suspicious activity to the covered institution (if the individual has an account with the covered institution); an explanation of what a fraud alert is and how an individual may place one; a recommendation that the individual periodically obtain credit reports; an explanation of how the individual may obtain a credit report free of charge; and information about the availability of online guidance from the FTC and
The proposed amendments included a provision that would have required the notice to include a description of what has been done by the covered institution to protect the sensitive customer information from further unauthorized access or use. One commenter disagreed with this proposed requirement, stating that it “would be extremely useful to threat actors and not particularly useful to clients.”
The final amendments require that notice must be transmitted by a means designed to ensure that each affected individual can reasonably be expected to receive actual notice in writing.
We expect that the main benefit of this provision will be to help ensure that customers whose sensitive personal information has been breached receive the required information. We expect that the costs of this provision will be limited for most covered institutions since most States require similar methods of notification.
However, we do expect some benefits in some instances. First, 26 States allow
Second, many States allow for electronic notifications. While most of these States require that this be done only under certain conditions that are similar to the final amendments' conditions, some States have conditions that are significantly looser. The final amendments provide that the notice can be provided through electronic means to customers who have agreed to receive information electronically.
Third, all States allow for a substitute notice under certain conditions.
The final amendments require written notification, which may be provided electronically if certain conditions are met, such as if the customer has agreed to receive information electronically.
The final amendments require that a covered institution's incident response program include the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of service providers. Specifically, these written policies and procedures must be reasonably designed to ensure the service providers take appropriate measures to protect against unauthorized access to or use of customer information and provide notification to the covered institution as soon as possible, but no later than 72 hours after becoming aware that a breach in security has occurred resulting in unauthorized access to a customer information system. Upon receipt of such notification, a covered institution must initiate its incident response program.
As modern business processes increasingly rely on service providers,
Commenters supported the proposal's objective to safeguard customer information in the case where this information rests with service providers.
Some commenters criticized the analysis of the proposed service provider provisions.
The costs to covered institutions of implementing the final amendments will be influenced by the potential burdens on service providers that may result from the amendments. If implementing procedures that satisfy covered institutions' requirements were costless for them, service providers would be likely to agree to implement the requirements without much negotiation and the costs to covered institutions would be minimal. If, instead, such procedures were costly to implement for service providers, more negotiation would be required, which would be costlier for all parties involved. In addition, in this case, the service providers might increase the price of their services, further increasing the costs for covered institutions.
However, even if, as in the scenario described above, the cost per service provider turns out to be minimal for covered institutions, the total cost might still become significant for covered institutions that have a large number of service providers. Even in this case, covered institutions will need to devote time and resources to verify that they satisfy the final requirements with respect to each of their service providers. In addition, covered institutions will need to devote time and resources to oversee their service providers throughout their relationship with these service providers.
The definition of service provider in the final amendments will affect the costs to covered institutions by determining the number of service providers for which covered institutions will have to perform these tasks. The final amendments adopt a definition of service provider to mean “any person or entity that receives, maintains, processes, or otherwise is permitted access to customer information through its provision of services directly to a covered institution.”
We acknowledge that fulfilling the requirements for each of their service providers will impose costs on the covered institutions. However, the potential benefits are also large given the increasing reliance of covered institutions on service providers.
The indirect effects of the final amendments on service providers might also affect the costs borne by covered institutions and, ultimately, their customers. In particular, these indirect effects may generate costs to service providers, which may be passed on (at least partly) to covered institutions and ultimately to covered institutions' customers,
Second, covered institutions' policies and procedures will need to be reasonably designed to ensure that service providers take appropriate measures to provide notification of unauthorized access to a customer information system to the covered institutions as soon as possible, but no later than 72 hours after becoming aware that the breach has occurred. This provision might also result in a number of service providers adapting their businesses processes. However, considering that 24 States require entities that maintain but do not own or license customer information data to notify the entity that owns or licenses such data “immediately” in case of a breach of security, we expect that many service providers already have processes in place to ensure that such notification is made.
Third, because the final amendments require covered institutions to establish, maintain, and enforce written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of service providers who have access to their customers' information, these service providers will face requests for information from covered institutions or otherwise participate in the covered institutions' oversight activities. This will impose costs on service providers, but it will also strengthen the benefits of the amendments by helping ensure that customer information is appropriately protected even when it is residing in service providers' systems.
For service providers that provide specialized services aimed at covered institutions, the final amendments may create market pressure to enhance service offerings that facilitate covered institutions' compliance with the requirements.
For the service providers that already have in place processes satisfying the covered institutions' requirements, we expect that the costs to both the service providers and the covered institutions will be minimal and will mostly result from covered institutions' oversight duties. If service providers modify their business processes to facilitate covered institutions' compliance with the final amendments' requirements, we anticipate they likely will pass costs on to covered institutions, and ultimately covered institutions may pass these costs on to customers.
The proposal included a requirement that a covered institution's response program must include written policies and procedures requiring the institution, pursuant to a written contract between the covered institution and its service providers, to require that service providers take appropriate measures that are designed to protect against unauthorized access to or use of customer information.
We also proposed that the measures taken by service providers include notification to the covered institution as soon as possible, but no later than 48 hours after becoming aware of a breach in security resulting in unauthorized access to a customer information system maintained by the service provider.
After considering these comments, we have changed this provision. The final amendments require covered institutions to ensure that their service providers notify them of a breach as soon as possible, but no later than 72 hours after becoming aware that an applicable breach has occurred.
The final amendments provide, as proposed, that a covered institution may enter into a written agreement with a service provider to notify individuals affected by a breach on the covered institution's behalf.
It is possible that a breach that will trigger a notification obligation might occur at a covered institution that will also be a service provider to another covered institution.
The final amendments more closely align the scope of the safeguards rule with the scope of the disposal rule. They also broaden the scope of information covered by the rules to all customer information, regardless of whether the customers are a covered institution's own, or those of another financial institution whose customer information has been provided to the covered institution.
While some commenters supported the proposed scope of the rules regarding the definition of customer information,
We acknowledge that applying the policies and procedures requirements to all customer information will impose costs that would not be incurred if the amendments covered only sensitive customer information. However, this approach creates important benefits. For example, the disclosure of customer information could be used for phishing attacks or similar efforts to access sensitive customer information. Moreover, with respect to policies and procedures specifically, the costs of creating policies and procedures for all information should not be much larger than the cost of creating them for only sensitive customer information, because the cost is in the creation of the policies and procedures rather than in their application. We acknowledge, however, that in some organizations the sensitive customer information could be located in different systems or accessible to different employees, such that policies and procedures for non-sensitive information would be different. In addition, covered institutions' existing policies and procedures may be less likely to meet the new requirements as a result of the breadth of the definition and would thus require modifications.
Because the final amendments extend the scope of customer information subject to protection to information possessed by a covered institution regardless of whether the customers are a covered institution's own, or those of another financial institution whose customer information has been provided to the covered institution, the benefits of the final amendments will extend to a wide range of individuals such as prospective customers, account beneficiaries, recipients of wire transfers, or any other individual whose customer information a covered institution comes to possess, so long as the individuals are customers of a financial institution.
Some commenters agreed that covered institutions should safeguard the customer information they receive from other financial institutions.
The final amendments extend both the safeguards rule and the disposal rule to apply to any transfer agent registered with the Commission or another appropriate regulatory agency. Before this adoption, the safeguards rule did not apply to any transfer agents, and the disposal rule only applied to transfer agents registered with the Commission.
As discussed in sections II.B.2 and IV.C.3.e, in the U.S., transfer agents provide the infrastructure for tracking ownership of securities. Maintaining such ownership records necessarily entails holding or accessing non-public information about a large swath of the U.S. investing public.
One commenter stated that because transfer agents' customers are not the individuals whose information they hold but the issuers of securities, the proposed amendments were ill-fitting, which decreased their efficacy and increased their complications.
The final amendments extend the scope of the safeguards rule to cover any transfer agent registered with the Commission or another appropriate regulatory agency. As discussed above,
Some commenters stated that a second notification would have negative consequences for customers without providing any benefits.
We disagree that no helpful, new information will be provided to the affected customers. In the situation where State law requires a notification from the issuer and the final amendments require a notification from the transfer agent as a covered institution, the final amendments will help ensure that the individuals whose information has been breached receive an informative and timely notice, with the benefits over the baseline described above.
Before this adoption, transfer agents that are registered with the Commission were not required to notify customers directly in case of a breach under Federal law.
Transfer agents that are registered with an appropriate regulatory agency other than the Commission may already be required to notify affected individuals in case of a breach under the Banking Agencies' Incident Response Guidance.
One commenter supported the proposed inclusion of transfer agents in the safeguards rule, stating that it would eliminate the asymmetry between the transfer agents registered with the Commission and those registered with another regulatory agency and that it would promote investor protection, regulatory parity, and fair competition among firms.
Other commenters opposed the proposed inclusion.
In response to commenters and as discussed above,
The final amendments to the safeguards rule also require transfer agents to develop, implement, and maintain written policies and procedures that address administrative, technical, and physical safeguards for the protection of customer information.
The final amendments extend the disposal rule to transfer agents registered with a regulatory agency other than the Commission.
The recordkeeping provisions of the final amendments require covered institutions (other than funding portals) to make and maintain written records documenting compliance with the requirements of the safeguards rule and of the disposal rule.
These recordkeeping requirements will help facilitate the Commission's inspection and enforcement capabilities. Covered institutions may react to this enhanced ability of the Commission staff to detect deficiencies and impose sanctions against non-compliance due to the recordkeeping requirements by taking more care to comply with the substance of the amendments, which may result in material improvement in the response capabilities of covered institutions and mitigate potential harm resulting from the lack of an adequate response program. As such, the amendments' recordkeeping requirements might benefit customers through channels described in section IV.D.1.
One commenter supported the proposed recordkeeping requirements.
We do not expect the final recordkeeping requirements to impose substantial compliance costs. As covered institutions are currently subject to similar recordkeeping requirements applicable to other required policies and procedures, we do not anticipate that covered institutions will need to invest in new recordkeeping staff, systems, or procedures to satisfy the new recordkeeping requirements.
The final amendments incorporate into the regulation an existing statutory exception to the requirement that a broker-dealer, investment company, or registered investment adviser deliver an annual privacy notice to its customers.
Because the exception became effective when the statute was enacted, the aforementioned benefits are likely to have already been realized. Consequently, we do not expect that its inclusion will have any economic effects relative to the current status quo.
As discussed above, market imperfections might lead to underinvestment in customer information safeguards, and to information asymmetry about incidents resulting in unauthorized access to or use of customer information.
While the amendments have the potential to mitigate these inefficiencies, the scale of the overall effect is difficult to estimate. Due to the presence of existing regulations, including State notification laws, and existing security practices,
The final provisions will not have first order effects on channels typically associated with capital formation (
Because the amendments are likely to impose proportionately larger direct and indirect costs on smaller and more geographically limited covered institutions, these institutions' competitiveness vis-à-vis their larger peers might be affected. Such covered institutions—which may be less likely to have written policies and procedures for incident response programs already in place—will face disproportionately higher costs resulting from the proposed amendments.
On the other hand, the amendments may have positive competitive effects also. Because safeguarding customer information, including through cybersecurity, is disproportionately more expensive for smaller institutions,
With respect to funding portals, the situation could be different. As discussed above, the final amendments are likely to impose proportionately larger costs on smaller covered institutions,
Two commenters raised concerns about barriers to entry disproportionately affecting smaller covered institutions. One commenter stated that smaller advisers had been significantly affected by “one-size-fits-all” regulations that effectively require substantial fixed investments in infrastructure, personnel, technology, and operations, adding that they were concerned that these stressors and barriers would negatively affect smaller advisers' ability to continue to serve their clients.
With respect to competition among transfer agents, the situation could be different. Because transfer agents registered with a regulatory agency other than the Commission may already have been required to notify customers in case of breach,
One commenter supported the proposed extension of the scope of the safeguard and disposal rules to all transfer agents and stated that it would promote fair competition among these firms by reducing asymmetry in the requirements with which different types of transfer agents must comply.
With respect to efficiency and competition among covered institutions' service providers, the overall effects of the final amendments are difficult to predict. The final amendments require covered institutions to ensure that their service providers protect against unauthorized access to or use of customer information and notify the covered institution in case of a breach. The final amendments also require covered institutions to oversee their service providers to ensure that these measures are enforced.
• Scenario 1: The service provider already has the processes and procedures in place to satisfy the covered institution's obligations under the final amendments and is willing to cooperate with the oversight activities of the covered institution.
• Scenario 2: The service provider does not have the necessary processes and procedures in place but is willing to adapt them to satisfy the covered institution's obligations under the final amendments and to cooperate with the oversight activities of the covered institution.
• Scenario 3: The service provider does not have the necessary processes and procedures in place and is not willing to adapt to satisfy the covered institution's obligation under the final amendments.
• Scenario 4: The service provider already has the processes and procedures in place to satisfy the covered institution's obligations under the final amendments but is not willing to cooperate with the oversight activities of the covered institution.
Under scenarios 1 and 2, the relationship between the covered institution and its service provider is maintained. Hence, we do not expect significant effects on efficiency and competition in these cases.
Commenters identified service providers exiting the market as a significant potential cost of the proposed requirements.
Because scenarios 3 and 4 result in service providers exiting the market, they also have effects on competition. While scenario 3 would result in an overall decrease in the number of service providers available to covered institutions, it would not necessarily reduce competition among service providers who are able and willing to satisfy covered institutions' requirements. In fact, the final amendments will prevent service providers that are not willing to satisfy the minimum requirements from operating in that market and from potentially undercutting service providers who do satisfy the requirements. This will improve the competitiveness of the service providers who are able and willing to satisfy the requirements. The situation is different for scenario 4, which would result in a decrease in the number of service providers with adequate customer information safeguards and notification procedures. This would result in a decrease in competition, and this is a potential cost of the regulation.
One commenter stated that the proposed amendments could lead to service providers not agreeing with the new requirements, adding that it could result in covered institutions relying on a small group of service providers in the industry.
Because of the reasons described above,
Some commenters requested that the Commission consider interactions between the effects of the proposed rule and other recent Commission rules, as well as practical realities such as implementation timelines.
Additionally, we anticipate that neither the recordkeeping provisions nor the exception from annual privacy notice delivery requirements will have a notable impact on efficiency, competition, or capital formation due to their limited economic effects.
In formulating the final amendments, we have considered various reasonable alternatives. These alternatives are discussed below.
Rather than requiring the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to
Under this alternative we would have used the final amendments' definition of “service provider,” which is “any person or entity that receives, maintains, processes, or otherwise is permitted access to customer information through its provision of services directly to a covered institution.”
For those service providers that provide specialized services aimed at covered institutions, this alternative would, like the final amendments, create market pressure to enhance service offerings so as to provide the requisite assurances and facilitate covered institutions' compliance with the requirements.
With respect to service providers providing services aimed at a broad range of institutions (
The Commission considered lowering the threshold for customer notice, such as one based on the “possible misuse” of sensitive customer information (rather than the adopted threshold requiring notice when sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization), or even requiring notification of any breach without exception. One commenter suggested that the final amendments require notification when the unauthorized access to or use of sensitive customer information was “reasonably possible” instead of “reasonably likely.”
Although a lower threshold could impose some additional compliance costs on covered institutions (due to additional notices being sent), we would not anticipate the additional direct compliance costs to be significant.
The Commission considered including a safe harbor to the notification requirement for breaches in which only encrypted information was compromised. Several commenters supported an encryption safe harbor.
The Commission considered incorporating longer customer notification deadlines, such as 60 or 90 days instead of the adopted 30 days, as well as providing no fixed customer notification deadline. Several commenters suggested longer customer notification deadlines.
Providing for longer notifications deadlines would likely reduce the promptness with which some covered institutions issue notifications to customers, potentially reducing their customers' ability to take effective mitigating actions. In particular, as discussed in section IV.D.1.b(2), some breaches are discovered very quickly. For customers whose sensitive customer information is compromised in such breaches, a longer notification deadline could significantly reduce the timeliness—and value—of the notice.
The Commission considered providing for a broader delay to the 30-day notification outside timeframe by extending its applicability to cases where any appropriate law enforcement agency requests the delay.
The principal function of a law enforcement delay is to allow a law enforcement or national security agency to prevent cybercriminals from becoming aware of their detection. Observing a cyberattack that is in progress can allow investigators to take actions that can assist in revealing the attacker's location, identity, or methods.
That said, use of the delay provisions would necessarily result in customers affected by a cyberattack being notified later, reducing the value to customers of such notices.
Information about cybercrime investigations is often confidential. The Commission does not have data on the prevalence of covert cybercrime investigations, their success or lack of success, their deterrent effect if any, or the impact of customer notification on investigations.
Certain provisions of the final amendments contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
The Commission did not receive any comments that specifically addressed the estimated PRA analysis in the Proposing Release but did receive comments regarding the costs and burdens of the proposed rules generally. Those comments are discussed in more detail in section IV above. In particular, several commentators raised concerns regarding the costs associated with negotiating and renegotiating written contracts with service providers.
As discussed above, the final amendments to the safeguards rule will require covered institutions to develop, implement, and maintain written policies and procedures that include incident response programs reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information, including customer notification procedures. The response program must include procedures to assess the nature and scope of any incident involving unauthorized access to or use of customer information; take appropriate steps to contain and control the incident; and provide notice to each affected individual whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization (unless the covered institution makes certain determinations as specified in the final amendments).
The final amendments to the disposal rule will require covered institutions that maintain or otherwise possess customer information, or consumer information to adopt and implement written policies and procedures that address proper disposal of such information, which will include taking reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal.
Finally, the final amendments will require covered institutions other than funding portals to make and maintain written records documenting compliance with the requirements of the safeguards rule and the disposal rule. Under the final amendments, the time periods for preserving records will vary by covered institution to be consistent with existing recordkeeping rules.
Based on FOCUS Filing, Form BD Filing, and Form BD-N data, as of the third quarter of 2023, there were 3,476 brokers or dealers, other than notice-registered brokers or dealers or funding portals. Based on Investment Adviser Registration Depository data, as of Oct. 5, 2023, there were 15,565 investment advisers registered with the Commission. As of Sept. 30, 2023, there were 13,766 investment companies.
Table 5 below summarizes our PRA initial and ongoing annual burden estimates associated with the final amendments to the safeguards rule and the disposal rule.
The Regulatory Flexibility Act (“RFA”) requires the Commission, in promulgating rules under Section 553 of the Administrative Procedure Act,
The purpose of the final amendments is to limit potential harmful impacts to customers by enhancing and modernizing the protection of customer information. Among other things, the amendments update the rule's requirements to address the expanded use of technology and corresponding risks.
The need for, and objectives of, the final amendments are described in Sections I and II above. We discuss the economic impact and potential alternatives to the amendments in Section IV, and the estimated compliance costs and burdens of the amendments under the PRA in Section V.
In the Proposing Release, the Commission requested comment on any aspect of the IRFA, and particularly on the number of small entities that would be affected by the proposed amendments, the existence or nature of the potential impact of the proposed amendments on small entities discussed in the analysis, how the proposed amendments could further lower the burden on small entities, and how to quantify the impact of the proposed amendments.
One commenter urged the Commission to conduct a more holistic cost-benefit analysis, and in particular consider the disproportionate costs on smaller advisers.
Additionally, multiple commenters discussed the burden small entities would face. For instance, several commenters stated that an increased compliance cost for implementing new systems, training employees, and conducting audits, may disproportionately affect smaller firms, inhibiting their ability to compete and grow.
Commenters proposed multiple alternatives to lower the burden on small entities. One commenter urged the Commission to provide a longer time to transition for smaller advisers.
We expect the benefits and the costs of the final amendments to vary across covered institutions.
We have revised the final amendments in several ways to mitigate potential compliance costs that small entities may face, as raised by commenters. As previously discussed, the changes made to the service provider provisions of the amendments requiring that the covered institution's policies and procedures are reasonably designed to oversee, monitor, and conduct due diligence on service providers instead of requiring written contracts between covered institutions and their service providers, and requiring that the covered institution's policies and procedures be reasonably designed to ensure service providers take appropriate measures to notify covered institutions of an applicable breach in security within 72 hours instead of 48 hours) may reduce some costs relative to the proposal and facilitate their implementation, especially for smaller covered institutions.
Moreover, the final amendments still maintain that the incident response program must include policies and procedures containing certain general elements but will not prescribe specific steps a covered institution must undertake when carrying out incident response activities, thereby enabling covered institutions to create policies and procedures best suited to their particular circumstances, including size. This design balances the necessity of maintaining general elements to achieve the investor protection objectives the amendments are designed to achieve, while still providing covered institutions the ability to tailor policies to their individual needs. We will not exempt small entities from any specific requirements, because entities of all sizes are vulnerable to the types of data security breach incidents we are trying to address, and therefore, no entity should be exempted from requirements, regardless of size.
Additionally, one commenter argued that the Commission does not accurately analyze the impact of its regulations on small advisers as required under the RFA because according to the commenter, virtually no SEC-registered advisers fall under the “asset-based” definition of small adviser adopted by the Commission.
The final amendments to Regulation S-P will affect brokers, dealers, registered investment advisers, investment companies, and transfer agents, including entities that are considered to be a small business or small organization (collectively, “small entity”) for purposes of the RFA. For purposes of the RFA, under the Exchange Act a broker or dealer is a small entity if it: (i) had total capital of less than $500,000 on the date in its prior fiscal year as of which its audited financial statements were prepared or, if not required to file audited financial statements, on the last business day of its prior fiscal year; and (ii) is not affiliated with any person that is not a small entity.
Based on Commission filings, we estimate that approximately 872 broker-dealers,
The final amendments to Regulation S-P will require covered institutions to develop incident response programs for unauthorized access to or use of customer information, as well as imposing a customer notification obligation in instances where sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization. The final amendments also would include new mandatory recordkeeping requirements and language conforming Regulation S-P's annual privacy notice delivery provisions to the terms of a statutory exception.
Under the final amendments, covered institutions would have to develop, implement, and maintain, within their written policies and procedures designed to comply with Regulation S-P, a program that is reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information, including customer notification procedures. Such policies and procedures will also need to require that covered institutions oversee, monitor, and conduct due diligence on service providers and ensure that service providers take appropriate measures to notify covered institutions of an applicable breach in security within 72 hours. Upon receipt of such notification, the covered institution must initiate its incident response program. As part of its incident response program, a covered institution may also enter into a written agreement with its service provider to have the service provider notify affected individuals on its behalf. However, the covered institution's obligation to ensure that affected individuals are notified in accordance with paragraph (a)(4) of the final amendments rests with the covered institution.
In addition, covered institutions will be required to make and maintain specified written records designed to evidence compliance with these requirements.
Some covered institutions, including covered institutions that are small entities, will incur increased costs involved in reviewing and revising their current safeguarding policies and procedures to comply with these obligations, including their cybersecurity policies and procedures. Initially, this will require covered institutions to develop as part of their written policies and procedures under the safeguards rule, a program reasonably designed to detect, respond to, and recover from any unauthorized access to or use of customer information, including customer notification procedures, in a manner that provides clarity for firm personnel. Further, in developing these policies and procedures, covered institutions will need to include policies and procedures requiring the covered institution to ensure its service providers take appropriate measures to protect against unauthorized access to or use of customer information, and notify the covered institution as soon as possible, but no later than 72 hours after becoming aware that a breach in security has occurred resulting in unauthorized access to a customer information system maintained by the service provider, and upon receipt of such notification, the covered institution must initiate its response program. However, as the Commission recognizes the number and varying characteristics (
In addition, the Commission acknowledges that the final amendments will impose greater costs on those transfer agents that are registered with another appropriate regulatory agency, if they are not currently subject to Regulation S-P, as well as those transfer agents registered with the Commission who are not currently subject to the safeguards rule. Such costs will include the development and implementation of necessary policies and procedures, the ongoing costs of required recordkeeping and maintenance requirements, and, where necessary, the costs to comply with the customer notification requirements of the final amendments. Such costs will also include the same minimal costs for employee training or establishing clear procedures for consumer report information disposal that are imposed on all covered institutions. To the extent that such costs are being applied to a transfer agent for the first time as a result of new obligations being imposed, the final amendments would incur higher present costs on those transfer agents than those covered institutions that are already subject to the safeguards rule and the disposal rule.
To comply with these amendments on an ongoing basis, covered institutions will need to respond appropriately to incidents that entail the unauthorized access to or use of customer information. This will entail carrying out the established response program procedures to (i) assess the nature and scope of any incident involving unauthorized access to or use of customer information and identify the customer information systems and types of customer information that may have been accessed or used without authorization; (ii) take appropriate steps to contain and control the incident to prevent further unauthorized access to
Where the covered institution determines notice is required, the covered institution will need to provide a clear and conspicuous notice, or ensure that such notice is provided, to each affected individual whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization. This notice must be provided as soon as reasonably practicable, but not later than 30 days, after the covered institution becomes aware that unauthorized access to or use of sensitive customer information has, or is reasonably likely to have, occurred, absent an applicable request from the Attorney General. This notice will need to be transmitted by a means designed to ensure that each affected individual can reasonably be expected to receive actual notice in writing. Further, the covered institution will need to satisfy the specified content requirements of that notice,
Finally, covered institutions will also face costs in complying with the new recordkeeping requirements imposed by these amendments that are incrementally more than those costs covered institutions already incur from their existing regulatory recordkeeping obligations, in light of their already existing record retention systems. However, the record maintenance provisions align with those most frequently employed as to each covered institution subject to this rulemaking, partially in an effort to minimize these costs to firms.
Overall, incremental costs will be associated with the final amendments to Regulation S-P.
More specifically, we estimate that many covered institutions will incur one-time costs related to reviewing and revising their current safeguarding policies and procedures to comply with these obligations, including their cybersecurity policies and procedures. Additionally, some covered institutions, including transfer agents, may incur costs associated with establishing such policies and procedures as these amendments require if those covered institutions do not already have such policies and procedures. We also estimate that the ongoing, long-term costs associated with the final amendments could include costs of responding appropriately to incidents that entail the unauthorized access to or use of customer information.
The RFA directs us to consider alternatives that would accomplish our stated objectives, while minimizing any significant adverse impact on small entities. Accordingly, we considered the following alternatives:
1. Establishing different compliance or reporting standards that take into account the resources available to small entities;
2. The clarification, consolidation, or simplification of the reporting and compliance requirements under the rule for small entities;
3. Use of performance rather than design standards; and
4. Exempting small entities from coverage of the rule, or any part of the rule.
With regard to the first alternative, the final amendments to Regulation S-P that will continue to permit institutions substantial flexibility to design safeguarding policies and procedures appropriate for their size and complexity, the nature and scope of their activities, and the sensitivity of the personal information at issue. However, it is necessary to require that covered institutions, regardless of their size, adopt a response program for incidents of unauthorized access to or use of customer information, which will include customer notification procedures.
With regard to the second alternative, the final amendments will, by their operation, simplify reporting and compliance requirements for small entities. Small covered institutions are likely to maintain personal information on fewer individuals than large covered institutions, and they are likely to have relatively simple personal information systems. The amendments will not prescribe specific steps a covered institution must take in response to a data breach, but instead would give the institution flexibility to tailor its policies and procedures to its individual facts and circumstances. The amendments therefore are intended to give covered institutions the flexibility to address the general elements in the response program based on the size and complexity of the institution and the nature and scope of its activities. Accordingly, the requirements of the amendments already will be simplified for small entities. In addition, the requirements of the amendments could
With regard to the third alternative, the final amendments are design based. Rather than specifying the types of policies and procedures that an institution would be required to include in its response program, the amendments will require a response program that is reasonably designed to detect, respond to, and recover from both unauthorized access to and unauthorized use of customer information. With respect to the specific requirements regarding notifications in the event of a data breach, institutions provide only the information that seems most relevant for an affected customer to know in order to assess adequately the potential damage that could result from the breach and to develop an appropriate response.
Finally, with regard to alternative four, an exemption for small entities would not be appropriate. Small entities are as vulnerable as large ones to the types of data security breach incidents we are trying to address. In this regard, the specific elements the final amendments must be considered and incorporated into the policies and procedures of all covered institutions, regardless of their size, to mitigate the potential for fraud or other substantial harm or inconvenience to investors. Exempting small entities from coverage of the amendments or any part of the amendments could compromise the effectiveness of the amendments and harm investors by lowering standards for safeguarding investor information maintained by small covered institutions. Excluding small entities from requirements that would be applicable to larger covered institutions also could create competitive disparities between large and small entities, for example by undermining investor confidence in the security of information maintained by small covered institutions.
