I. Background

Section 210 of the Economic Growth Act  1 amended section 10(d) of the FDI Act  2 to permit the agencies to examine qualifying IDIs (generally, those IDIs that are well capitalized and well managed) with under $3 billion in total assets not less than once during each 18-month period, rather than not less than once during each 12-month period. Prior to the enactment of the Economic Growth Act, only qualifying IDIs with under $1 billion in total assets were eligible for an 18-month on-site examination cycle. 3

On August 29, 2018, the agencies issued interim final rules to implement the Economic Growth Act's amendments to sections 10(d)(4) and 10(d)(10) of the FDI Act  4 that allow qualifying IDIs with under $3 billion in total assets to benefit from the extended 18-month examination cycle. In addition, the interim final rules made parallel changes to the agencies' regulations governing the on-site examination cycle for U.S. branches and agencies of foreign banks, consistent with the IBA. 5

Section 10(d)(1) of the FDI Act  6 generally requires the appropriate Federal banking agency for an IDI  7 to conduct a full-scope, on-site examination of an IDI at least once during each 12-month period. With the enactment of section 210 of the Economic Growth Act, section 10(d)(4) of the FDI Act authorizes the appropriate Federal banking agency to extend the on-site examination cycle for an IDI to at least once during an 18-month period if the IDI (1) has total assets of less than $3 billion; (2) is well capitalized (as defined in 12 U.S.C. 1831o (prompt corrective action)); (3) was found, at its most recent examination, to be well managed  8 and to have a composite condition of “outstanding” or, in the case of an IDI with total assets of not more than $200 million, “outstanding” or “good;” (4) is not subject to a formal enforcement proceeding or order by the FDIC or its appropriate Federal banking agency; and (5) has not undergone a change in control during the previous 12-month period in which a full-scope, on-site examination otherwise would have been required. The Economic Growth Act also amended section 10(d)(10) of the FDI Act to give each appropriate Federal banking agency discretionary authority to extend eligibility for an 18-month examination cycle, by regulation, to qualifying IDIs with an “outstanding” or “good” composite condition and total assets not greater than $3 billion, if the agency determines that this amount would be consistent with the principles of safety and soundness for IDIs. 9

In addition, section 7(c)(1)(C) of the IBA provides that a Federal or a State branch or agency of a foreign bank shall be subject to on-site examination by its appropriate Federal banking agency or State bank supervisor as frequently as a national or State bank would be subject to such an examination by the agency.

The agencies received three comment letters addressing the interim final rules, two from trade associations and one from a multi-bank financial holding company. All three letters were supportive of the interim final rules.

After considering the comments on the interim final rules, the agencies are adopting the interim final rules as final without change. The final rules, like the interim final rules implement section 10(d)(4) of the FDI Act to increase, from $1 billion to $3 billion, the total asset threshold under which an agency may apply an 18-month on-site examination cycle for qualified IDIs that have an “outstanding” composite rating.

The agencies also are exercising their discretionary authority under section 10(d)(10) of the FDI Act to extend eligibility for an 18-month examination cycle, by regulation, to qualifying IDIs with an “outstanding” or “good” composite rating with total assets under $3 billion. The agencies have determined that increasing the maximum asset amount limitation for qualifying IDIs with less than $3 billion in total assets is consistent with the principles of safety and soundness.

In determining whether the reduction in examination frequency is consistent with the principles of safety and soundness for such IDIs, the agencies considered several factors. The agencies acknowledge that extending the examination cycle could make it more likely that there will be a delay in an agency's ability to detect deterioration in an IDI's performance. However, the agencies believe that extending the examination cycle from 12 months to 18 months for these small IDIs with relatively simple risk profiles should not appreciably increase their risk of financial deterioration or failure. In addition, the agencies will continue their off-site monitoring activities and have the ability to examine IDIs more frequently as necessary or appropriate. The agencies also note that, in order to qualify for an 18-month examination cycle, any IDI with total assets under $3 billion—including one with a composite rating of “good”—must meet the other capital, managerial, and supervisory criteria set forth in section 10(d) of the FDI Act and the agencies' implementing regulations.

Considering the agencies' off-site monitoring activities; their discretion to examine IDIs more frequently as necessary; and the capital, managerial, and supervisory criteria in section 10(d) of the FDI Act, the agencies believe that increasing the maximum asset amount limitation for IDIs from less than $1 billion to less than $3 billion is consistent with the principles of safety and soundness. Additionally, the agencies expect that this increase will allow the agencies to better focus their supervisory resources on the IDIs and U.S. branches and agencies of foreign banks (collectively, financial institutions) that may present capital, managerial, or other issues of supervisory concern, and therefore, the final rules have the potential to enhance safety and soundness collectively for all financial institutions. The agencies will continue to monitor financial institutions in this asset range between examinations and the impact of the extended examination cycle.

In accordance with section 7(c)(1)(C) of the IBA, the agencies also are finalizing conforming changes to their regulations governing the on-site examination cycle for the U.S. branches and agencies of foreign banks. For the same reasons as discussed above with respect to qualifying IDIs, the agencies believe that extending similar treatment to qualifying U.S. branches and agencies of foreign banks is consistent with the principles of safety and soundness.

Based on data available at publication, the agencies estimate that the number of banks and savings associations that may qualify for an extended 18-month examination cycle increased by approximately 430 (241 of which are supervised by the FDIC, 99 by the OCC, and 90 by the Board), bringing the total number to 4,706 banks and savings associations since the interim rules took effect. 10 Approximately 30 U.S. branches and agencies of foreign banks would be eligible for the extended examination cycle based on the final rules (2 of which are supervised by the FDIC, 8 by the OCC, and 20 by the Board). 11

For all the reasons described above, the agencies are adopting the interim final rules as final without change.

The Administrative Procedure Act (APA) generally requires that a final rule be published in the Federal Register no less than 30 days before its effective date. 12 Therefore, the final rules will become effective on January 28, 2019. The interim final rules will continue to be in effect until the final rules become effective.

Section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA) requires that each Federal banking agency, in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosures, or other requirements on IDIs, consider, consistent with the principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. 13 Further, new regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally must take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form. 14 The RCDRIA does not apply to the final rules because the rules do not impose any additional reporting, disclosures, or other new requirements on IDIs.

Section 722 of the Gramm-Leach-Bliley Act  15 requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The agencies' staff believe the final rules are presented in a simple and straightforward manner. Having received no comments with respect to making the interim final rules easier to understand, the agencies are adopting the final rules without change.

The Regulatory Flexibility Act (RFA)  16 requires an agency to consider whether the rules it proposes will have a significant economic impact on a substantial number of small entities. 17 The RFA applies only to rules for which an agency publishes a general notice of proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed in the joint interim final rules, consistent with section 553(b)(B) of the APA, the agencies determined for good cause that general notice and opportunity for public comment was unnecessary, and therefore the agencies did not issue a notice of proposed rulemaking. Accordingly, the agencies have concluded that the RFA's requirements relating to initial and final regulatory flexibility analysis do not apply. Further, the agencies note that no small entities, as defined by the Small Business Administration's rules implementing the RFA, will be affected by the final rules' increased asset thresholds.

The Paperwork Reduction Act of 1995  18 states that no agency may conduct or sponsor, nor is the respondent required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. Because the final rules do not create a new, or revise an existing, collection of information, no information collection request submission needs to be made to the OMB.

Consistent with section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA), before promulgating any final rule for which a general notice of proposed rulemaking was published, the OCC prepares an economic analysis of the final rules. Because the OCC determined that the publication of a general notice of proposed rulemaking was unnecessary, the OCC has not prepared an economic analysis of the joint final rules under UMRA.

Discussion

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2018-0246, dated November 13, 2018 (“EASA AD 2018-0246”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus SAS Model A350-941 and -1041 airplanes. The MCAI states:

EASA AD 2018-0246 describes procedures for revising the AFM to incorporate procedures related to an APU bleed leak. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section, and it is publicly available through the EASA website.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI referenced above. We are issuing this AD because we evaluated all pertinent information and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.

This AD requires accomplishing the actions specified in EASA AD 2018-0246 described previously.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA worked with Airbus and EASA to develop a process to use certain EASA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. As a result, EASA AD 2018-0246 will be incorporated by reference in the FAA final rule. This AD would, therefore, require compliance with the provisions specified in EASA AD 2018-0246, except for any differences identified as exceptions in the regulatory text of this AD. Service information specified in EASA AD 2018-0246 that is required for compliance with EASA AD 2018-0246 will be available at http://www.regulations.gov under Docket No. FAA-2018-1062 after the FAA final rule is published.

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because an issue with the FWS logic makes it possible that the “AIR APU BLEED LEAK” ECAM alert can trigger several times. An engine bleed reset in response to the ECAM alert could lead to exposure of critical locations and the surrounding structure to heat stress, possibly resulting in reduced structural integrity of the airplane. Therefore, we find good cause that notice and opportunity for prior public comment are impracticable. In addition, for the reason(s) stated above, we find that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. We invite you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2018-1062; Product Identifier 2018-NM-163-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD based on those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this AD.

We estimate that this AD affects 11 airplanes of U.S. registry. We estimate the following costs to comply with this AD:

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

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

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.

We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

3. Will not affect intrastate aviation in Alaska; and

4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

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

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain The Boeing Company Model 777 airplanes. The NPRM published in the Federal Register on March 8, 2016 (81 FR 12039). The NPRM was prompted by reports of latently failed engine fuel shutoff spar valves discovered during fuel filter replacement. The NPRM proposed to require replacing certain MOV actuators with MOV actuators having a certain acceptable part number on both airline information management system (AIMS) Version 1- and 2-equipped airplanes, or installing a newer software version on AIMS Version 2-equipped airplanes.

We issued a SNPRM to amend 14 CFR part 39 by adding an AD that would apply to certain The Boeing Company Model 777 airplanes. The SNPRM published in the Federal Register on August 21, 2017 (82 FR 39545). We issued the SNPRM to add a part number inspection, add an AWL, and specify new AIMS software.

We are issuing this AD to address latent failure of the fuel shutoff spar valve to the engine, which could result in the inability to terminate fuel flow to the engine and, in the case of an engine fire, could lead to wing failure.

We gave the public the opportunity to participate in developing this final rule. The following presents the comments received on the SNPRM and the FAA's response to each comment.

American Airlines (American) requested that we revise paragraph (g) of the proposed AD (in the SNPRM) to omit the requirement to inspect for the MOV actuator part numbers, and to reflect only the essential compliance requirements as stated in paragraphs (g)(1) and (g)(2) of the proposed AD (in the SNPRM) (the conditional requirements that depend on the part number found). The commenter stated that the inspection is not necessary to accomplish any of the compliance options and adds no value to the process.

We disagree with the request. The MOV actuator is a rotable part. Several previously approved and existing interchangeable MOV actuator part numbers may be installed at the engine fuel shutoff spar valve positions. The MOV actuator installed at the engine fuel shutoff spar valve positions at the time of airplane manufacture may have been later replaced by an MOV actuator of a different part number. Because an unsafe condition exists with certain part numbers, we have determined that it is necessary to control the method by which an operator may determine what part number is installed. In the absence of such a control, an operator might simply assume that the part number delivered with the airplane is still in place. The most positive method to verify the installed part number is to inspect the part. Alternatively, as stated in paragraph (g) of this AD, the FAA will accept verification through a maintenance records check if the records positively show the installed part number. We have not changed the AD regarding this issue.

American requested that we revise paragraph (g)(1) of the proposed AD (in the SNPRM) to include incorporation of new airworthiness limitation (AWL) 28-AWL-MOVA, which is specified in paragraph (h) of the proposed AD (in the SNPRM).

We disagree with the request. The commenter did not provide rationale for the requested change, but we infer their request was to have all required actions within paragraph (g) of this AD. We have determined that it is better to structure the AD by separating required actions that are discretely different into separate paragraphs. As such, all required actions associated with inspecting and replacing the affected MOV actuators are in paragraph (g) of this AD and all required actions associated with the AWL revisions are in paragraph (h) of this AD. Therefore, we find it unnecessary to change this AD regarding this issue.

Cathay Pacific noted a discrepancy in Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015. Some airplanes that subsequently installed AIMS-2 Block Point (BP) Version 17A software may no longer match the conditions for the service bulletin groups, and do not fit the criteria of either paragraph (g)(1) or (g)(2) of the proposed AD (in the SNPRM). Cathay Pacific therefore requested that we revise paragraph (g) of the proposed AD (in the SNPRM) to clarify that the inspection is required only on airplanes without AIMS-2 BP Version 17A software. The commenter reported that Boeing confirmed that the service bulletin will be revised to address this discrepancy.

We agree with the request. We had intended to exclude the inspection requirement for airplanes with AIMS-2 BP Version 17A software installed. We have therefore revised paragraph (g) of this AD to also state that no further action is required by paragraph (g) of this AD if AIMS-2 BP Version 17 or later software is installed, which also include AIMS-2 BP Versions 17.1 and 17A.

Delta Air Lines (Delta) requested that we revise paragraph (g)(2)(ii) of the proposed AD (in the SNPRM) to allow Boeing Service Bulletin 777-31-0275, dated June 8, 2017, as another method to use to install AIMS-2 BP Version 17A software or later-approved version. Delta explained that this service bulletin describes procedures for modifying the hardware and software related to converting from AIMS-1 to AIMS-2 software, including AIMS-2 BP Version 17A software. Delta added that Boeing Service Bulletin 777-31-0275 specifies installation of the same software as that specified in Boeing Service Bulletin 777-31-0218, and provides an equivalent level of safety to that of the SNPRM.

We partially agree with the request. We agree that installation of AIMS-2 BP Version 17A and later-approved software is an acceptable alternative to replacing the MOV actuator, because that software allows failure of any of the previously approved MOV actuator part numbers to be detected and annunciated by the airplane display system. However, we find it unnecessary to revise paragraph (g)(2)(ii) of this AD to add another acceptable method of compliance (Boeing Service Bulletin 777-31-0275) for the installation of AIMS-2 BP Version 17A software during conversion of an airplane from AIMS-1 to AIMS-2 software. Instead, we have revised paragraph (g) of this AD to clarify that no further action is required by paragraph (g) of this AD if AIMS-2 BP Version 17 or later software is installed.

American and Delta requested that we revise paragraph (j) of the proposed AD (in the SNPRM) to provide credit for installation of AIMS-2 BP Version 17A software. Delta noted a conflict between the “Actions Since the NPRM was Issued” section of the SNPRM (which specified the proposed AD would require installing AIMS-2 BP Version 17A software) and paragraph (j) of the proposed AD (in the SNPRM) (which specified credit for paragraph (g)(2)(ii) when AIMS-2 BP Version 17 or 17.1 software was installed before the effective date of this AD).

We agree to clarify that we have achieved similar results to the commenters request since we have clarified the multiple references to AIMS-2 BP Version 17 software in this AD, and that we have revised this AD to exclude airplanes with AIMS-2 BP Version 17 or later software installed from the requirements of paragraph (g) of this AD. Therefore, we have not changed paragraph (j) and have determined that no further change to the AD is necessary regarding this issue.

Boeing requested that we revise paragraph (h) of the proposed AD (in the SNPRM) to remove the requirement to incorporate the new AWL. Boeing noted that paragraphs (g)(1) and (g)(2)(i) of the proposed AD (in the SNPRM) would require inspection of all affected airplanes and replacement of all MOV actuators at the engine fuel shutoff spar valve positions with MOV actuators having P/N MA30A1017 (Boeing P/N S343T003-76). Boeing asserted that those proposed requirements would therefore be redundant with the proposed requirement of paragraph (h) of the proposed AD (in the SNPRM), since the AWL prohibits installation of MA20A2027 (Boeing P/N S343T003-56) and P/N MA30A1001 (Boeing P/N S343T003-66) MOV actuators at the engine fuel shutoff spar valve positions.

We disagree with the request. As previously explained in the SNPRM, the new AWL is necessary to prevent an airplane from being modified to a pre-AD condition. Although the AWL would prohibit installation of the MOV actuators at the engine fuel shutoff spar valve positions, these two MOV actuator part numbers may still be installed at other locations (as their failure in the other locations is of economic impact only), and could be inadvertently re-installed at the engine fuel shutoff spar valve positions. To address this concern, we added paragraph (h) to the proposed AD (in the SNPRM) to specify the incorporation of the new AWL. We have not changed this AD regarding this issue.

Delta recommended that we add details on how to conduct the maintenance or inspection program, such as inspection methods and repetitive intervals, in order to clarify the proposed requirements of paragraph (h) of the proposed AD (in the SNPRM). That proposed requirement would require revising the maintenance program to incorporate a new airworthiness limitation prohibiting the installation of certain MOV actuators, and to maintain this limitation in the operator's fleet maintenance program. Delta inferred that the purpose of the proposed requirement is to ensure that P/Ns MA30A1001 and MA20A2027 are not installed in the two engine fuel shutoff spar valve positions once the requirements of paragraph (g) of the AD have been complied with.

Delta stated that the requirement to incorporate a statement indicating that a part is prohibited is not a maintenance program. Delta stated that an aircraft maintenance program is not the appropriate way to do this, adding that a “parts prohibition” statement (including locations—left and right engine fuel shutoff spar valve positions, in this case) would be more appropriate to ensure that a specific part number is not installed in the future. Delta stated that similar parts prohibition statements are included in AD 2016-04-20, Amendment 39-18414 (81 FR 10460, March 1, 2016), and AD 2013-05-03, Amendment 39-17375 (78 FR 17290, March 21, 2013), such that operators could then add notes to the airplane illustrated parts catalog (IPC), aircraft maintenance manual (AMM), etc., to ensure that those parts are not installed at the specified location in the future.

We disagree with the request. An AWL containing a parts prohibition statement for a maintenance or inspection program has been required by other ADs, and is appropriate in this case. Paragraph (h) of this AD requires only the incorporation of the AWL item into the operator's fleet, not specific ways to accomplish the AWL task or comply with the restriction. Each operator is responsible for accomplishing the AWL task and maintaining the AWL restriction. Although a parts prohibition statement could be included in the AD, we chose to mandate this requirement via incorporation of an AWL to be consistent with the requirements of AD 2015-19-01, Amendment 39-18264 (80 FR 55521, September 16, 2015) (“AD 2015-19-01”). AD 2015-19-01 required revising the existing maintenance or inspection program to include a new AWL that required certain actions for The Boeing Company Model 777 airplanes with MOV actuators having P/N MA20A2027 or P/N MA30A1001 installed at the engine fuel shutoff spar valve positions. The prohibited MOV actuator part numbers at the engine fuel shutoff spar valve positions are still physically interchangeable with the acceptable part numbers and may be used in other valve locations, and they are expected to remain in operators' parts stores for a long period of time. We have not changed this AD regarding this issue.

Delta requested that we clarify the compliance time for incorporating the new AWL into the maintenance program, as specified in paragraph (h) of the proposed AD (in the SNPRM): 24 months after the effective date of the AD, and after accomplishing the actions required by (g). Delta recommended that the compliance time be changed to within 24 months after the effective date of the AD or after accomplishment of the actions required by paragraph (g)(1) or (g)(2)(i) of the AD, whichever occurs first. Delta also asked that we remove the condition “after accomplishing the actions required by paragraph (g) of this AD on all airplanes in an operator's fleet.” Delta stated that the current wording is unclear and appears to indicate operators must wait until the actions of paragraph (g) of the AD are complete on their Model 777 fleets before they can insert 28-AWL-MOVA into the maintenance program. Delta believes the FAA's intent is to put in place a part prohibition for MOV actuators at the engine fuel shutoff spar valve positions on applicable airplanes without AIMS-2 BP Version 17 software or later version, and that when the requirements of paragraph (g)(2)(ii) of the AD are completed, this AWL would no longer be applicable.

We agree with the request. We have revised the compliance time in paragraph (h) of this AD to “within 24 months after the effective date of the AD.” This allows operators to incorporate the new AWL into their maintenance program at any time within that 24-month period, without waiting until all required actions on all affected airplanes in the fleet are completed. This would also allow continued operation of an airplane if another airplane having the pre-AD configuration is introduced into an operator's fleet before the end of the compliance time, even if this were to occur after the accomplishment of the required actions on all other airplanes in the fleet.

FedEx requested that we exclude Model 777F series airplanes from the proposed requirements of paragraphs (g), (h), and (i) of the proposed AD (in the SNPRM). The service information, Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015, specifies that no work is necessary for airplanes in Group 7, which includes Model 777F series airplanes.

We disagree with the request. Even though the commenter is correct in that Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015, specifies that no work is necessary for airplanes in Group 7, which includes Model 777F series airplanes, the intent of this AD is to ensure that all airplanes identified in paragraph (c) of this AD, which includes Model 777F series airplanes and other Group 7 airplanes, address the unsafe condition through compliance with the requirements of the AD. Compliance with the requirements of paragraph (g) of this AD may be accomplished by installing a certain MOV actuator in accordance with Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015, or installing certain AIMS-2 BP Version 17 or later software in accordance with Boeing Service Bulletin 777-31-0218, dated September 8, 2016 (depending on configuration).

We have clarified the options available for some of the affected airplanes, i.e., Group 7 airplanes with AIMS-2 BP Version 16 or earlier software. Specifically, if the actions specified in paragraph (g)(2)(i) of this AD are done, Figures 35 and 37 of Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015, can be used for compliance regarding installation of the MOV actuator. Operators may also install AIMS-2 BP Version 17A software in accordance with paragraph (g)(2)(ii) of this AD. It is also necessary for operators of affected Boeing Model 777F airplanes to incorporate the AWL requirements specified in paragraph (h) of this AD.

The effectivity of Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015, incorrectly categorizes airplanes in Group 4 as only those with AIMS-1 software installed. We have confirmed with Boeing that Group 4 airplanes includes airplanes with AIMS-1 software or AIMS-2 BP Version 16 or earlier software; or AIMS-2 BP Version 17 or later software. The airplane variable number listing in the service information does include the AIMS-2 equipped airplanes. We have therefore clarified for the purposes of the requirements in paragraph (g)(2) of this AD to state that Group 4, as identified in Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015, includes airplanes with AIMS-1 software or AIMS-2 BP Version 16 or earlier software installed.

We have revised paragraph (i) in this AD to clarify that the requirements of AD 2015-19-01 may be terminated only when the requirements of paragraph (g) and (h) of this AD have been done on “all affected airplanes in an operator's fleet.”

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule with the changes described previously and minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the SNPRM for addressing the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the SNPRM.

We also determined that these changes will not increase the economic burden on any operator or increase the scope of this final rule.

We reviewed Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015. This service information describes procedures for, among other things, inspection and replacement of the MOV actuators at the engine fuel shutoff spar valve positions.

We also reviewed Boeing Service Bulletin 777-31-0218, dated September 8, 2016. This service information describes procedures for installing the AIMS-2 BP Version 17A software upgrade.

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

We estimate that this AD affects 154 airplanes of U.S. registry. We estimate the following costs to comply with this AD:

We have determined that revising the maintenance or inspection program takes an average of 90 work-hours per operator, although we recognize that this number may vary from operator to operator. In the past, we have estimated that this action takes 1 work-hour per airplane. Since operators incorporate maintenance or inspection program changes for their affected fleets, we have determined that a per-operator estimate is more accurate than a per-airplane estimate. Therefore, we estimate the total cost per operator to be $7,650 (90 work-hours × $85 per work-hour).

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

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

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

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

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),

(3) Will not affect intrastate aviation in Alaska, and

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

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all The Boeing Company Model 737-600, -700, -700C, -800, -900, and -900ER series airplanes. The NPRM published in the Federal Register on May 11, 2018 (83 FR 21948). The NPRM was prompted by reports of loose, worn, or missing attachment bolts for the MLG center door assemblies. The NPRM proposed to require repetitive detailed inspections of the forward and aft MLG center door assembly attachments for loose, missing, damaged, or bottomed-out attachment bolts, and any wear to the retention clip assemblies as applicable; and applicable on-condition actions. The NPRM also provided an optional terminating action for the repetitive inspections.

We are issuing this AD to address loose, missing, damaged, or bottomed-out attachment bolts, and any wear to the retention clip assemblies, which could result in departure of the center and inboard MLG door assemblies, subsequent damage to the main flap and horizontal stabilizer, and loss of control of the airplane.

We gave the public the opportunity to participate in developing this final rule. The following presents the comments received on the NPRM and the FAA's response to each comment.

Boeing and The Air Line Pilots Association, International, each stated that it concurred with the intent of the NPRM.

Alaska Airlines (Alaska) requested that changes be made to Boeing Special Attention Service Bulletin 737-52-1170, Revision 1, dated December 19, 2017 (“BSASB 737-52-1170, R1”). Alaska noted that operators cannot comply with the requirements specified in paragraph (g) of the proposed AD in cases where BSASB 737-52-1170, R1, directs the operator to inspect a Group 3 airplane using Figure 3 or Figure 4 of BSASB 737-52-1170, R1, because those figures are not applicable to Group 3 airplanes.

We agree with the commenter's observations concerning Figure 3 and Figure 4 of BSASB 737-52-1170, R1. We contacted Boeing and have determined that the actions for Group 2 airplanes are appropriate for all airplanes to comply with the requirements of paragraph (g) of this AD. We have revised paragraph (h) of this AD, “Exceptions to Service Information Specifications,” by adding paragraph (h)(2), which states that “Where BSASB 737-52-1170, R1, limits use of Figures 3 and 4 to Group 2 airplanes, for the purposes of this AD, those figures apply to all airplane groups.”

Alaska requested clarification of the requirements specified in paragraph (j) of the proposed AD and clarification of which airplane groups would be affected by these requirements. Alaska asked if “all actions for Group 3” means that this paragraph is for Group 3 airplanes only or for all airplane groups. Alaska also noted that an inspection of the “door assembly” implies an inspection of the door, but BSASB 737-52-1170, R1, describes procedures for inspection of the “door installation.”

We agree with the commenter's request and have revised paragraph (j) of this AD as follows:

American Airlines (American) requested that BSASB 737-52-1170, R1, be revised to include an identifying stencil or placard that could be placed on an affected MLG center door assembly once it has been modified. The commenter stated that the MLG center door assembly is a rotable part. However, neither the NPRM nor BSASB 737-52-1170, R1, addresses the issue of a post-modification MLG center door assembly being removed from an airplane and replaced with a pre-modification MLG center door assembly.