The Commission is amending Regulation S-P pursuant to authority set forth in sections 17, 17A, 23, and 36 of the Exchange Act [15 U.S.C. 78q, 78q-1, 78w, and 78mm], sections 31 and 38 of the Investment Company Act [15 U.S.C. 80a-30 and 80a-37], sections 204, 204A, and 211 of the Investment Advisers Act [15 U.S.C. 80b-4, 80b-4a, and 80b-11], section 628(a) of the FCRA [15 U.S.C. 1681w(a)], and sections 501, 504, 505, and 525 of the GLBA [15 U.S.C. 6801, 6804, 6805, and 6825].
Reporting and recordkeeping requirements; Securities.
Brokers, Consumer protection, Dealers, Investment advisers, Investment companies, Privacy, Reporting and recordkeeping requirements, Securities, Transfer agents.
Reporting and recordkeeping requirements; Securities.
For the reasons set out in the preamble, title 17, chapter II of the Code of Federal Regulations is amended as follows:
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78j-4, 78k, 78k-1, 78
Section 240.17a-14 is also issued under Public Law 111-203, sec. 913, 124 Stat. 1376 (2010).
Section 240.17ad-7 is also issued under 15 U.S.C. 78b, 78q, and 78q-1.
(e) * * *
(13) [Reserved]
(14)(i) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(1) of this chapter until three years after the termination of the use of the policies and procedures;
(ii) The written documentation of any detected unauthorized access to or use of customer information, as well as any response to, and recovery from such unauthorized access to or use of customer information required by § 248.30(a)(3) of this chapter for three years from the date when the records were made;
(iii) The written documentation of any investigation and determination made regarding whether notification is required pursuant to § 248.30(a)(4) of this chapter, including the basis for any determination made, any written documentation from the United States Attorney General related to a delay in notice, as well as a copy of any notice transmitted following such determination, for three years from the date when the records were made;
(iv) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(5)(i) of this chapter until three years after the termination of the use of the policies and procedures;
(v) The written documentation of any contract or agreement entered into pursuant to § 248.30(a)(5) of this chapter until three years after the termination of such contract or agreement; and
(vi) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(b)(2) of this chapter until three years after the termination of the use of the policies and procedures;
The revision and additions read as follows:
(j) [Reserved]
(k) Every registered transfer agent shall maintain in an easily accessible place:
(1) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(1) of this chapter for no less than three years after the termination of the use of the policies and procedures;
(2) The written documentation of any detected unauthorized access to or use of customer information, as well as any
(3) The written documentation of any investigation and determination made regarding whether notification is required pursuant to § 248.30(a)(4) of this chapter, including the basis for any determination made, any written documentation from the United States Attorney General related to a delay in notice, as well as a copy of any notice transmitted following such determination, for no less than three years from the date when the records were made;
(4) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(5)(i) of this chapter until three years after the termination of the use of the policies and procedures;
(5) The written documentation of any contract or agreement entered into pursuant to § 248.30(a)(5) of this chapter until three years after the termination of such contract or agreement; and
(6) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(b)(2) of this chapter for no less than three years after the termination of the use of the policies and procedures.
15 U.S.C. 78q, 78q-1, 78
(a)(1)
(e)
(i) Provide nonpublic personal information to nonaffiliated third parties only in accordance with § 248.13, § 248.14, or § 248.15; and
(ii) Have not changed your policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed to the customer under § 248.6(a)(2) through (5) and (9) in the most recent privacy notice provided pursuant to this part.
(2)
(i)
(ii)
(iii)
(B) You change your policies and practices in such a way that you no longer meet the requirements of paragraph (e)(1) of this section, and so provide an annual notice to your customers. After providing the annual notice to your customers, you once again meet the requirements of paragraph (e)(1) of this section for an exception to the annual notice requirement. You do not need to provide additional annual notice to your customers until such time as you no longer meet the requirements of paragraph (e)(1) of this section.
(a)
(2)
(i) Ensure the security and confidentiality of customer information;
(ii) Protect against any anticipated threats or hazards to the security or integrity of customer information; and
(iii) Protect against unauthorized access to or use of customer information that could result in substantial harm or inconvenience to any customer.
(3)
(i) Assess the nature and scope of any incident involving unauthorized access
(ii) Take appropriate steps to contain and control the incident to prevent further unauthorized access to or use of customer information; and
(iii) Notify each affected individual whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization in accordance with paragraph (a)(4) of this section unless the covered institution determines, after a reasonable investigation of the facts and circumstances of the incident of unauthorized access to or use of sensitive customer information, that the sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience.
(4)
(ii)
(iii)
(iv)
(A) Describe in general terms the incident and the type of sensitive customer information that was or is reasonably believed to have been accessed or used without authorization;
(B) Include, if the information is reasonably possible to determine at the time the notice is provided, any of the following: the date of the incident, the estimated date of the incident, or the date range within which the incident occurred;
(C) Include contact information sufficient to permit an affected individual to contact the covered institution to inquire about the incident, including the following: a telephone number (which should be a toll-free number if available), an email address or equivalent method or means, a postal address, and the name of a specific office to contact for further information and assistance;
(D) If the individual has an account with the covered institution, recommend that the customer review account statements and immediately report any suspicious activity to the covered institution;
(E) Explain what a fraud alert is and how an individual may place a fraud alert in the individual's credit reports to put the individual's creditors on notice that the individual may be a victim of fraud, including identity theft;
(F) Recommend that the individual periodically obtain credit reports from each nationwide credit reporting company and that the individual have information relating to fraudulent transactions deleted;
(G) Explain how the individual may obtain a credit report free of charge; and
(H) Include information about the availability of online guidance from the Federal Trade Commission and
(5)
(A) Protect against unauthorized access to or use of customer information; and
(B) Provide notification to the covered institution as soon as possible, but no later than 72 hours after becoming aware that a breach in security has occurred resulting in unauthorized access to a customer information system maintained by the service provider. Upon receipt of such notification, the covered institution must initiate its incident response program adopted pursuant to paragraph (a)(3) of this section.
(ii) As part of its incident response program, a covered institution may enter into a written agreement with its
(iii) Notwithstanding a covered institution's use of a service provider in accordance with paragraphs (a)(5)(i) and (ii) of this section, the obligation to ensure that affected individuals are notified in accordance with paragraph (a)(4) of this section rests with the covered institution.
(b)
(2)
(3)
(i) To require any covered institution to maintain or destroy any record pertaining to an individual that is not imposed under other law; or
(ii) To alter or affect any requirement imposed under any other provision of law to maintain or destroy records.
(c)
(i) The written policies and procedures required to be adopted and implemented pursuant to paragraph (a)(1) of this section;
(ii) The written documentation of any detected unauthorized access to or use of customer information, as well as any response to, and recovery from such unauthorized access to or use of customer information required by paragraph (a)(3) of this section;
(iii) The written documentation of any investigation and determination made regarding whether notification is required pursuant to paragraph (a)(4) of this section, including the basis for any determination made, any written documentation from the United States Attorney General related to a delay in notice, as well as a copy of any notice transmitted following such determination;
(iv) The written policies and procedures required to be adopted and implemented pursuant to paragraph (a)(5)(i) of this section;
(v) The written documentation of any contract or agreement entered into pursuant to paragraph (a)(5) of this section; and
(vi) The written policies and procedures required to be adopted and implemented pursuant to paragraph (b)(2) of this section.
(2) In the case of covered institutions described in paragraph (c)(1) of this section, such records, apart from any policies and procedures, must be preserved for a time period not less than six years, the first two years in an easily accessible place. In the case of policies and procedures required under paragraphs (a) and (b)(2) of this section, covered institutions described in paragraph (c)(1) of this section must maintain a copy of such policies and procedures in effect, or that at any time within the past six years were in effect, in an easily accessible place.
(d)
(1)
(i) Any record about an individual, whether in paper, electronic or other form, that is a consumer report or is derived from a consumer report, or a compilation of such records, that a covered institution maintains or otherwise possesses for a business purpose regardless of whether such information pertains to:
(A) Individuals with whom the covered institution has a customer relationship; or
(B) To the customers of other financial institutions where such information has been provided to the covered institution.
(ii) Consumer information does not include information that does not identify individuals, such as aggregate information or blind data.
(2)
(3)
(4)
(ii) With respect to a transfer agent registered with the Commission or another ARA, for purposes of this section,
(5)
(A) Individuals with whom the covered institution has a customer relationship; or
(B) To the customers of other financial institutions where such information has been provided to the covered institution.
(ii) With respect to a transfer agent registered with the Commission or another ARA,
(6)
(7)
(i) The discarding or abandonment of consumer information or customer information; or
(ii) The sale, donation, or transfer of any medium, including computer equipment, on which consumer information or customer information is stored.
(8)
(9)
(ii) Examples of sensitive customer information include:
(A) Customer information uniquely identified with an individual that has a reasonably likely use as a means of authenticating the individual's identity, including
(
(
(
(
(B) Customer information identifying an individual or the individual's account, including the individual's account number, name or online user name, in combination with authenticating information such as information described in paragraph (d)(9)(ii)(A) of this section, or in combination with similar information that could be used to gain access to the customer's account such as an access code, a credit card expiration date, a partial Social Security number, a security code, a security question and answer identified with the individual or the individual's account, or the individual's date of birth, place of birth, or mother's maiden name.
(10)
(11)
15 U.S.C. 80a-1
Section 270.31a-2 is also issued under 15 U.S.C. 80a-30.
(b) * * *
(13)(i) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(1);
(ii) The written documentation of any detected unauthorized access to or use of customer information, as well as any response to, and recovery from such unauthorized access to or use of customer information required by § 248.30(a)(3);
(iii) The written documentation of any investigation and determination made regarding whether notification is required pursuant to § 248.30(a)(4), including the basis for any determination made, any written documentation from the United States Attorney General related to a delay in notice, as well as a copy of any notice transmitted following such determination;
(iv) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(5)(i);
(v) The written documentation of any contract or agreement entered into pursuant to § 248.30(a)(5); and
(vi) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(b)(2).
The addition reads as follows:
(a) * * *
(8) Preserve for a period not less than six years, the first two years in an easily accessible place, the records required by § 270.31a-1(b)(13) apart from any policies and procedures thereunder and, in the case of policies and procedures required under § 270.31a-1(b)(13), preserve a copy of such policies and procedures in effect, or that at any time within the past six years were in effect, in an easily accessible place.
15 U.S.C. 80b-2(a)(11)(G), 80b-2(a)(11)(H), 80b-2(a)(17), 80b-3, 80b-4, 80b-4a, 80b-6(4), 80b-6a, 80b-11, 1681w(a)(1), 6801-6809, and 6825, unless otherwise noted.
Section 275.204-2 is also issued under 15 U.S.C. 80b-6.
(a) * * *
(25)(i) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(1);
(ii) The written documentation of any detected unauthorized access to or use of customer information, as well as any response to, and recovery from such unauthorized access to or use of customer information required by § 248.30(a)(3) of this chapter;
(iii) The written documentation of any investigation and determination made regarding whether notification is required pursuant to § 248.30(a)(4) of this chapter, including the basis for any determination made, any written documentation from the United States Attorney General related to a delay in notice, as well as a copy of any notice transmitted following such determination;
(iv) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(5)(i) of this chapter;
(v) The written documentation of any contract or agreement entered into pursuant to § 248.30(a)(5) of this chapter; and
(vi) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(b)(2) of this chapter.
By the Commission.
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking and notice of public hearing.
This document contains proposed regulations relating to the clean electricity production credit and the clean electricity investment credit established by the Inflation Reduction Act of 2022. The proposed regulations would provide rules for: determining greenhouse gas emissions rates resulting from the production of electricity; petitioning for provisional emissions rates; and determining eligibility for these credits in various circumstances. The proposed regulations would affect all taxpayers who produce clean electricity and claim the clean electricity production credit with respect to a facility or the clean electricity investment credit with respect to a facility or energy storage technology, as applicable, that is placed in service after 2024. This document also provides notice of a public hearing on the proposed regulations.
Written or electronic comments must be received by August 2, 2024. The public hearing on these proposed regulations is scheduled to be held on August 12, 2024, at 10 a.m. (ET) and August 13, 2024, at 10 a.m. (ET). On August 13, 2024, the public hearing will be held by telephone only. Requests to speak and outlines of topics to be discussed at the public hearing must be received by August 2, 2024. If no outlines are received by August 2, 2024, the public hearing will be cancelled.
Commenters are strongly encouraged to submit public comments electronically via the Federal eRulemaking Portal at
Concerning these proposed regulations, the Office of Chief Counsel (Passthroughs and Special Industries) at (202) 317-6853 (not a toll-free number); concerning submissions of comments or the public hearing, Vivian Hayes at (202) 317-6901 (not a toll-free number) or by email to
This notice of proposed rulemaking contains proposed amendments to the Income Tax Regulations (26 CFR part 1) to implement sections 45Y and 48E of the Internal Revenue Code (Code), which generally replace sections 45 and 48 of the Code with respect to qualified facilities, and for section 48E, with respect to energy storage technology, that is placed in service after December 31, 2024.
The renewable electricity production credit determined under section 45 of the Code (section 45 credit) is generally available for qualified facilities described in section 45(d), which provides that the construction of the qualified facilities must begin before January 1, 2025. Similarly, other than for geothermal heat pump equipment (described in section 48(a)(3)(vii)
Sections 45Y and 48E were added to the Code, respectively, by sections 13701(a) and 13702(a) of Public Law 117-169, 136 Stat. 1818, 1982 (August 16, 2022), commonly referred to as the Inflation Reduction Act of 2022 (IRA). Section 13701(c) of the IRA provides that the clean electricity production credit determined under section 45Y (section 45Y credit) applies to facilities placed in service after December 31, 2024. Similarly, section 13702(c) of the IRA provides that the clean electricity investment credit determined under section 48E (section 48E credit) applies to property placed in service after December 31, 2024.
Thus, in some cases, if a taxpayer places in service a qualified facility or energy property after 2024, the construction of which begins before 2025, the qualified facility or energy property may be eligible for more than one of the credits determined under section 45, 45Y, 48, or 48E, although a taxpayer can only claim one of these credits with respect to such qualified facility or energy property. Accordingly, a taxpayer must choose which one of these credits to claim with respect to such qualified facility or energy property. Once the taxpayer has claimed one of these credits with respect to a qualified facility or an energy property, the taxpayer cannot claim any other of these credits with respect to the same qualified facility or energy property.
Section 45Y(a)(1) provides that for purposes of the general business credit under section 38 of the Code, the section 45Y credit for any taxable year is an amount equal to the product of the kilowatt hours (kWh) of eligible electricity produced by the taxpayer at a qualified facility, multiplied by the applicable amount with respect to such qualified facility. For this purpose, eligible electricity is electricity that is either (1) sold by the taxpayer to an unrelated person during the taxable year or (2) in the case of a qualified facility that is equipped with a metering device that is owned and operated by an unrelated person, sold, consumed, or stored by the taxpayer during the taxable year.
For purposes of the applicable amount used in calculating the section 45Y credit, section 45Y(a)(2) provides a base amount and a higher alternative amount. Section 45Y(a)(2)(A) provides that the applicable amount will be the base amount of 0.3 cents in the case of a qualified facility that does not satisfy the requirements for the higher alternative amount. Section 45Y(a)(2)(B) provides that the alternative amount of 1.5 cents applies in the case of any qualified facility (1) with a maximum net output of less than 1 megawatt (as measured in alternating current), (2) the construction of which begins prior to the date that is 60 days after the Secretary of the Treasury or her delegate
Section 45Y(c)(1) provides for an inflation adjustment for both the base and alternative amounts. Section 45Y(c)(1) provides that in the case of a calendar year beginning after 2024, the 0.3 cent amount in section 45Y(a)(2)(A) and the 1.5 cent amount in section 45Y(a)(2)(B) will each be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale, consumption, or storage of the electricity occurs. Section 45Y(c)(1) also addresses the rounding rules to be applied to this computation. Section 45Y(c)(2) provides that the Secretary will, not later than April 1 of each calendar year, determine and publish in the
Section 45Y(g)(7) provides for an increase in the section 45Y credit amount for any qualified facility located in an energy community, and section 45Y(g)(11) provides for an increase in the section 45Y credit amount if the domestic content bonus requirement is satisfied.
Section 45Y(g)(7) provides that in the case of any qualified facility that is located in an energy community (as defined in section 45(b)(11)(B)), for purposes of determining the amount of the credit under section 45Y(a) with respect to any electricity produced by the taxpayer at such facility during the taxable year, the applicable amount under section 45Y(a)(2) will be increased by an amount equal to 10 percent of the amount otherwise in effect under such paragraph.
Section 45Y(g)(11) provides that in the case of any qualified facility that satisfies the domestic content bonus requirement under section 45Y(g)(11)(B)(i), the amount of the credit determined under section 45Y(a) will be increased by an amount equal to 10 percent of the amount so determined (as determined without application of section 45Y(g)(7)). Section 45Y(g)(11)(B)(i) generally provides that the domestic content bonus requirement is satisfied with respect to any qualified facility if the taxpayer certifies to the Secretary (at such time, and in such form and manner, as the Secretary may prescribe) that any steel, iron, or manufactured product that is a component of such facility (upon completion of construction) was produced in the United States (as determined under section 661 of title 49, Code of Federal Regulations). Section 45Y(g)(11)(B)(iii) provides that for purposes of the domestic content bonus requirement, the manufactured products that are components of a qualified facility upon completion of construction will be deemed to have been produced in the United States if not less than the adjusted percentage (as determined under section 45Y(g)(11)(C)) of the total cost of all such manufactured products of such facility are attributable to manufactured products (including components) that are mined, produced, or manufactured in the United States.
Section 45Y(b) provides guidance on the meaning of a qualified facility for purposes of section 45Y. Subject to section 45Y(b)(1)(B) through (D), section 45Y(b)(1)(A) defines a qualified facility to mean a facility owned by the taxpayer that is used for the generation of electricity, that is placed in service after December 31, 2024, and for which the greenhouse gas emissions rate (as determined under section 45Y(b)(2)) is not greater than zero.
Section 45Y(b)(1)(B) provides that for purposes of section 45Y, a facility will only be treated as a qualified facility during the 10-year period beginning on the date the facility was originally placed in service.
Section 45Y(b)(1)(C) provides that a qualified facility will include a new unit or any additions of capacity that are placed in service after December 31, 2024, if in connection with a facility described in section 45Y(b)(1)(A) (without regard to section 45Y(b)(1)(A)(ii) describing the requirement that the facility be placed in service after December 31, 2024) that was placed in service before January 1, 2025, but only to the extent of the increased amount of electricity produced at the facility due to the new unit or addition of capacity.
Section 45Y(b)(1)(D) provides that a qualified facility will not include any facility for which a credit determined under section 45, 45J, 45Q, 45U, 48, 48A, or 48E of the Code is allowed under section 38 for the taxable year or any prior taxable year.
Section 45Y(b)(2) describes the greenhouse gas emissions rate referenced in section 45Y(b)(1)(A)(iii). Section 45Y(b)(2)(A) defines greenhouse gas emissions rate for purposes of section 45Y to mean the amount of greenhouse gases emitted into the atmosphere by a facility in the production of electricity, expressed as grams of CO
Section 45Y(b)(2)(B) provides that in the case of a facility that produces electricity through combustion or gasification, the greenhouse gas emissions rate (GHG emissions rate) for such facility is equal to the net rate of greenhouse gases emitted into the atmosphere by such facility (taking into account lifecycle greenhouse gas emissions, as described in section 211(o)(1)(H) of the CAA (42 U.S.C. 7545(o)(1)(H))) in the production of electricity, expressed as grams of CO
Section 45Y(b)(2)(C) provides for the establishment of GHG emissions rates for facilities either through the publication of emissions rates described in section 45Y(b)(2)(C)(i) or a provisional emissions rate as described in section 45Y(b)(2)(C)(ii). Section 45Y(b)(2)(C)(i) states that the Secretary will annually publish a table that sets forth the GHG emissions rates for types or categories of facilities, that a taxpayer will use for purposes of section 45Y. Section 45Y(b)(2)(C)(ii) provides that in the case of any facility for which a GHG emissions rate has not been established by the Secretary, a taxpayer that owns such facility may file a petition with the Secretary for determination of the GHG emissions rate with respect to such facility.
Section 45Y(b)(2)(D) provides that for purposes of section 45Y(b) the amount of greenhouse gases emitted into the atmosphere by a facility in the production of electricity cannot include any qualified carbon dioxide that is captured by the taxpayer and either (1) disposed of by the taxpayer in secure geological storage pursuant to any regulations established under section 45Q(f)(2), or (2) utilized by the taxpayer in a manner described in section 45Q(f)(5). Section 45Y(e)(3) defines qualified carbon dioxide for purposes of
Section 45Y(d) describes the credit phase-out. Section 45Y(d)(1) provides generally that the amount of the clean electricity production credit under section 45Y(a) for any qualified facility the construction of which begins during a calendar year described in section 45Y(d)(2) is equal to the product of the amount of the credit determined under section 45Y(a) without regard to section 45Y(d), multiplied by the phase-out percentage under section 45Y(d)(2). Section 45Y(d)(2) provides that the phase-out percentage is 100 percent for a facility the construction of which begins during the first calendar year following the applicable year; 75 percent for a facility the construction of which begins during the second calendar year following the applicable year; 50 percent for a facility the construction of which begins during the third calendar year following the applicable year; and 0 percent for a facility the construction of which begins during any calendar year subsequent to the calendar year described in section 45Y(d)(2)(C). Section 45Y(d)(3) defines the “applicable year” for purposes of section 45Y(d) to mean the later of the calendar year in which the Secretary determines that the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2022, or 2032.
Section 45Y(g) provides special rules for section 45Y. Section 45Y(g)(1) provides that consumption, sales, or storage is taken into account under section 45Y only with respect to electricity the production of which is within the United States (within the meaning of section 638(1)), or a United States territory, which for purposes of section 45Y and the section 45Y regulations has the meaning of the term “possession” of the United States (within the meaning of section 638(2)).
Section 45Y(g)(2) provides a rule for combined heat and power system (CHP) property. For purposes of section 45Y(a), section 45Y(g)(2)(A) generally provides that the kWh of electricity produced by a taxpayer at a qualified facility will include any production in the form of useful thermal energy by any CHP property within such facility, and the amount of greenhouse gases emitted into the atmosphere by such facility in the production of such useful thermal energy will be included for purposes of determining the GHG emissions rate for such facility. Section 45Y(g)(2)(B) defines CHP property for purposes of section 45Y(g)(2) to have the same meaning given such term by section 48(c)(3) (without regard to section 48(c)(3)(A)(iv), (B), and (D) thereof). Section 45Y(g)(2)(C) provides the necessary conversion from BTU to kWh for a taxpayer to calculate a section 45Y credit for useful thermal energy produced by a CHP property.
Section 45Y(g)(3) provides that in the case of a qualified facility in which more than one person has an ownership interest, except to the extent provided in regulations prescribed by the Secretary, production from the facility will be allocated among such persons in proportion to their respective ownership interests in the gross sales from such facility.
Section 45Y(g)(4) provides that persons will be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b). In the case of a corporation that is a member of an affiliated group of corporations filing a consolidated return, such corporation will be treated as selling electricity to an unrelated person if such electricity is sold to such a person by another member of such group.
Section 45Y(g)(5) provides that under regulations prescribed by the Secretary, rules similar to the rules of section 52(d) will apply to a pass-thru in the case of estates and trusts.
Section 45Y(g)(6) provides for the allocation of the credit to patrons of an agricultural cooperative.
Section 45Y(g)(8) provides that rules similar to the rules of section 45(b)(3) will apply to a credit reduced for tax-exempt bonds.
Section 45Y(g)(9) provides that rules similar to the rules of section 45(b)(7) apply with respect to wage requirements. Section 45Y(g)(10) provides rules similar to the rules of section 45(b)(8) apply with respect to apprenticeship requirements.
For purposes of the general business credit under section 38, which includes the investment credit under section 46, section 48E(a)(1) provides a credit for any taxable year in which a qualified investment is made with respect to any qualified facility and any energy storage technology (EST).
The amount of the section 48E credit is equal to the applicable percentage of the qualified investment in any qualified facility and any EST. Section 48(E)(a)(2) provides a base rate and a higher alternative rate for the applicable percentage. Section 48E(a)(2)(A)(i) provides that in the case of a qualified facility that does not satisfy the requirements for the higher alternative rate, the base rate will be 6 percent. Section 48E(a)(2)(A)(ii) provides that the alternative rate of 30 percent applies in the case of any qualified facility (1) with a maximum net output of less than 1 megawatt (as measured in alternating current), (2) the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance on the prevailing wage requirements of section 48E(d)(3) and the apprenticeship requirements of section 48E(d)(4),
Similarly, section 48E(a)(2)(B)(ii) provides that the alternative rate of 30 percent applies in the case of an EST (1) with a capacity of less than 1 megawatt, (2) the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance on the requirements of section 48E(d)(3) and (4)
Section 48E(a)(3)(A) provides for an increase in credit rate for a qualified facility or EST located in an energy community (as defined in section 45(b)(11)(B)) and section 48E(a)(3)(B) similarly provides for an increase in credit rate for a qualified facility or EST that meets the domestic content bonus requirements.
Section 48E(b) describes a qualified investment with respect to a qualified facility. Generally, for purposes of section 48E(a), section 48E(b)(1)(A) and (B)(i) provide that the qualified investment with respect to a qualified facility for any taxable year is the sum of the basis of any qualified property placed in service by the taxpayer during such taxable year that is part of a qualified facility, plus the amount of expenditures that are paid or incurred by the taxpayer for qualified interconnection property that is properly chargeable to capital account of the taxpayer.
Section 48E(b)(2) provides that for purposes of section 48E, qualified property means property that is tangible personal property, or other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified facility; with respect to which depreciation (or amortization in lieu of depreciation) is allowable; and the construction, reconstruction, or erection of which is completed by the taxpayer, or that is acquired by the taxpayer provided the original use of such property commences with the taxpayer.
Section 48E(b)(1)(B)(i)(I) and (II) provide that qualified interconnection property must be in connection with a qualified facility that has a maximum net output of not greater than 5 megawatts (as measured in alternating current) and be placed in service during the taxable year of the taxpayer. Section 48E(b)(4) provides that the term “qualified interconnection property” has the meaning given such term in section 48(a)(8)(B).
Section 48E(b)(3)(A) provides that for purposes of section 48E, the term “qualified facility” means a facility that is used for the generation of electricity, which is placed in service after December 31, 2024, and for which the anticipated GHG emissions rate (as determined under section 48E(b)(3)(B)(ii)) is not greater than zero.
Section 48E(b)(3)(B) provides additional rules for a qualified facility. Section 48E(b)(3)(B)(i) provides rules on an expansion of facility and incremental production stating that rules similar to the rules of section 45Y(b)(1)(C) apply for purposes of section 48E(b)(3). Section 48E(b)(3)(B)(ii) provides rules to determine the GHG emissions rate of a qualified facility by stating that rules similar to the rules of section 45Y(b)(2) apply for purposes of section 48E(b)(3).
Section 48E(b)(3)(C) provides that a qualified facility will not include any facility for which a renewable electricity production credit determined under section 45, an advanced nuclear power facility production credit determined under section 45J, a carbon oxide sequestration credit determined under section 45Q, a zero-emission nuclear power production credit determined under section 45U, a clean electricity production credit determined under section 45Y, an energy credit determined under section 48, or a qualifying advanced coal project credit under section 48A, is allowed under section 38 for the taxable year or any prior taxable year. Section 48E(b)(5) provides a rule for coordination with the rehabilitation credit stating that the qualified investment with respect to any qualified facility for any taxable year will not include that portion of the basis of any property that is attributable to qualified rehabilitation expenditures (as defined in section 47(c)(2) of the Code).