We acknowledge the commenter's concern that BSASB 737-52-1170, R1, does not address the rotability of an MLG center door assembly. We addressed the issue of rotability in this AD in two ways. First, the applicability in paragraph (c) of this AD includes all Model 737-600, -700, -700C, -800, -900, and -900ER series airplanes, not just the airplanes specified in the effectivity of BSASB 737-52-1170, R1. Second, we added paragraph (j) of this AD, “Parts Installation Limitation”.

While marking or part marking might provide some benefit for operator awareness and recordkeeping, the issue of rotability is approached in different ways by different operators. When there have been similar issues regarding rotable parts, operators expressed a preference to not have a requirement to mark and/or part mark, although operators may do this at their own discretion. We also note that this AD addresses not only the MLG center door assembly but also the attachments to the MLG strut assemblies. We have not changed this AD in regard to this issue.

Delta Air Lines (DAL) and SunExpress (SXS) requested that the compliance time specified in paragraph (g) of the proposed AD be extended. SXS requested that the compliance time for the initial inspection be extended from 12,000 total flight cycles to 20,000 total flight cycles, or from 800 flight cycles after the effective date of the proposed AD to 1,500 flight cycles after the effective date of the proposed AD, and that the interval for the repetitive inspection be extended from 5,500 flight cycles to 6,600 flight cycles. SXS stated that 41 airplanes in its fleet have exceeded 12,000 total flight cycles, and it would have a short period of time to perform the required inspection as described in BSASB 737-52-1170, R1, and it would have to operate some airplanes a long time without the MLG shock strut doors. SXS noted that performing operations without a MLG shock strut door incurs a fuel burn penalty, which is approximately 0.77% more fuel burned per flight.

DAL stated that the compliance time for the initial inspection would require them to inspect approximately 80 airplanes in a 200-day period, requiring them to accomplish the work for most of its airplanes in the line environment, which increases the risk for an “airplane on ground” situation if there is a finding on the MLG structure. DAL noted that BSASB 737-52-1170, R1, does not provide relief for operators when a crack or corrosion is found in the MLG lug after removal of the bushing. For an MLG that requires re-work, DAL typically removes the MLG, replaces it with another MLG, and sends the discrepant MLG to a shop for repair. We infer that DAL is requesting that the compliance time for the initial inspection be extended.

In addition, DAL pointed out that the procedures in BSASB 737-52-1170, R1, would restrict an operator from dispatching an affected airplane until corrective is taken to repair the MLG. DAL requested that this situation be considered in the final rule by providing a limited return to service. DAL stated that if several MLG lugs are found with discrepancies, there is the potential of the operator grounding airplanes outside of a heavy maintenance check to either replace the MLG gear or go through its spare parts inventory.

We do not agree with the commenters' requests. We appreciate the impact that the required actions and the associated compliance times will have on operators. However, both the FAA and Boeing have identified this issue as an unsafe condition, and the commenters have not provided substantiating data for their proposals. In addition, a limited return to service would not be appropriate for dispatching airplanes with known cracking or corrosion. As SXS has noted, airplanes may be operated with the MLG shock strut center and inner doors removed until repairs can be made.

We have reviewed the related service information and note that while repair of the MLG lug parts is required for compliance (“RC”), certain steps are either labeled as “RC Exempt,” or contain technical instructions that are prefaced by “Refer to.” Paragraph (l)(4) of this AD and paragraph 3A., “General Information,” of BSASB 737-52-1170, R1 specify the actions labeled as “RC Exempt” are not required in order to show compliance to this AD. When the words “refer to” are used within an RC step and the operator has an accepted alternative procedure, the accepted alternative procedure can be used. When the words “in accordance with” are included in an RC step, the procedure in the Boeing document must be used. In addition, for proposals that provide an acceptable level of safety and have substantiating data, operators may apply for an AMOC using the procedures specified in paragraph (l) of this AD. We have not changed this AD in regard to this issue.

DAL requested that operators be allowed to install a new, overhauled, or serviceable MLG instead of repairing a damaged lug and installing a new bushing if excessive wear, galling, or cracking is found during a detailed inspection/measurement of the MLG shock strut bushing. DAL stated that it would have to remove the damaged MLG and send it to the shop for repair, and it would be easier to install a new, overhauled, or serviceable MLG than to wait for the damaged MLG to be repaired. DAL explained that installing a new, overhauled, or serviceable MLG provides an equivalent level of safety because the intent of the proposed AD is to repair and install new bushings. DAL observed that the damaged MLG would be repaired and then be ready for use on another airplane.

We agree with the commenter's request for the reasons provided by the commenter. We have revised paragraph (g) of this AD to clarify that replacement of an entire MLG assembly within the required compliance time satisfies the requirements of paragraph (g), provided that the requirements of paragraph (j) of this AD, “Parts Installation Limitation,” are satisfied for that MLG assembly.

Since the unsafe condition is also affected by rotability, we have revised paragraph (j) of this AD to clarify that an MLG assembly cannot be installed on any airplane identified in paragraphs (c)(1) through (c)(4) of this AD unless all actions for Group 3 airplanes have been accomplished on the MLG assembly. Paragraph (j) of this AD states that:

In the proposed AD, paragraph (j) specified only an MLG center door assembly.

DAL stated that paragraph (j), “Parts Installation Paragraph,” of the proposed AD was confusing because it stated that an operator may not install an MLG center door assembly on an airplane unless all actions identified as RC in BSASB 737-52-1170, R1, are accomplished within the compliance times specified in Tables 4, 5, and 6, as applicable, of paragraph 1.E., “Compliance,” of BSASB 737-52-1170, R1. DAL observed that if an operator receives a spare door with an FAA Form 8130, “Authorized Release Certificate—Airworthiness Approval Tag,” attached, the tag might include the AD number but the number of flight cycles at the last inspection or total flight cycles of the door would not be provided. DAL suggested that operators ensure that the inspection and corrective actions are accomplished before the spare part is installed on the airplane. Therefore, if the flight cycles on the door are unknown, the operator would still be in compliance with the intent of the NPRM by inspecting the door before installation, and that it would be an equivalent level of safety that meets the intent of the NPRM.

We appreciate the commenter's concern and the opportunity to clarify the intent of the “Parts Installation Limitation” paragraph. The compliance times specified in Tables 4, 5, and 6, as applicable, of paragraph 1.E., “Compliance,” of BSASB 737-52-1170, R1, are in airplane flight cycles. There is no requirement in this AD or any statement in BSASB 737-52-1170, R1, that it is necessary to determine the flight cycles accumulated on the MLG door assembly. The compliance times in this AD are based on flight cycles of the airplane instead of the MLG door assembly. Our strategy in addressing the unsafe condition is to first inspect all affected airplanes, and then to address future possible unsafe conditions with the requirements in the “Parts Installation Limitation” paragraph.

We have not made any changes to this AD in regard to this issue.

American, subsequent to its earlier comments, requested that the final rule not be issued until discrepancies in BSASB 737-52-1170, R1, are rectified and the instructions made clearer. The commenter stated that operators cannot comply with the requirements specified in the NPRM because of discrepancies in BSASB 737-52-1170, R1. The commenter identified the following discrepancies.

Alaska also noted that Figure 13 and Figure 14 of BSASB 737-52-1170, R1, depict view C with a pre-modification installation in lieu of a post-modification installation.

We acknowledge the commenters' concerns regarding the information in the service information that requires clarification. The amount of clarification needed would be overly complex for inclusion in this AD. We expect to work with Boeing to issue a global AMOC addressing any known errors as soon as possible. In addition, we have revised paragraph (h) of this AD, “Exceptions to Service Information Specifications,” by adding paragraph (h)(3) to provide operators with information regarding how to address any other issues, if needed.

In light of the critical nature of the identified unsafe condition, we do not consider it warranted to delay the issuance of this final rule. When Boeing provides a revision to BSASB 737-52-1170, R1, we will review it in consideration of an AMOC to this AD or may consider future rulemaking action.

DAL noted that paragraph (h) of the proposed AD states that “For purposes of determining compliance with the requirements of this AD: Where BSASB 737-52-1170, Revision 1, uses the phrase `the original issue date of this service bulletin', this AD requires using `the effective date of this AD'.” DAL pointed out that in Table 4 of BSASB 737-52-1170, R1, the compliance times for the Group 3 airplanes, states that the actions should be completed “Within 800 flight cycles after the Revision 1 date of this service bulletin.” DAL asked if the AD effective date should also replace the Revision 1 date of the service information. We infer that DAL is requesting a revision to paragraph (h) of the proposed AD to clarify that for purposes of determining compliance with the requirements of the final rule that the effective date of the AD should be used instead of the original issue date or the Revision 1 date of the service information.

We agree with the commenter's request for the reasons provided by the commenter. We have re-designated paragraph (h) of the proposed AD as paragraph (h)(1) in this AD, and revised the text to state that for purposes of determining compliance with the requirement of this AD, where BSASB 737-52-1170, Revision 1, uses the phrase “the original issue date of this service bulletin” or “the Revision 1 date of this service bulletin” this AD requires using “the effective date of this AD.”

American stated that BSASB 737-52-1170, R1, is confusing and unnecessarily complex. American observed that BSASB 737-52-1170, R1, provides for 14 possible conditions, multiple options for corrective actions, 3 multi-page logic diagrams, and 10 different parts of instructions. American stated that the complexity could be simplified if the service information pointed the operator straight to the modification of the MLG center door assembly retention clip assemblies and, if needed, repair to the lugs and replacement of the bushings. American declared that the unnecessary complexity of the service bulletin invites non-compliance issues.

We acknowledge the commenter's concerns regarding BSASB 737-52-1170, R1. The reason BSASB 737-52-1170, R1, includes 14 possible conditions, multiple options for corrective actions, 3 multi-page logic diagrams, and 10 different parts of instructions is to provide a comprehensive set of procedures to address the unsafe condition that exists in the affected fleet of airplanes. We suggest that the commenter provide its comments regarding improvements to this document directly to Boeing. We have not changed this AD in regard to this issue.

Aviation Partners Boeing stated that accomplishing the Supplemental Type Certificate (STC) ST00830SE does not affect the ability to accomplish the actions specified in the NPRM.

We concur with the commenter. We have added paragraph (c)(5) to this AD to state that installation of STC ST00830SE does not affect the ability to accomplish the actions required by this final rule. Therefore, for airplanes on which STC ST00830SE is installed, a “change in product” alternative method of compliance (AMOC) approval request is not necessary to comply with the requirements of 14 CFR 39.17.

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule with the changes described previously and minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

We also determined that these changes will not increase the economic burden on any operator or increase the scope of this final rule.

We reviewed Boeing Special Attention Service Bulletin 737-52-1170, Revision 1, dated December 19, 2017. The service information describes procedures for repetitive detailed inspections of the forward and aft MLG center door assembly attachments for loose, missing, damaged, or bottomed-out attachment bolts, and any wear to the retention clip assemblies as applicable; and applicable on-condition actions. The service information also describes procedures for modification of the MLG center door assembly retention clip assemblies as an optional terminating action for the repetitive inspections. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 1,814 airplanes of U.S. registry. We estimate the following costs to comply with this AD:

We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this AD.

According to the manufacturer some of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all known costs in our cost estimate.

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

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

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

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

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),

(3) Will not affect intrastate aviation in Alaska, and

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

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

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2017-22-07, Amendment 39-19087 (82 FR 56158, November 28, 2017) (“AD 2017-22-07”). AD 2017-22-07 applied to certain Airbus SAS Model A319 series airplanes; Model A320-211, -212, -214, -231, -232, and -233 airplanes; and Model A321-111, -112, -131, -211, -212, -213, -231, and -232 airplanes. The NPRM published in the Federal Register on August 3, 2018 (83 FR 38091). The NPRM was prompted by an evaluation done by the design approval holder (DAH) indicating that the frame forks and outer skin on the forward and aft cargo compartment doors are subject to widespread fatigue damage (WFD), and a determination was made that a modification of the frame forks must be accomplished. The NPRM proposed to continue to require repetitive inspections of the frame forks, and corrective actions if necessary, and to include optional modifications that constitute terminating action. The NPRM also proposed to require modifying certain forward and aft cargo compartment doors, and related investigative and corrective actions. We are issuing this AD to address cracks on the frame forks and outer skin on the forward and aft cargo compartment doors, which could lead to reduced structural integrity and failure of the cargo compartment door, possible decompression of the airplane, and injury to occupants.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2018-0024, dated January 29, 2018 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus SAS Model A319 series airplanes; Model A320-211, -212, -214, -216, -231, -232, and -233 airplanes; and Model A321-111, -112, -131, -211, -212, -213, -231, and -232 airplanes. The MCAI states:

The related investigative action is a high frequency eddy current (HFEC) rotating probe inspection for cracks. Corrective actions include, among other things, oversizing and cold-expanding any affected holes and repair.

The Airbus SAS Model A320-216 was U.S. type certificated on December 19, 2016. Before that date, any EASA ADs that affected Model A320-216 airplanes were included on the Required Airworthiness Actions List (RAAL). One or more Model A320-216 airplanes have subsequently been placed on the U.S. Register, and will now be included in FAA AD actions. For Model A320-216 airplanes, the requirements that correspond to AD 2017-22-07 were mandated by the MCAI via the RAAL. Although that RAAL requirement is still in effect, for continuity and clarity we have identified Model A320-216 airplanes in paragraph (c) of this AD.

You may examine the MCAI in the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2018-0641.

We gave the public the opportunity to participate in developing this final rule. The following presents the comments received on the NPRM and the FAA's response to each comment.

United Airlines (UA) stated its agreement with the intent of the NPRM.

UA asked that the NPRM reference Airbus Service Bulletin A320-52-1170, Revision 01, dated June 14, 2018. UA stated that this latest revision only includes various updates and clarifications. Further, UA pointed out that an existing alternative method of compliance (AMOC) already allows this revision. UA also asked that we include credit for doing previous actions using Airbus Service Bulletin A320-52-1170, dated September 5, 2016.

We agree with the commenter's request. For the reasons provided by the commenter, and because the revised service information does not include any additional actions, we have updated the preamble and paragraphs (j) and (k)(2) of this AD to refer to the revised service information. We have also added paragraph (o)(1) to this AD to provide credit for actions accomplished prior to the effective date of this AD using Airbus Service Bulletin A320-52-1170, dated September 5, 2016. We have redesignated subsequent paragraphs accordingly.

UA asked that we change paragraph (h) of the proposed AD to allow use of later EASA-approved service bulletins. UA stated that EASA AD 2018-0024, dated January 29, 2018, allows the use of later-approved revisions of Airbus Service Bulletin A320-52-1170, dated September 5, 2016. UA added that it has an approved AMOC that allows for the use of Airbus Service Bulletin A320-52-1170, Revision 01, dated June 14, 2018, as well as “all corresponding later EASA-approved service information” for accomplishing the requirements in the proposed AD.

We do not agree with the commenter's request. We may not refer to any document that does not yet exist. In general terms, we are required by Office of the Federal Register (OFR) regulations to either publish the service document contents as part of the actual AD language; or submit the service document to the OFR for approval as referenced material, in which case we may only refer to such material in the text of an AD. The AD may refer to the service document only if the OFR approved it for incorporation by reference. See 1 CFR part 51. To allow operators to use later revisions of the referenced document (issued after publication of the AD), either we must revise the AD to reference specific later revisions, or operators must request approval to use later revisions as an AMOC with this AD under the provisions of paragraph (q)(1) of this AD. Therefore, we made no change to this AD in this regard.

UA asked for approval for a correction to Appendix 02, page 1, of Airbus Service Bulletin A320-52-1170, Revision 01, dated June 14, 2018. UA asked that the following sentence “For the alternate fasteners for ASNA2657K3 series, refer to the next page” be changed to “For the alternate fasteners for ASNA2657K3 series, refer to table in page 1.”

We acknowledge the commenter's concern. However, page 2 of Appendix 02, does contain a table referencing alternative fasteners; there is no table on page 1 of Appendix 02. Therefore, the service information is correct regarding this issue. Further, only the manufacturer may revise its service information. Therefore, we have made no change to this AD in this regard.

We have added paragraph (o)(2) to this AD to provide credit for actions accomplished prior to the effective date of this AD using Airbus Service Bulletin A320-52-1042, Revision 2, dated January 14, 1997. As explained previously, we have redesignated subsequent paragraphs accordingly.

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule with the changes described previously and minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

We also determined that these changes will not increase the economic burden on any operator or increase the scope of this final rule.

Airbus SAS has issued Service Bulletin A320-52-1170, Revision 01, dated June 14, 2018, which describes procedures for modifying all affected forward and aft cargo compartment doors, including oversizing and cold working of riveting for all frame forks.

Airbus SAS has also issued Service Bulletin A320-52-1171, Revision 02, dated April 10, 2017, which the Director of the Federal Register approved for incorporation by reference as of January 2, 2018 (82 FR 56158, November 28, 2017).

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

We estimate that this AD affects 88 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

We have received no definitive data that would enable us to provide cost estimates for the on-condition repairs and replacements specified in this AD.

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

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

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.

We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

3. Will not affect intrastate aviation in Alaska; and

4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

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

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends Class E airspace extending upward from 1,200 feet above the surface at Atqasuk Edward Burnell Sr. Memorial Airport, AK, to support IFR operations in standard instrument approach and departure procedures at the airport.

The FAA published a notice of proposed rulemaking in the Federal Register (83 FR 46434; September 13, 2018) for Docket No. FAA-2018-0577 to modify Class E airspace extending upward from 1,200 feet above the surface at Atqasuk Edward Burnell Sr. Memorial Airport, Atqasuk, AK, and to add exclusionary language to the legal description of the airport to ensure the safety and management of aircraft within the National Airspace System. Also, the geographic coordinates of the airport would be updated. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11C, dated August 13, 2018, and effective September 15, 2018, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order.

This document amends FAA Order 7400.11C, Airspace Designations and Reporting Points, dated August 13, 2018, and effective September 15, 2018. FAA Order 7400.11C is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11C lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is amending Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying Class E airspace extending upward from 1,200 feet above the surface at Atqasuk Edward Burnell Sr. Memorial Airport, Atqasuk, AK. Also, language has been added to the legal description of the airport to exclude that airspace extending beyond 12 miles of the shoreline. This action supports IFR operations in standard instrument approach and departure procedures at the airport.

Additionally, an editorial change made to the airport's geographic coordinates brings them up to date with FAA's aeronautical database.

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

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

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

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes Class E airspace at Hyde County Airport, Engelhard, NC, to support standard instrument approach procedures for IFR operations at this airport.

The FAA published a notice of proposed rulemaking in the Federal Register (83 FR 51903, October 15, 2018) for Docket No. FAA-2018-0626 to establish Class E airspace extending upward from 700 feet above the surface at Hyde County Airport, Engelhard, NC. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11C dated August 13, 2018, and effective September 15, 2018, which is incorporated by reference in 14 CFR part 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.

This document amends FAA Order 7400.11C, Airspace Designations and Reporting Points, dated August 13, 2018, and effective September 15, 2018. FAA Order 7400.11C is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11C lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 establishes Class E airspace extending upward from 700 feet above the surface within a 6.4-mile radius of Hyde County Airport, Engelhard, NC, providing the controlled airspace required to support the new RNAV (GPS) standard instrument approach procedures. These changes are necessary for continued safety and management of IFR operations at this airport.

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

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

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

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies the route structure to support the safe and efficient flow of air traffic within the National Airspace System.

The FAA published a notice of proposed rulemaking in the Federal Register for Docket No. FAA-2018-0280 (83 FR 16804; April 17, 2018), amending VOR Federal airways V-170 and V-219 due to the planned decommissioning of the Fairmont, MN, VOR. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. No comments were received.

VOR Federal airways are published in paragraph 6010(a) of FAA Order 7400.11C dated August 13, 2018, and effective September 15, 2018, which is incorporated by reference in 14 CFR 71.1. The VOR Federal airways listed in this document would be subsequently published in the Order.

This document amends FAA Order 7400.11C, Airspace Designations and Reporting Points, dated August 13, 2018, and effective September 15, 2018. FAA Order 7400.11C is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11C lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is amending Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying VOR Federal airways V-170 and V-219. The planned decommissioning of the Fairmont, MN, VOR has made these actions necessary. The VOR Federal airway changes are outlined below.

V-170: V-170 extends between the Devils Lake, ND, VOR/DME and the Salem, MI VORTAC; and between the Bradford, PA, VOR/DME and the intersection of the Andrews 060° and Baltimore, MD, 165° radials (POLLA fix); excluding the airspace within R-5802 when active. The airway segment between the Worthington, MN, VOR/DME and the Rochester, MN, VOR/DME is removed. The unaffected portions of the existing airway remain as charted.

V-219: V-219 extends between the Hayes Center, NE, VORTAC and the Mankato, MN, VOR/DME. The airway segment between the Sioux City, IA, VORTAC and the Mankato, MN, VOR/DME is removed. The unaffected portions of the existing airway remain as charted.

All radials in the route descriptions below are unchanged and stated in True degrees.

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

The FAA has determined that this action of modifying VOR Federal airways V-170 and V-219 near Fairmont, MN, qualifies for categorical exclusion under the National Environmental Policy Act and its implementing regulations at 40 CFR part 1500, and in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a, which categorically excludes from further environmental impact review rulemaking actions that designate or modify classes of airspace areas, airways, routes, and reporting points (see 14 CFR part 71, Designation of Class A, B, C, D, and E Airspace Areas; Air Traffic Service Routes; and Reporting Points). As such, this action is not expected to result in any potentially significant environmental impacts. In accordance with FAA Order 1050.1F, paragraph 5-2 regarding Extraordinary Circumstances, the FAA has reviewed this action for factors and circumstances in which a normally categorically excluded action may have a significant environmental impact requiring further analysis. The FAA has determined that no extraordinary circumstances exist that warrant preparation of an environmental assessment or environmental impact study.

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

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends Class E airspace extending upward from 1,200 feet above the surface at Nuiqsut Airport, Oooguruk Island Heliport, Pioneer Heliport, Perryville Airport, Pilot Point Airport, and Point Lay Airport, AK, to support IFR operations in standard instrument approach and departure procedures at these airports.

The FAA published a notice of proposed rulemaking in the Federal Register (83 FR 37776; August 2, 2018) for Docket No. FAA-2017-0348 to modify Class E airspace for the following Alaska Towns; Nuiqsut, AK; Perryville, AK; Pilot Point, AK; and Point Lay, AK. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11C, dated August 13, 2018, and effective September 15, 2018, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order.

This document amends FAA Order 7400.11C, Airspace Designations and Reporting Points, dated August 13, 2018, and effective September 15, 2018. FAA Order 7400.11C is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11C lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is amending Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying Class E airspace extending upward from 1,200 feet above the surface at Nuiqsut Airport, Nuiqsut, AK; Oooguruk Island Heliport, Nuiqsut, AK; Pioneer Heliport, Nuiqsut, AK; Perryville Airport, Perryville, AK; Pilot Point Airport, Pilot Point, AK; and Point Lay Airport, Point Lay, AK. This action adds language to the legal descriptions of these airports that reads “excluding that airspace that extends beyond 12 miles from the shoreline.”

Also, this action removes the airport name from the airspace designation for Oooguruk Island Heliport and Pioneer Heliport, to conform with recent change to FAA Order 7400.2L, Procedures for Handling Airspace Matters.

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

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

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

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes Class E airspace extending upward from 700 feet above the surface and modifies Class E airspace designated as an extension at Olympia Regional Airport (formerly Olympia Airport). This action removes the Notice to Airmen (NOTAM) part-time status for Class E airspace designated as an extension, and updates the airport name and geographic coordinates in the associated Class D and E airspace areas to match the FAA's aeronautical database. These changes are necessary to accommodate airspace redesign for the safety and management of instrument flight rules (IFR) operations within the National Airspace System.

The FAA published a notice of proposed rulemaking in the Federal Register (83 FR 1201; January 10, 2018) for Docket No. FAA-2017-1012 to modify Class D airspace, Class E surface area airspace, Class E airspace designated as an extension, and Class E airspace extending upward from 700 feet above the surface at Olympia Regional Airport (formerly Olympia Airport), WA; remove the Notice to Airmen (NOTAM) part-time status for Class E airspace designated as an extension; and update the airport name and geographic coordinates in the associated Class D and E airspace areas to match the FAA's aeronautical database. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class D and E airspace designations are published in paragraph 5000, 6002, 6004, and 6005, respectively, of FAA Order 7400.11C, dated August 13, 2018, and effective September 15, 2018, which is incorporated by reference in 14 CFR 71.1. The Class D and E airspace designation listed in this document will be published subsequently in the Order.

This document amends FAA Order 7400.11C, Airspace Designations and Reporting Points, dated August 13, 2018, and effective September 15, 2018. FAA Order 7400.11C is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11C lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 establishes Class E airspace extending upward from 700 feet above the surface at Olympia Regional Airport to contain IFR departure and arrival aircraft below 1,200 and 1,500 feet above the surface, respectively. This airspace duplicates the larger Seattle Class E airspace extending upward from 700 feet above the surface, but ensures no future changes at Seattle inadvertently impact aircraft operations at Olympia Regional Airport.

The FAA also modifies the Class E airspace designated as an extension to a Class D or Class E surface area at Olympia Regional Airport, Olympia, WA, by removing the segments north (within 1.8 miles each side of the Olympia VORTAC 010° radial extending from the 4-mile radius of the airport to 4.8 miles north of the VORTAC) and south (within 3.5 miles each side of the Olympia VORTAC 195° radial extending from the 4-mile radius of Olympia Airport to 9.2 miles south of the VORTAC) of the airport, and establishing a 2-mile wide segment extending to approximately 5.5 miles southeast of the airport.

Also, this action also eliminates the following language from the legal description of Class E airspace designated as an extension to a Class D or Class E surface area at the airport, “This Class E airspace is effective during the specific dates and times established in advance by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Airport/Facility Directory.”

Finally, this action updates the airport name from Olympia Airport to Olympia Regional Airport, updates the geographic coordinates of the airport to match the FAA's aeronautical database, and replaces the outdated term Airport/Facility Directory with the term Chart Supplement in the associated Class D and Class E airspace legal descriptions. This airspace redesign is necessary for the safety and management of IFR operations at the airport.

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

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

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

1. The Federal Energy Regulatory Commission (Commission) is amending its regulations to remove § 8.11, thereby eliminating the requirement for licensees to file a Licensed Hydropower Development Recreation Report, designated as FERC Form No. 80 (Form 80). Form 80 solicits information on the use and development of recreation facilities at hydropower projects licensed by the Commission under the Federal Power Act (FPA). In addition, the Final Rule revises §§ 8.1 and 8.2 of the Commission's regulations to modernize licensee public notice practices, clarify recreational signage requirements, and provide flexibility to assist licensees' compliance with these requirements.