Section 48E(b)(6) provides that for purposes of section 48E(b), the terms “CO
Section 48E(c) describes a qualified investment with respect to EST. For purposes of section 48E(a), section 48E(c)(1) provides that the qualified investment with respect to EST for any taxable year is the basis of any EST placed in service by the taxpayer during such taxable year. Section 48E(c)(2) provides that for purposes of section 48E, the term “energy storage technology” has the meaning given such term in section 48(c)(6) (except that section 48(c)(6)(D) will not apply). Section 48(c)(6)(A)(i) defines “energy storage technology” to mean property (other than property primarily used in the transportation of goods or individuals and not for the production of electricity) that receives, stores, and delivers energy for conversion to electricity (or, in the case of hydrogen, which stores energy), and has a nameplate capacity of not less than 5 kWh. Section 48(c)(6)(A)(ii) provides that the term “energy storage technology” also includes thermal energy storage property. Section 48(c)(6)(B) describes a rule for modifications of certain property.
Section 48(c)(6)(C)(i) defines “thermal energy storage property” to mean for purposes of section 48(c)(6), subject to section 48(c)(6)(C)(ii), property comprising a system that is directly connected to a heating, ventilation, or air conditioning system, removes heat from, or adds heat to, a storage medium for subsequent use, and provides energy for the heating or cooling of the interior of a residential or commercial building. Section 48(c)(6)(C)(ii) describes the exclusion that thermal energy storage property will not include a swimming pool, combined heat and power system property, or a building or its structural components.
Section 48E(d) provides special rules for section 48E, all of which refer to other provisions. Section 48E(d)(1) provides a rule for qualified progress expenditures, stating that rules similar to the rules of former section 46(c)(4) and (d) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) apply for purposes of section 48E(a).
Section 48E(e) describes the credit phase-out. Section 48E(e)(1) provides generally that the amount of the clean electricity investment credit under section 48E(a) for any qualified investment with respect to any qualified facility or EST the construction of which begins during a calendar year described in section 48E(e)(2) is equal to
For purposes of the recapture rules under section 50(a), section 48E(g) provides a special recapture rule applicable to qualified facilities. Specifically, section 48E(g) provides that, for purposes of section 50, if the Secretary determines that the GHG emissions rate for a qualified facility is greater than 10 grams of CO
On October 24, 2022, the Treasury Department and the IRS published Notice 2022-49, 2022-43 I.R.B. 321. The notice requested general comments on issues arising under sections 45Y and 48E, as well as on issues relating to three other credits. For section 45Y, the notice specifically requested comments concerning (1) industry standards for taxpayer eligibility for the credit, (2) what the Treasury Department and the IRS should consider, including around the scope and factors, for the annual GHG emissions rate table, (3) whether guidance is needed to clarify cases in which a metering device is owned and operated by an unrelated person or in which electricity produced at such a qualified facility with such a device is sold, consumed or stored by the taxpayer, and (4) what procedures the Treasury Department and the IRS should provide for a taxpayer whose facility does not have an emissions rate established by the annual rate table, and what should the Secretary consider in making such a determination. For section 48E, the notice specifically requested comments concerning what industry mechanisms currently exist for a taxpayer to demonstrate eligibility for the credit.
The Treasury Department and the IRS received over 100 comments specifically addressing sections 45Y and 48E from industry participants and other stakeholders. The Treasury Department and the IRS appreciate the commentors' interest and engagement on these issues. These comments have been carefully considered in the preparation of these proposed regulations.
On August 30, 2023, the Treasury Department and the IRS published a notice of proposed rulemaking and a notice of public hearing (REG-100908-23) in the
On November 22, 2023, the Treasury Department and the IRS published a notice of proposed rulemaking and a notice of public hearing (REG-132569-17) in the
The proposed regulations under section 45Y are organized in five sections, proposed §§ 1.45Y-1 through 1.45Y-5 (section 45Y regulations). Proposed § 1.45Y-1 would provide an overview of the section 45Y regulations, generally applicable definitions, and general rules applicable to section 45Y, including a rule for calculating the credit for a CHP property. Proposed § 1.45Y-2 would provide rules relating to qualified facilities for purposes of the section 45Y credit. Section 1.45Y-3 is reserved for rules relating to the increased credit amount for meeting the prevailing wage and apprenticeship requirements. A cross reference will be added to § 1.45Y-3 in the final regulations after § 1.45Y-3 is finalized. Proposed § 1.45Y-4 would provide the rules of general application under section 45Y, including rules that attribute production to the taxpayer, rules for the expansion of a facility and incremental production, and rules for retrofits of an existing facility. Proposed § 1.45Y-5 would provide rules pertaining to the determination of a GHG emissions rate for a facility under section 45Y.
Proposed § 1.45Y-1 would provide an overview of the section 45Y regulations and definitions of terms for purposes of the section 45Y regulations, including the terms “combined heat and power system (CHP) property,” “metering device,” “related person,” “unrelated person,” and “qualified facility.”
Proposed § 1.45Y-1(a)(5)(i) would define, for purposes of section 45Y(a)(1)(A)(ii)(II), the term “metering device” as equipment that is owned and operated by an unrelated person (as defined in paragraph (a)(11) of this section) for energy revenue metering to measure and register the continuous summation of an electricity quantity with respect to time. Further, proposed § 1.45Y-1(a)(5)(ii) would provide standards for maintaining and operating a metering device for purposes of section 45Y(a)(1)(A)(ii)(II) and proposed § 1.45Y-1(a)(5) by requiring a metering device to be maintained in proper working order according to the instructions of its manufacturer. Proposed § 1.45Y-1(a)(5)(ii) would also provide that a metering device should meet the requirements of the American National Standards Institute C12.1-2022 standard, or subsequent revisions, be revenue grade with a +/−0.5% accuracy, and be properly calibrated. Proposed § 1.45Y-1(a)(5)(iii) would provide that for purposes of monitoring the metering device, the unrelated person may share network equipment, such as spare fiber optic cable owned by the taxpayer that produces the electricity, and may co-locate network
Proposed § 1.45Y-1(a)(7)(i) would provide that for purposes of section 45Y(a), the term “related person” means a person who is related to another person if such person would be treated as a single employer under the regulations in 26 CFR chapter 1 under section 52(b) of the Code. Proposed § 1.45Y-1(a)(7)(ii) would provide that in the case of a corporation that is a member of a consolidated group (as defined in § 1.1502-1(h)), such corporation will be treated as selling electricity to an unrelated person if such electricity is sold to an unrelated person by another member of such group.
Proposed § 1.45Y-1(a)(11) would provide that for purposes of section 45Y(a), the term “unrelated person” means a person who is not a related person as defined in section 45Y(g)(4) and proposed § 1.45Y-1(a)(7). In the case of sales of electricity to an individual consumer, such sales will be treated as sales to an unrelated party for purposes of the section 45Y credit. Proposed § 1.45Y-1(a)(11) provides an example illustrating the application of these rules.
Proposed § 1.45Y-1(b)(1) would describe the calculation of the section 45Y credit, providing that the credit is an amount equal to the product of the kWh of electricity that is produced by the taxpayer at a qualified facility (as defined in proposed § 1.45Y-2(a)) and sold by the taxpayer to an unrelated person during the taxable year, multiplied by the applicable amount (as described in proposed § 1.45Y-1(b)) with respect to such qualified facility. Proposed § 1.45Y-1(b)(1) would further provide that in the case of a qualified facility that is equipped with a metering device that is owned and operated by an unrelated person, the section 45Y credit for any taxable year is an amount equal to the product of the kWh of electricity that is both produced at the qualified facility (as defined in proposed § 1.45Y-2(a)) and sold, consumed, or stored by the taxpayer during the taxable year, multiplied by the applicable amount with respect to such qualified facility. Proposed § 1.45Y-1(b)(1) would also provide that only one section 45Y credit may be claimed for each kWh of electricity produced by the taxpayer at a qualified facility.
Proposed § 1.45Y-1(b)(2)(i) would define the applicable amount as the base amount described in § 1.45Y-1(b)(2)(ii) or the alternative amount described in § 1.45Y-1(b)(2)(iii). Proposed § 1.45Y-1(b)(2)(i) would further provide that the applicable amount is subject to the inflation adjustment as provided in section 45Y(c)(1) and proposed § 1.45Y-1(b)(3), and that the applicable amount may also be increased as provided in section 45Y(g)(7)) and proposed § 1.45Y-1(b)(4), in the case of a qualified facility that is located in an energy community. Proposed § 1.45Y-1(b)(2)(ii) would describe the base amount as 0.3 cents in the case of any qualified facility that does not satisfy the requirements provided in section 45Y(a)(2)(B). Proposed § 1.45Y-1(b)(2)(iii) would describe the alternative amount as 1.5 cents if prevailing wage and apprenticeship requirements are satisfied as provided in section 45Y(a)(2)(B).
Proposed § 1.45Y-1(b)(3) would provide the rules related to the inflation adjustment factor applicable to the section 45Y credit. Proposed § 1.45Y-1(b)(4) would provide the rules applicable to the energy communities increase in credit. Proposed § 1.45Y-1(b)(5) would provide the domestic content bonus credit amount.
Proposed § 1.45Y-1(c) would provide the credit phase-out rules. Generally, proposed § 1.45Y-1(c)(1) would provide that the amount of the clean electricity production credit under section 45Y(a) for any qualified facility the construction of which begins during a calendar year described in section 45Y(d)(2) is equal to the product of the amount of the credit determined under section 45Y(a) without regard to the credit phaseout rules of section 45Y(d) (credit phase-out), multiplied by the phase-out percentage provided in section 45Y(d)(2). Proposed § 1.45Y-1(c)(2) would provide that the phase-out percentage is 100 percent for a facility the construction of which begins during the first calendar year following the applicable year; 75 percent for a facility the construction of which begins during the second calendar year following the applicable year; 50 percent for a facility the construction of which begins during the third calendar year following the applicable year; and 0 percent for a facility the construction of which begins during any calendar year subsequent to the calendar year described in section 45Y(d)(2)(C).
Proposed § 1.45Y-1(c)(3) would define the “applicable year” for purposes of proposed § 1.45Y-1(c) to mean the later of the calendar year in which the Secretary makes the determination that the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2022, or 2032. Proposed § 1.45Y-1(c)(4) would provide that, for the purposes of determining the applicable year, the annual greenhouse gas emissions from the production of electricity in the United States for any year must be assessed separately using both the Energy Information Administration's (EIA) Electric Power Annual, using the sum of the annual carbon dioxide emissions data from conventional power plants and combined heat and power plants as currently listed in Table 9.1 and the Monthly Energy Review annual carbon dioxide emissions from the combustion of biomass to produce electricity in the electric power sector as currently listed in Table 11.7, and the U.S. Environmental Protection Agency (EPA) Inventory of U.S. Greenhouse Gas Emissions and Sinks (GHGI) annual electric power-related carbon dioxide, methane, and nitrous oxide emissions data including carbon dioxide emissions from the combustion of biomass to produce electricity. In the most current version of the GHGI, annual fossil and biogenic CO
For 2022, the EIA Electric Power Annual states that the annual carbon dioxide emissions from conventional power plants and combined heat and power plants are 1,650 MMT, and the Monthly Energy Review annual carbon dioxide emissions from the combustion of biomass to produce electricity in the electric power sector are 35 MMT. Thus, the EIA's data reflects a total of 1,685 MMT in 2022. See EIA Electric Power Annual (
Proposed § 1.45Y-1(c)(5) would provide that, for the purposes of determining the applicable year, the Secretary will make such determination only if the annual greenhouse gas emissions from the production of
There are other United States Government greenhouse gas datasets that could serve as the basis for the Secretary's determination as to whether the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent compared to 2022. Two such datasets are the EPA Greenhouse Gas Reporting Program (GHGRP) and Emissions & Generation Resource Integrated Database (eGRID). The Treasury Department and the IRS request comment on which datasets are most appropriate to determine the applicable year and why.
Proposed § 1.45Y-1(d) would provide requirements for CHP property and special rules for calculating the section 45Y credit for CHP property. Proposed § 1.45Y-1(d)(1) would provide that CHP property must produce at least 20 percent of its total useful energy in the form of thermal energy that is not used to produce electrical or mechanical power (or combination thereof), and at least 20 percent of its total useful energy in the form of electrical or mechanical power (or combination thereof). Proposed § 1.45Y-1(d)(1) would further provide that the energy efficiency percentage of CHP property must exceed 60 percent, and that these percentages are determined on a British thermal unit (Btu) basis. Section 45Y(g)(2)(B) incorporates these requirements by providing that the term “combined heat and power system property” has the same meaning given such term by section 48(c)(3) (without regard to section 48(c)(3)(A)(iv), (B), and (D)).
Proposed § 1.45Y-1(d)(2) would describe the energy efficiency percentage of a CHP property stating that it is the fraction the numerator of which is the total useful electrical, thermal, and mechanical power produced by the system at normal operating rates, and expected to be consumed in its normal application, and the denominator of which is the lower heating value of the fuel sources for the system, which is a measure of heat content based on the net energy content of a combustible fuel.
Proposed § 1.45Y-1(d)(3) would provide a special rule for calculating electricity produced by CHP property. For purposes of section 45Y(a) and proposed § 1.45Y-1(b), the kWh of electricity produced by a taxpayer at a qualified facility will include any production in the form of useful thermal energy by any CHP property within such facility, and the amount of greenhouse gases emitted into the atmosphere by such facility in the production of such useful thermal energy will be included for purposes of determining the GHG emissions rate for such facility.
Proposed § 1.45Y-1(d)(3)(ii)(A) would provide a conversion from Btu to kWh. Proposed § 1.45Y-1(d)(3)(ii))(A) would provide that for purposes of section 45Y(g)(2)(A)(i) and § 1.45Y-1(d)(3), the amount of kWh of electricity produced in the form of useful thermal energy is equal to the quotient of the total useful thermal energy produced by the CHP property within the qualified facility, divided by the heat rate for such facility.
Proposed § 1.45Y-1(d)(3)(ii)(B) would define the term “heat rate” to mean the amount of energy used by the qualified facility to generate 1 kWh of electricity, expressed as Btus per net kWh generated. In calculating the heat rate of a qualified facility that includes CHP property that uses combustion, a taxpayer must use the annual average heat rate, defined as the total annual fuel consumption of the CHP property (in Btus, using the lower heating value of the fuel) during the taxable year for which the section 45Y credit is claimed, divided by the annual net electricity generation (in kWh) of the CHP property during such taxable year.
Section 45Y(g)(2), by cross reference to section 48(c)(3), requires that the energy efficiency percentage of the CHP property must exceed 60 percent, calculated as (1) the total useful electrical, thermal, and mechanical power produced by the system at normal operating rates, and expected to be consumed in its normal application, divided by (2) the lower heating value (LHV) of the fuel sources for the system. The LHV is calculated based on combustion. Some CHP property may not involve combustion, such as nuclear cogeneration. In these scenarios, because there is no calculable LHV, the energy efficiency percentage of the CHP property cannot be determined using the calculation provided in the statute.
The Treasury Department and the IRS request comments regarding the application of the energy efficiency percentage requirements to CHP property for which there is no combustion. Relatedly, comment is requested on whether the existing definition of heat rate provided in section 45Y(g)(2)(C)(ii) for purposes of calculating the section 45Y credit for CHP property that does not use combustion should be clarified.
Proposed § 1.45Y-2(a) would define a “qualified facility” to mean a facility owned by the taxpayer and used for the generation of electricity, that is placed in service after December 31, 2024, and has a GHG emissions rate of not greater than zero (as determined under rules provided in proposed § 1.45Y-5).
Proposed § 1.45Y-2(b) would provide a description of the property included in a qualified facility. Proposed § 1.45Y-2(b)(1) would provide that a qualified facility includes a unit of qualified facility (as defined in proposed § 1.45Y-2(b)(2)(i)) that meets the requirements of proposed § 1.45Y-2(b)(2)(ii). Proposed § 1.45Y-2(b)(1) would provide that a qualified facility also includes qualified property owned by the taxpayer that is an integral part of a qualified facility (as defined in proposed § 1.45Y-2(b)(3)). Section 45Y is silent regarding the credit eligibility of components that are part of a qualified facility but located in different locations. Proposed § 1.45Y-2(b)(1) would clarify that any property that meets the requirements of a qualified facility described in proposed § 1.45Y-2(b) is part of a qualified facility, regardless of where such property is located. Proposed § 1.45Y-2(b)(1) would provide that a qualified facility also generally does not include equipment that is an addition or modification to an existing qualified facility, however, proposed § 1.45Y-2(b)(1) would reference proposed § 1.45Y-4(c) for rules regarding the expansion of a facility or incremental production and proposed § 1.45Y-4(d) for rules regarding a retrofitted qualified facility (80/20 Rule).
Proposed § 1.45Y-2(b)(2)(i) would provide that for purposes of the section 45Y credit, the unit of qualified facility includes all functionally interdependent components of property (as defined in proposed § 1.45Y-2(b)(2)(ii)) owned by the taxpayer that are operated together and that can operate apart from other property to produce electricity. Proposed § 1.45Y-2(b)(2)(i) would clarify that no provision of proposed § 1.45Y-1, or proposed § 1.45Y-4 through § 1.45Y-5 uses the term “unit” in respect of a qualified facility with any meaning other than that provided in proposed § 1.45Y-2(b)(2)(i). A reference to § 1.45Y-3 will also be added to the previous sentence in proposed § 1.45Y-2(b)(2)(i) when proposed § 1.45Y-2(b)(2)(i) is finalized, but it cannot be added until § 1.45Y-3 is finalized.
Proposed § 1.45Y-2(b)(2)(ii) would provide that components are functionally interdependent if placing in service each component is dependent upon placing in service other components to produce electricity. See the discussion in section I.A. of the Explanation of Provisions regarding the special rule for CHP property.
Proposed § 1.45Y-2(b)(3)(i) would provide that for purposes of thesection 45Ycredit, a component of property owned by a taxpayer is an integral part of a facility if it is used directly in the intended function of the qualified facility and is essential to the completeness of such function.
Proposed § 1.45Y-2(b)(3)(ii) would provide that components of property that are an integral part of a qualified facility include power conditioning equipment and transfer equipment. Proposed § 1.45Y-2(b)(3)(ii) would provide that power conditioning equipment includes equipment that modifies the characteristics of electricity into a form suitable for use or transmission or distribution. Proposed § 1.45Y-2(b)(3)(ii) would provide that parts related to the functioning or protection of power conditioning equipment are also treated as power conditioning equipment and includes examples.
Proposed § 1.45Y-2(b)(3)(ii) would provide that transfer equipment includes components that permit the aggregation of electricity generated by components of qualified facilities and components that alter voltage in order to permit transfer to a transmission or distribution line. Proposed § 1.45Y-2(b)(3)(ii) would also clarify that transfer equipment does not include transmission or distribution lines. Proposed § 1.45Y-2(b)(3)(ii) would provide that examples of transfer equipment include, but are not limited to, wires, cables, and combiner boxes that conduct electricity. Proposed § 1.45Y-2(b)(3)(ii) would provide that parts related to the functioning or protection of transfer equipment are also treated as transfer equipment and include examples.
Proposed § 1.45Y-2(b)(3)(iii) would provide that roads that are an integral part of a qualified facility are those roads integral to the intended function of the qualified facility, such as onsite roads that are used to operate and maintain the qualified facility. Proposed § 1.45Y-2(b)(3)(iii) would also clarify that roads used primarily for access to the site, or roads used primarily for employee or visitor vehicles, are not integral to the intended function of the qualified facility and thus are not an integral part of a qualified facility.
Proposed § 1.45Y-2(b)(3)(iv) and (v) would also provide that fences and buildings (also referred to as structures) are generally not integral parts of a qualified facility because they are not integral to the intended function of the qualified facility. However, a building (or structure) may be an integral part of a qualified facility if it is essentially an item of machinery or equipment and a structure that houses components of property that are integral to the intended function of the qualified facility if the use of the structure is so closely related to the use of the housed components of property therein that the structure clearly can be expected to be replaced if the components of property it initially houses are replaced.
Proposed § 1.45Y-2(b)(3)(vi) would provide a rule for shared integral property by stating that multiple qualified facilities (whether owned directly by one or more taxpayers), including qualified facilities with respect to which a taxpayer has claimed a credit under section 45Y or section 48E, may include shared property that can be considered an integral part of each qualified facility. Proposed § 1.45Y-2(b)(3)(vi) would also provide that a component of property that is shared by a qualified facility (as defined in section 45Y(b)) (45Y Qualified Facility) and a qualified facility (as defined in section 48E(b)(3)) (48E Qualified Facility) that is an integral part of both qualified facilities will not affect the eligibility of the section 45Y Qualified Facility to claim the section 45Y credit or the section 48E Qualified Facility to claim a section 48E credit. Proposed § 1.45Y-2(b)(3)(vii) would provide examples illustrating proposed § 1.45Y-2(b)(3).
Proposed § 1.45Y-2(c)(1) would provide that the term “qualified facility” (as defined in section 45Y(b)) will not include any facility for which a credit determined under section 45, 45J, 45Q, 45U, 48, 48A, or 48E is allowed under section 38 of the Code for the taxable year or any prior taxable year. Proposed § 1.45Y-2(c)(1) would further clarify that a taxpayer that directly owns a qualified facility (as defined in section 45Y(b)) that is eligible for both a section 45Y credit and another Federal income tax credit is eligible for the section 45Y credit only if the other Federal income tax credit was not allowed with respect to the qualified facility. Proposed § 1.45Y-2(c)(1) would also add that nothing in § 1.45Y-2(c) precludes a taxpayer from claiming a section 45Y credit with respect to a qualified facility (as defined in section 45Y(b)) that is co-located with another facility for which a credit determined under section 45, 45J, 45Q, 45U, 48, 48A, or 48E is allowed under section 38 for the taxable year or any prior taxable year. Proposed § 1.45Y-2(c)(2) would clarify that for purposes of proposed § 1.45Y-2(c)(1), the term “allowed” only includes credits that taxpayers have claimed on a Federal income tax return or Federal return, as appropriate, and that the IRS has not challenged in terms of the taxpayer's eligibility. Proposed § 1.45Y-2(c)(3) includes several examples illustrating the rules of § 1.45Y-2(c).
Proposed § 1.45Y-4(a) would provide that consumption, sales, or storage of electricity are taken into account for purposes of the section 45Y credit only with respect to electricity produced within the United States (as defined in section 638(1)), or a United States territory, which for purposes of section 45Y and the section 45Y regulations has the meaning of the term “possession” of the United States (as defined in section 638(2)).
Proposed § 1.45Y-4(b)(1) would provide that in the case of a qualified facility in which more than one person has an ownership share (and such arrangement is not treated as a partnership for Federal tax purposes), production from the qualified facility is
Proposed § 1.45Y-4(b)(3) would provide that if a qualified facility is owned through an unincorporated organization that has made a valid election under section 761(a) of the Code, each member's undivided ownership share in the qualified facility will be treated as a separate qualified facility owned by such member.
Proposed § 1.45Y-4(c)(1) would provide, solely for purposes of proposed § 1.45Y-4(c), that the term “qualified facility” includes either a new unit or an addition of capacity placed in service after December 31, 2024, in connection with a facility described in section 45Y(b)(1)(A) (without regard to clause (ii) of such paragraph), which was placed in service before January 1, 2025, but only to the extent of the increased amount of electricity produced at the facility by reason of such new unit or addition of capacity. Proposed § 1.45Y-4(c)(1) would also provide that a new unit or an addition of capacity will be treated as a separate qualified facility. Proposed § 1.45Y-4(c)(1) would provide for purposes of proposed § 1.45Y-4(c), that a new unit or an addition of capacity require the addition or replacement of components of property, including any new or replacement integral property, added to a facility necessary to increase capacity. If applicable for purposes of proposed § 1.45Y-4(c), taxpayers must use modified or amended facility operating licenses or the International Standard Organization (ISO) conditions to measure the maximum electrical generating output of a facility to determine its nameplate capacity. Additionally, proposed § 1.45Y-4(c)(1) would provide that for purposes of section 45Y(a)(2)(B)(i) (that is, the One-Megawatt Exception), the capacity for a new unit or an addition of capacity is the sum of the nameplate capacity of the added qualified facility and the nameplate capacity of the facility to which the qualified facility was added.
Proposed § 1.45Y-4(c)(2) would provide that solely for purposes of § 1.45Y-4(c), a facility that is decommissioned or in the process of decommissioning and restarts can be considered to have increased capacity if the following conditions are met: (1) the existing facility must have ceased operations; (2) the existing facility must have a shutdown period of at least one calendar year during which it is without a valid operating license from its respective Federal regulatory authority (that is, the Federal Energy Regulatory Commission (FERC) or the Nuclear Regulatory Commission (NRC)); and (3) the increased capacity of the restarted facility must have a new, reinstated, or renewed operating license issued by either FERC or NRC.
Proposed § 1.45Y-4(c)(3) would describe how to compute the increased amount of electricity produced as a result of a new unit or an addition of capacity. Proposed § 1.45Y-4(c)(3) would provide that to determine the increased amount of electricity produced by a facility by reason of a new unit or an addition of capacity, a taxpayer must multiply the amount of electricity that the facility produces during a taxable year after the new unit or addition of capacity is placed in service by a fraction, the numerator of which is the added nameplate capacity that results from the new unit or addition of capacity, and the denominator of which is the total nameplate capacity of the facility with the new unit or addition of capacity added.
Proposed § 1.45Y-4(c)(4) would illustrate the application of these rules to determine the increased amount of electricity attributable to a new unit or an addition of capacity described in § 1.45Y-4(c).
Proposed § 1.45Y-4(d)(1) would provide that for purposes of section 45Y(b)(1)(B), a facility may qualify as originally placed in service even if it contains some used components of property within the unit of qualified facility, provided the fair market value of the used components of the unit of qualified facility is not more than 20 percent of the total value of the unit of qualified facility (that is, the cost of the new components of property plus the fair market value of the used components of property within the unit of qualified facility) (80/20 Rule). Proposed § 1.45Y-4(d)(1) would further provide that if a facility satisfies the requirements of the 80/20 Rule, then the date on which such qualified facility is considered originally placed in service for purposes of section 45Y(B)(1)(b) is the date on which the new components of property of the unit of qualified facility are placed in service. Proposed § 1.45Y-4(d)(2) would provide that, for purposes of this 80/20 Rule, the cost of new components of the unit of qualified facility includes all costs properly included in the depreciable basis of the new components of property. Lastly, proposed § 1.45Y-4(d)(3) would provide examples demonstrating the 80/20 Rule.
Section 45Y(b)(2) provides rules for determining GHG emissions rates. Proposed § 1.45Y-5(a) would provide an overview of the rules pertaining to GHG emissions rates for facilities under section 45Y.
Proposed § 1.45Y-5(b) would provide definitions of terms relevant to determining GHG emissions rates. Section 45Y(e)(1) defines the term “CO
Proposed § 1.45Y-5(b)(8) would provide that the term “fuel” means material directly used to produce electricity or energy inputs that are used to produce electricity. Proposed § 1.45Y-5(b)(9) would provide that the term “feedstock” means any raw material used in a process for electricity generation or to produce an intermediate product or finished fuel used for electricity generation.
Section 45Y(b)(2)(B) provides rules for determining a GHG emissions rate for a facility that produces electricity through combustion or gasification. Proposed § 1.45Y-5(b)(2) would provide that the term “combustion” means a rapid exothermic chemical reaction, specifically the oxidation of a fuel, which liberates energy including heat and light. This proposed definition of “combustion” would include, for example, burning fossil fuels, but it would not include the reaction that produces electricity inside a fuel cell.
Gasification produces fuel but not electricity. Proposed § 1.45Y-5(b)(3) would provide that the term “gasification” means a thermochemical process that converts carbon-containing materials into syngas, a gaseous mixture that is composed primarily of carbon monoxide, carbon dioxide, and hydrogen. Because gasification does not produce electricity, the inclusion of the term “gasification” as a category separate from “combustion” in section 45Y(b)(2)(B) would have no independent significance unless it is interpreted as applying to the production of an energy source that is ultimately used by the facility to generate electricity (for example, syngas used to make electricity). Thus, proposed § 1.45Y-5(b)(4) would interpret the phrase “facility which produces electricity through combustion or gasification” in section 45Y(b)(2)(B) as applying to facilities that produce electricity through combustion or use an input energy source to produce electricity, which energy source was produced through a fundamental transformation, or multiple transformations, of one energy source into another using combustion or gasification. The Treasury Department and the IRS request comment on this proposed interpretation, including whether the application of this proposed interpretation should be clarified with respect to any type of fundamental transformation of an energy source and any related activities or operations. Comment is also requested on supply chain tracing requirements that the Treasury Department and the IRS may apply to verify whether or not a feedstock or fuel (including energy inputs) used by a facility to produce electricity was produced using combustion or gasification.
Section 45Y(b)(2)(B) provides that in the case of electricity produced through combustion or gasification, the GHG emissions rate for such facility is equal to the net rate of greenhouse gases emitted into the atmosphere by such facility (taking into account lifecycle greenhouse gas emissions, as described in section 211(o)(1)(H) of the CAA (42 U.S.C. 7545(o)(1)(H)) in the production of electricity. Proposed § 1.45Y-5(b)(4) would provide that a “facility that produces electricity through combustion or gasification” (C&G Facility) means a facility that produces electricity through combustion or uses an input energy source to produce electricity, if the input energy source was produced through a fundamental transformation, or multiple transformations, of one energy source into another using combustion or gasification. Under proposed § 1.45Y-5(b)(4), a facility that produces electricity using any fuel that was produced using electricity that had been produced, in whole or in part, from the combustion of fossil fuels would be considered a C&G Facility. For example, a hydrogen fuel cell would be considered a C&G Facility if it produced electricity using hydrogen that was produced by an electrolyzer powered, in whole or in part, by electricity from the grid because some of the electricity from the grid was produced through combustion or gasification. A fuel cell facility such as a solid oxide fuel cell, which uses methane as fuel, would be considered a C&G Facility, because the methane reforming reaction that produces syngas within the fuel cell prior to the production of electricity would be considered a gasification reaction. In contrast, a hydrogen fuel cell facility using hydrogen produced exclusively using electricity from a new solar array or wind farm co-located with the hydrogen fuel cell facility would not be considered a C&G Facility, because the input energy source was not produced through a transformation of one energy source into another using combustion or gasification.
The Treasury Department and the IRS request comment on whether the proposed definitions of gasification, combustion, and C&G Facility would result in certain types of fuel cells that use fossil or biogenic fuel inputs (via combustion or gasification) to produce electricity being unable to demonstrate a net rate of greenhouse gas emissions that is not greater than zero with a lifecycle analysis because they are not classified as a C&G Facility as defined in proposed § 1.45Y-5(b)(4). Because the energy transformation that produces electricity in a fuel cell would not be considered combustion under the definition in proposed § 1.45Y-5(b)(2), a fuel cell facility would only qualify as a C&G Facility if the fuel it used to produce electricity was produced through combustion or gasification under these proposed regulations.
Proposed § 1.45Y-5(b)(7) would provide that a “Non-C&G Facility” means a facility that produces electricity and is not described in proposed § 1.45Y-5(b)(4).
Proposed § 1.45Y-5(b)(5) would provide that, consistent with section 45Y(b)(2)(A), the term “greenhouse gas emissions rate” means the amount of greenhouse gases emitted into the atmosphere by a facility in the production of electricity, expressed as grams of CO
Proposed § 1.45Y-5(b)(6) would provide that, for the purposes of section 45Y(b)(2)(A), for both C&G Facilities and Non-C&G Facilities, the term “greenhouse gases emitted into the atmosphere by a facility in the production of electricity” means emissions from a facility that directly occur from the process that transforms the input energy source into electricity. Proposed § 1.45Y-5(b)(6)(i) through § 1.45Y-5(b)(6)(vi) would exclude emissions that may relate to a facility but do not occur “in the production of electricity” as specified in section 45Y(b)(2)(A). Proposed § 1.45Y-5(c)(1) would provide, for Non-C&G Facilities only, additional types of excluded emissions under section 45Y(b)(2)(A). Proposed § 1.45Y-5(d)(2) would provide, for C&G Facilities only, that additional rules on included and excluded emissions apply in order to conduct a lifecycle analysis as required by section 45Y(b)(2)(B).
Proposed § 1.45Y-5(b)(6)(i) through § 1.45Y-5(b)(6)(vi) would clarify that for the purposes of both Non-C&G and C&G Facilities this definition excludes: (1) emissions from back-up generators that are primarily used in maintaining critical systems in case of a power system outage or for supporting restart of a generator after an outage; (2) emissions from routine operational and maintenance activities that are integral to the production of electricity, including, but not limited to, emissions from internal combustion vehicles used to access and perform maintenance on remote electricity generating facilities or emissions occurring from heating and cooling control rooms or dispatch centers; (3) emissions from a step-up transformer that conditions the electricity into a form suitable for productive use or sale; (4) emissions that occur before commercial operations commence or after commercial operations terminate, including, but not limited to, on-site emissions occurring from construction or manufacturing of the facility itself, emissions from the off-site manufacturing of facility components, or emissions occurring due to siting or decommissioning; (5) emissions from infrastructure associated with the facility, including, but not limited to, emissions from road construction for feedstock production; and (6) emissions from the distribution of electricity to consumers.
Proposed § 1.45Y-5(c) would provide the rules for determining a GHG emissions rate for Non-C&G Facilities, including by the Secretary when
Proposed § 1.45Y-5(c)(1)(ii) would provide that, subject to proposed § 1.45Y-5(b)(6) and (c)(1), a GHG emissions rate for a Non-C&G Facility must be determined through a technical and engineering assessment of the fundamental energy transformation into electricity, and that such assessment must consider all input and output energy carriers and chemical reactions or mechanical processes taking place at the facility in the production of electricity. Proposed § 1.45Y-5(c)(1)(iii) would provide an example of a GHG emissions rate determination for a Non-C&G Facility.
Proposed § 1.45Y-5(c)(2) would identify certain types or categories of facilities that are categorically Non-C&G Facilities with a GHG emissions rate that is not greater than zero. Proposed § 1.45Y-5(c)(2)(i) through (viii) would provide that these include wind facilities (including small wind properties), hydropower facilities (including retrofits adding power production to non-powered dams, conduit hydropower, hydropower using new impoundments, and hydropower using diversions such as a penstock or channel), marine and hydrokinetic facilities, solar facilities (including photovoltaic and concentrating solar power), geothermal facilities (including flash and binary plants), nuclear fission facilities, nuclear fusion facilities, and waste energy recovery property (WERP) that derives energy from any of the energy sources described in proposed § 1.45Y-5(c)(2)(i) through (vii) (including geothermal or solar waste heat recovery such as from a district geothermal heating system, and waste heat recovery such as from a nuclear reactor dedicated to heat production for an industrial facility).
WERP is property that generates electricity solely from heat from buildings or equipment if the primary purpose of such building or equipment is not the generation of electricity. Examples of buildings or equipment the primary purpose of which is not the generation of electricity include, but are not limited to, manufacturing plants, medical care facilities, facilities on school campuses, pipeline compressor stations, and associated equipment. The Treasury Department and the IRS request comment on whether this definition of WERP is appropriate. Comment is further requested on whether and why it would be appropriate to revise proposed § 1.45Y-5(c)(2)(viii) to include additional energy sources (such as energy from exothermic chemical reactions or pressure drop technologies) that do not rely on combustion or gasification but could include equipment related to the transport of fossil fuels (for example, natural gas).
For purposes of proposed § 1.45Y-5(c)(2)(ii), hydropower includes retrofits that add electricity production to non-powered dams, conduit hydropower, hydropower using new impoundments, and hydropower using diversions such as a penstock or channel. Greenhouse gas emissions are not created by the fundamental transformation of electricity needed to produce electricity in a hydropower facility. A hydropower facility converts the potential energy of flowing water into electricity. The potential energy results from changes in gravitational potential energy from the flowing water, which the hydropower facility captures with a turbine which spins a rotor within a generator to produce electricity. Hydropower facilities may release greenhouse gas emissions from the hydropower reservoir due to diffusion at the water surface or due to ebullition, and from degassing when water passes through a pump house or turbine. Such emissions from hydropower facilities would not be considered greenhouse gases emitted into the atmosphere by a Non-C&G Facility in the production of electricity under proposed § 1.45Y-5(b)(6)(C), because emissions of greenhouse gasses are not created by the fundamental transformation of potential energy in flowing water into electricity, but rather from processes that are not fundamental to the transformation of potential energy into electricity.
Similarly, greenhouse gas emissions are not created by the fundamental transformation of energy from high-pressure hot water into electricity in a flash geothermal facility, which is included in proposed § 1.45Y-5(c)(2)(v). A flash geothermal facility uses high-pressure hot water from deep inside the earth and converts it directly to steam that drives a turbine and generator. After the steam passes through the turbine, it is released into the atmosphere and any non-condensable gases including greenhouse gases dissolved in the steam are also released. Such emissions from flash geothermal facilities would not be considered greenhouse gases emitted into the atmosphere by a facility in the production of electricity under proposed § 1.45Y-5(c)(1)(i)(C), because the greenhouse gases are already present in the underground water and are not created by the fundamental transformation of the thermal energy in the water into electricity, but rather by processes that are not fundamental to the transformation of the thermal energy into electricity. This proposed treatment of flash geothermal facilities is supported by surveys indicating that underground carbon dioxide in certain geothermal reservoirs is emitted passively into the atmosphere even in the absence of geothermal electricity generation. The Treasury Department and the IRS request comment on whether the identification of flash geothermal facilities as Non-C&G Facilities with a GHG emissions rate that is not greater than zero in proposed § 1.45Y-5(c)(2)(v) is appropriate.
For purposes of proposed § 1.45Y-5(c)(2)(iv), solar includes concentrated solar power. Concentrated solar power facilities may have auxiliary burners that in some cases use combustion exclusively for the purposes of cold starts or freeze protection of thermal working fluids, but in other cases, may also be used to generate electricity in hybrid configurations. The Treasury Department and the IRS request comment on whether the existing definitions of C&G Facilities and Non-C&G Facilities is sufficient to distinguish between these two categories of facilities, or whether additional clarification is needed.
Section 45Y(b)(2)(B) provides that in the case of electricity produced through combustion or gasification, the GHG emissions rate for such facility is equal to the net rate of greenhouse gases emitted into the atmosphere by such facility (taking into account lifecycle greenhouse gas emissions, as described in section 211(o)(1)(H) of the CAA) in the production of electricity.
Section 211(o)(1)(H) of the CAA provides that “lifecycle greenhouse gas emissions” means the aggregate quantity of greenhouse gas emissions (including direct emissions and significant indirect emissions such as significant emissions from land use changes) related to the full fuel lifecycle, including all stages of fuel and feedstock production and distribution, from feedstock generation or extraction through the distribution and delivery and use of the finished fuel to the ultimate consumer, if the mass values for all greenhouse gases are adjusted to account for their relative global warming potential.
The EPA promulgated its interpretation of section 211(o)(1)(H) of the CAA in a 2010 notice-and-comment rulemaking establishing the regulatory framework for the updated renewable fuel standard (RFS2) program. The EPA interpreted section 211(o)(1)(H) of the CAA in the context of the facts and policy framework of the RFS program and based on information available at that time; however, the EPA's analysis and implementation of the RFS2 rule offer relevant precedent for the Treasury Department's and the IRS's interpretation of section 45Y(b)(2)(B). In the RFS2 rulemaking, the EPA interpreted 211(o)(1)(H) of the CAA as requiring the agency to account for the real-world emissions consequences of increased production of biofuels. Thus, the EPA determined in the RFS2 context that the inclusion of direct emissions and significant indirect emissions such as significant emissions from land-use changes in section 211(o)(1)(H) of the CAA requires a consequential approach to considering the real-world emissions associated with biofuel production. A “consequential” approach considers the real-world greenhouse gas emissions associated with biofuel production, including secondary or indirect emissions resulting from market interactions induced by expanded biofuel production and use. Such an approach includes consideration of market interactions induced by expanded biofuel production and use that may result in secondary or indirect greenhouse gas emissions, domestically and globally.
Proposed § 1.45Y-5(d) would provide the rules applicable to determining a net rate of GHG emissions for C&G Facilities, including by the Secretary when publishing a table described in section 45Y(b)(2)(C)(i) or determining an emissions rate as provided in section 45Y(b)(2)(C)(ii). Proposed § 1.45Y-5(d)(1) would provide that GHG emissions rates for C&G Facilities must be determined by a lifecycle analysis (LCA) that complies with proposed § 1.45Y-5(d) and (e), and that such rate equals the net rate of greenhouse gases emitted into the atmosphere by such facility (taking into account lifecycle greenhouse gas emissions, as described in section 211(o)(1)(H) of the CAA) in the production of electricity, expressed as grams of CO
Proposed § 1.45Y-5(d)(2) would provide that an LCA used for determining the net rate of greenhouse gases emitted into the atmosphere by a facility must comply with the requirements provided in proposed § 1.45Y-5(d)(2)(i) through (vii). Proposed § 1.45Y-5(d)(2)(i) would provide that the starting boundary of the LCA for an LCA involving generation-derived feedstocks (such as biogenic feedstocks) is feedstock generation, and the starting boundary of the LCA for an LCA involving extraction-derived feedstocks (such as fossil fuel feedstocks) is feedstock extraction. Under proposed § 1.45Y-5(d)(2)(i), the starting boundaries would include the processes necessary to produce and collect or extract the raw materials used to produce electricity from combustion or gasification technologies, including those used as energy inputs to electricity production. This includes the emissions effects of relevant land management activities or changes related to or associated with feedstock production. The starting conditions are the material and energy flows, including associated direct and indirect greenhouse gas emissions, of the processes associated with the extraction or production of raw feedstock materials or fuel.
Proposed § 1.45Y-5(d)(2)(ii) would provide that the ending boundary of an LCA for electricity that is transmitted to the grid or electricity that is used on-site is the meter at the point of production of the C&G Facility. The distribution, transmission, and use of such electricity generated by a C&G Facility (and other types of energy sources it may displace while in use) are outside of the LCA boundary; therefore, such emissions would not be taken into account because they do not occur in the “production of electricity” as described in section 45Y(b)(2)(B). Given the particular context of section 45Y(b)(2)(B) (that is, a tax credit for the production of clean electricity), proposed § 1.45Y-5(d)(2)(ii) is consistent with section 45Y(b)(2)(B) of the Code (and the term “ultimate consumer” in section 211(o)(1)(H) of the CAA referenced therein) because it would treat the C&G Facility as the ultimate consumer of the fuel used to produce electricity.
Proposed § 1.45Y-5(d)(2)(iii) would provide that an LCA must be based on a future anticipated baseline, which projects future status quo in the absence of the availability of the sections 45Y and 48E credits (taking into account anticipated changes in technology, policies, practices, and environmental and other socioeconomic conditions).
Proposed § 1.45Y-5(d)(2)(iv) would provide that offsets and offsetting activities that are unrelated to the production of electricity by a C&G Facility, including the production and distribution of any input fuel, may not be taken into account in an LCA.
Proposed § 1.45Y-5(d)(2)(v) would interpret the reference to section 211(o)(1)(H) of the CAA as requiring that an LCA must take into account direct emissions, significant indirect emissions in the United States or other countries, emissions associated with market-mediated changes in related commodity markets, emissions associated with feedstock generation or extraction, emissions consequences of increased production of feedstocks, emissions at all stages of fuel and feedstock production and distribution, and emissions associated with distribution, delivery, and use of feedstocks to and by a C&G Facility. Proposed § 1.45Y-5(d)(2)(v) would interpret section 45Y(b)(2)(B) of the Code (and the term “ultimate consumer” in section 211(o)(1)(H) of the CAA referenced therein) as applying to the C&G Facility because it is the
Proposed § 1.45Y-5(d)(2)(v)(A) would provide that direct emissions include, but are not limited to: (1) emissions from feedstock generation, production, and extraction (including emissions from feedstock and fuel harvesting and extraction and direct land use change and management, including emissions from fertilizers, and changes in carbon stocks); (2) emissions from feedstock and fuel transport (including emissions from transporting the raw or processed feedstock to the fuel processing facility); (3) emissions from transporting and distributing fuels to the electricity production facility; (4) emissions from handling, processing, upgrading, and/or storing feedstocks, fuels and intermediate products (including emissions from on/offsite storage and preparation/pre-treatment for use (for example, torrefaction or pelletization) and emissions from process additives); and (5) emissions from combustion and gasification at the electricity generating facility (including emissions from the combustion and/or gasification process and emissions from gasification or combustion additives). Proposed § 1.45Y-5(d)(2)(v)(B) would provide examples of significant indirect emissions including, but not limited to, emissions from indirect land use and land use change and other induced emissions associated with the increased use of the feedstock for electricity production. Significant indirect emissions may include positive or negative emissions. For biogenic resources, significant indirect emissions may include emissions from growth and regrowth.
Proposed § 1.45Y-5(d)(2)(vi) would provide principles for excluded emissions by listing types of emissions that the LCA must not take into account.
Proposed § 1.45Y-5(d)(2)(vii) would provide that an LCA may consider alternative fates and may account for avoided emissions. Alternative fate means a set of informed assumptions (for example, production processes, material outcomes, market-mediated effects) used to estimate the emissions from the use of each feedstock were it not for the feedstock's new use due to the implementation of policy (that is, to produce electricity). Avoided emissions means the estimated emissions associated with the feedstock, including the feedstock's production and use, that would have occurred in the alternative fate (if such feedstock had not been diverted for electricity production) but are instead avoided with the feedstock's use for electricity production. It is important to note that, while, in some circumstances, emissions may be avoided if compared to the alternative fate, in others the new use of the material (for example, for electricity production) may involve additional emissions that were not emitted in the alternative fate estimation. Relatedly, in some circumstances, emissions may be avoided in one part of the supply chain only to occur elsewhere along the supply chain due to the new use.
The determination of net GHG emissions rates for C&G Facilities raises a range of complex technical questions that are relevant to determining eligibility for the section 45Y and section 48E credits. The Treasury Department and the IRS request comment on the following topics: (1) the treatment of renewable natural gas (RNG) and fugitive sources of methane; (2) analytical LCA parameters, including spatial scales and time horizons; (3) whether and how to distinguish between co-products, byproducts, and waste products and how emissions should be allocated to each in LCAs; (4) how to attribute emissions to the heat produced by facilities using combined heat and power systems; (5) how to create and maintain LCA baselines; and (6) certain issues related to LCA modeling.
The Treasury Department and the IRS intend to provide rules addressing facilities that produce electricity using biogas, renewable natural gas (RNG), or fugitive sources of methane (for example, from coal mine operations) for purposes of the section 45Y credit or the section 48E credit, collectively referred to as the “Clean Electricity Tax Credits.” In the context of this guidance, the term “RNG” refers to biogas that has been upgraded to be equivalent in nature to fossil natural gas. Fugitive methane refers to the release of methane through, for example, equipment leaks during the extraction, processing, transformation, and delivery of fossil fuels to the point of final use, such as coal mine methane. Such rules would apply to all biogas, RNG, or fugitive methane used for the purposes of the Clean Electricity Tax Credits and would provide requirements that must be met to account for any greenhouse gas emissions benefits from biogas, RNG, or fugitive methane in determining GHG emissions rates for purposes of the Clean Electricity Tax Credits. Such requirements would be designed to reflect the ways in which additional demand for biogas, RNG or fugitive methane can impact greenhouse gas emissions outcomes.
The Treasury Department and the IRS anticipate requiring that for purposes of the Clean Electricity Tax Credits, in order for biogas, biogas-based RNG, or fugitive methane to receive an emissions value consistent with such gases (and not standard natural gas), the biogas or RNG used to produce electricity or to produce a feedstock or fuel that is used to produce electricity must originate from the first productive use of the relevant methane. For any specific source of biogas, RNG, or fugitive methane, productive use is generally defined as any valuable application of the relevant methane (including to provide heat or cooling, generate electricity, or upgraded to RNG in the case of biogas or fugitive methane), and specifically excludes venting to the atmosphere or capture and flaring. The Treasury Department and the IRS further propose to define first productive use of the relevant methane as the time when a producer of that gas first begins using or selling it for productive use in the same taxable year as (or after) the electricity production facility was placed in service. The implication of this proposal is that biogas, for example, from any source that had been productively used in a taxable year prior to the taxable year in which the relevant electricity production facility was placed in service would not include GHG emissions benefits that might otherwise be attributable to biogas-based RNG, but would instead receive a value consistent with natural gas. This proposal would limit emissions associated with the diversion of biogas, RNG, or fugitive methane from other pre-existing productive uses.
For existing biogas sources that typically productively use or sell a portion of the biogas and flare or vent the remaining excess, the flared or vented portion may be eligible for first productive use as defined above if the flaring or venting volume can be adequately demonstrated and verified. In such circumstances, the flared or vented volume may be determined based on the previous taxable year's flared or vented volume as demonstrated via reported data to programs such as the Greenhouse Gas Reporting Program. Requirements would be established to reduce the risk that entities will deliberately generate additional biogas for purposes of the Clean Electricity Tax Credits, above historic and expected future levels or an equivalent metric, for example by
The Treasury Department and the IRS also recognize that different sources of methane may have significantly different characteristics (for example, counterfactuals, alternative fates, baseline characteristics, upstream leakage rates, etc.) and therefore significantly different lifecycle emissions. For this reason, the Treasury Department and the IRS are considering requiring an LCA to be conducted for electricity produced by each category of feedstock, rather than across all feedstocks used for the production of electricity by a facility. The Treasury Department and the IRS request comment on whether LCAs should be conducted on a feedstock-by-feedstock basis or averaged across feedstocks, and how to determine the appropriate categories of feedstock.
For purposes of the Clean Electricity Tax Credits, producers using biogas, RNG, or fugitive methane would be required to acquire and retire corresponding energy attribute certificates (EACs) through a book-and-claim system that can verify in an electronic tracking system that all applicable requirements are met.
Electricity producers would also be required to have a pipeline interconnection and measurement capability using a revenue grade meter. These rules would apply to the use of EACs with both direct and non-direct claims of biogas, RNG, or fugitive methane use. Direct use would involve a direct exclusive pipeline connection to a facility that generates biogas or RNG or from which fugitive methane is being sourced, while non-direct use would involve production using biogas, RNG, or fugitive methane sourced from a commercial or common-carrier natural gas or other specified pipeline. In all cases, EACs would need to document the biogas, RNG, or fugitive methane procurement use claims and that the energy attributes of the RNG or fugitive methane being used are not sold to other parties or used for compliance with other policies or programs.
The Treasury Department and the IRS request comments on these and other approaches related to biogas, RNG and fugitive methane. Regarding these sources of methane, the Treasury Department and the IRS request comment on the appropriate LCA considerations associated with them, such as counterfactual scenarios (that is, appropriate baselines), to account for direct and significant indirect emissions, and also the manner in which to assess methane from these sources if the current practice is flaring. In particular, the Treasury Department and the IRS request comments on the following questions:
(1) What data sources and peer reviewed studies provide information on fugitive methane, biogas, and RNG production systems (including biogas production and reforming systems), markets, monitoring, reporting, and verification processes, and greenhouse gas emissions associated with these production systems and markets?
(2) What conditions for the use of biogas, RNG, and fugitive methane would ensure that emissions accounting for purposes of the Clean Electricity Tax Credits reflect and reduce the risk of indirect emissions effects from electricity production using biogas and RNG? How can taxpayers verify that they have met these requirements?
(3) How broadly available and reliable are existing electronic tracking systems and verification protocols and practices for biogas, RNG, or fugitive methane certificates in book and claim systems? What developments may be required, if any, before such systems are appropriate for use with biogas or RNG certificates used to claim the Clean Electricity Tax Credits?
(4) How should biogas, RNG or fugitive methane resulting from the first productive use of methane be defined, documented, and verified? What industry best practices or alternative methods would enable such verification to be reflected in a biogas, RNG or methane certificate or other documentation? What additional information should be included in such EACs to help certify compliance?
(5) What are the emissions associated with different methods of transporting biogas, RNG or fugitive methane to electricity producers (for example, vehicular transport, pipeline)?
(6) How can the final regulations reflect and mitigate indirect emissions effects from the diversion of biogas, RNG, or fugitive methane from potential future productive uses? What other new uses of biogas, RNG, or fugitive methane could be affected in the future if more gas from new capture and productive use of methane from these sources is used in the electricity production process?
(7) How can the potential for the generation of additional emissions from the production of additional waste, waste diversion from lower-emitting disposal methods, and changes in waste management practices be limited through emissions accounting or rules for biogas and RNG use established for purposes of the Clean Electricity Tax Credits?
(8) To limit the additional production of waste, should the final regulations limit eligibility to methane sources that existed as of a certain date or waste or waste streams that were produced before a certain date, such as the date that the IRA was enacted? If so, how can that be documented or verified? How should any changes in volumes of waste and waste capacity at existing methane sources be documented and treated for purposes of the Clean Electricity Tax Credits? How should additional capture of existing waste or waste streams be documented and treated?
(9) Are geographic or temporal deliverability requirements needed to reflect and reduce the risk of indirect emissions effects from biogas, RNG, or fugitive methane use in the electricity production process? If so, what should these requirements be and are electronic tracking systems able to capture these details?
(10) How should variation in methane leakage across the existing natural gas pipeline system be taken into account in estimating the emissions from the transportation of RNG or fugitive methane or establishing rules for RNG or fugitive methane use? How should methane leakage rates be estimated based on factors such as the location where RNG or fugitive methane is injected and withdrawn, the distance between the locations where RNG or fugitive methane is injected and withdrawn, season of year, age of pipelines, or other factors? Are data or analysis available to support this?
(11) What counterfactual assumptions and data should be used to assess the net greenhouse gas emissions of facilities that rely on biogas, RNG, or fugitive methane (for example, venting, flaring, or other practice)? Is venting an appropriate counterfactual assumption in some cases? If not, what other factors should be considered?
(12) What criteria should be used in assessing biogas, fugitive methane, or RNG-based provisional emissions rates? What practices should be put in place to reduce the risk of unintended consequences (for example, gaming)? Should conservative default parameters
(13) What are the effects on greenhouse gas emissions of capturing methane emissions for use as biogas or RNG, such as on livestock farms?
The Treasury Department and the IRS recognize that sufficient tracking and verification mechanisms for biogas, RNG, or fugitive methane are not yet available, and existing systems have limited capabilities for tracking and verifying RNG pathways, especially in the part of the production process before the methane has been reformed to RNG. Existing tracking and verification systems do not clearly distinguish between inputs, verify or require verification of underlying practices claimed by biogas or RNG production sources, require proof of generator interconnection or revenue-quality metering, provide validation of generation methodology, include exclusively United States based-generation, verify generator registration, and track the vintage of generator interconnection. The Treasury Department and the IRS are considering providing rules to address whether or how book-and-claim systems with sufficient tracking and verification mechanisms may be used to attribute the environmental benefits of biogas, RNG, or fugitive methane in the final regulations.
The treatment of biogas, RNG, and fugitive methane presents a range of complex issues that the Treasury Department and the IRS will consider in the development of the final regulations.
An LCA may require decisions on a wide range of analytical parameters that may have a meaningful impact on the accuracy and utility of its results. The Treasury Department and the IRS request comment on the analytical LCA parameters that are most relevant to particular types of categories of facilities that may be eligible for the Clean Electricity Tax Credits.
The Treasury Department and the IRS specifically request comment regarding spatial and temporal scales, including the factors that should be considered in setting the spatial and temporal scales for LCAs conducted for the Clean Electricity Tax Credits. Spatial scale involves defining the area over which emissions impacts will be evaluated. Temporal scale involves defining the time period over which emissions impacts will be evaluated. The decision of setting the spatial scale should be considered in conjunction with decisions on temporal scale, as the two can interact in ways that affect greenhouse gas assessment outcomes.
In conducting a greenhouse gas assessment for biomass feedstocks, for example, carbon stocks or flows that have high variability at fine spatial or temporal scales may have much less variability if averaged over larger areas or longer temporal scales. Averaging over long temporal scales may reduce the variability observed at small spatial scales, and averaging over large areas may reduce the variability observed over small temporal scales. However, it is not safe to assume that integrating over large areas and long timeframes is always preferable. Large spatial scales and long temporal scales are not necessarily the most accurate way to conduct specific policy or program assessments because the combination of the two may obscure important information (for example, biophysical differences in species or landscapes, or shorter time frames or subregional analysis needed for policy analysis) or may mask important smaller-scale impacts. It is important to note that utilizing a large spatial scale and a short temporal scale could yield the same result as a small spatial scale combined with a longer temporal scale.