2. Section 10(a)(1) of the FPA requires the Commission to ensure that any licensed project is best adapted to a comprehensive plan for improving and developing a waterway for a variety of beneficial public uses, including recreational use. 1 Although section 10(a) of the Federal Water Power Act of June 10, 1920  2 did not refer specifically to recreation, in 1935 when the Federal Water Power Act was re-enacted as Part I of the Federal Power Act, 3 the words `including recreational purposes' were added to section 10(a) to make clear that recreation considerations were to be included in the comprehensive development of the nation's water resources. Pursuant to this obligation, the Commission required licensees to allow public access to project lands and waters for recreational use and began to include standard conditions in licenses for the provision of recreational facilities.

3. In the 1960s, the Commission developed specific policies and practices to ensure that licensees provided reasonable recreational opportunities and notice of such opportunities to the public. In 1963, the Commission began requiring recreation plans for the public utilization of project water and land, 4 and in 1965 amended its regulations by adding part 8, entitled “Recreation Opportunities and Development at Licensed Projects,” in order to require licensees to widely publicize to the general public recreational opportunities at individual projects. 5 Order 313, issued on December 27, 1965, amended the Commission's general policy regulations (18 CFR part 2) by adding § 2.7 to clarify that licensees whose projects include land and water resources with outdoor recreational potential have a responsibility to develop those resources in accordance with area needs, to the extent that such development is not inconsistent with the primary purpose of the project. 6 In 1966, the Commission further amended part 8 of its regulations to require licensees to file Form 80, a report that provides an inventory of the use and development of recreational facilities at each development contained within a licensed project. 7

4. Over the years, the Commission has continued to revise its regulations to reflect the Commission's current public recreation policies and practices. And once again, the Commission has decided to modify certain recreation-related regulations in order to eliminate unnecessary reporting requirements, modernize licensee public notice practices, clarify recreational signage requirements, and provide flexibility to assist licensees' compliance with these requirements.

5. On May 17, 2018, the Commission issued a Notice of Proposed Rulemaking (NOPR) proposing to eliminate the Form 80, and further revise its regulations governing recreational use and development at licensed hydropower projects. 8 In response to the NOPR, the Commission received 14 comments from the following entities: eight licensees, two federal land management agencies, two local governments, and two trade associations. 9 The proposal set forth in the NOPR, the comments received, and the Commission's determinations are discussed below.

6. Section 8.11 requires licensees to file Form 80, which is a report on the use and development of recreational facilities at each development contained within a licensed hydropower project, on April 1 of every sixth year, documenting data compiled during the previous calendar year. 10 For each project development, 11 the Form 80 requires licensees to report the number of visits (i.e., recreation days), 12 the use capacity of each type of public recreation facility, and the licensee's annual costs and revenues associated with the public recreation facilities within the project boundary. In order to complete the Form 80, licensees must collect data on recreation use, facilities, and capacity for a 12-month period. Licensees may request an exemption from the Form 80 requirement if they demonstrate that a project development has little or no existing use or recreation potential (i.e., less than 100 recreation days per year). 13

7. In the NOPR, the Commission proposed to remove § 8.11 from its regulations, thereby eliminating the requirement for licensees to file the Form 80. The Commission advanced several reasons for eliminating Form 80. 14 First, unlike in 1965 when Form 80 was adopted, licensed projects with significant recreation opportunities are often now required to comply with project-specific license conditions that direct licensees to prepare and implement a recreation plan, conduct recreation monitoring, and file periodic updates to an approved recreation plan. 15 Second, for licensed projects with limited recreation opportunities—many of which are exempt from filing Form 80—Commission staff relies on a variety of tools other than the Form 80 to determine whether the projects are meeting public recreation needs, including periodic inspections and investigation of non-compliance allegations (e.g., any recreation-related inquiries or complaints submitted by resource agencies, recreation users, or local residents). Third, Commission staff reports limited use of Form 80 data and cites concerns about the data's validity and lack of specificity. Finally, advances in technology since the advent of the Form 80 (e.g., websites, publicly-available aerial photography, and the Commission's eLibrary system) allow interested parties and the general public to easily access information about a project's recreational opportunities and any recreation-related license requirements.

8. All eight licensees that commented on the NOPR support the Commission's proposal to eliminate the Form 80 reporting requirement. Alaska Power Association and NHA also filed comments in support of the NOPR's proposal to eliminate the Form 80. The Park Service conditionally supports the Commission's proposal, provided that the Commission strengthens its oversight of licensees' recreation-related planning, monitoring, and information dissemination.

9. In response to the NOPR's proposal to eliminate Form 80, the Park Service commented that additional guidance, training, and technical assistance is needed to ensure new and existing recreation management plans satisfy the general obligations set forth in § 2.7 of the Commission's regulations. The Park Service recommends that the Commission: (i) Conduct a comprehensive evaluation of its recreation planning and monitoring programs for licensing and post-licensing compliance; (ii) develop guidance and offer training and technical assistance for recreation management planning and monitori  16 and (iii) establish a public process for periodic review of recreation facilities, conditions, needs, and recreation flows.

10. Pursuant to its obligations under the FPA and the Commission's regulations, Commission staff evaluates the existing recreation resources, facilities, and needs at each existing or proposed hydropower project on a case-by-case basis during the licensing process and, as appropriate, also during the amendment process. Similarly, as appropriate, Commission staff continues to evaluate a project's recreational resources, facilities, and needs over the term of a license by considering license-required recreation plan updates and monitoring reports, conducting periodic project inspections, and addressing allegations of non-compliance.

11. Commission staff frequently provides guidance to licensees on a range of recreation management planning and monitoring matters. Staff regularly participates in recreation and land use management trainings, workshops, and conferences. Staff also strives to provide timely and constructive advice to licensees in response to project-specific recreation inquiries. In addition, Commission staff is currently developing a guidance document for licensees, which will provide general guidance on how to prepare a recreation management plan in consultation with stakeholders. This guidance document will describe the components of an effective recreation management plan, such as recreation use monitoring, periodic plan review and updates, and circumstances warranting a plan amendment.

12. The Commission's hydropower licensing and compliance programs already incorporate a robust public process that allows for periodic review of recreation facilities, conditions, needs, and, where appropriate, recreation flows. Most often, public engagement opportunities arise during the pre-filing consultation process and the Commission's public notice process for license applications and recreation-related compliance proceedings (e.g., consideration of a recreation management plan or amendment application). During the term of a license, agencies, members of the public, and other stakeholders have additional opportunities to review and provide input on any license-required recreation plan updates, periodic recreation plan assessments, or recreation-related monitoring results. Finally, members of the public may, at any time during the license term, access and review recreation-related documents on the Commission's website, seek available project-specific recreation plans or other information from individual licensees, or contact Commission staff regarding recreation inquiries or complaints.

13. The foregoing demonstrates that there are sufficient safeguards to ensure that our recreation requirements are understood and implemented.

14. The Park Service expresses concern that the Commission would not require projects with limited recreation opportunities to implement any new or additional recreation monitoring efforts if it eliminates the Form 80 reporting requirement. Rather, for all projects including those with little or no recreation opportunities, the Park Service recommends that the Commission: (i) Notice project inspections and invite stakeholders and the public to participate; (ii) inspect projects on a regular basis using staff with recreation expertise; and (iii) improve or clarify the process for submitting recreation-related complaints to the Commission.

15. If Form 80 is eliminated, Roanoke County and the Town of Vinton urge the Commission to include language in every project license requiring licensees to develop a recreation monitoring plan in consultation with the appropriate federal agencies, state agencies, local governments, and other stakeholders. 17 Roanoke County and the Town of Vinton also ask the Commission to reconsider the NOPR's statement that licensed projects with little to no recreation, including projects previously exempted from the Form 80 reporting requirement pursuant to § 8.11(c), would not be expected to implement any new or additional recreation monitoring efforts, but should continue to comply with any project-specific license conditions related to public recreation.

16. PacifiCorp asks the Commission to clarify that projects that do not have any license-required recreation use reporting other than Form 80 submittals will no longer have any routine recreation use reporting obligations if the Form 80 is eliminated.

17. The Commission considers the need for recreation monitoring on a project-specific basis, based on the conditions at that project at the time of licensing and during post-licensing review, as appropriate. Roughly half of all licensed projects will begin the relicensing process within the next 12 years and during the relicensing proceeding the Commission will conduct a comprehensive review of each project's recreational resources and determine the appropriate level of recreational use monitoring, if any, needed for each project.

18. In addition, Commission staff periodically conducts project inspections that focus on an individual license's environmental and recreation-related requirements. Generally, Commission staff also will conduct an environmental inspection for projects with significant environmental or public use license requirements—e.g., projects with high recreational use, fish passage facilities, or wildlife mitigation areas. These inspections allow Commission staff to inspect project features, facilities, and areas to ensure that licensees are complying with the requirements of their respective project licenses. Commission staff also regularly conducts environmental inspections at projects with on-going non-compliance or identified resource issues.

19. Finally, the most efficient way to bring a recreation-related complaint or non-compliance allegation to the Commission's attention is by directly contacting the Commission's Office of Energy Projects through its enforcement hotline telephone number. 18 Once a recreation-related allegation of non-compliance is received by the Commission, it is forwarded to staff within the Commission's Office of Energy Projects' Division of Hydropower Administration and Compliance for investigation and any necessary follow-up action.

20. In response to PacifiCorp's clarification request, unless recreation use reporting is required by a license condition—including any approved recreation plan or report or mandatory agency condition—licensees will no longer have any specific recreation use reporting obligation once the Form 80 is eliminated.

21. For the reasons discussed above, we will not establish a standard requirement for recreational use monitoring at every licensed project. 19 Considering recreation planning and monitoring needs on a project-by-project basis is the most appropriate method for Commission staff to ensure that each licensed project protects its recreational opportunities and is best adapted to the comprehensive development of the waterway.

22. The Forest Service comments that it values the type of information reported by licensees in Form 80 submittals.

23. The Forest Service expresses concern that if the Form 80 reporting requirement is eliminated, there will be no long-term baseline information on recreational usage to inform the development of operational plans or license conditions, and suggests that in future relicensing proceedings it will rely increasingly on its mandatory conditioning authority under section 4(e) of the FPA to ensure that licensees monitor recreation usage, and facility features and operations meet public recreational needs on Forest Service lands.

24. The Forest Service also asks the Commission to clarify how eliminating Form 80 will affect projects that are currently awaiting final license orders, including projects with 4(e) license conditions that may rely on Form 80 information. Under such circumstances, the Forest Service cautions that it may need to revise previously-submitted 4(e) license conditions.

25. As previously explained in the NOPR, most projects with significant recreation resources have a recreation management plan or recreation monitoring report requirements and thus are already responsible for recreational monitoring or oversight above and beyond that required by the Form 80 filing requirement. 20 In the absence of the Form 80 reporting requirement, licensees will remain subject to any other recreation monitoring requirements contained within a license condition or approved recreation plan.

26. Going forward, Commission staff evaluating future license and amendment applications will continue to make case-by-case determinations on whether recreation monitoring is warranted for a particular project and, if so, the type and degree of monitoring needed. We anticipate that Federal land management agencies will likewise continue to provide input on the appropriateness of recreation monitoring during individual licensing proceedings. In any event, Federal land management agencies, such as Forest Service, are not precluded by this Final Rule from continuing to use their mandatory 4(e) conditioning authority to require recreational monitoring for individual projects during licensing proceedings, as they deem appropriate.

27. As to Forest Service's concern regarding current pending license applications, while we have explained that we believe sufficient information regarding recreation usage and needs will continue to be available after Form 80 is eliminated, the Forest Service may, if it deems it necessary, timely amend its 4(e) license conditions.

28. The Park Service states that, following the elimination of Form 80, the Commission should require all licensees to report annual recreation costs and revenues, as well as user fees for specific facilities, on a regular basis.

29. The Commission's regulations allow a licensee to charge reasonable fees to help defray the cost of constructing, operating, and maintaining recreation facilities. 21 Form 80 required licensees to include data on its annual recreation costs and revenues, but it did not require licensees to identify specific user fees for individual facilities. Typically, the Commission does not review or approve the reasonableness of such fees. 22 However, if the Commission receives an inquiry or complaint regarding recreation costs, revenues, or user fees at a particular project, staff may request that the licensee provide such information to assist in its investigation of a non-compliance allegation. Therefore, the Commission does not believe that establishing a standard requirement for every licensee to report to the Commission recreation costs, revenues, and user fees on an annual basis is necessary, nor does the Park Service elaborate on the utility of such a standard reporting requirement.

30. For the reasons discussed above, the Commission concludes that the benefits and the reduced burden for licensees and staff that result from eliminating the Form 80 outweigh the potential minor obstacles that may arise during the transition from the Form 80 data to specific recreation data gained through licensee compliance with project-specific license conditions. By this Final Rule, we adopt the NOPR's proposal to delete § 8.11 of our regulations, thereby eliminating the Form 80 filing requirement.

31. Added to the Commission's regulations alongside the Form 80 requirement in 1966, 23 § 141.14 approved licensee use of Form 80 in the manner prescribed in § 8.11 of our regulations. 24 To parallel the proposed removal of § 8.11, the NOPR also proposed to remove § 141.14 of its regulations.