The Treasury Department and the IRS acknowledge that it may be appropriate to utilize different spatial and temporals scales for different feedstocks given their heterogeneity. The Treasury Department and the IRS request comment on the following questions regarding spatial and temporal scale:
(1) What factors should be considered in establishing the timeframe for the LCA analysis? What timeframe would provide confidence that significant emissions have been accounted for?
(2) Should the LCA distinguish between an “emissions horizon” (the timeframe over which emissions effects from the feedstock use persist into the future) and an “assessment horizon” (the timeframe over which the emissions effects are included in the analysis), and how would that be reflected in the choice of temporal scale? What assessment horizon will provide reasonable confidence that significant LCA emissions have been incorporated? Should the modeled future anticipated baseline include estimated emissions from electricity production to reflect the effects of the anticipated phase out of the Clean Electricity Tax Credits?
(3) If the assessment horizon is shorter than the emissions horizon, should an estimate of the emissions beyond the assessment horizon be included in the LCA?
(4) What considerations should be reflected in the choice(s) of spatial scale? For example, the increased use of some fuels/feedstocks may have global effects (for example, changes in commodity production and ensuing land use and greenhouse gas changes), though this may not be the case for all feedstocks or fuels. What factors should be considered to assess whether a global scale is necessary for certain feedstocks to ensure that significant emissions are captured? Should all feedstock/fuels assessments be conducted with the same spatial scale to determine the extent to which increased use has estimated global ramifications?
(5) The choice of spatial scale can be greatly influenced by the availability and accuracy of data and the precision with which one can measure and model feedstock production as well as market dynamics. What sources of data would be most important to consider for modeling? What strengths or weaknesses do these sources have?
The categorization and assessment of products as co-products, byproducts, or waste products in an LCA may affect the LCA's results. Products, co-products, byproducts, and wastes may all be produced in the full fuel cycle or used as inputs to the same. A co-product is a product produced together with another product, both of which are economic drivers of the process. A byproduct is a product that is produced together with another product, and which has a productive use but is not the primary economic driver of the process from which it is produced. It is not solely or separately produced. A waste product is a substance or object that the holder intends or is required to dispose of. See ISO:14040, “Environmental management—Life cycle assessment—Principles and framework. For biogenic sources, scientific literature often classifies byproducts, wastes, and residues together in one category.
The categorization of products as co-products, byproducts, and waste products may be relevant to an LCA's assessment of the greenhouse gas emissions related to the production of inputs to electricity generation or in the generation of electricity itself if the LCA modeling approach or approaches used for purposes of the Clean Electricity Tax Credits have the ability to distinguish between such categories. For example, in certain circumstances, the use of a waste product as a feedstock or fuel for
The Treasury Department and the IRS intend to clarify the principles for categorizing products as co-products, byproducts, or waste input materials and products and assessing the emissions impacts for such products in an LCA for C&G Facilities in the final regulations for the Clean Electricity Tax Credits if such categorization is relevant to the LCA model or models used. Under such principles, if byproducts are produced concurrently with electricity production, then a portion of the process emissions may be allocated to those byproducts. If applying an analytical approach that considers the consequences of the material being used for electricity production and byproducts are produced concurrent with electricity production, the LCA may consider the market impacts associated with the byproducts. In addition, if wastes are produced concurrently with electricity production, then no process emissions may be allocated to those wastes; all emissions must be associated with the electricity produced. Whether alternative productive uses of a byproduct-derived feedstock exist would be determined by expert analysis of the likely alternative uses of the byproduct, taking into account technological and economic capabilities and common practice. The alternative fate of waste-derived feedstocks would be determined by expert analysis, literature review, and historical practice.
To inform the development of these categorization principles for the final regulations, the Treasury Department and the IRS request comment on the following:
(1) What principles should be used to distinguish between co-products, byproducts, and waste products for the purposes of the Clean Electricity Tax Credits? Are there common scientific or industry definitions that can be relied upon to distinguish between co-products, byproducts, and waste products?
(2) What principles should be used to determine whether a product has sufficient value to be considered a co-product or byproduct?
(3) The Clean Electricity Tax Credits may provide additional economic incentive for the consumption of a product categorized as waste prior to the availability of the incentive provided by the Clean Electricity Tax Credits. How should this additional economic incentive be considered to determine if a product is a waste product, byproduct, or co-product? Should this categorization be reevaluated and, if so, how often?
(4) To limit the additional production of waste, should the final regulations limit eligible waste sources that existed as of a certain date, or waste or waste streams that were produced before a certain date, such as the date that the IRA was enacted? If so, how could that be documented or verified? How should any changes in volumes of waste and waste capacity at existing sources be documented and treated for purposes of the Clean Electricity Tax Credits? How should additional capture of existing waste or waste streams be documented and treated?
(5) More generally, how could the potential for the intentional generation of waste or co-products for the purposes of lowering the allocated process emissions to electricity be addressed?
(6) Would the classification of feedstocks as products, co-products, byproducts, or waste change depending on the technology? For example, would products, co-products, byproducts, and waste be described and accounted for differently if derived from biogenic sources, such as biogenic biomass?
Section 45Y(g)(2)(A) provides that the kWh of electricity produced by a taxpayer at a qualified facility includes any production in the form of useful thermal energy by any CHP property within such facility, and the amount of greenhouse gases emitted into the atmosphere by such facility in the production of such useful thermal energy will be included for purposes of determining the GHG emissions rate for such facility. See Explanation of Provisions section I.A. for the definition of CHP property. The inclusion of thermal energy production-related emissions in an LCA for a CHP facility introduces additional considerations, such as how to set an appropriate baseline for useful energy production-related emissions and what rules should govern the attribution of emissions for thermal energy production. The Treasury Department and the IRS intend to clarify the principles for assessing the emissions related to the generation of useful thermal energy by a CHP facility in an LCA in the final regulations for the Clean Electricity Tax Credits. Accordingly, the Treasury Department and the IRS request comment on the following:
(1) To determine the amount of greenhouse gases emitted by a CHP facility, the LCA must include the greenhouse gas emissions emitted by that facility in the production of useful thermal energy. For purposes of the LCA of a CHP facility, what principles should govern how emissions from the production of useful thermal energy are calculated?
(2) What principles should be used to determine the baseline for useful thermal energy production by a CHP facility? For example, should the baseline for the heat production for a CHP facility be an alternative form of thermal energy production such as natural gas boilers, such that emissions from the production of thermal energy from the boilers would be subtracted from the facility's emissions? Alternatively, is it more appropriate if the baseline for a CHP facility is no thermal energy production by the facility?
(3) There may be scenarios in which a facility generates electricity that is used (a) by the electricity generation facility in the production of electricity or (b) in the production of fuel ultimately consumed by that facility to generate electricity. For example, a wastewater treatment plant's post-processing materials are digested to produce biogas; this biogas is then used in a CHP facility that produces electricity; this electricity is consumed by the wastewater treatment facility. In such scenarios, what principles should be used to determine how emissions from the consumption of electricity in the production of electricity or in the production of the fuel consumed by the facility are calculated? Similarly, there may be scenarios in which a facility self-consumes thermal energy that it produces, for example, if a facility generates steam as a byproduct that is
The Treasury Department and the IRS intend to provide additional rules and principles addressing what factors must be considered to assess the emissions associated with feedstocks used by C&G Facilities to produce electricity for purposes of the Clean Electricity Tax Credits.
Such rules would apply to all feedstocks used for the purposes of the Clean Electricity Tax Credits and would provide conditions that must be met in determining GHG emissions rates for purposes of the Clean Electricity Tax Credits. The CAA explicitly defines the term “lifecycle greenhouse gas emissions” to include “the aggregate quantity of greenhouse gas emissions (including direct emissions and significant indirect emissions such as significant emissions from land use changes).” Given the highly interconnected economic, energy, and agricultural and other lands-based systems involved in electricity production, the Treasury Department and the IRS recognize that electricity production may have effects, including emissions effects, beyond the direct supply chain. The Treasury Department and the IRS think that the provision “including direct emissions and significant indirect emissions” requires any LCA for the Clean Electricity Tax Credits to adopt an approach that considers the consequential, or market-mediated, impacts of increased demand for the input feedstocks or fuels used in electricity production.
The EPA interpreted CAA 211(o)(1)(H) as requiring the agency in the RFS context to account for the real-world emissions consequences of increased production of biofuels. Thus, the EPA determined that CAA section 211(o)(1)(H)'s inclusion of “direct emissions and significant indirect emissions such as significant emissions from land-use changes” requires a “consequential” approach to considering the real-world emissions associated with biofuel production. Such an approach includes consideration of market interactions induced by expanded biofuel production and use that may result in secondary or indirect greenhouse gas emissions.
The Treasury Department and the IRS propose to use a future anticipated baseline approach for analyzing the greenhouse gas emissions associated with the production of electricity by C&G Facilities and feedstocks used by such facilities. This approach would require generating a baseline projection of the future, which reflects estimated future conditions under a business-as-usual (BAU) trajectory that incorporates key drivers and trends informed by historical data and other considerations. This baseline would then serve as the “reference” against which another scenario in which specific conditions or changes, such as implementation of the policy embodied by the Clean Electricity Tax Credits, can be projected. This construct would allow for the evaluation of the projected estimated change or difference of emissions outcomes between the two scenarios. These scenarios would include (1) the baseline scenario (that is, without the Clean Electricity Tax Credits) and (2) a policy scenario (that is, with the Clean Electricity Tax Credits).
These scenarios would require, to the extent possible, data on: (1) feedstock or fuel production systems (including fuel/feedstock generation or extraction, etc.); (2) associated greenhouse gas emissions and, if applicable, carbon pool fluxes; (3) the feedstock or fuel's sector details; (4) feedstock or fuel demand and prices; (5) energy market projections, including electricity demand and supply and prices, if applicable; (6) future macroeconomic factors (for example, EIA Annual Energy Outlook-derived population growth, gross domestic product projections, demand functions tied to population or income); (7) technological progress assumptions, especially if applicable to stationary sources for which efficiency improvements are possible and anticipated; and (8) other parameters (for example, representation of current and anticipated, energy, environmental, or other policies including expected outcomes from other parts of the IRA or other policies, if relevant, that can inform or constrain BAU trajectories).
For example, the list that follows identifies proposed key modeling approach elements and considerations for simulation of a future anticipated baseline and policy scenarios specific to biomass-based feedstocks: (1) model function types and model dynamics (for example, economic optimization, intertemporal and/or recursive dynamic); (2) anticipated future conditions (for example, macroeconomic, biophysical, chemical); (3) greenhouse gas emissions representation, by including the different greenhouse gases and the relevant greenhouse gas emissions and sequestration sources (for example, how greenhouse gases and their effects on the environment are incorporated and represented, such as what emissions sources and factors are reflected in the model or models); (4) forest sector representation (for example, how are forestry and forest industries reflected in the model and how are they tied to the rest of the economy); (5) agricultural sector representation; (6) land use competition; (7) energy sector representation; and (8) the appropriate spatial scale (for example, international representation) for all of these considerations.
There may be different ways to model or estimate greenhouse gas emissions associated with the production of electricity by a C&G Facility. Consistent with the parameters in proposed § 1.45Y-5(d), the Treasury Department and the IRS seek comment on general principles and factors to be considered to estimate net greenhouse gas emissions associated with electricity production by C&G Facilities, including the selection or creation of an assessment or modeling approach for the purposes of Clean Electricity Tax Credits. Comment is specifically requested on the following topics:
(1) What factors should be considered in deciding how to create and maintain LCA baseline scenarios?
(2) What factors should be considered in deciding how to create and maintain LCA scenarios other than the baseline?
(3) What existing model or suite of models are capable of completing an LCA consistent with the section 45Y(b)(2)(B) and proposed § 1.45Y-5(d) and (e)? Please explain whether any such model or models are open source or proprietary including what type of documentation is publicly available detailing the model design, data, inputs, and assumptions, as well as whether such models are able to link with external data sources or models. Please also explain which entities own, manage, or update such models. Furthermore, because some LCA models may be used for only a certain aspect of the total required analysis (for example, a model may solely assess the agriculture sector) or only include certain feedstocks or technologies, please specify what technologies, feedstocks, or type of impacts are included or are not included in the recommended model or models. Please also explain how widely and for what purposes the recommended model or models are used, including whether the model has previously been used by a Federal or State agency or national
(4) What data sources and peer-reviewed studies provide information on different feedstock production systems that would be most important to consider for gathering data for LCA modeling? These sources and studies should provide information on the feedstock production process (ideally, beginning with the extraction or generation of the feedstock and ending at the electrical meter) and on markets related to the feedstock production process. Appropriate sources and studies should also describe the greenhouse gas emissions associated with these production systems and markets, as well as any monitoring, reporting, and verification processes used in the creation of the source or study. If recommending data sources or peer-reviewed studies, please specify whether they are open source or proprietary; their temporal and spatial scale (for example, regional versus national studies); whether they are regularly updated and with what frequency; whether they are collected by a Federal or State agency or statistical agency or national laboratory; and whether they employ direct measurements or modeling or use remote sensing data. Finally, please assess overall the strengths and weaknesses of the recommended sources or studies with respect to their usefulness as modeling data inputs.
(5) The availability of the Clean Electricity Tax Credits may create an incentive to use a given material differently than in the past (for example, a material that was not typically used for electricity production is initially used or used more broadly after the credits are available). How could an LCA or LCAs establish and account for whether the incentives created by the Clean Electricity Tax Credits have resulted in a reduction, removal of, or increase in greenhouse gas emissions beyond the emissions that would have occurred in the absence of the Clean Electricity Tax Credits? For example, consider a scenario in which, in the absence of the incentive provided by the Clean Electricity Tax Credits, an amount of woody biomass would be either left standing or laying in a forest, pile burned, or used to create timber products, such as charcoal or mulch, each an “alternative fate.” In the presence of the Clean Electricity Tax Credits, that amount of woody biomass is now being used to generate electricity. How should the possible fates of the feedstock in the absence of the Clean Electricity Tax Credits (for example, left in standing or laying in a forest, pile burned, or used to create a timber product, such as charcoal or mulch) be represented in an LCA, including the different potential direct and indirect greenhouse gas effects of those fates?
(6) How could an LCA account for alternative fates stemming from events such as potential future greenhouse gas emissions from wildfires that could be associated with woody biomass feedstocks that may be left on the landscape in the absence of the incentive created by the Clean Electricity Tax Credits? How would these considerations be affected if, in the absence of the incentive provided by the Clean Electricity Tax Credits, a feedstock is used productively but not in electricity production?
(7) Which feedstock classification categories should be established for purposes of LCA analyses, if any? To what extent should the LCA or LCAs differentiate between the sources and subtypes of a given feedstock for electricity production or not (for example, all forest-derived materials as one category, or subcategories such as logging residues)? If applied, should subcategories of feedstocks be aggregated in modeling, or should they be should they be separately modeled? How could the LCA or LCAs account for the emissions attributed to feedstocks that include a mixture of sub-types of feedstocks, such as products, coproducts, byproducts and residues? Should LCAs be standardized or provide average estimates for feedstocks and how could such standardization best be done?
(8) What factors should be considered to determine the appropriate scale(s) of feedstock demand changes or other shocks to evaluate the extent to which the production, processing, and use of the feedstocks used for electricity production results in net greenhouse gas emissions?
(9) Should the shock reflect a small incremental increase in use of the feedstock to reflect the marginal impact, or a large increase to reflect the average effect of all potential users?
(10) What could the general increment of the shock be? Should it be specified as an absolute or relative increase?
(11) What factors should be considered to determine whether shocks for different feedstocks should be implemented in isolation (separate model runs), in aggregate (for example, as an across-the-board increase in biomass usage endogenously allocated by the model across feedstocks), or something in between (for example, separately model agriculture-derived and forest-derived feedstocks, but endogenously allocate within each category)?
(12) How should variation and uncertainty be considered in evaluating model estimates of the GHG emissions associated with an increase in the use of a feedstock for electricity generation? Feedstock modeling will likely involve uncertainties and variabilities associated with data, parameterization, scenario, and model choices. For example, if the modeling reports a range of GHG emissions changes that are greater and less than zero, how should such a range of outcomes be evaluated under section 45Y(b)(2)(B)?
The Treasury Department and the IRS are considering whether to allow and provide rules governing the use of book and claim accounting in the final regulations for the Clean Electricity Tax Credits. Under these proposed regulations, the methods used, and emissions associated with the production of fuels and feedstocks used in the generation of electricity are essential to determining whether a facility is a C&G Facility and assessing its GHG emissions rate. See Explanation of Provisions sections I.D.1 and I.D.3 for discussion of tracking fuel or feedstock production to determine whether a facility is a C&G Facility or Non-C&G Facility. EACs are a form of book-and-claim accounting that conveys information about the attributes associated with a unit of energy, including the fuel or feedstock used to create the energy. EACs may also include information about the location of the facility that generated the unit of energy, when that facility began operations, and when the unit of energy was produced. Because EACs can serve as a system for tracking the attributes associated with the production of a unit of energy and as a means to avoid double-counting, the Treasury Department and the IRS are considering whether to provide rules that address the use of book-and-claim systems as a means of verifying the emissions profile of a facility's use of fuel and electricity production. The Treasury Department and the IRS request comment on whether and how it may be appropriate for such systems to be used in determining GHG emissions rates in the final regulations for the Clean Electricity Tax Credits. In particular, comment is requested regarding what types of
Proposed § 1.45Y-5(e) would provide that, for purposes of proposed § 1.45Y-5(c) and (d), the GHG emissions rate for a Non-C&G Facility or C&G Facility must exclude any qualified carbon dioxide in such facility's production of electricity that is captured by the taxpayer, and, pursuant to any regulations established under section 45Q(f)(2), disposed of by the taxpayer in secure geological storage, or utilized by the taxpayer in a manner described in section 45Q(f)(5) and any regulations established under such section. The Treasury Department and the IRS request comment on the following:
(1) What requirements should apply to substantiate and verify that carbon dioxide that is captured by the taxpayer is (a) disposed of by the taxpayer in secure geological storage pursuant to any regulations established under section 45Q(f)(2), disposed of by the taxpayer in secure geological storage, or (b) utilized by the taxpayer in a manner described in section 45Q(f)(5)? For example, would it be appropriate to limit the carbon dioxide that may be considered to be qualified carbon dioxide under section 45Y(e)(3), and thus excluded under section 45Y(b)(2)(D), to carbon dioxide that has been reported to the U.S. Greenhouse Gas Reporting Program (GHGRP)? If so, which GHGRP subpart or subparts should be used?
(2) In the event that carbon dioxide that was captured and sequestered as required by section 45Y(e)(3) subsequently escapes into the atmosphere after such carbon dioxide was taken into account by a taxpayer that claimed a Clean Electricity Tax Credit, what enforcement mechanisms or regulatory regimes should be used to identify when such emissions leakages have occurred? How should such emissions leakages be taken into account in determining compliance with the GHG emissions rate requirements under sections 45Y and 48E? Are the existing recapture provisions under section 45Q sufficient for this purpose?
(3) Should carbon capture and sequestration that occurs in the production of fuel that is used by a facility to produce electricity be taken into account under proposed § 1.45Y-5(e) and section 45Y(e)(3)? If so, how should such use of carbon capture and sequestration (for example, emissions from CO
Proposed § 1.45Y-5(f)(1) would provide that, as required by section 45Y(b)(2)(C)(i), the Secretary will annually publish a table that sets forth the GHG emissions rates for types or categories of facilities (Annual Table), which a taxpayer must use for purposes of section 45Y. Proposed § 1.45Y-5(f)(1) would further provide that, except as provided in proposed § 1.45Y-5(h), a taxpayer that owns a facility that is described in the Annual Table on the first day of the taxpayer's taxable year in which the section 45Y or section 48E credit is determined with respect to such facility must use the Annual Table as of such date to determine an emissions rate for such facility for such taxable year. Types or categories of facilities must be added or removed from the Annual Table consistent with, for Non-C&G Facilities, a technical assessment of the fundamental energy transformation into electricity as provided in proposed § 1.45Y-5(c)(1)(ii), and, for C&G Facilities, an LCA that complies with proposed § 1.45Y-5(d) and (e). Proposed § 1.45Y-5(f)(2) would also provide that in connection with the publication of the Annual Table, the Secretary must publish an accompanying expert analysis that addresses any types or categories of facilities added or removed from the Annual Table since its last publication. Such analysis must be prepared by one or more of the National Laboratories, in consultation with other agency experts, such as experts from DOE, the Treasury Department, the United States Department of Agriculture (USDA), and the EPA, as appropriate, and must address whether the addition or removal of types or categories of facilities from the Annual Table complies with section 45Y(b)(2)(A) and 45Y(b)(2)(B) (which refers to the definition of lifecycle greenhouse gas emissions in section 211(o)(1)(H) of the CAA) of the Code and proposed § 1.45Y-5. The Treasury Department and the IRS view the requirement to publish an expert analysis prepared by the National Laboratories of changes to the Annual Table as essential to ensuring public accountability and adherence to sound scientific principles. This requirement would also ensure that the Secretary has a robust record to inform any changes to the Annual Table.
The Treasury Department and the IRS intend to include in the Annual Table the types or categories of facilities that are described in the final regulations as having a GHG emissions rate that is not greater than zero. The Treasury Department and the IRS intend to publish the first Annual Table after the publication of the final regulations. Until the first publication of the Annual Table, taxpayers may treat the types or categories of facilities that are listed in proposed § 1.45Y-5(c)(2)(i) through (viii) as being described in an Annual Table as having a GHG emissions rate that is not greater than zero. Further, any types or categories of facilities that are added or removed from this list in the first publication of the Annual Table must be accompanied by the publication of an expert analysis of such change as provided in proposed § 1.45Y-5(f)(2).
Proposed § 1.45Y-5(g) would provide the rules applicable to provisional emissions rates. Proposed § 1.45Y-5(g)(1) would provide that, in the case of any facility that is of a type or category for which an emissions rate has not been established by the Secretary under proposed § 1.45Y-5(g), a taxpayer that owns such facility may file a petition with the Secretary for the determination of the emissions rate with respect to such facility (Provisional Emissions Rate or PER).
Proposed § 1.45Y-5(g)(2) would provide that an emissions rate has not been established by the Secretary for a facility for purposes of section 45Y(b)(2)(C)(ii) if such facility is not described in the Annual Table. Proposed § 1.45Y-5(g)(2) would further provide that if a taxpayer's request for an emissions value pursuant to proposed § 1.45Y-5(g)(5) is pending at
Proposed § 1.45Y-5(g)(3) would provide the process for filing a PER petition. Proposed § 1.45Y-5(g)(3) would provide that to file a PER petition with the Secretary, a taxpayer must submit a PER petition by attaching it to the taxpayer's Federal income tax return or Federal return, as appropriate, for the first taxable year in which the taxpayer claims the section 45Y credit with respect to the facility to which the PER petition applies. Proposed § 1.45Y-5(g)(3) would further provide that a PER petition must contain an emissions value and, if applicable, the associated DOE letter. An emissions value may be obtained from DOE or by using the LCA model designated in proposed § 1.45Y-5(g)(6). An emission value obtained from DOE will be based on an analytical assessment of the emissions rate associated with the facility, performed by one or more National Laboratories, in consultation with other agency experts as appropriate, consistent with proposed § 1.45Y-5. A taxpayer would be required to retain in its books and records the request to DOE for an emissions value, including any information provided by the taxpayer to DOE pursuant to the emissions value request process provided in proposed § 1.45Y-5(g)(5). Alternatively, an emissions value can be determined by the taxpayer for a facility using the most recent version of an LCA model or models, as of the time the PER petition is filed, that have been designated by the Secretary for such use under proposed § 1.45Y-5(g)(6). If an emissions value is determined using the designated model, a taxpayer is required to provide to the IRS information to support its determination of the emissions value in the form and manner prescribed in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. A taxpayer may not request an emissions value from DOE for a facility for which an emissions value can be determined by using the most recent version of an LCA model or models that have been designated by the Secretary for such use under proposed § 1.45Y-5(g)(6).
Proposed § 1.45Y-5(g)(4) would provide that, upon the IRS's acceptance of the taxpayer's Federal income tax return or Federal return, as appropriate, containing a PER petition, the emissions value of the facility specified on such petition will be deemed accepted. Proposed § 1.45Y-5(g)(4) would further provide that a taxpayer would be able to rely upon an emissions value provided by DOE for purposes of calculating and claiming a section 45Y credit, provided that any information, representations, or other data provided to DOE in support of the request for an emissions value are accurate. If applicable, a taxpayer may rely upon an emissions value determined for a facility using the most recent version of the LCA model or models that, as of the time the PER petition is filed, have been designated by the Secretary for such use under proposed § 1.45Y-5(g)(6), provided that any information, representations, or other data used to obtain such emissions value are accurate. The IRS's deemed acceptance of an emissions value is the Secretary's determination of the PER. Finally, proposed § 1.45Y-5(g)(4) would provide that the taxpayer must still comply with all applicable requirements for the section 45Y credit and any information, representations, or other data supporting an emissions value are subject to later examination by the IRS.
Proposed § 1.45Y-5(g)(5) would provide the rules applicable to the emissions value request process. Proposed § 1.45Y-5(g)(5) would provide that an applicant that submits a request for an emissions value must follow the procedures specified by DOE to request and obtain such emissions value, and that emissions values will be determined consistent with the rules provided in proposed § 1.45Y-5. Proposed § 1.45Y-5(g)(5) would further provide that an applicant may request an emissions value from DOE only after a front-end engineering and design (FEED) study or similar indication of project maturity, as determined by DOE, such as the completion of a project specification and cost estimation sufficient to inform a final investment decision for the facility. Proposed § 1.45Y-5(g)(5) would provide that DOE may decline to review applications that are non-responsive and those applications that relate to a facility that is described in the Annual Table (consistent with proposed § 1.45Y-5(g)(2)) or a facility that can determine an emissions value using a designated LCA model under proposed § 1.45Y-5(g)(6) (consistent with proposed § 1.45Y-5(g)(3)), or applications that are incomplete. Proposed § 1.45Y-5(g)(5) would also provide that applicants must follow DOE's guidance and procedures for requesting and obtaining an emissions value from DOE. DOE will publish guidance and procedures that applicants must follow to request and obtain an emissions value from DOE. DOE's guidance and procedure will include a process, under limited circumstances, for a taxpayer to request a revision to DOE's initial assessment of an emissions value on the basis of revised technical information or facility design and operation. The Treasury Department and the IRS anticipate that the emissions value request process will open after the publication of the final regulations.
Proposed § 1.45Y-5(g)(6) would provide that the Secretary may designate one or more LCA models for a taxpayer to determine an emissions value for C&G Facilities that are not described in the Annual Table. Proposed § 1.45Y-5(g)(6) would further provide that a model may only be designated if it complies with section 45Y(b)(2)(B) and proposed § 1.45Y-5(d) and (e). The Secretary may revoke the designation of an LCA model or models. In connection with the designation or revocation of a designation of an LCA model or models, the Secretary would be required to publish an accompanying expert analysis of the model prepared by one or more of the National Laboratories, in consultation with other agency experts as appropriate, and such analysis must address the model's compliance with section 45Y(b)(2)(B) of the Code and proposed § 1.45Y-5(d) and (e). The Treasury Department and the IRS view the requirement to publish an expert analysis prepared by the National Laboratories of the designation or revocation of designation of an LCA model or models as essential to ensuring public accountability and adherence to sound scientific principles. This requirement would also ensure that the Secretary has a robust record to inform any designations or revocations of an LCA model or models.
Proposed § 1.45Y-5(g)(7) would provide the rules governing the effect of a PER. Proposed § 1.45Y-5(g)(7) would provide that a taxpayer may use a PER determined by the Secretary to determine the section 45Y credit for the facility to which the PER applies, provided all other requirements of section 45Y are met. Proposed § 1.45Y-5(g)(7) would further provide that the Secretary's PER determination is not an examination or inspection of books of account for purposes of section 7605(b) of the Code and does not preclude or impede the IRS (under section 7605(b) or any administrative provisions adopted by the IRS) from later examining a return or inspecting books or records with respect to any taxable year for which the section 45Y credit is claimed. Finally, proposed § 1.45Y-5(g)(7) would provide that a PER determination does not signify that the IRS has determined that the
Proposed § 1.45Y-5(h) would provide that taxpayers may rely on the Annual Table in effect as of the date a facility began construction or the provisional emissions rate that has been determined by the Secretary for the taxpayer's facility under proposed § 1.45Y-5(g)(4) to determine the facility's GHG emissions rate for that facility for any taxable year that is within the 10-year period described in section 45Y(b)(1)(B), provided that the facility continues to operate as a type of facility that is described in the Annual Table or the facility's emissions value request, as applicable, for the entire taxable year.