32. The Commission did not receive any comments addressing the NOPR's proposed removal of § 141.14 of the Commission's regulations. Therefore, we retain the NOPR's proposal to delete § 141.14.

33. The Commission amends §§ 8.1 and 8.2 of its regulations to modernize licensee public notice practices, clarify recreational signage requirements, and provide flexibility to assist licensees' compliance with these requirements. All licensees that filed comments in response to the NOPR generally support the Commission's proposal to revise §§ 8.1 and 8.2 of the Commission's regulations to update licensee public notice practices. Forest Service also expressed support for the Commission's efforts to modernize and diversify licensee options for keeping the public informed of recreation opportunities at licensed projects.

34. Section 8.1 directs licensees to publicize information about the availability of projects lands and waters for recreational purposes, and any recreation-related license conditions. 25 Section 8.1 requires licensees, at a minimum, to publish notice in a local newspaper once each week for four weeks of any recreation-related license conditions that the Commission may designate in an order issuing or amending a license. 26

35. In addition to publishing notice in the local newspaper, the NOPR proposed to require licensees with project websites to also post notice of recreation-related license conditions on its website. This requirement would only apply to a licensee that already has an existing project website, or decides to develop a project website in the future. As explained in the NOPR, this additional publication method will ensure that the public is informed of recreational opportunities and recreation-related license conditions regardless of whether members of the public rely on a newspaper or the internet as their main information source.

36. The Park Service recommends that the Commission ensure that the information it receives from licensees is available to the public, and develop standardized information about recreation facilities and flows at licensed projects. 27 In addition, the Park Service recommends that the Commission require every licensee to create and maintain a project website that publicizes information about available public recreation opportunities. To this end, the Park Service recommends that all licensees be required to maintain a project website that, at minimum, provides: (i) Operating status of recreation facilities; (ii) notice of future recreation reviews and inspections, and the outcome of any such evaluations; (iii) recreation management plans, recreation-related reports, and the entire license instrument; and (iv) a map that provides standard Geographic Information System (GIS) layers identifying recreation facilities, public access, and the project boundary.

37. As revised by this Final Rule, §§ 8.1 and 8.2 of the Commission's regulations require licensees to publicize specific recreation use and availability information to the public for its licensed project through newspaper notices, project signage, its local office, and any existing licensee website. We are satisfied that the existing publication requirements provide a variety of ways to sufficiently inform the public of recreation and public access information. Therefore, we decline to adopt the Park Service's recommendation that all licensees be required to create and maintain a project website.

38. On occasion, the Commission has required a licensee to provide recreation information to the public on a recurring basis through telephone recordings or website updates (e.g., periodic notifications communicating recreational streamflow data, whitewater boating opportunities, or recreation site accessibility). However, we do not believe that a blanket requirement directing licensees to regularly notify the public of recreation flows or recreation site accessibility is appropriate for all licensed projects. In addition, members of the public may obtain information about a project's recreational opportunities—including detailed information about recreation facility availability and use, project boundary maps, and inspection reports—by searching the project docket on the Commission's eLibrary website, registering for the Commission's e-Subscription service, and participating in publicly-noticed licensing and post-licensing proceedings, such as the consideration of a recreation plan or significant recreation-related license amendment.

39. NHA supports the proposed changes to § 8.1, but asks the Commission to eliminate the newspaper publication requirement for licensees that publicly notice recreation-related license conditions by publication on a project website. In addition, where a licensee does not maintain a project website and there is no local newspaper, NHA posits that licensees should be allowed to post notice on municipal or county websites.

40. We decline to eliminate the requirement that licensees publish notice of recreation-related license conditions in a local newspaper. As we noted in the NOPR, requiring licensees to publish notice in a local newspaper and, if applicable, on a project website ensures that the public is on notice of recreational opportunities and recreation-related license conditions or amendments regardless of whether a particular member of the public relies on a newspaper or the internet as their primary news source. Further, the possibility that newspaper publication will reach local community members that may not have reliable internet access outweighs the negligible time and expense necessary to publish a notice in a local newspaper. Licensees are not precluded from supplementing the required methods of public notice by also posting notice on municipal or country websites or at local government offices.

41. Pacific Gas and Electric Company (PG&E) asks the Commission to clarify which types of websites will be considered “project websites.” PG&E recommends that the Commission exclude from its definition “relicensing websites,” which it describes as websites maintained during the relicensing process for stakeholders to access documents associated with the pre-filing process and the relicensing application process. PG&E further explains that relicensing websites are generally targeted to the stakeholders participating in the relicensing process, and do not provide specific information about the recreation opportunities provided near or on project reservoirs.

42. We agree that temporary websites developed specifically for a relicensing proceeding do not constitute the type of project website the Commission expects to be used for the purposes of § 8.1 publication. To clarify, by using the term “project website,” the Commission intended to capture any existing website, or webpage, used by a licensee to communicate information to the public about recreation opportunities provided by a particular project over the duration of the project's license. We anticipate that the information required by § 8.1 is the type of information that is already offered by many website-ready licensees in an electronic format or can be easily uploaded to an existing project webpage.

43. Section 8.2(a) requires the licensee to post at each public access point a visible sign that identifies: The project name, project owner, project number, directions to project areas available for public recreation, permissible times and activities, and other regulations regarding recreation use. Section 8.2(a) also requires licensees to post visible notice that project recreation facilities are open to all members of the public without discrimination. Section 8.2(b) directs the licensee to make available for inspection at its local offices the Commission-approved recreation plan and the entire license order indexed for easy reference to the recreation-related license conditions designated for publication in accordance with § 8.1 of the Commission's regulations. As the Commission explained in Order 299, the rationale behind the types of public notice required by §§ 8.1 and 8.2 is two-fold: (i) It puts prospective purchasers of land in the project vicinity on notice of the project's public access and recreation purposes; and (ii) it informs the general public of the location and terms of use of the project's recreation facilities. 28

44. To streamline the amount of information that must appear on recreation signage, the NOPR proposed revisions to § 8.2(a) that would require signs to, at a minimum, identify: The project name and number, and a statement that the project is licensed by the Commission; the licensee name and contact information for obtaining additional project recreation information; and permissible times and activities. As explained in the NOPR, the revisions reduce the information licensees must include on recreation signage at each public access point and afford licensees greater flexibility to design signs that effectively communicate recreation information to the public.

45. A number of commenters filed comments in support of this aspect of the Commission's proposal. 29 No negative comments were filed. The Final Rule retains the NOPR's revisions to § 8.2(a).

46. The NOPR also proposed to revise § 8.2(b) to require licensees with project websites to include on their websites copies of any approved recreation plan, recreation-related reports approved by the Commission, and the entire license instrument. This requirement would only apply to a licensee that already has an existing project website, or establishes a project website in the future.

47. No negative comments were filed on this aspect of the Commission's proposal. The Final Rule retains the NOPR's revisions to § 8.2(b).

48. The Paperwork Reduction Act  30 requires each federal agency to seek and obtain the Office of Management and Budget's (OMB) approval before undertaking a collection of information (including reporting, record keeping, and public disclosure requirements) directed to ten or more persons or contained in a rule of general applicability. OMB regulations require approval of certain information collection requirements contained in final rules published in the Federal Register . 31 Upon approval of a collection of information, OMB will assign an OMB control number and an expiration date. Respondents subject to the filing requirements of a rule will not be penalized for failing to respond to the collection of information unless the collection of information displays a valid OMB control number.

49. Public Reporting Burden: By eliminating the Form 80 filing requirement, this Final Rule eliminates an existing data collection, FERC-80 (OMB Control No. 1902-0106). In addition, the Final Rule modifies certain reporting and recordkeeping requirements included in FERC-500 (OMB Control No. 1902-0058)  32 and FERC-505 (OMB Control No. 1902-0115). 33

50. Under the most recent Form 80 reporting cycle, 34 346 licensees prepared and filed 843 Form 80 reports. 35 Every three years, the Commission is required to request from OMB an extension of any currently approved information collection. Since the Form 80 is only filed every six years, the most recent annual burden and cost figures provided to OMB were based on an estimate of 400 respondents. To determine the total number of responses per year for OMB submittal purposes, we multiplied the number of respondents (400) by the annual number of responses per respondent (0.167) to arrive at 67 responses per year. The Commission estimated the current public reporting burden to be an average of three hours per form, with an associated cost of approximately $224 per form. Because the Form 80 is filed every six years, the estimated annualized cost to complete each form is $37.44, with a total annual cost for all licenses of approximately $14,974.50. 36 This estimate includes the time required to review instructions, research existing data sources, and complete and review the collection of information.

51. This Final Rule eliminates certain information collection and recordkeeping requirements. The removal of the Form 80 report eliminates the estimated annual information collection burden (201 hours) and cost ($14,974.50) associated with FERC-80 (OMB Control No. 1902-0106). 37

52. In addition, the revisions to §§ 8.1 and 8.2, associated with the FERC-500 and FERC-505 information collections, 38 are intended to modernize licensee public notice practices, clarify recreational signage requirements, and provide flexibility to assist licensees' compliance with these requirements. With regard to modernized public notice practices, the revisions require licensees that have a project website to (1) publish notice on its website of license conditions related to recreation; and (2) maintain on its website copies of any approved recreation plan, recreation-related reports, and the license instrument. If a licensee does not have a project website, the website publication requirements would not apply. Accordingly, there is a slight increase in the reporting requirements and burden for FERC-500 and FERC-505.

53. The estimated changes to the burden and cost of the information collections affected by this Final Rule follow.

54. Titles: FERC-80 (Licensed Hydropower Development Recreation Report), FERC-500 (Application for License/Relicense for Water Projects with More than 5 Megawatt (MW) Capacity), and FERC-505 (Small Hydropower Projects and Conduit Facilities including License/Relicense, Exemption, and Qualifying Conduit Facility Determination).

55. Action: Deletion of information collection (FERC-80), and revisions to existing collections FERC-500 and FERC-505.

56. OMB Control Nos.: 1902-0106 (FERC-80), 1902-0058 (FERC-500), and 1902-0115 (FERC-505).

57. Respondents: Hydropower licensees, including municipalities, businesses, private citizens, and for-profit and not-for-profit institutions.

58. Frequency of Information: Ongoing (FERC-500 and FERC-505).

59. Necessity of Information: The revised regulations eliminate unnecessary reporting requirements, modernize licensee public notice practices, and clarify recreational signage requirements.

60. Internal Review: The Commission has reviewed the revisions and has determined they are necessary. These requirements conform to the Commission's need for efficient information collection, communication, and management within the energy industry. The Commission has specific, objective support for the burden estimates associated with the information collection requirements.

61. Interested persons may obtain information on the reporting requirements by contacting the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426 [Attention: Ellen Brown, Office of the Executive Director], by email to DataClearance@ferc.gov, by phone (202) 502-8663, or by fax (202) 273-0873.

62. Comments concerning the collections of information and the associated burden estimates may also be sent to: Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street NW, Washington, DC 20503 [Attention: Desk Officer for the Federal Energy Regulatory Commission]. Due to security concerns, comments should be sent electronically to the following e-mail address: oira_submission@omb.eop.gov. Comments submitted to OMB should refer to FERC-80, FERC-500, and FERC-505 and OMB Control Nos. 1902-0106 (FERC-80), 1902-0058 (FERC-500), and 1902-0115 (FERC-505).

63. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant effect on the human environment. 44 Excluded from this requirement are rules that are clarifying, corrective, or procedural, or that do not substantially change the effect of legislation or the regulations being amended. 45 This Final Rule updates the Commission's recreation-related regulations by clarifying public notice and signage requirements, and eliminating unnecessary reporting requirements. Because this rule is clarifying and procedural in nature, preparation of an Environmental Assessment or Environmental Impact Statement is not required.

64. The Regulatory Flexibility Act of 1980 (RFA)  46 generally requires a description and analysis of final rules that will have significant economic impact on a substantial number of small entities. The RFA mandates consideration of regulatory alternatives that accomplish the stated objectives of a rulemaking while minimizing any significant economic impact on a substantial number of small entities. 47 In lieu of preparing a regulatory flexibility analysis, an agency may certify that a final rule will not have a significant economic impact on a substantial number of small entities. 48

65. The Small Business Administration's (SBA) Office of Size Standards develops the numerical definition of a small business. 49 The SBA size standard for electric utilities (effective January 22, 2014) is based on the number of employees, including affiliates. 50 Under SBA's current size standards, a hydroelectric power generator (NAICS code 221111)  51 is small if, including its affiliates, it employs 500 or fewer people. 52

66. This Final Rule directly affects all hydropower licensees that are currently required to file the Form 80. The Final Rule removes the Form 80 filing requirement, eliminating (for small and large entities) the cost of $224 associated with filing the Form 80 every six years.

67. In addition, the revisions to §§ 8.1 and 8.2 of the Commission's regulations would directly affect all hydropower licensees of projects that offer existing or potential recreational use opportunities. These revisions are intended to modernize licensee public notice practices, clarify recreational signage requirements, and provide flexibility to assist licensees' compliance with these requirements. We expect the clarified signage requirements to benefit licensees by providing them more flexibility to design recreation-related signage strategies that best fit the needs of their individual projects. To modernize public notice practices, the revisions will require licensees that have a project website, or develop one in the future, to publish and maintain certain recreation-related information on its website. If a licensee does not have a project website, the website publication requirements would not apply. Therefore, there is a slight increase in the information collection reporting requirements and burden for FERC-500 and FERC-505. 53 However, we do not anticipate the impact on affected entities, regardless of their status as a small or large entity, to be significant.