Taxpayers have a general obligation to substantiate and verify that they have met the requirements of any tax credits claimed on their tax returns. Section 6001 of the Code provides that every person liable for any tax imposed by the Code, or for the collection thereof, must keep such records as the Secretary may from time to time prescribe. Section 1.6001-1(a) provides that any person subject to income tax must keep such permanent books of account or records as are sufficient to establish the amount of gross income, deductions, credits, or other matters required to be shown by such person in any return of such tax. Section 1.6001-1(e) provides that the books and records required by § 1.6001-1 must be retained so long as the contents thereof may become material in the administration of any internal revenue law.
In addition to this general obligation to substantiate eligibility for a claimed tax credit, taxpayers may also be required to keep specific records as prescribed by the Secretary. This may be appropriate for purposes of the section 45Y credit because certain types of facilities may depend on operational choices, such as the use of certain types of feedstocks or fuels or engaging in carbon capture and sequestration, to achieve a net GHG emissions rate that is not greater than zero for a taxable year, and these operational choices may vary by year. Proposed § 1.45Y-5(i)(1) would provide that a taxpayer must maintain in its books and records documentation regarding the design, operation, and if applicable, feedstock or fuel source used by the facility that establishes that such facility had a GHG emissions rate, as determined under § 1.45Y-5, that is not greater than zero for the taxable year. The Treasury Department and the IRS intend to require in the final regulations that taxpayers maintain specific types of documentation to substantiate that a facility for which a section 45Y credit is claimed has a net GHG emissions rate that is not greater than zero. The Treasury Department and the IRS request comment on the types of documentation taxpayers should be required to maintain to substantiate eligibility for the section 45Y credit.
Proposed § 1.45Y-5(i)(2) would further provide that documentation that is sufficient to substantiate that a facility had a GHG emissions rate of not greater than zero includes documentation or a report prepared by an unrelated party that verifies that a facility had such an emissions rate. Proposed § 1.45Y-5(i)(2) would also provide that facilities described in § 1.45Y-5(c)(2) can maintain sufficient documentation to demonstrate a GHG emissions rate showing that the facility is described in § 1.45Y-5(c)(2). Finally, proposed § 1.45Y-5(i)(2) would provide that future guidance may describe sufficient documentation to substantiate that certain facilities have a GHG emissions rate of not greater than zero. Because certain types or categories of facilities may have emissions rates that are highly variable and dependent on complex interactions between design choices, operational choices, and fuel and feedstock sourcing choices, the Treasury Department and the IRS seek comment on the relative risk of inadvertently crediting above-zero-emissions electricity generation for types or categories of facilities that may potentially be eligible for the section 45Y credit. In addition, comment is also requested on supply chain tracing and substantiation requirements that the Treasury Department and the IRS may require in the final regulations to demonstrate whether a facility used a specific fuel to produce electricity and that such fuel has the emissions attributes claimed by the taxpayer. Specifically, to inform the development of the substantiation rules for the Clean Electricity Tax Credits, comment is requested on the following topics:
(1) What types of documentation or substantiation should a taxpayer maintain to establish that an input in the supply chain of a fuel/feedstock used for electricity production has the energy attributes or other relevant characteristics (for example, source and production process) that were taken into account in determining a GHG emissions rate?
(2) What existing systems, industry standards, or practices may be used to substantiate that a facility's operations and the supply chain for the inputs it used to produce electricity resulted in a GHG emissions rate that is not greater than zero for a taxable year? If existing systems, standards, or practices are currently not sufficiently developed to serve as a form of substantiation, how should such tracking and verification systems be developed and how long might such development take?
(3) What supply chain tracing systems or verification bodies address fuels or feedstocks that may be commonly used by facilities that may be eligible for the Clean Electricity Tax Credits? What fuels or feedstocks could these systems or bodies address and for what purpose?
The Treasury Department and the IRS intend to provide a more detailed definition for the One-Megawatt Exception in section 45Y(a)(2)(B)(i) by expanding upon the definition provided in the August Proposed Regulations. The final regulations would provide that, for purposes of section 45Y(a)(2)(B)(i), the determination of whether a qualified facility has a maximum net output of less than one megawatt of electricity (as measured in alternating current) is determined based on the nameplate capacity. If applicable, taxpayers must use the International Standard Organization (ISO) conditions to measure the maximum electrical generating output of a qualified facility. For purposes of this measurement, the nameplate capacity is the maximum electrical generating output in MW (as measured in alternating current) that the qualified facility is capable of producing on a steady state basis and during continuous operation under standard conditions, as measured by the manufacturer and consistent with the definition of nameplate capacity provided in 40 CFR 96.202. The Treasury Department and the IRS request comment on this proposed definition. This rule is proposed to apply to qualified facilities placed in service after December 31, 2024, and during taxable years ending on or after the date of publication of the final regulations in the
These proposed regulations are organized in five sections, proposed §§ 1.48E-1 through 1.48E-5 (section 48E regulations). Proposed § 1.48E-1 would provide an overview of the section 48E regulations, generally applicable definitions, and the rules applicable to the calculation of section 48E credit. Proposed § 1.48E-2 would provide rules
Proposed § 1.48E-1(a) would provide an overview of the section 48E regulations and provide definitions of terms for purposes of the section 48E regulations. Proposed § 1.48E-1(b) would explain how to calculate the amount of the section 48E credit for any taxable year.
Proposed § 1.48E-1(b)(1) would provide that the credit is an amount equal to the applicable percentage of the qualified investment for such taxable year with respect to any qualified facility (as defined in proposed § 1.48E-2(a)) and any EST (as defined in proposed § 1.48E-2(g)). Proposed § 1.48E-1(b)(2) would define the applicable percentage as the base rate in proposed § 1.48E-1(b)(3) or the alternative rate in proposed § 1.48E-1(b)(4). Proposed § 1.48E-1(b)(2) would also propose that the applicable percentage may be increased as provided in section 48E(a)(3)(A) and proposed § 1.48E-1(b)(5) in the case of a qualified facility that is located in an energy community. Similarly, § 1.48E-1(b)(2) would propose that the applicable percentage may be increased as provided in section 48E(a)(3)(B) and proposed § 1.48E-1(b)(6) in the case of a qualified facility that satisfies the domestic content requirements.
Proposed § 1.48E-1(b)(3) would describe the base rate as 6 percent. Proposed § 1.48E-1(b)(4) would describe the alternative rate as 30 percent if certain prevailing wage and apprenticeship requirements are satisfied.
Proposed § 1.48E-1(b)(5) would provide rules applicable to the energy communities increase in credit rate. Proposed § 1.48E-1(b)(6) would provide rules applicable to the domestic content increase in credit rate.
Proposed § 1.48E-1(c) would provide the credit phase-out rules. Generally, proposed § 1.48E-1(c)(1) would provide that the amount of the clean electricity investment credit under section 48E for any qualified facility or EST the construction of which begins during a calendar year described in section 48E(e)(2) is equal to the product of the amount of the credit determined under section 48E(a) and proposed § 1.48E-1(b) without regard to section 48E(e), multiplied by the phase-out percentage under section 48E(e)(2) and proposed § 1.48E-1(c)(2). Proposed § 1.48E-1(c)(2) would provide that the phase-out percentage is 100 percent for any qualified investment with respect to any qualified facility or EST the construction of which begins during the first calendar year following the applicable year; 75 percent for any qualified investment with respect to any qualified facility or EST the construction of which begins during the second calendar year following the applicable year; 50 percent for any qualified investment with respect to any qualified facility or EST the construction of which begins during the third calendar year following the applicable year; and 0 percent for any qualified investment with respect to any qualified facility or EST the construction of which begins during any calendar year subsequent to the calendar year described in section 48E(e)(2)(C). Proposed § 1.48E-1(c)(3) would define “applicable year” for purposes of proposed § 1.48E-1(c) as having the same meaning as provided in proposed § 1.45Y-1(c)(3).
Proposed § 1.48E-2(a) would define a “qualified facility” to mean a facility that is used for the generation of electricity; is placed in service by the taxpayer after December 31, 2024; and has a GHG emissions rate of not greater than zero (as determined under rules provided in § 1.45Y-5).
Proposed § 1.48E-2(b) would provide that a qualified facility includes a unit of qualified facility (as defined in proposed § 1.48E-2(b)(2)(i)) and property owned by the same taxpayer that is integral to the unit of qualified facility (as described in proposed § 1.48E-2(b)(3)). Proposed § 1.48E-2(b)(1) would provide that any component of property that meets the requirements of proposed § 1.48E-2(b) is part of a qualified facility regardless of where such component of property is located. Proposed § 1.48E-2(b)(1) would provide that a qualified facility does not include any electrical transmission equipment, such as transmission lines and towers, or any equipment beyond the electrical transmission stage. Proposed § 1.48E-2(b)(1) would also provide that a qualified facility generally does not include equipment that is an addition or modification to an existing qualified facility. However, proposed § 1.48E-2(b)(1) would reference proposed § 1.48E-4(b) regarding the expansion of a facility or incremental production and proposed § 1.48E-4(c) for rules regarding retrofitted facilities (80/20 Rule).
Proposed § 1.48E-2(b)(2)(i) would provide that the unit of a qualified functionally interdependent components of a property (as defined in § 1.48E-2(b)(2)(ii) owned by the taxpayer that are operated together and that can operate apart from other property to produce electricity. Proposed § 1.48E-2(b)(2)(i) would further provide that no provision of this section, § 1.48E-1, or § 1.48E-4 through 1.48E-5 uses the term “unit” in respect of a qualified facility with any meaning other than that provided in § 1.48E-2(b)(2)(ii). A reference to § 1.48E-3 will also be added to the previous sentence in proposed § 1.48E-2(b)(2)(i) when that regulation is finalized, but it cannot be added until § 1.48E-3 is finalized. Proposed § 1.48E-2(b)(2)(ii) would define components as “functionally interdependent” if the placing in service of each of the components is dependent upon the placing in service of each of the other components to produce electricity.
Proposed § 1.48E-2(b)(3)(i) would provide that property owned by a taxpayer is an integral part of a qualified facility owned by the same taxpayer if it is used directly in the intended function of the qualified facility and is essential to the completeness of the intended function. Proposed § 1.48E-2(b)(3)(i) would also clarify that property that is an integral part of a qualified facility is part of the qualified facility. Lastly, proposed § 1.48E-2(b)(3)(i) would explain that a taxpayer may not claim the section 48E credit for any property that is an integral part of a qualified facility that is not owned by the taxpayer.
Proposed § 1.48E-2(b)(3)(ii) would describe power conditioning equipment and transfer equipment as integral parts of a qualified facility. Proposed § 1.48E-2(b)(3)(ii) would further provide that power conditioning equipment includes equipment that modifies the characteristics of electricity into a form suitable for use or transmission or distribution. Proposed § 1.48E-2(b)(3)(ii) would also provide that parts related to the functioning or protection of power conditioning equipment are also treated as power conditioning equipment and include examples.
Proposed § 1.48E-2(b)(3)(ii) would further provide that transfer equipment includes components that permit the aggregation of electricity generated by components of qualified facilities and components that alter voltage to permit transfer to a transmission or distribution line and would clarify that transfer equipment does not include transmission or distribution lines. Proposed § 1.45Y-2(b)(3)(ii) would provide examples of transfer equipment that include, but are not limited to, wires, cables, and combiner boxes that conduct electricity. Proposed § 1.45Y-2(b)(3)(ii) would provide that parts related to the functioning or protection of transfer equipment are also treated as transfer equipment and include examples.
Proposed § 1.48E-2(b)(3)(iii) would provide that roads that are an integral part of a qualified facility are those roads integral to the intended function of the qualified facility such as onsite roads that are used to operate and maintain the qualified facility. Proposed § 1.48E-2(b)(3)(iii) would also clarify that roads primarily for access to the site, or roads used primarily for employee or visitor vehicles, are not integral to the intended function of the qualified facility, and thus are not an integral part of a qualified facility.
Proposed § 1.48E-2(b)(3)(iv) and (v) would provide that fences and buildings (also referred to as structures) are generally not integral parts of a qualified facility because they are not integral to the intended function of the qualified facility. However, a building (or structure) may be an integral part of a qualified facility if it is essentially an item of machinery or equipment and a structure that houses property that is integral to the intended function of the qualified facility, if the use of the structure is so closely related to the use of the housed components of property therein that the structure clearly can be expected to be replaced if the components of property it initially houses are replaced.
Proposed § 1.48E-2(b)(3)(vi) would provide a rule for shared integral property stating that multiple qualified facilities (whether owned by one or more taxpayers), including qualified facilities with respect to which a taxpayer has claimed a credit under section 48E or another Federal income tax credit, may include shared property that may be considered an integral part of each qualified facility so long as the cost basis for the shared property is properly allocated to each qualified facility and the taxpayer only claims a section 48E credit with respect to the portion of the cost basis properly allocable to a facility for which the taxpayer is claiming a section 48E credit. Proposed § 1.48E-2(b)(3)(vi) would further clarify that the total cost basis of such shared property divided among the qualified facilities may not exceed 100 percent of the cost of such shared property. Lastly, proposed § 1.48E-2(b)(3)(vi) specifies that property that is shared by a qualified facility (as defined in section 48E(b)(3)) (48E Qualified Facility) and a qualified facility (as defined by section 45Y(b) (45Y Qualified Facility) that is an integral part of both qualified facilities will not affect the eligibility of the 48E Qualified Facility for the section 48E credit or the 45Y Qualified Facility for the section 45Y credit.
Proposed § 1.48E-2(c)(1) would provide that the term “qualified facility” (as defined in section 48E(b)(3)) will not include any facility for which a credit determined under section 45, 45J, 45Q, 45U, 45Y, 48, or 48A is allowed under section 38 for the taxable year or any prior taxable year. Proposed § 1.48E-2(c)(1) would further clarify that a taxpayer that directly owns a qualified facility (as defined in section 48E(b)(3)) that is eligible for both a section 48E credit and another Federal income tax credit is eligible for the section 48E credit only if the other Federal income tax credit was not allowed with respect to the qualified facility. Proposed § 1.48E-2(c)(1) would provide that nothing in proposed § 1.48E-2(c) precludes a taxpayer from claiming a section 48E credit with respect to a qualified facility (as defined in section 48E(b)(3)) that is co-located with another facility for which a credit determined under section 45, 45J, 45Q, 45U, 45Y, 48, or 48A is allowed under section 38 for the taxable year or any prior taxable year.
Proposed § 1.48E-2(c)(2) would clarify that for purposes of proposed § 1.48E-2(c)(1), the term “allowed” only includes credits that taxpayers have claimed on a Federal income tax return or Federal return, as appropriate, and that the IRS has not challenged in terms of the taxpayer's eligibility.
Proposed § 1.48E-2(c)(3) would include several examples that illustrate the application of the rules provided in proposed § 1.48E-2(c).
Proposed § 1.48E-2(d) would describe a qualified investment with respect to any qualified facility for any taxable year as the sum of the basis of any qualified property (as defined in proposed § 1.48E-2(e)(1)) placed in service by the taxpayer during such taxable year that is part of a qualified facility (as defined in proposed § 1.48E-2(a)) and the amount of any expenditures paid or incurred by the taxpayer for qualified interconnection property (as defined in proposed § 1.48E-4(a)(2)).
Proposed § 1.48E-2(e) would define “qualified property” for purposes of proposed § 1.48E-2(a) to mean property that meets three requirements. First, proposed § 1.48E-2(e)(1)(i) would require that the property is tangible personal property (as defined in proposed § 1.48E-2(f)(1)) or other tangible property (not including a building or its structural components) (as defined in proposed § 1.48E-2(f)(2)), but only if such other tangible property is used as an integral part (as defined proposed § 1.48E-2(b)(3)) of the qualified facility (as defined in proposed § 1.48E-2(a)).
Second, proposed § 1.48E-2(e)(1)(ii) would require that depreciation (or amortization in lieu of depreciation) be allowable (as defined in proposed § 1.48E-2(f)(6)) with respect to the property.
Third, proposed § 1.48E-2(e)(1)(iii) would require that the taxpayer either constructs, reconstructs, or erects the property (as defined in proposed § 1.48E-2(f)(3)) or acquires the property (as defined in proposed § 1.48E-2(f)(4)) if the original use of the property (as defined in proposed § 1.48E-2(f)(5)) commences with the taxpayer.
Proposed § 1.48E-2(e)(2) would provide that any component of a qualified property that meets the requirements of proposed § 1.48E-2(e) is part of a qualified facility regardless of where such component of property is located.
Proposed § 1.48E-2(f)(1) would define the term “tangible personal property” for purposes of section 48E and proposed § 1.48E-2(b) to mean any tangible property except land and improvements thereto, such as buildings or other inherently permanent structures (including items that are structural components of such buildings or structures). Proposed § 1.48E-2(f)(1) would further provide that tangible personal property includes all property (other than structural components) that is contained in or attached to a building and that all property that is in the nature of machinery (other than structural components of a building or other inherently permanent structure) is considered tangible personal property even though located outside a building. Finally, proposed § 1.48E-2(f)(1) would clarify that local law is not controlling for purposes of determining whether property is or is not tangible property or tangible personal property. Therefore, proposed § 1.48E-2(f)(1) would explain that tangible property may be personal property for purposes of the section 48E credit even though under local law the property is considered a fixture and therefore real property.
Proposed § 1.48E-2(f)(2) would define the term “other tangible property” to mean tangible property other than tangible personal property (not including a building and its structural components), that is used as an integral part of furnishing electricity by a person engaged in a trade or business of furnishing any such service.
Proposed § 1.48E-2(f)(3) would define the term “construction, reconstruction, or erection of qualified property” to mean work performed to construct, reconstruct, or erect qualified property either by the taxpayer or for the taxpayer in accordance with the taxpayer's specifications.
Proposed § 1.48E-2(f)(4) would define the term “acquisition of qualified property” to mean a transaction by which a taxpayer obtains rights and obligations with respect to qualified property including title to the qualified property under the law of the jurisdiction in which the qualified property is placed in service, unless the qualified property is possessed or controlled by the taxpayer as a lessee, and physical possession or control of the qualified property.
Proposed § 1.48E-2(f)(5)(i) would provide that the term “original use of qualified property” means the first use to which qualified property is put, whether or not such use is by the taxpayer. Proposed § 1.48E-2(f)(5)(ii) would clarify that a retrofitted qualified facility acquired by the taxpayer will not be treated as being put to original use by the taxpayer unless the rules in proposed § 1.48E-4(c) regarding retrofitted qualified facilities (80/20 Rule) apply. Proposed § 1.48E-2(f)(5)(ii) explains that the question of whether a qualified facility meets the 80/20 Rule is a facts and circumstances determination.
Proposed § 1.48E-2(f)(6)(i) would provide a general rule for purposes of applying proposed § 1.48E-2(b), that depreciation (or amortization in lieu of depreciation) is allowable with respect to qualified property if such property is of a character subject to the allowance for depreciation under section 167 of the Code and the basis or cost of such property is recovered using a method of depreciation (for example, the straight line method), which includes any additional first year depreciation deduction method of depreciation (for example, under section 168(k) of the Code). Proposed § 1.48E-2(f)(6)(i) would further clarify that if an adjustment with respect to the Federal income tax or Federal return for such taxable year requires the basis or cost of such qualified property to be recovered using a method of depreciation, depreciation is allowable to the taxpayer with respect to the qualified property. Proposed § 1.48E-2(f)(6)(ii) would describe exclusions from allowable depreciation stating that for purposes of proposed § 1.48E-2(b), depreciation is not allowable with respect to a qualified facility if the basis or cost of such qualified facility is not recovered through a method of depreciation but, instead, such basis or cost is recovered through a deduction of the full basis or cost of the qualified facility in one taxable year (for example, under section 179 of the Code).
Proposed § 1.48E-2(f)(7)(i) would provide the general rule for determining when a qualified facility has been placed in service for purposes of the section 48E credit. Proposed § 1.48E-2(f)(7)(ii) would provide that notwithstanding the general placed in service rules provided in proposed § 1.48E-2(b)(7)(i), a qualified facility with respect to which an election is made under § 1.48-4 to treat the lessee as having purchased such qualified facility is considered placed in service by the lessor in the taxable year in which possession is transferred to such lessee.
Proposed § 1.48E-2(f)(8) would provide that with respect to a section 48E credit determined with respect to qualified facility of a taxpayer, the term “claim” would be defined to mean filing a completed Form 3468, Investment Credit, or any successor form(s), with the taxpayer's timely filed (including extensions) Federal income tax return or Federal return, as appropriate, for the taxable year in which the qualified facility is placed in service, and includes making an election under section 6417 or 6418 of the Code and corresponding regulations with respect to such section 48E credit and made on the taxpayer's filed return.
Proposed § 1.48E-2(g)(1) would provide that an EST includes a unit of EST that meets the requirements of proposed § 1.48E-2(g)(2)(i). An EST also would include property owned by the taxpayer that is an integral part (as defined in proposed § 1.48E-2(g)(3)) of the unit of EST. Proposed § 1.48E-2(g)(1) would provide that equipment that is an addition or modification to an existing EST is not eligible for the section 48E credit. Proposed § 1.48E-2(g)(1) would further provide that, an EST would include electrical energy storage property described in proposed § 1.48E-2(g)(6)(i), thermal energy storage property described in proposed § 1.48E-2(g)(6)(ii), and hydrogen energy storage property described in proposed § 1.48E-2(g)(6)(iii).
Proposed § 1.48E-2(g)(2) would provide that a unit of EST includes all functionally interdependent components of property (as defined in proposed § 1.48E-2(g)(2)(ii)), owned by the taxpayer that are operated together and that can operate apart from other property to perform the intended function of the EST.
Proposed § 1.48E-2(g)(2)(i) would provide that for purposes of the section 48E credit, a unit of EST includes all functionally interdependent components of property (as defined in paragraph proposed § 1.48E-2(g)(2)(ii))
Proposed § 1.48E-2(g)(3) would provide that property owned by a taxpayer is an integral part of EST owned by the same taxpayer if it is used directly in the intended function of the EST and is essential to the completeness of such function. Proposed § 1.48E-2(g)(3) would also provide that property that is an integral part of an EST is part of an EST. Lastly, proposed § 1.48E-2(g)(3) would provide that a taxpayer may not claim the section 48E credit for any property that is an integral part of an EST that is not owned by the taxpayer.
Proposed § 1.48E-2(g)(4) would describe the qualified investment with respect to any EST for any taxpayer year as the basis of any EST placed in service by the taxpayer during such taxable year.
Proposed § 1.48E-2(g)(5)(i) would provide rules for determining when an EST has been placed in service for purposes of the section 48E credit. Proposed § 1.48E-2(g)(5)(ii) also would provide that notwithstanding the general placed in service rules provided in proposed § 1.48E-2(g)(5)(i), an EST with respect to which an election is made under § 1.48-4 to treat the lessee as having purchased such EST is considered placed in service by the lessor in the taxable year in which possession is transferred to such lessee.
Proposed § 1.48E-2(g)(6)(i) would describe electrical energy storage property as property (other than property primarily used in the transportation of goods or individuals and not for the production of electricity) that receives, stores, and delivers energy for conversion to electricity and has a nameplate capacity of not less than 5 kWh. See subsection C of Overview of Section 48E. Proposed § 1.48E-2(g)(6)(i) also would provide examples of such electrical energy storage property, subject to the exclusion for property primarily used in the transportation of goods or individuals.
The Treasury Department and the IRS understand that this exclusion for property primarily used in the transportation of goods or individuals, at a minimum, would apply to batteries and other EST that are incorporated into or otherwise physically integrated within motor vehicles and other modes of transportation of goods or individuals and from which an electric motor of such vehicle or other mode of transportation draws electricity for propulsion.
Proposed § 1.48E-2(g)(6)(ii) would describe thermal energy storage property as property comprising a system that is directly connected to a heating, ventilation, or air conditioning (HVAC) system; removes heat from, or adds heat to, a storage medium for subsequent use; and provides energy for the heating or cooling of the interior of a residential or commercial building. See section C of Overview of Section 48E. Proposed § 1.48E-2(g)(6)(ii) would also provide that thermal energy storage property includes equipment and materials, and parts related to the functioning of such equipment, to store thermal energy for later use to heat or cool, or to provide hot water for use in heating a residential or commercial building. In addition, proposed § 1.48E-2(g)(6)(ii) would provide that thermal energy storage property does not include a swimming pool, CHP property, or a building or its structural components. Lastly, proposed § 1.48E-2(g)(6)(ii) would provide examples of thermal energy storage property.
Proposed § 1.48E-2(g)(6)(iii) would provide that hydrogen energy storage property is property (other than property primarily used in the transportation of goods or individuals and not for the production of electricity) that stores hydrogen and has a nameplate capacity of not less than 5 kWh, equivalent to 0.127 kg of hydrogen or 52.7 standard cubic feet (scf) of hydrogen. Proposed § 1.48E-2(g)(6)(iii) would also provide that hydrogen energy storage property must store hydrogen that is solely used as energy and not for other purposes such as for the production of end products such as fertilizer. Proposed § 1.48E-2(g)(6)(iii) would also provide examples of hydrogen energy storage property.
Although the list of examples of energy storage technologies that proposed § 1.48E-2(g)(6) would provide is nonexclusive, and therefore many other technologies that are not addressed would meet these functional definitions, there are some examples that do not meet the functional definition. For example, some technologies are marketed as “virtual batteries,” which are aggregations of controllable electricity demand providing similar electrical grid services to an electrical grid battery. Such “virtual batteries” receive energy in the form of electricity, but they do not store it for later discharge as electricity. The function of “virtual batteries” is to shift demand to different points in time. Because such demand shifting is not a storage activity for purposes of section 48(c)(6) (and thus for purposes of section 48E(c)(2)), this technology is not an EST. There are other technologies for which the determination of whether they meet the statutory requirements is less clear.
Proposed § 1.48E-2(g)(7) would provide rules for modification of EST. Based on the rules in section 48(c)(6)(B), proposed § 1.48E-2(g)(7) would provide that with respect to electrical energy storage property and hydrogen energy storage property, modified as set forth in proposed § 1.48E-2(g)(7), such property will be will be treated as an electrical energy storage property (as described in proposed § 1.48E-2(g)(6)(i)) or a hydrogen energy storage property (as described in proposed § 1.48E-2(g)(6)(iii)), except that the basis of any existing electrical energy storage property or hydrogen energy storage property prior to such modification is not taken into account for purposes of proposed § 1.48E-2(g)(7) and section 48E.
Proposed § 1.48E-2(g)(8) would provide that with respect to a section 48E credit determined with respect to an EST of a taxpayer, the term “claim” means filing a completed Form 3468, Investment Credit, or any successor form(s), with the taxpayer's timely filed (including extensions) Federal income tax return or Federal return, as appropriate, for the taxable year in which the EST is placed in service, and includes making an election under section 6417 or 6418 and corresponding regulations with respect to such section 48E credit and made on the taxpayer's filed return.
Proposed § 1.48E-4(a)(1) would provide rules for qualified facilities with a maximum net output of not greater than 5 megawatts to include qualified interconnection costs in the basis of an associated qualified facility. Proposed § 1.48E-4(a)(1) would provide that the qualified investment for a qualified facility includes amounts paid or incurred by the taxpayer for qualified interconnection property in connection with the installation of a qualified facility that has a maximum net output of not greater than 5 MW (as measured in alternating current) (Five-Megawatt Limitation). Proposed § 1.48E-4(a)(1) would provide that the qualified interconnection property must provide for the transmission or distribution of the electricity produced by a qualified facility and must be properly chargeable to the capital account of the taxpayer as reduced by proposed § 1.48E-4(a)(6). Proposed § 1.48E-4(a)(2) would define the term “qualified interconnection property.” Proposed § 1.48E-4(a)(2) would further provide that qualified interconnection property is not taken into account to determine if a qualified facility meets the requirements for the increase in credit rate for energy communities or domestic content because qualified interconnection property is not part of a qualified facility.
Proposed § 1.48E-4(a)(3) would describe the Five-Megawatt Limitation as a measurement taken at the qualified facility level. Proposed § 1.48E-4(a)(3)(i) would provide that the maximum net output of a qualified facility is measured only by the nameplate generating capacity of the unit of qualified facility, which does not include the nameplate capacity of any integral property, at the time that the qualified facility is placed in service. Further, proposed § 1.48E-4(a)(3)(i) would also provide that the nameplate generating capacity of the unit of qualified facility is measured independently from any other qualified facilities that share the same integral property.
Proposed § 1.48E-4(a)(4) would define the term “interconnection agreement.” and proposed § 1.48E-4(a)(5) would define the term “utility.”
Proposed § 1.48E-4(a)(6) would provide that expenses paid or incurred for qualified interconnection property and amounts otherwise chargeable to capital account with respect to such expenses must be reduced under rules similar to the rules contained in section 50(c). The taxpayer must pay or incur the interconnection property costs, and therefore, any reimbursement, including by a utility, must be accounted for by reducing the taxpayers' expenditure to determine eligible costs.
A taxpayer that is reimbursed for these costs may not include such reimbursed costs in the amount paid or incurred by the taxpayer for qualified interconnection property. Proposed § 1.48E-4(a)(6) would adopt this rule. In the case of a utility reimbursing a taxpayer for costs the taxpayer pays or incurs for qualified interconnection property, the utility should provide the taxpayer with information regarding such costs by the date on which the project is placed in service.
The Treasury Department and the IRS are aware of common situations in which a taxpayer could ultimately receive a payment, credit, or service from another entity, including a utility, related to the costs the taxpayer pays or incurs for qualified interconnection property. For example, one taxpayer may place in service a qualified facility and make payments to a utility with respect to qualified interconnection property involving the addition, modification, or upgrade to the utility's transmission system related to such qualified facility. Subsequently, a different taxpayer may, at a later date, place in service a qualified facility and make payments to the same utility related to the same additions, modifications, or upgrades to the utility's transmission system that were made in response to the first taxpayer's interconnection. The utility may pay, credit, or provide services to the first taxpayer in an amount related to the costs paid by the second taxpayer. The likely amount or timing of any such payment, credit, or service would not be known at the time the first taxpayer interconnects to the utility's transmission system.
The Treasury Department and the IRS request comment on whether such payment, credit, or service received by the first taxpayer, as the result of subsequent payments made to a utility by other parties, should be treated as a reimbursement to the first taxpayer and impact the amount of the costs of qualified interconnection property that the first taxpayer may include in its basis for purposes of the section 48E credit. The Treasury Department and the IRS also request comment on whether the costs paid by the second taxpayer should be treated as amounts paid or incurred for qualified interconnection property in connection with the installation of the second taxpayer's qualified facility. The Treasury Department and the IRS request comment on industry practices relevant to the determination of costs paid or incurred for qualified interconnection property, including the accounting treatment of costs paid or incurred for qualified interconnection property. The Treasury Department and the IRS also request comment on whether any clarifications are needed regarding the tax treatment of amounts paid or incurred for qualified interconnection property, including reimbursement of costs paid or incurred by a taxpayer for qualified interconnection costs.
In section 3.02(1)(b)(ii) of Notice 2022-49, the Treasury Department and the IRS requested comments concerning what type of documentation, in addition to interconnection agreements and cost certification reports, is readily available for a taxpayer to demonstrate that they have paid or incurred interconnection costs in the context of the section 48 credit. Taxpayers must retain documentation in compliance with section 6001. The proposed regulations do not provide any specific type of required documentation, and any documentation that satisfies section 6001 will suffice to substantiate that a taxpayer has paid or incurred qualified interconnection costs. Commenters to Notice 2022-49 provided feedback on the documentation that taxpayers may use to substantiate costs paid or incurred for qualified interconnection property in the context of the section 48 credit. The Treasury Department and the IRS request comments on this same question in the context of the section 48E credit.
Qualified interconnection property is either constructed, reconstructed, or erected by the taxpayer, or the taxpayer pays or incurs the cost with respect to the construction, reconstruction, or erection of such property; and the original use of which, pursuant to an interconnection agreement, commences with a utility. Therefore, in some cases, taxpayers will have the necessary information and documentation on these costs. In other cases, the taxpayers will need to receive this information from the utility, which, the Treasury Department and the IRS understand, will be a common scenario. For situations in which property is constructed, reconstructed, or erected by a party other than the taxpayer, final information with conclusive details such as a true-up report with the actual costs, final invoices, proof of payment or reimbursement, and permission to operate documentation or any other final project accounting documentation should be maintained. Other examples
Proposed § 1.48E-4(b) would provide rules related to the expansion of capacity of a qualified facility by the addition of a new unit or an addition of capacity. Proposed § 1.48E-4(b)(1) would provide, that solely for purposes of § 1.48E-4(b), the term “qualified facility” includes either a new unit or an addition of capacity placed in service after December 31, 2024, in connection with a facility described in section 48E(b)(3)(A) (without regard to clause (ii) of such paragraph), which was placed in service before January 1, 2025, but only to the extent of the increased amount of electricity produced at the facility by reason of such new unit or addition of capacity. Proposed § 1.48E-4(b)(1) further provides that a new unit or an addition of capacity that meets the requirements of proposed § 1.48E-4(b) will be treated as a separate qualified facility. Proposed § 1.48E-4(b) provides that a new unit or addition of capacity requires the addition or replacement of qualified property (as defined in § 1.48E-2(e)), including any new or replacement integral property added to the facility necessary to increase capacity. If applicable, taxpayers must use modified or amended facility operating licenses or the International Standard Organization (ISO) conditions to measure the maximum electrical generating output of a facility to determine nameplate capacity. Additionally, § 1.48E-4(b)(1) would provide that for purposes of section 48E(a)(2)(B)(ii)(I) (that is, the One-Megawatt Exception), the capacity for a new unit or an addition of capacity is the sum of the nameplate capacity of the added qualified facility and the nameplate capacity of the facility to which the qualified facility was added.
Proposed § 1.48E-4(b)(2) would provide that solely for purposes of § 1.48E-4(b), a facility that is decommissioned or in the process of decommissioning and restarts can be considered to have increased capacity if the following conditions are met: (1) the existing facility must have ceased operations; (2) the existing facility must have a period of at least one calendar year during which it is without a valid operating license from its respective Federal regulatory authority (that is, the Federal Energy Regulatory Commission (FERC) or the Nuclear Regulatory Commission (NRC)); and (3) the increased capacity of the restarted facility must have a new, reinstated, or renewed operating license issued by either FERC or NRC.
Proposed § 1.48E-4(b)(3) would describe two different methods for a taxpayer to compute the qualified investment that increased the amount of electricity produced by either a new unit or an addition of capacity described in § 1.48E-4(b)(1). Proposed § 1.48E-4(b)(3)(i) would provide that the term “new unit” means components of property including any new or replacement integral property added to a facility necessary to increase the capacity of the facility but do not replace the existing capacity of the facility. Further, proposed § 1.48E-4(b)(3)(i) would provide that the taxpayer's qualified investment in the new unit during the taxable year that results in an increase in capacity is eligible for the section 48E credit.
Proposed § 1.48E-4(b)(3)(ii) would address the application of the rule to an addition of capacity by providing that the term “addition of capacity” means components of property, including any new or replacement integral property added to a facility necessary to increase the capacity of the facility by replacing, in whole or in part, the existing capacity of the facility. Proposed § 1.48E-4(b)(3)(ii) would provide that to determine a taxpayer's qualified investment during the taxable year that resulted in an increased capacity of a facility by reason of an addition of capacity not described in proposed § 1.48E-4(b)(3)(i), a taxpayer must multiply its total qualified investment during the taxable year with respect to the facility, by a fraction, the numerator of which is the increase in nameplate capacity that results from the addition of capacity, and the denominator of which is the total nameplate capacity associated with the components of property that result in the addition of capacity.
Proposed § 1.48E-4(b)(4) would provide examples to illustrate the application of both methods to determine the increased amount of electricity attributable to a new unit or an addition of capacity described in § 1.48E-4(b)(1).
Proposed § 1.48E-4(c) would provide rules related to the retrofit of an existing qualified facility. Proposed § 1.48E-4(c)(1) would provide that for purposes of section 48E(b)(3)(A)(ii), a facility may qualify as originally placed in service even if it contains some used components of property within the unit of qualified facility, provided that the fair market value of the used components of the unit of qualified facility is not more than 20 percent of the unit of qualified facility's total value (that is, the cost of the new components of property plus the value of the used components of property within the unit of qualified facility) (80/20 Rule).
Proposed § 1.48E-4(c)(2) would provide that only expenditures paid or incurred that related to the new components of the unit of qualified facility are taken into account for computing the section 48E credit with respect to the unit of qualified facility.
Proposed § 1.48E-4(c)(3) would provide that the cost of new components of the unit of qualified facility includes all costs properly included in the depreciable basis of the new components.
Proposed § 1.48E-4(c)(4) would provide that if the taxpayer satisfies the 80/20 Rule with regard to a unit of qualified facility, and the taxpayer incurs new costs for property that is an integral part of the qualified facility, the taxpayer may include these new costs paid or incurred for property that is an integral part of the qualified facility in the basis of the qualified facility for purposes of calculating the section 48E credit.
Proposed § 1.48E-4(c)(5) would provide that costs incurred for new components of property added to used components of a unit of qualified facility may not be taken into account for purposes of the section 48E credit unless the taxpayer satisfies the 80/20 Rule. Proposed § 1.48E-4(c)(6) would provide examples.
Proposed § 1.48E-4(d) would provide rules related to the ownership of a qualified facility or EST. Proposed § 1.48E-4(d)(1) would provide that a taxpayer that owns a qualified investment with respect to a qualified facility or EST is eligible for the section 48E credit only to the extent of the taxpayer's eligible investment in the qualified facility or EST. In the case of multiple taxpayers holding direct ownership through their qualified investments in a single qualified facility or EST, each taxpayer determines its eligible investment based on the taxpayer's fractional ownership interest in the qualified facility or EST.
Proposed § 1.48E-4(d)(2) would provide that a taxpayer must directly own at least a fractional interest in the entire unit of qualified facility (as defined in § 1.48E-2(b)(2) or unit of EST (as defined in § 1.48E-2(g)(2)) for a section 48E credit to be determined with
Proposed § 1.48E-4(d)(3) would provide that if a qualified facility or EST is owned through an unincorporated organization that has made a valid election under section 761(a), each member's undivided ownership share in the facility or EST will be treated as a separate qualified facility or EST owned by such member.
Proposed § 1.48E-4(d)(4)(i) would define the term “related taxpayers” and proposed § 1.48E-4(d)(4)(ii) would provide a related taxpayer rule, that related taxpayers are treated as one taxpayer in determining whether a taxpayer has made an investment in a qualified facility or EST with respect to which a section 48E credit may be determined. Proposed § 1.48E-4(d)(5) would provide examples illustrating these ownership rules.
Proposed § 1.48E-4(e) would provide that as provided under section 50(c)(3)(C), in the case of a taxpayer determining eligible basis for purposes of calculating a credit under section 42 of the Code (section 42 credit), a taxpayer is not required to reduce its basis in a qualified facility or EST by the amount of the section 48E credit determined with respect to the qualified investment with respect to such qualified facility or EST. Further, proposed § 1.48E-4(e) would provide that the qualified investment with respect to a qualified facility or EST may be used to determine a section 48E credit and may also be included in eligible basis to determine a section 42 credit.
Proposed § 1.48E-4(f)(1) would provide recapture rules for the section 48E credit that incorporate the recapture provisions of section 50(a). Proposed § 1.48E-4(f)(1) would further provide that the credit calculated under proposed § 1.48E-1(b) is subject to recapture for any qualified facility that has a GHG emissions rate (as determined under proposed § 1.48E-5) that exceeds 10 grams of CO
Proposed § 1.48E-4(f)(2)(i) would provide that any failure of the qualified facility to not exceed a GHG emissions rate of 10 grams per CO
Proposed § 1.48E-4(f)(2)(iii) would provide that a determination of whether a recapture event has occurred must be made for each taxable year (or portion thereof) occurring within the five-year recapture period, beginning with the taxable year ending after the date the qualified facility is placed in service. For each taxable year that begins or ends within the five-year recapture period, the taxpayer must determine, for any qualified facility for which it has claimed the section 48E credit, whether such facility has maintained a GHG emissions rate of not greater than 10 grams of CO
Proposed § 1.48E-4(f)(2)(iv) would provide that in the case of any recapture event, the carrybacks and carryforwards under section 39 must be adjusted by reason of such recapture event.
Proposed § 1.48E-4(f)(3)(i) would provide that if a recapture event has occurred, the tax under chapter 1 of the Code for the taxable year in which the recapture event occurs is increased by an amount equal to the applicable recapture percentage multiplied by the credit amount that was claimed by the taxpayer under proposed § 1.48E-1. Proposed § 1.48E-4(f)(3)(ii) provides the applicable recapture percentage for each year during the five-year recapture period.
Proposed § 1.48E-4(f)(4) would provide that the five-year recapture period begins on the date the qualified facility is placed in service and ends on the date that is five full years after the placed-in-service date. Each 365-day period (366-day period in the case of a leap year) within the five-year recapture period is a separate recapture year for recapture purposes.
Proposed § 1.48E-4(f)(5) would provide that the increased tax under chapter 1 of the Code for the recapture of the credit amount under proposed § 1.48E-1 occurs in the year of the recapture event.
Section 48E(b)(3)(B)(ii) provides that rules similar to the rules of section 45Y(b)(2) regarding greenhouse emissions rates apply for purposes of section 48E. Proposed § 1.48E-5(a) would provide an overview of the rules pertaining to GHG emissions rates for qualified facilities under section 48E. Proposed § 1.48E-5(b) through (f) would clarify that the definitions of certain terms, rules for determining GHG emissions rates for Non-C&G Facilities, the rules for determining net GHG emissions rates for C&G Facilities, rules regarding carbon capture and sequestration, and requirement to publish the Annual Table provided in proposed § 1.45Y-5(b) through (f) also apply for purposes of section 48E and this section.
Proposed § 1.48E-5(g) would provide the rules applicable to provisional emissions rates. Proposed § 1.48E-5(g)(1) would provide that, in the case of any facility for which an emissions rate has not been established by the Secretary, a taxpayer that owns such facility may file a petition with the Secretary for determination of the emissions rate with respect to such facility (Provisional Emissions Rate or PER).
Proposed § 1.48E-5(g)(2) would provide that an emissions rate has not been established by the Secretary for a facility if such facility is not described in the Annual Table. Proposed § 1.48E-5(g)(2) would further provide that if a taxpayer's request for an emissions value pursuant to proposed § 1.48E-5(g)(5) is pending at the time such facility is or becomes described in the Annual Table, the taxpayer's request for an emissions value would be automatically denied.
Proposed § 1.48E-5(g)(3) would provide the process for filing a PER petition. Proposed § 1.48E-5(g)(3) would provide that to file a PER petition with the Secretary, a taxpayer must submit a PER petition attached to the taxpayer's Federal income tax return or Federal return, as appropriate, for the taxable year in which the taxpayer claims the section 48E credit with respect to the facility. Proposed § 1.48E-5(g)(3) would further provide that a PER petition must contain an emissions value and, if applicable, include as an attachment the DOE letter. An emissions value obtained from DOE based on an analytical assessment of the emissions rate associated with the facility performed by one or more of the National Laboratories, in consultation with other agency experts as appropriate, consistent with proposed § 1.48E-5. A taxpayer would be required to retain its books and records a copy of the taxpayer's request to DOE for an emissions value, including any information provided by the taxpayer to DOE pursuant to the emissions value request process provided in proposed § 1.48E-5(g)(5). Alternatively, an emissions value can be determined for a facility by using the most recent version of an LCA model, as of the time the PER petition is filed, that has been designated by the Secretary for such use under paragraph (g)(6) of this section. If an emissions value is determined using a designated LCA model or models, the taxpayer would be required to provide to the IRS information to support its use of the model or models in the form and manner prescribed in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. A taxpayer may not request an emissions value from DOE for a facility for which an emissions value can be determined by using the most recent version of an LCA model or models that have been designated by the Secretary for such use under proposed § 1.48E-5(g)(6).
Proposed § 1.48E-5(g)(4) would provide that, upon the IRS's acceptance of the taxpayer's Federal income tax return or Federal return, as appropriate, containing a PER petition, the emissions value of the facility specified on such petition will be deemed accepted. Proposed § 1.48E-5(g)(4) would further provide that a taxpayer would be able to rely upon an emissions value provided by DOE for purposes of claiming a section 48E credit, provided that any information, representations, or other data provided to DOE in support of the request for an emissions value are accurate. If applicable, a taxpayer may rely upon an emissions value determined for a facility using an LCA model or models that have been designated by the Secretary for such use under proposed § 1.48E-5(g)(6), provided that any information, representations, or other data used to obtain such emissions value are accurate. The IRS's deemed acceptance of an emissions value would be the Secretary's determination of the PER. Finally, proposed § 1.48E-5(g)(4) would provide that the taxpayer must also comply with all applicable requirements for the section 48E credit, and any information, representations, or other data provided to DOE in support of the request for an emissions value would be subject to later examination by the IRS.
Proposed § 1.48E-5(g)(5) would provide the rules applicable to the emissions value request process. Proposed § 1.48E-5(g)(5) would provide that an applicant that submits a request for an emissions value must follow the procedures specified by DOE to request and obtain such emissions value, and that emissions values will be determined consistent with the rules provided in proposed § 1.48E-5. Proposed § 1.48E-5(g)(5) would further provide that an applicant may request an emissions value from DOE only after a front-end engineering and design (FEED) study or similar indication of project maturity, as determined by DOE, such as the completion of a project specification and cost estimation sufficient to inform a final investment decision for the facility. Proposed § 1.48E-5(g)(5) would provide that DOE may decline to review applications that are non-responsive, and those applications that relate to a facility that is described in the Annual Table (consistent with proposed § 1.48E-5(g)(2)) or a facility that can determine an emissions value using a designated LCA model under proposed § 1.48E-5(g)(6) (consistent with proposed § 1.48E-5(g)(3)), or applications that are incomplete. Proposed § 1.45Y-5(g)(5) would also provide that applicants must follow DOE's guidance and procedures for requesting and obtaining an emissions value from DOE. DOE will publish guidance and procedures that applicants must follow to request and obtain an emissions value from DOE. DOE's guidance and procedures will include a process that, under limited circumstances, a taxpayer may request a revision to DOE's initial assessment of an emissions value on the basis of revised technical information or facility design and operation. The Treasury Department and the IRS anticipate that the emissions value request process will open after the publication of the final regulations.
Proposed § 1.48E-5(g)(6) would provide that the rules provided in proposed § 1.45Y-5(g)(6) regarding the designation of an LCA model or models for determining an emissions value for C&G Facilities apply for purposes of section 48E and this section.
Proposed § 1.48E-5(g)(7) would provide rules governing the effect of a PER. Proposed § 1.48E-5(g)(7) would provide that a taxpayer may use a PER determined by the Secretary to determine the eligibility for the section 48E credit for a taxable year for the facility to which the PER relates, provided all other requirements of section 48E are met, unless the emissions rate for such type or category of facility is provided in the Annual Table for any portion of the taxable year. Proposed § 1.48E-5(g)(7) would further provide that the Secretary's PER determination is not an examination or inspection of books of account for purposes of section 7605(b) of the Code and does not preclude or impede the IRS (under section 7605(b) or any administrative provisions adopted by the IRS) from later examining a return or inspecting books or records with respect to any taxable year for which the section 48E credit is claimed. Finally, proposed § 1.48E-5(g)(7) would provide that a PER determination does not signify that the IRS has determined that the requirements of section 48E have been satisfied for any taxable year.
Proposed § 1.48E-5(h) would provide the rules applicable to determining an anticipated GHG emissions rate. Proposed § 1.48E-5(h)(1) would provide that a facility's anticipated GHG emissions rate must be objectively determined based on an examination of all the facts and circumstances. Proposed § 1.48E-5(h)(1) would further provide that certain Non-C&G Facilities, such as the facilities described in proposed § 1.45Y-5(c)(2), may have an anticipated GHG emissions rate that is not greater than zero based on the technology and practices they rely upon to generate electricity. Finally, proposed § 1.48E-5(h)(1) would provide that for facilities that require the use of certain feedstocks or carbon capture and sequestration, which may vary, to generate electricity with a GHG emissions rate that is not greater than zero, objective indicia that such facilities will operate with a GHG emissions rate that is not greater than zero for at least 10 years beginning from the date the facility is placed in service are required to establish that its anticipated GHG emissions rate is not greater than zero.
Proposed § 1.48E-5(h)(2) would provide a non-exhaustive list of examples of objective indicia that may establish an anticipated GHG emissions rate that is not greater than zero. Proposed § 1.48E-5(h)(2)(i) through (iv) would provide that these examples include co-location of the facility with a fuel source for which the combination of fuel, type of facility, and practice is reasonably expected to result in a GHG emissions rate that is not greater than zero; a 10-year contract to purchase fuels for which the combination of fuel, type of facility, and practice is reasonably expected to result in a GHG emissions rate that is not greater than zero; or a facility type that only accommodates one type of fuel or a small range of fuels for which the combination of fuel, type of facility, and practice is reasonably expected to result in a GHG emissions rate that is not greater than zero; or a 10-year contract for the capture, disposal, or utilization of qualified carbon dioxide from the facility for which the combination of fuel, type of facility, and practice is reasonably expected to result in a GHG emissions rate that is not greater than zero.
The Treasury Department and the IRS interpret the reference in section 48E(b)(3)(A)(iii) to an “anticipated greenhouse gas emissions rate” that is not greater than zero to require a reasonable expectation that a facility will operate with a rate or net rate of greenhouse gas emissions that is not greater than zero over a specified period of time (for example, the anticipated lifetime of the facility). The Treasury Department and the IRS request comment on what evidence or substantiation taxpayers should be required to maintain to establish an anticipated GHG emissions rate for a facility. In addition, comment is requested on the appropriate period of time for which taxpayers should be required to demonstrate that there is a reasonable expectation that a facility will operate with a GHG emissions rate that is not greater than zero.
Proposed § 1.48E-5(i) would provide that taxpayers may rely on the Annual Table in effect as of the date a facility began construction or the provisional emissions rate determined by the Secretary for the taxpayer's facility to determine the facility's GHG emissions rate, provided that the facility continues to operate as a type of facility that is described in the Annual Table or the facility's emissions value request, as applicable, for the entire taxable year.
Proposed § 1.48E-5(j)(1) would provide that a taxpayer must maintain in its books and records documentation regarding the design and operation of a facility that establishes that such facility had an anticipated GHG emissions rate that is not greater than zero in the year in which the section 48E credit is determined and operated with a GHG emissions rate that is not greater than 10 grams of CO
Proposed § 1.48E-5(j)(2) would further provide that documentation sufficient to substantiate that a facility had a GHG emissions rate that is not greater than 10 grams of CO
These regulations are proposed to apply to qualified facilities (and for § 1.48E-1 through 1.48E-4, energy storage technologies) placed in service after December 31, 2024, and during taxable years ending on or after the date of publication of the final regulations in the
Pursuant to the Memorandum of Agreement, Review of Treasury Regulations under Executive Order 12866 (June 9, 2023), tax regulatory actions issued by the IRS are not subject to the requirements of section 6 of Executive Order 12866, as amended. Therefore, a regulatory impact assessment is not required.
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) (PRA) generally requires that a Federal agency obtain the approval of the Office of Management and Budget (OMB) before collecting information from the public, whether such collection of information is mandatory, voluntary, or required to obtain or retain a benefit.
The collections of information in these proposed regulations contain recordkeeping and reporting requirements that are required to substantiate eligibility to claim a section 45Y or section 48E credit. These collections of information would generally be used by the IRS for tax compliance purposes and by taxpayers to facilitate proper reporting and compliance. The general recordkeeping requirements mentioned within these proposed regulations are considered general tax records under § 1.6001-1(e).
The recordkeeping requirements in these proposed regulations with respect to section 45Y would include the requirement in proposed § 1.45Y-5(i)(1) that taxpayers claiming the section 45Y credit must maintain in its books and records documentation regarding the design and operation of a facility that establishes that such facility had a GHG emissions rate that is not greater than zero for the taxable year. Included in proposed § 1.45Y-5(i)(2) are examples of documentation that sufficiently substantiates that a facility has a GHG emissions rate that is not greater than zero for the taxable year, which includes documentation, or a report prepared by an unrelated party that verifies that a facility had such an emissions rate. A facility described in proposed § 1.45Y-5(c)(2) can maintain sufficient documentation to demonstrate a GHG emissions rate that is not greater than zero for the taxable year by showing that it is a type of facility described in proposed § 1.45Y-5(c)(2). Proposed § 1.45Y-5(i)(2) would provide that Secretary may determine that other types of facilities can sufficiently substantiate a GHG emissions rate, as determined under this section, that is not greater than zero with certain documentation and will describe such facilities and documentation in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. For PRA purposes, these general tax records are already approved by OMB under 1545-0074 for individuals, 1545-0123 for business entities, 1545-0092 for trust and estate filers, and 1545-0047 for tax-exempt organizations.
The recordkeeping requirements in these proposed regulations with respect to section 48E would include the requirement in proposed § 1.48E-5(i)(1) that a taxpayer must maintain in its books and records documentation regarding the design and operation of a facility that establishes that such facility had an anticipated GHG emissions rate that is not greater than 10 grams of CO
The reporting requirements in these proposed regulations are in proposed §§ 1.45Y-5 and 1.48E-5, which provide the process for applicants to file a petition with the Secretary for a PER determination. To file a PER petition with the Secretary, a taxpayer must submit the PER petition attached to the taxpayer's Federal income tax return or Federal return, as appropriate, for the taxable year in which the taxpayer claims the section 45Y credit or the section 48E credit with respect to the facility to which the PER petition relates. A PER petition must contain an emissions value. If the applicant obtained an emissions value from DOE, the PER petition made to the IRS must include and emissions value letter from DOE. This emission value letter process will be approved by OMB under the DOE Control Number 1910-####. A taxpayer must retain in its books and records a copy of the taxpayer's request to DOE for an emissions value, including the supporting documentation provided to DOE with the request. Alternatively, if applicable, a PER petition may contain an emissions value determined for a facility using the most recent version of an LCA model, as of the time the PER petition is filed, that has been designated by the Secretary for such use. If an emissions value is determined using a designated model, a taxpayer is required to provide to the IRS information to support its determination of the emissions value in the form and manner prescribed in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. The burden for these requirements will be included within the forms and instructions applicable to sections 45Y and 48E. For section 45Y, the burden for these requirements will be associated the form and instructions applicable to claiming this credit and will be approved by OMB, in accordance with 5 CFR 1320.10, under the following OMB control numbers: 1545-0074 for individuals/sole proprietors, 1545-0123 for business entities, 1545-0047 for tax-exempt organizations, and 1545-0092 for trust and estate filers. For section 48E, the burden for these requirements will be associated with Form 3468, Investment Credit, and will be approved by OMB, in accordance with 5 CFR 1320.10, under the following OMB control numbers: 1545-0074 for individuals/sole proprietors, 1545-0123 for business entities, 1545-0047 for tax-exempt organizations, and 1545-0092 for trust and estate filers.
The Regulatory Flexibility Act (5 U.S.C. 601
Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking has been submitted to the Chief Counsel of the Office of Advocacy of the Small Business Administration for comment on its impact on small business.
The proposed regulations would provide greater clarity to taxpayers for purposes of claiming the section 45Y credit or the section 48E credit. The proposed regulations would provide necessary definitions rules regarding the determination of credit amounts and the procedure for requesting a provisional emissions rate. The proposed regulations will provide greater clarity to taxpayers for purposes of claiming the section 45Y credit and the section 48E credit and encourage taxpayers to produce clean energy or invest in clean energy projects and facilities. Thus, the Treasury Department and the IRS intend and expect that the proposed rules will deliver benefits across the economy that will beneficially impact various industries.
The RFA directs agencies to provide a description of, and if feasible, an estimate of, the number of small entities that may be affected by the proposed rules, if adopted. The Small Business Administration's Office of Advocacy estimates in its 2023 Frequently Asked Questions that 99.9 percent of American businesses meet its definition of a small business. The applicability of these proposed regulations does not depend on the size of the business, as defined by the Small Business Administration.