68. Based on this understanding, pursuant to section 605(b) of the RFA, the Commission certifies that this Final Rule will not have a significant economic impact on a substantial number of small entities. Accordingly, no regulatory flexibility analysis is required.

69. In addition to publishing the full text of this document in the Federal Register , the Commission provides all interested persons an opportunity to view and print the contents of this document via the Internet through the Commission's Home Page ( http://www.ferc.gov ) and in the Commission's Public Reference Room during normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE, Room 2A, Washington, DC 20426.

70. From the Commission's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.

71. User assistance is available for eLibrary and the Commission's website during normal business hours from the Commission's Online Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-8371, TTY (202) 502-8659. E-mail the Public Reference Room at public.referenceroom@ferc.gov.

72. This regulation is effective March 28, 2019. The Commission has determined, with the concurrence of the Administrator of the Office of Information and Regulatory Affairs of OMB, that this rule is not a “major rule” as defined in section 251 of the Small Business Regulatory Enforcement Fairness Act of 1996. 54 This rule is being submitted to the Senate, House, Government Accountability Office, and Small Business Administration.

In consideration of the foregoing, the Federal Energy Regulatory Commission amends parts 8 and 141, chapter I, title 18, Code of Federal Regulations, as follows:

I. Statutory and Regulatory Background

On November 2, 2015, the President signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Pub. L. 114-74 section 701 (Nov. 2, 2015)) (2015 Act). 1 The 2015 Act amended the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note) (1990 Inflation Adjustment Act) to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect. The 2015 Act required agencies to: (1) Adjust the level of civil monetary penalties with an initial “catch-up” adjustment through issuance of an interim final rule (IFR) and (2) make subsequent annual adjustments for inflation. Through the “catch-up” adjustment, agencies were required to adjust the maximum amounts of civil monetary penalties to more accurately reflect inflation rates. The 2015 Act directed the Office of Management and Budget (OMB) to issue guidance to agencies on implementing the initial “catch-up” adjustment. The 2015 Act required that agencies publish their IFRs in the Federal Register no later than July 1, 2016 and that the adjusted amounts were to take effect no later than August 1, 2016.

For the subsequent annual adjustments, the 2015 Act requires agencies to increase the penalty amounts by a cost-of-living adjustment. The 2015 Act directs OMB to provide guidance to agencies each year to assist agencies in making the annual adjustments. The 2015 Act requires agencies to make the annual adjustments no later than January 15 of each year and to publish the adjustments in the Federal Register .

The Department of Homeland Security (DHS) undertook a review of the civil penalties that DHS and its components administer to determine which penalties would need adjustments. On July 1, 2016, DHS published an IFR adjusting the civil monetary penalties with an initial “catch-up” adjustment, as required by the 2015 Act. See 81 FR 42987. DHS calculated the adjusted penalties based upon nondiscretionary provisions in the 2015 Act and upon guidance issued by OMB on February 24, 2016. 2 The adjusted penalties were effective for civil penalties assessed after August 1, 2016 (the effective date of the IFR) where the associated violations occurred after November 2, 2015 (the date of enactment of the 2015 Act). 3 On January 27, 2017, DHS published a final rule adopting as final the civil monetary penalty adjustment methodology from the IFR and making the 2017 annual inflation adjustment pursuant to the 2015 Act and upon guidance OMB issued to agencies on December 16, 2016. 4 See 82 FR 8571. On April 2, 2018, DHS published a final rule making the 2018 annual inflation adjustment pursuant to the 2015 Act and the guidance OMB issued to agencies on December 15, 2017. 5 See 83 FR 13826.

As discussed in Section II below, several civil monetary penalties assessed by CBP and subject to the 2015 Act were inadvertently omitted from these DHS rulemakings.

CBP assesses or enforces penalties under various titles of the United States Code (U.S.C.) and the Code of Federal Regulations (CFR). These penalties include civil monetary penalties for certain violations of title 8 of the CFR pursuant to the Immigration and Nationality Act of 1952, 6 as well as certain civil monetary penalties for customs violations for laws codified in title 19 of the U.S.C. and the CFR. CBP assesses many of the title 19 penalties under the Tariff Act of 1930, as amended, and as discussed in the IFR preamble at 81 FR 42987, the 2015 Act specifically exempts Tariff Act penalties from the inflation adjustment requirements in the 2015 Act. For that reason, DHS did not list those penalties in the tables of CBP penalty adjustments in the DHS rulemakings. There are also various other monetary penalties found throughout the U.S.C. and CFR which CBP may seek to issue or enforce but which were not included in the tables because they fall within the purview of another Department or Agency for purposes of the 2015 Act. 7

Several non-Tariff Act penalties that are assessed by CBP were inadvertently omitted from the DHS rulemakings. On December 8, 2017, CBP published a rule, correcting for three penalties that had been omitted from the DHS rulemakings for the following three violations—transporting passengers between coastwise points in the United States by a non-coastwise qualified vessel; towing a vessel between coastwise points in the United States by a non-coastwise qualified vessel; and dealing in or using an empty stamped imported liquor container after it has already been used once. See 82 FR 57821.

However, two additional non-Tariff Act penalties that are assessed by CBP were inadvertently omitted from the DHS rulemakings and the CBP correction rulemaking. The first is a penalty set forth at 46 U.S.C. 12118(f)(3) for transporting passengers coastwise for hire by certain vessels (known as Bowaters vessels) that do not meet specified conditions. This penalty is incurred if a vessel that is used primarily in manufacturing or mineral industries and owned by a Bowaters corporation transports passengers for hire except as a service for a parent or subsidiary of the corporation owning the vessel or under a bareboat charter to a corporation otherwise qualifying as a citizen of the United States. 8 The conditions under which a vessel identified as a Bowaters vessel under the authority of 46 U.S.C. 12118 may transport passengers coastwise for hire are detailed in 46 U.S.C. 12118(d)(2) and 19 CFR 4.80(d). The penalty amount is only set forth in the statute and is not reflected in the CBP regulations. The second is a penalty for employing a vessel in a trade without a required Certificate of Documentation pursuant to 19 U.S.C. 1706a and 19 CFR 4.80(i). A Certificate of Documentation is form CG-1270 issued by the U.S. Coast Guard. This form is required for the operation of a vessel in certain trades. See 19 CFR 4.0(c) and 46 CFR part 67.

This final rule adjusts these penalty amounts using the same civil monetary penalty adjustment methodology that DHS announced in the IFR (81 FR 42987) and finalized in the DHS final rule (82 FR 8571), and detailed below.

The 2015 Act provides a new method for calculating inflation adjustments. The new method differs substantially from the methods that agencies used in the past when conducting inflation adjustments pursuant to the 1990 Inflation Adjustment Act. The new method is intended to more accurately reflect inflation. Previously, when agencies conducted adjustments to civil penalties, they did so under rules that required significant rounding of figures. For example, an agency would round a penalty increase that was greater than $1,000, but less than or equal to $10,000, to the nearest multiple of $1,000. While this allowed penalties to be kept at round numbers, it meant that agencies would often not increase penalties at all if the inflation factor was not large enough. Furthermore, increases to penalties were capped at 10 percent, which meant that longer periods without an inflation adjustment could cause a penalty to rapidly lose value in real terms. Over time, the formula used in the 1990 Inflation Adjustment Act calculations frequently caused penalties to lose value relative to actual inflation. The 2015 Act removed these rounding rules, and instead instructs agencies to round penalties to the nearest $1. While this creates penalty values that are no longer round numbers, it does ensure that agencies will increase penalties each year to a figure commensurate with the actual calculated inflation.

To better reflect the original impact of civil penalties, the 2015 Act “resets” the inflation calculations by excluding prior inflationary adjustments under the Inflation Adjustment Act. To do this, the 2015 Act requires agencies to identify, for each penalty, the year that Congress originally enacted the maximum penalty level/range of minimum and maximum penalty levels or the year that the agency last adjusted the penalty amount other than pursuant to the Inflation Adjustment Act, and the corresponding penalty amount(s). The 2015 Act then requires agencies to perform an initial “catch-up” adjustment, using the original amounts of civil penalties as a baseline, so that the 2016 penalty levels are equal, in real terms, to the penalty amounts as they were originally established. The 2015 Act also requires agencies to make subsequent annual adjustments to increase the penalty amounts by a cost-of-living adjustment.

This section sets forth the initial “catch-up” adjustment for the two civil monetary penalties assessed by CBP that were inadvertently omitted from the DHS rulemakings and CBP correction rulemaking. The catch-up adjustments for these two penalties are listed in Table 1 below. This table shows how DHS would have initially increased the penalties pursuant to the 2015 Act. The table contains the following information:

• In the first column (penalty name), we provide a description of the penalty.

• In the second column (citation), we provide the statutory cite from the United States Code (U.S.C.) and the regulatory cite from the Code of Federal Regulations (CFR).

• In the third column (current penalty), we list the existing penalty in effect on November 2, 2015.

• In the fourth column (baseline penalty (year)), we provide the amount and year of the penalty as enacted by Congress or as last changed through a mechanism other than pursuant to the Inflation Adjustment Act, whichever is later.

• In the fifth column (2016 multiplier), we list the multiplier used to adjust the penalty pursuant to the initial OMB catch-up guidance. The multiplier is determined by the year of enactment or last adjustment of the penalty. The multiplier is based upon the Consumer Price Index (CPI-U) for the month of October 2015, not seasonally adjusted.

• In the sixth column (preliminary new penalty), we list the amount obtained by multiplying the Baseline Penalty from column 4 with the Multiplier from column 5. This amount will be the catch-up adjustment amount, if, in accordance with the 2015 Act, this level does not increase penalty levels by more than 150 percent of the corresponding levels in effect on November 2, 2015.

• In the seventh column (adjusted 2016 penalty), we provide the number for the penalty as it would have been adjusted for 2016. To derive this number, we compare the preliminary new penalty with the current penalty from column 3. The adjusted new penalty is the lesser of either the preliminary new penalty or an amount equal to 150 percent more than the current penalty.

This table shows how DHS would have made the 2017 annual inflation adjustment for the two civil monetary penalties assessed by CBP that were inadvertently omitted from the DHS rulemakings and CBP correction rulemaking, pursuant to the 2015 Act and the guidance OMB issued to agencies on December 16, 2016. 9 In Table 2 below, we show: (1) The civil penalty (or penalties) name, (2) the penalty statutory and/or regulatory citation, (3) the penalty amount as it would have been adjusted in 2016 (See Table 1), (4) the cost-of-living adjustment multiplier for 2017 that OMB provided in its December 16, 2016 guidance, and (5) the 2017 adjusted penalty.

This final rule also makes the 2018 annual inflation adjustment pursuant to the 2015 Act and the guidance OMB issued to agencies on December 15, 2017. 10 Pursuant to 28 U.S.C. 2461 note sec. 6, as amended by the 2015 Act, the penalty amounts adjusted by this final rule will be applicable for penalties assessed after December 28, 2018 where the associated violation occurred after November 2, 2015 ( i.e., the date the 2015 Act was signed into law). Consistent with OMB guidance, the 2015 Act does not change previously assessed penalties that the agency is actively collecting or has collected.

In Table 3 below, we show: (1) The civil penalty (or penalties) name, (2) the penalty statutory and/or regulatory citation, (3) the penalty amount as it would have been adjusted in 2017 (See Table 2), (4) the cost-of-living adjustment multiplier for 2018 that OMB provided in its December 15, 2017 guidance, and (5) the new 2018 adjusted penalty.

Additionally, we have made conforming edits to the regulatory text for the new adjusted penalty amounts in 19 CFR 4.80(i). Because the 46 U.S.C. 12118 penalty is not included in 19 CFR 4.80(d), there are no conforming edits to be made to the regulatory text. However, this penalty is listed in Table 3 for informational purposes.

The Administrative Procedure Act (APA) generally requires agencies to publish a notice of proposed rulemaking in the Federal Register (5 U.S.C. 553(b)) and to provide interested persons with the opportunity to submit comments (5 U.S.C. 553(c)). The APA also requires agencies to provide a delayed effective date (of not less than 30 days) for substantive rules. 5 U.S.C. 553(d). The 2015 Act, however, specifically instructed that agencies are to make the required annual adjustments notwithstanding section 553 of title 5 of the U.S.C.

DHS is promulgating this final rule to ensure that the amounts for civil penalties that CBP assesses or enforces that were inadvertently omitted from the DHS rulemakings reflect the statutorily mandated ranges as adjusted for inflation. The 2015 Act provides a clear nondiscretionary formula for adjustment of the civil penalties; DHS and CBP have been charged only with performing ministerial computations to determine the amounts of adjustments for inflation to civil monetary penalties. Additionally, although the 2015 Act requires publication of an IFR to take effect not later than August 1, 2016, that date has passed and publishing a separate IFR to account for these inadvertently omitted penalty adjustments would cause unnecessary delay. Further, this final rule merely applies the adjustment methodology that DHS provided for public comment in the 2016 IFR and finalized in the 2017 final rule. DHS finds that it is unnecessary to seek further public comment regarding the application of the finalized methodology to these two penalties. For these reasons, and as specified in the 2015 Act, DHS finds good cause to promulgate these CBP civil monetary penalty adjustments as a final rule and finds that the prior public notice-and-comment procedures and delayed effective date requirements of the APA are unnecessary and do not apply to this rule.