As described more fully in the preamble to this proposed regulation and in this IRFA, the section 45Y credit and the section 48E credit incentivize the production of clean energy and the investment in clean energy projects and facilities. Because the potential credit claimants can vary widely, it is difficult to estimate at this time the impact of these proposed regulations, if any, on small businesses.
The Treasury Department and the IRS expect to receive more information on the impact on small businesses through comments on these proposed rules and again once taxpayers start to claim the section 45Y credit or the section 48E credit using the guidance and procedures provided in these proposed regulations.
The proposed regulations will allow taxpayers to plan investments and transactions based on the ability to claim the section 45Y production credit and/or the section 48E investment credit. The increased use of these
Because recordkeeping and reporting requirements relating to the section 45Y and 48E credits will not materially differ from the requirements relating to existing energy production and investment tax credits, the recordkeeping and reporting requirements should not materially increase for taxpayers that already claim existing credits. To claim the section 45Y credit or the 48E credit, taxpayers will continue to need to execute the relevant form (or successor form, or pursuant to instructions and other guidance) and file such form with the taxpayer's timely filed return (including extensions) for the taxable year in which the property is placed in service.
Although the Treasury Department and the IRS do not have sufficient data to precisely determine the likely extent of the increased costs of compliance, the estimated burden of complying with the recordkeeping and reporting requirements are described in the Paperwork Reduction Act section of this preamble.
The Treasury Department and the IRS considered alternatives to the proposed regulations. For example, the Treasury Department and the IRS considered whether to impose different rules for determining if a section 48E qualified facility had a recapture event, and how and when a taxpayer was required to notify the Secretary that the emissions rate at a qualified facility was greater than 10 grams of CO
An additional example is that the Treasury Department and the IRS considered alternatives to how a taxpayer should compute any increase in capacity at a qualified facility that for purposes of section 45Y and 48E was a qualified facility due to an increase in capacity. The proposed regulations were designed to provide a rule that was administrable for the IRS and taxpayers. Thus, the proposed regulations adopt a rule for taxpayers to compute the increase in capacity by multiplying the amount of electricity that the facility produces during a taxable year after the new unit or an addition of capacity is placed in service by a fraction, the numerator of which is the nameplate capacity that results from the new unit or an addition of capacity, and the denominator of which is the total nameplate capacity of the facility with the new unit or an addition of capacity
Comments are requested on the requirements in the proposed regulations, including specifically, whether there are less burdensome alternatives that ensure the IRS has sufficient information to administer the Clean Electricity Tax Credits.
The proposed rules would not duplicate, overlap, or conflict with any relevant Federal rules. As discussed above, the proposed regulations would provide guidance relating to the section 45Y tax credit and the section 48E tax credit. The Treasury Department and the IRS invite input from interested members of the public about identifying and avoiding overlapping, duplicative, or conflicting requirements.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits and take certain other actions before issuing a final rule that includes any Federal mandate that may result in expenditures in any one year by a State, local, or Indian Tribal government, in the aggregate, or by the private sector, of $100 million (updated annually for inflation). This proposed rule does not include any Federal mandate that may result in expenditures by State, local, or Indian Tribal governments, or by the private sector in excess of that threshold.
Executive Order 13132 (Federalism) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial, direct compliance costs on State and local governments, and is not required by statute, or preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. This proposed rule does not have federalism implications and does not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive order.
Executive Order 13175 (Consultation and Coordination With Indian Tribal Governments) prohibits an agency from publishing any rule that has Tribal implications if the rule either imposes substantial, direct compliance costs on Indian Tribal governments, and is not required by statute, or preempts Tribal law, unless the agency meets the consultation and funding requirements of section 5 of the Executive order. This proposed rule does not have substantial direct effects on one or more federally recognized Indian tribes and does not impose substantial direct compliance costs on Indian Tribal governments within the meaning of the Executive order.
Before these proposed amendments to the regulations are adopted as final regulations, consideration will be given to comments regarding the notice of proposed rulemaking that are submitted timely to the IRS as prescribed in the preamble under the
A public hearing with respect to this notice of proposed rulemaking has been scheduled for August 12, 2024, beginning at 10 a.m. (ET) and August 13, 2024, at 10 a.m. (ET). The hearing scheduled for August 12, 2024, will be held in the Auditorium at the Internal Revenue Building, 1111 Constitution Avenue NW, Washington, DC Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 30 minutes before the hearing starts. Participants may alternatively attend the public hearing on August 12, 2024, by telephone. On August 13, 2024, the public hearing will be by telephone only.
The rules of 26 CFR 601.601(a)(3) apply to the public hearing. Persons who wish to present oral comments at the public hearing must submit an
Individuals who want to testify in person at the public hearing must send an email to
Individuals who want to testify by telephone at the public hearing must send an email to
Individuals who want to attend the public hearing in person without testifying must also send an email to
Individuals who want to attend the public hearing by telephone without testifying must also send an email to
Public hearings will be made accessible to people with disabilities. To request special assistance during a public hearing please contact the Publications and Regulations Branch of the Office of Associate Chief Counsel (Procedure and Administration) by sending an email to
Guidance cited in this preamble is published in the Internal Revenue Bulletin and is available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at
The principal author of these proposed regulations is the Office of the Associate Chief Counsel (Passthroughs and Special Industries). However other personnel from the Treasury Department, the DOE, the EPA, the USDA, and the IRS participated in the development of the proposed regulations.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, the Treasury Department and the IRS propose to amend 26 CFR part 1 as follows:
26 U.S.C. 7805 * * *
Section 1.45Y-1 also issued under 26 U.S.C. 45Y(a), (c), (d), and (g).
Section 1.45Y-2 also issued under 26 U.S.C. 45Y(b) and (e).
Section 1.45Y-3 also issued under 26 U.S.C. 45Y(a) and (g).
Section 1.45Y-4 also issued under 26 U.S.C. 45Y(b) and (g).
Section 1.45Y-5 also issued under 26 U.S.C. 45Y(b).
Section 1.48E-1 also issued under 26 U.S.C. 48E(a) and (c).
Section 1.48E-2 also issued under 26 U.S.C. 48E(b) and (c).
Section 1.48E-3 also issued under 26 U.S.C. 48E(a) and (b).
Section 1.48E-4 also issued under 26 U.S.C. 48E(b), (d), and (g).
Section 1.48E-5 also issued under 26 U.S.C. 48E(b).
This section lists the captions contained in §§ 1.45Y-1 through 1.45Y-5.
(a) Overview.
(1) In general.
(2) CHP property.
(i) In general.
(ii) Components excluded.
(iii) Unit of qualified facility.
(3) Code.
(4) kWh.
(5) Metering device.
(i) In general.
(ii) Standards for maintaining and operating a metering device.
(iii) Network equipment.
(iv) Examples.
(6) Qualified facility.
(7) Related person.
(i) In general.
(ii) Member of a consolidated group.
(8) Secretary.
(9) Section 45Y credit.
(10) Section 45Y regulations.
(11) Unrelated person.
(b) Credit amount.
(1) In general.
(2) Applicable amount.
(i) In general.
(ii) Base amount.
(iii) Alternative amount.
(3) Inflation adjustment.
(i) In general.
(ii) Annual computation.
(iii) Inflation adjustment factor.
(iv) GDP implicit price deflator.
(4) Energy communities increase in credit.
(5) Domestic content bonus credit amount.
(c) Credit phase-out.
(1) In general.
(2) Phase-out percentage.
(3) Applicable year.
(4) Phase-out data.
(5) Determination of phase-out.
(d) Requirements for CHP property.
(1) In general.
(2) Energy efficiency percentage.
(3) Special rule for calculating electricity produced by CHP property.
(i) In general.
(ii) Conversion from Btu to kWh.
(e) Applicability date.
(a) Qualified facility.
(b) Property included in qualified facility.
(1) In general.
(2) Unit of qualified facility.
(i) In general.
(ii) Functionally interdependent.
(3) Integral part.
(i) In general.
(ii) Power conditioning and transfer equipment.
(iii) Roads.
(iv) Fences.
(v) Buildings.
(vi) Shared integral property.
(vii) Examples.
(c) Coordination with other credits.
(1) In general.
(2) Allowed.
(3) Examples.
(d) Applicability date.
(a) Only production in the United States taken into account.
(b) Production attributable to the taxpayer.
(1) In general.
(2) Example of gross sales.
(3) Section 761(a) election.
(c) Expansion of facility; Incremental production.
(1) In general.
(2) Special rule for restarted facilities.
(3) Computation of increased amount of electricity produced.
(4) Examples.
(d) Retrofit of an existing facility (80/20 Rule).
(1) In general.
(2) Cost of new components of property.
(3) Examples.
(e) Applicability date.
(a) In general.
(b) Definitions.
(1) CO
(2) Combustion.
(3) Gasification.
(4) Facility that produces electricity through combustion or gasification.
(5) Greenhouse gas emissions rate.
(6) Greenhouse gases emitted into the atmosphere by a facility in the production of electricity.
(7) Non-C&G Facility.
(8) Fuel.
(9) Feedstock.
(c) Non-C&G Facilities.
(1) Determining a greenhouse gas emissions rate for Non-C&G Facilities.
(i) Excluded emissions.
(ii) Emissions assessment process.
(iii) Example of greenhouse gas emissions rate determination for a Non-C&G Facility.
(2) Non-C&G Facilities with a greenhouse gas emissions rate that is not greater than zero.
(d) C&G Facilities.
(1) Determining a greenhouse gas emissions rate for C&G Facilities.
(2) LCA requirements.
(i) Starting boundary.
(ii) Ending boundary.
(iii) Baseline.
(iv) Offsets and offsetting activities.
(v) Principles for included emissions.
(vi) Principles for excluded emissions.
(vii) Alternative fates and avoided emissions.
(e) Carbon capture and sequestration.
(f) Annual publication of emissions rates.
(1) In general.
(2) Publication of analysis required for changes to the Annual Table.
(g) Provisional emissions rates.
(1) In general.
(2) Rate not established.
(3) Process for filing a PER petition.
(4) PER determination.
(5) Emissions value request process.
(6) LCA model for determining an emissions value for C&G Facilities.
(7) Effect of PER.
(h) Reliance on Annual Table or Provisional Emissions Rate.
(i) Substantiation.
(1) In general.
(2) Sufficient substantiation.
(j) Applicability date.
(a)
(2)
(ii)
(iii)
(3)
(4)
(5)
(ii)
(iii)
(iv)
(A)
(B)
(6)
(7)
(ii)
(8)
(9)
(10)
(11)
(b)
(2)
(ii)
(iii)
(3)
(ii)
(iii)
(A) The numerator of which is the GDP implicit price deflator for the preceding calendar year, and
(B) The denominator of which is the GDP implicit price deflator for the calendar year 1992.
(iv)
(4)
(5)
(c)
(i) The amount of the credit determined under section 45Y(a) and described in paragraph (b) of this section, without regard to section 45Y(d) and this paragraph (c), multiplied by
(ii) The phase-out percentage provided under section 45Y(d)(2) and described in paragraph (c)(2) of this section.
(2)
(i) For a facility the construction of which begins during the first calendar year following the applicable year, 100 percent,
(ii) For a facility the construction of which begins during the second calendar year following the applicable year, 75 percent,
(iii) For a facility the construction of which begins during the third calendar year following the applicable year, 50 percent, and
(iv) For a facility the construction of which begins during any calendar year subsequent to the calendar year described in paragraph (c)(2)(iii) of this section, 0 percent.
(3)
(i) The calendar year in which the Secretary makes the determination that the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2022, or
(ii) 2032.
(4)
(i) The U.S. Energy Information Administration's Electric Power Annual, summing the annual carbon dioxide emissions data from conventional power plants and combined heat and power plants and the Monthly Energy Review annual carbon dioxide emissions from the combustion of biomass to produce electricity in the Electric Power Sector; and
(ii) The U.S. Environmental Protection Agency (EPA) Inventory of U.S. Greenhouse Gas Emissions and Sinks (GHGI) annual electric power-related carbon dioxide, methane, and nitrous oxide emissions data including carbon dioxide emissions from the combustion of biomass to produce electricity.
(5)
(d)
(2)
(3)
(ii)
(B)
(e)
(a)
(1) The facility is used for the generation of electricity,
(2) The facility is placed in service after December 31, 2024, and
(3) The facility has a greenhouse gas emissions rate of not greater than zero
(b)
(2)
(ii)
(3)
(ii)
(iii)
(iv)
(v)
(A) A structure that is essentially an item of machinery or equipment; and
(B) A structure that houses components of property that are integral to the intended function of a qualified facility if the use of the structure is so closely related to the use of the housed components of property therein that the structure clearly can be expected to be replaced if the components of property it initially houses are replaced.
(vi)
(vii)
(A)
(B)
(C)
(D)
(c)
(2)
(3)
(i)
(ii)
(iii)
(iv)
(d)
(a)
(b)
(2)
(3)
(c)
(2)
(i) The existing facility must have ceased operations;
(ii) The existing facility must have a shutdown period of at least one calendar year during which it is without a valid operating license from its respective Federal regulatory authority (that is, the Federal Energy Regulatory Commission (FERC) or the Nuclear Regulatory Commission (NRC); and
(iii) The increased capacity of the restarted facility must have a new, reinstated, or renewed operating license issued by either FERC or NRC.
(3)
(4)
(i)
(ii)
(d)
(2)
(3)
(i)
(ii)
(iii)
(iv)
(e)
(a)
(b)
(1)
(2)
(3)
(4)
(5)
(6)
(i) Emissions from electricity production by back-up generators that are primarily used in maintaining critical systems in case of a power system outage or for supporting restart of a generator after an outage.
(ii) Emissions from routine operational and maintenance activities that are integral to the production of electricity, including, but not limited to, emissions from internal combustion vehicles used to access and perform maintenance on remote electricity generating facilities or emissions occurring from heating and cooling control rooms or dispatch centers.
(iii) Emissions from a step-up transformer that conditions the electricity into a form suitable for productive use or sale.
(iv) Emissions that occur before commercial operations commence or after commercial operations terminate, including, but not limited to, on-site emissions occurring from construction
(v) Emissions from infrastructure associated with the facility, including, but not limited to, emissions from road construction for feedstock production.
(vi) Emissions from the distribution of electricity to consumers.
(7)
(8)
(9)
(c)
(i)
(A) Emissions from hydropower reservoirs due to anoxic conditions;
(B) Ebullitive, diffuse, and degassing emissions from hydropower operations;
(C) Emissions of non-condensable gases from underground reservoirs during geothermal operations; and
(D) Emissions occurring due to activities and operations occurring off-site, including but not limited to, the production and transportation of fuels used by the facility, or land use change from siting or changes in demand.
(ii)
(iii)
(A)
(B)
(2)
(i) Wind (including small wind properties);
(ii) Hydropower (including retrofits that add electricity production to non-powered dams, conduit hydropower, hydropower using new impoundments, and hydropower using diversions such as a penstock or channel);
(iii) Marine and hydrokinetic;
(iv) Solar (including photovoltaic and concentrated solar power);
(v) Geothermal (including flash and binary plants);
(vi) Nuclear fission;
(vii) Nuclear fusion; and
(viii) Waste energy recovery property that derives energy from a source described in paragraphs (c)(2)(i) through (vii) of this section.
(d)
(2)
(i)
(ii)
(iii)
(iv)
(v)
(A)
(
(
(
(
(
(B)
(vi)
(A) Emissions from facility construction, siting or decommissioning (including on-site emissions occurring from construction or manufacturing of the facility itself);
(B) Emissions from facility maintenance (including emissions from the on and offsite construction or maintenance of the facility; emissions from vehicles used to access and perform maintenance on electricity generating facilities; emissions from back-up generators that do not provide additional firm power and are used in maintaining critical systems in case of a power system outage or for supporting restart of a generator after an outage; and emissions occurring from heating and cooling control rooms or dispatch centers);
(C) Emissions from infrastructure associated with the facility (including emissions from road construction for feedstock production and emissions from onsite backup or emergency generators used in an emergency or unplanned outage); and
(D) Emissions from the distribution of electricity to consumers.
(vii)
(e)
(f)
(2)
(g)
(2)
(3)
(4)
(5)
(6)
(7)
(h)
(i)
(2)
(j)
This section lists the captions contained in §§ 1.48E-1 through 1.48E-5.
(a) Overview.
(1) In general.
(2) Code.
(3) EST.
(4) kWh.
(5) Qualified facility.
(6) Qualified investment with respect to a qualified facility.
(7) Qualified investment with respect to EST.
(8) Secretary.
(9) Section 48E credit.
(10) Section 48E regulations.
(b) Credit amount.
(1) In general.
(2) Applicable percentage.
(3) Base rate.
(4) Alternative rate.
(5) Energy communities increase in credit rate.
(i) In general.
(ii) Applicable credit rate increase.
(6) Domestic content increase in credit rate.
(i) In general.
(ii) Applicable credit rate increase.
(c) Credit phase-out.
(1) In general.
(2) Phase-out percentage.
(3) Applicable year.
(d) Applicability date.
(a) Qualified facility.
(b) Property included in qualified facility.
(1) In general.
(2) Unit of qualified facility.
(i) In general.
(ii) Functionally interdependent.
(3) Integral part.
(i) In general.
(ii) Power conditioning and transfer equipment.
(iii) Roads.
(iv) Fences.
(v) Buildings.
(vi) Shared integral property.
(vii) Examples.
(c) Coordination with other credits.
(1) In general.
(2) Allowed.
(3) Examples.
(d) Qualified investment with respect to a qualified facility.
(e) Qualified property.
(1) In general.
(2) Location of qualified property.
(f) Definitions related to requirements for qualified property.
(1) Tangible personal property.
(2) Other tangible property.
(3) Construction, reconstruction, or erection of qualified property.
(4) Acquisition of qualified property.
(5) Original use of qualified property.
(i) In general.
(ii) Retrofitted qualified facility.
(6) Depreciation allowable.
(i) In general.
(ii) Exclusions from allowable.
(7) Placed in service.
(i) In general.
(ii) Qualified facility subject to § 1.48-4 election to treat lessee as purchaser.
(8) Claim.
(g) EST.
(1) Property included in EST.
(2) Unit of EST.
(i) In general.
(ii) Functionally interdependent.
(3) Integral part.
(4) Qualified investment with respect to EST.
(5) Placed in service.
(i) In general.
(ii) EST subject to § 1.48-4 election to treat lessee as purchaser.
(6) Types of EST.
(i) Electrical energy storage property.
(ii) Thermal energy storage property.
(iii) Hydrogen energy storage property.
(7) Modification of EST.
(8) Claim.
(h) Applicability date.
(a) Rules for certain lower-output qualified facilities to include qualified interconnection costs in the basis of associated qualified facility.
(1) In general.
(2) Qualified interconnection property.
(3) Five-Megawatt Limitation.
(i) In general.
(ii) Nameplate capacity for purposes of the Five-Megawatt Limitation.
(4) Interconnection agreement.
(5) Utility.
(6) Reduction to amounts chargeable to capital account.
(7) Examples.
(b) Expansion of facility; Incremental production.
(1) In general.
(2) Special rule for restarted facilities.
(3) Computation of qualified investment for a new unit or an addition of capacity.
(i) New unit.
(ii) Addition of capacity.
(4) Examples.
(c) Retrofit of an existing facility (80/20 Rule).
(1) In general.
(2) Expenditures taken into account.
(3) Cost of new components.
(4) New costs.
(5) Excluded costs.
(6) Examples.
(d) Special rules regarding ownership.
(1) Qualified investment with respect to a qualified facility or EST.
(2) Multiple owners.
(3) Section 761(a) election.
(4) Related taxpayers.
(i) Definition.
(ii) Related taxpayer rule.
(5) Examples.
(e) Coordination rule for section 42 credits and section 48E credits.
(f) Recapture.
(1) In general.
(2) Recapture event.
(i) In general.
(ii) Changes to the Annual Table.
(iii) Yearly determination.
(iv) Carryback and carryforward adjustments.
(3) Recapture amount.
(i) In general.
(ii) Applicable recapture percentage.
(4) Recapture period.
(5) Increase in tax for recapture.
(g) Cross references.
(h) Applicability date.
(a) In general.
(b) Definitions.
(c) Non-C&G Facilities.
(d) C&G Facilities.
(e) Carbon capture and sequestration.
(f) Annual publication of emissions rates.
(g) Provisional emissions rates.
(1) In general.
(2) Rate not established.
(3) Process for filing a PER petition.
(4) PER determination.
(5) Emissions value request process.
(6) LCA model for determining an emissions value for C&G Facilities.
(7) Effect of PER.
(h) Determining anticipated greenhouse gas emissions rate.
(1) In general.
(2) Examples of objective indicia.
(i) Reliance on Annual Table or Provisional Emissions Rate.
(j) Substantiation.
(1) In general.
(2) Sufficient substantiation.
(k) Applicability date.
(a)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(b)
(2)
(3)
(4)
(5)
(ii)
(6)
(ii)
(c)
(i) The amount of the credit determined under section 48E(a) and paragraph (b) of this section without regard to section 48E(e) and paragraph (c) of this section, multiplied by
(ii) The phase-out percentage under section 48E(e)(2) and paragraph (c)(2) of this section.
(2)
(i) For any qualified investment with respect to any qualified facility or EST the construction of which begins during the first calendar year following the applicable year, 100 percent,
(ii) For any qualified investment with respect to any qualified facility or EST the construction of which begins during the second calendar year following the applicable year, 75 percent,
(iii) For any qualified investment with respect to any qualified facility or EST the construction of which begins during the third calendar year following the applicable year, 50 percent, and
(iv) For any qualified investment with respect to any qualified facility or EST the construction of which begins during any calendar year subsequent to the calendar year described in paragraph (c)(2)(iii) of this section, 0 percent.
(3)
(d)
(a)
(1) The facility is used for the generation of electricity;
(2) The facility is placed in service by the taxpayer after December 31, 2024; and
(3) The facility has a greenhouse gas emissions rate of not greater than zero (as determined under rules provided in § 1.45Y-5).
(b)
(2)
(ii)
(3)
(ii)
(iii)
(iv)
(v)
(A) A structure that is essentially an item of machinery or equipment; and
(B) A structure that houses components of property that is integral to the intended function of the qualified facility if the use of the structure is so closely related to the use of the housed components of property therein that the structure clearly can be expected to be replaced if the components of property it initially houses are replaced.
(vi)
(vii)
(A)
(B)
(C)
(D)
(c)
(2)
(3)
(i)
(ii)
(iii)
(d)
(1) The basis of any qualified property (as defined in paragraph (e)(1) of this section) placed in service by the taxpayer during such taxable year that is part of a qualified facility (as defined in paragraph (a) of this section); and
(2) The amount of any expenditures paid or incurred by the taxpayer for qualified interconnection property (as defined in § 1.48E-4(a)(2)).
(e)
(i) The property is tangible personal property (as defined in paragraph (f)(1) of this section) or other tangible property (not including a building or its structural components) (as defined in paragraph (f)(2) of this section), but only if such other tangible property is used as an integral part of the qualified facility;
(ii) Depreciation (or amortization in lieu of depreciation) is allowable (as defined paragraph (f)(6) of this section) with respect to the property; and
(iii) Either—
(A) The construction, reconstruction, or erection of the property is completed by the taxpayer (as defined in paragraph (f)(3) of this section); or
(B) The taxpayer acquires the property (as defined in paragraph (f)(4) of this section) if the original use of the property (as defined paragraph (f)(5) of this section) commences with the taxpayer.
(2)
(f)
(1)
(2)
(3)
(4)
(i) Title to the qualified property under the law of the jurisdiction in which the qualified property is placed in service, unless the qualified property is possessed or controlled by the taxpayer as a lessee, and
(ii) Physical possession or control of the qualified property.
(5)
(ii)
(6)
(ii)
(7)
(A) The taxable year in which, under the taxpayer's depreciation practice, the period for depreciation with respect to such qualified facility begins; or
(B) The taxable year in which the qualified facility is placed in a condition or state of readiness and availability to produce electricity, whether in a trade or business or in the production of income. A qualified facility in a condition or state of readiness and availability to produce electricity includes, but is not limited to, components of property that are acquired and set aside during the taxable year for use as replacements for a particular qualified facility (or facilities) in order to avoid operational time loss and equipment that is acquired for a specifically assigned function and is operational but is undergoing testing to eliminate any defects. However, components of property acquired to be used in the construction of a qualified facility are not considered in a condition or state of readiness and availability for a specifically assigned function.
(ii)
(8)
(g)
(2)
(ii)
(3)
(4)
(5)
(A) The taxable year in which, under the taxpayer's depreciation practice, the period for depreciation with respect to such EST begins; or
(B) The taxable year in which the EST is placed in a condition or state of readiness and availability for the intended function of the EST, whether in a trade or business or in the production of income. An EST in a condition or state of readiness and availability for its intended function includes, but is not limited to, components of property that are acquired and set aside during the taxable year for use as replacements for a particular EST (or ESTs) in order to avoid operational time loss and equipment that is acquired for a specifically assigned function and is operational but is undergoing testing to eliminate any defects. However, components of property acquired to be used in the construction of an EST are not considered in a condition or state of readiness and availability for a specifically assigned function.
(ii)
(6)
(ii)
(iii)
(7)
(i) Was placed in service before August 16, 2022, and would be described in section 48(c)(6)(A)(i), except that such property had a capacity of less than 5 kWh and is modified in a manner that such property (after such modification) has a nameplate capacity of not less than 5 kWh; or
(ii) Is described in section 48(c)(6)(A)(i) and is modified in a manner that such property (after such modification) has an increase in nameplate capacity of not less than 5 kWh.
(8)
(h)
(a)
(2)
(3)
(ii)
(4)
(5)
(6)
(7)
(i)
(ii)
(b)
(2)
(i) The existing facility must have ceased operations;
(ii) The existing facility must have a shutdown period of at least one calendar year during which it is without a valid operating license from its respective Federal regulatory authority (that is, the Federal Energy Regulatory Commission (FERC) or the Nuclear Regulatory Commission (NRC)); and
(iii) The increased capacity of the restarted facility must have a new, reinstated, or renewed operating license issued by either FERC or NRC.
(3)
(ii)
(4)
(i)
(ii)
(c)
(2)
(3)
(4)
(5)
(6)
(i)
(ii)
(iii)
(iv)
(d)
(2)
(3)
(4)
(ii)
(5)
(i)
(ii)
(iii)
(e)
(f)
(2)
(ii)
(iii)
(B)
(iv)
(3)
(ii)
(A) Within one full year after the property is placed in service, the recapture percentage is 100;
(B) Within one full year after the close of the period described in paragraph (f)(3)(ii)(A) of this section, the recapture percentage is 80;
(C) Within one full year after the close of the period described in paragraph (f)(3)(ii)(B) of this section, the recapture percentage is 60;
(D) Within one full year after the close of the period described in paragraph (f)(3)(ii)(C) of this section, the recapture percentage is 40;
(E) Within one full year after the close of the period described in paragraph (f)(3)(ii)(D) of this section, the recapture percentage is 20.
(4)
(5)
(g)
(2) For rules regarding the credit eligibility of property used outside the United States, see section 50(b)(1) of the Code.
(3) For rules regarding the credit eligibility of property used by certain tax-exempt organizations, see section 50(b)(3) of the Code. See section 6417(d)(2) of the Code for an exception to this rule in the case of an applicable entity making an elective payment election.
(4) For application of the normalization rules to the section 48E credit in the case of certain regulated companies, including rules regarding
(5) For rules relating to certain leased property, see section 50(d)(5) of the Code.
(h)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(2)
(3)
(4)
(5)
(6)
(7)
(h)
(2)
(i) Co-location of the facility with a fuel source (for example, an anaerobic digester) for which the combination of fuel, type of facility, and practice is reasonably expected to result in a greenhouse gas emissions rate that is not greater than zero;
(ii) A 10-year contract to purchase fuels for which the combination of fuel, type of facility, and practice is reasonably expected to result in a greenhouse gas emissions rate that is not greater than zero;
(iii) A facility type that only accommodates one type of fuel or a small range of fuels for which the combination of fuel, type of facility, and practice is reasonably expected to result in a greenhouse gas emissions rate that is not greater than zero; or
(iv) A 10-year contract for the capture, disposal, or utilization of qualified carbon dioxide from the facility for which the combination of fuel, type of facility, and practice is reasonably expected to result in a greenhouse gas emissions rate that is not greater than zero.
(i)
(j)
(2)
(k)