As described in Section I above, the 2015 Act requires agencies to make annual adjustments to civil monetary penalties no later than January 15 of each year and to publish the adjustments in the Federal Register . DHS will make future annual inflation adjustments required pursuant to the 2015 Act by final rule notwithstanding the notice-and-comment and delayed effective date requirements of the APA, as required by the 2015 Act. For future annual adjustments, DHS will update the penalty amounts by applying a cost-of-living adjustment multiplier pursuant to OMB guidance. DHS will publish a final rule that provides a table with the adjusted penalty amounts and that updates the numbers in the regulatory text accordingly. DHS will incorporate the two CBP penalties adjusted in this final rule into such future annual adjustment final rules.

Executive Orders 12866 (“Regulatory Planning and Review”) and 13563 (“Improving Regulation and Regulatory Review”) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 13771 (“Reducing Regulation and Controlling Regulatory Costs”) directs agencies to reduce regulation and control regulatory costs and provides that “for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.”

OMB has not designated this rule a significant regulatory action under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed it. As this rule is not a significant regulatory action it is not subject to the requirements of Executive Order 13771. See OMB's Memorandum, “Guidance Implementing Executive Order 13771, Titled `Reducing Regulation and Controlling Regulatory Costs' ” (April 5, 2017) at Q2.

This final rule makes nondiscretionary adjustments to existing civil monetary penalties in accordance with the 2015 Act and OMB guidance. 11 DHS therefore did not consider alternatives and does not have the flexibility to alter the adjustments of the civil monetary penalty amounts as provided in this rule. To the extent this final rule increases civil monetary penalties, it would result in an increase in transfers from persons or entities assessed a civil monetary penalty to the government.

The Regulatory Flexibility Act applies only to rules for which an agency publishes a notice of proposed rulemaking pursuant to 5 U.S.C. 553(b). See 5 U.S.C. 601-612. The Regulatory Flexibility Act does not apply to this final rule because a notice of proposed rulemaking was not required for the reasons stated above.

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. This final rule will not result in such an expenditure.

The provisions of the Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35, and its implementing regulations, 5 CFR part 1320, do not apply to this final rule, because this final rule does not trigger any new or revised recordkeeping or reporting.

The signing authority for this document falls under 19 CFR 0.2(a). Accordingly, this document is signed by the Secretary of Homeland Security.

For the reasons stated in the preamble, CBP amends 19 CFR part 4 as follows:

This rule is needed to carry out the requirements of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 and Office of Management and Budget guidance M-19-04. The rule adjusts, as required for 2019, the maximum civil penalties under 29 CFR part 4071 and 29 CFR part 4302 that the Pension Benefit Guaranty Corporation (PBGC) may assess for failure to provide certain notices or other material information and certain multiemployer plan notices.

PBGC's legal authority for this action comes from the Federal Civil Penalties Inflation Adjustment Act of 1990 as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 and from sections 4002(b)(3), 4071, and 4302 of the Employee Retirement Income Security Act of 1974 (ERISA).

This rule adjusts as required by law the maximum civil penalties that PBGC may assess under sections 4071 and 4302 of ERISA. The new maximum amounts are $2,194 for section 4071 penalties and $292 for section 4302 penalties.

PBGC administers title IV of ERISA. Title IV has two provisions that authorize PBGC to assess civil monetary penalties. 1 Section 4302, added to ERISA by the Multiemployer Pension Plan Amendments Act of 1980, authorizes PBGC to assess a civil penalty of up to $100 a day for failure to provide a notice under subtitle E of title IV of ERISA (dealing with multiemployer plans). Section 4071, added to ERISA by the Omnibus Budget Reconciliation Act of 1987, authorizes PBGC to assess a civil penalty of up to $1,000 a day for failure to provide a notice or other material information under subtitles A, B, and C of title IV and sections 303(k)(4) and 306(g)(4) of title I of ERISA.

On November 2, 2015, the President signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, 2 which requires agencies to adjust civil monetary penalties for inflation and to publish the adjustments in the Federal Register . An initial adjustment was required to be made by interim final rule published by July 1, 2016, and effective by August 1, 2016. Subsequent adjustments must be published by January 15 each year after 2016.

On December 14, 2018, the Office of Management and Budget issued memorandum M-19-04 on implementation of the 2019 annual inflation adjustment pursuant to the 2015 act. 3 The memorandum provides agencies with the cost-of-living adjustment multiplier for 2019, which is based on the Consumer Price Index (CPI-U) for the month of October 2018, not seasonally adjusted. The multiplier for 2019 is 1.02522. The adjusted maximum amounts are $2,194 for section 4071 penalties and $292 for section 4302 penalties.

The Office of Management and Budget has determined that this rule is not a “significant regulatory action” under Executive Order 12866 and therefore not subject to its review. As this is not a significant regulatory action under E.O. 12866, it is not considered an E.O. 13771 regulatory action.

The Office of Management and Budget also has determined that notice and public comment on this final rule are unnecessary because the adjustment of civil penalties implemented in the rule is required by law. See 5 U.S.C. 553(b).

Because no general notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act of 1980 does not apply. See 5 U.S.C. 601(2).

In consideration of the foregoing, PBGC amends 29 CFR parts 4071 and 4302 as follows:

The Coast Guard will enforce a segment of the Safety Zone; Brandon Road Lock and Dam to Lake Michigan including Des Plaines River, Chicago Sanitary and Ship Canal, Chicago River, Calumet-Saganashkee Channel, Chicago, IL, listed in 33 CFR 165.930. Specifically, the Coast Guard will enforce this safety zone on all waters of the main branch of the Chicago River 600 feet west of the Franklin/Orleans Street Bridge and 1,000 feet east of the Columbus Drive Bridge from 11:45 p.m. on December 31, 2018 through 12:15 a.m. on January 1, 2019. During the enforcement period, no vessel may enter into, transit, moor lay up or anchor within this regulated area without approval from the Captain of the Port Lake Michigan or a Captain of the Port Lake Michigan designated representative. Vessels and persons granted permission to enter the safety zone shall obey all lawful orders or directions of the Captain of the Port Lake Michigan, or his or her on-scene representative.

This notice of enforcement is issued under the authority of 33 CFR 165.930 and 5 U.S.C. 552(a). In addition to this publication in the Federal Register , the Captain of the Port Lake Michigan will also provide notice through other means, which will include Broadcast Notice to Mariners, distribution in leaflet form, and/or on-scene oral notice. Additionally, the Captain of the Port Lake Michigan may notify representatives from the maritime industry through telephonic and email notifications. If the Captain of the Port or a designated representative determines that the regulated area need not be enforced for the full duration stated in this notice of enforcement, he or she may use a Broadcast Notice to Mariners to grant general permission to enter the regulated area. The Captain of the Port Lake Michigan or a designated on-scene representative may be contacted via Channel 16, VHF-FM or at (414) 747-7182.

I. Table of Abbreviations CFR Code of Federal Regulations COTP Captain of the Port Sector New Orleans DHS Department of Homeland Security FR Federal Register MM Mile Marker NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background Information and Regulatory History

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. The Coast Guard was notified of this event on December 17, 2018. We must establish this safety zone by December 31, 2018 and lack sufficient time to provide a reasonable comment period and then consider those comments before issuing this rule. Immediate action is needed to respond to the potential safety hazards associated with a fireworks display.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Delaying the effective date of this rule would be contrary to the public interest because immediate action is needed to respond to the potential safety hazards associated with a fireworks display.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port Sector New Orleans (COTP) has determined that potential hazards associated with a fireworks display are a safety concern for anyone within a one-mile stretch of the Lower Mississippi River between Mile Marker (MM) 99.3 and MM 100.3. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone during the fireworks display.

This rule establishes a safety zone from 10 p.m. through 11 p.m. on December 31, 2018. The safety zone will cover all navigable waters between Mile Marker (MM) 99.3 and MM 100.3 on the Lower Mississippi River, above Head of Passes. The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters from the hazards associated with a fireworks display. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. A designated representative is a commissioned, warrant, or petty officer of the U.S. Coast Guard assigned to units under the operational control of USCG Sector New Orleans. Vessels requiring entry into this safety zone must request permission from the COTP or a designated representative. They may be contacted on VHF-FM Channel 16 or 67. Persons and vessels permitted to enter or to move within this safety zone must transit at their slowest safe speed and comply with all lawful directions issued by the COTP or the designated representative. The COTP or a designated representative will inform the public through Broadcast Notices to Mariners of any changes in the planned schedule.

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. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

This regulatory action determination is based on the size, location, duration, and time-of-day of the safety zone. Vessel traffic will be able to transit around the safety zone, which will impact a small designated area of the Lower Mississippi River for one hour during the evening. Moreover, the Coast Guard will issue a Broadcast Notice to Mariners about the zone, and the rule allows vessels to seek permission to enter the zone.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this 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 temporary 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 contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

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 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 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. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

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 and Commandant Instruction M16475.1D, 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 a safety zone being established for one hour in the evening and encompassing one mile of the Lower Mississippi River for a fireworks display. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES .

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

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule. Since the Coast Guard received notice of this event on December 10, 2018, notice and comment procedures would be impracticable in this instance.

For similar reasons as those stated above, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register .

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port (COTP) San Francisco has determined that potential hazards associated with the Sacramento New Year's Eve fireworks display on December 31, 2018, will be a safety concern for anyone within a 175-foot radius of the fireworks firing sites. This rule is needed to protect spectators, vessels, and other property from hazards associated with pyrotechnics.

This rule establishes three temporary safety zones from 8:30 p.m. to 9:46 p.m. on December 31, 2018. At 8:30 p.m. on December 31, 2018, 30 minutes prior to the commencement of the 16 minute fireworks display, the safety zones for the Sacramento New Year's Eve Fireworks Display will encompass the navigable waters around the fireworks firing sites within a radius of 175 feet in approximate positions:

Near River Walk Park at 38°35′02″ N, 121°30′30″ W,

Near River Walk Park at 38°34′54″ N, 121°30′33″ W, and

Near the Tower Bridge at 38°34′50″ N, 121°30′30″ W (NAD83).

This portion of the Sacramento River is depicted on National Oceanic and Atmospheric Administration (NOAA) Chart 18662, available for free at http://www.charts.noaa.gov/OnLineViewer/18662.shtml. The safety zones will terminate at 9:46 p.m. on December 31, 2018.

The effect of the temporary safety zones is to restrict navigation in the vicinity of the fireworks firing sites during the scheduled display. Except for persons or vessels authorized by the COTP or a designated representative, no person or vessel may enter or remain in the restricted areas. These regulations are needed to keep spectators and vessels away from the immediate vicinity of the fireworks firing sites to ensure the safety of participants, spectators, and transiting vessels.

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. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

This regulatory action determination is based on the limited duration and narrowly tailored geographic area of the safety zones. Although this rule restricts access to the waters encompassed by the safety zones, the effect of this rule will not be significant because the local waterway users will be notified via public Notice to Mariners to ensure the safety zone will result in minimum impact. The entities most likely to be affected are waterfront facilities, commercial vessels, and pleasure craft engaged in recreational activities.

The Regulatory Flexibility Act of 1980 (RFA), 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 rule will not have a significant economic impact on a substantial number of small entities.

This rule may affect the following entities, some of which may be small entities: Owners and operators of waterfront facilities, commercial vessels, and pleasure craft engaged in recreational activities and sightseeing, if these facilities or vessels are in the vicinity of the safety zones at times when these zones are being enforced. This rule will not have a significant economic impact on a substantial number of small entities for the following reasons: (i) This rule will encompass only a small portion of the waterway for a limited period of time, and (ii) the maritime public will be advised in advance of these safety zones via Broadcast Notice to Mariners.

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 contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

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 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 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. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

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 and Commandant Instruction M16475.1D, 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 of limited size and duration. It is categorically excluded from further review under Categorical Exclusion L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES .

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

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

The Coast Guard will enforce the safety zone in the Table to 33 CFR 165.506, entry (a)(16), as effective as of Dec. 19, 2018, for the Delaware River Waterfront Corporation New Year's Eve Fireworks displays from 5:45 p.m. through 6:45 p.m. on December 31, 2018, and from 11:45 p.m. on December 31, 2018, through 12:45 a.m. on January 1, 2019. (The Coast Guard published a final rule on November 18, 2018, amending entry (a)(16) to table 33 CFR 165.506 that will go into effect on December 19, 2018, 83 FR 58186.) This action is necessary to ensure safety of life on the navigable waters of the United States immediately prior to, during, and immediately after the fireworks displays. Our regulation for safety zones of fireworks displays within the Fifth Coast Guard District, table to § 165.506, entry (a)(16) specifies the location of the regulated area as all waters of Delaware River, adjacent to Penn's Landing, Philadelphia, PA, within 500 yards of a fireworks barge at approximate position latitude 39°56′49″ N, longitude 075°08′11″ W. During the enforcement periods, as reflected in § 165.506(d), vessels may not enter, remain in, or transit through the safety zones during these enforcement periods unless authorized by the Captain of the Port or designated Coast Guard patrol personnel on scene.

In addition to this notice of enforcement in the Federal Register , the Coast Guard plans to provide notification of this enforcement period via broadcast notice to mariners.

I. Table of Abbreviations CFR Code of Federal Regulations COTP Captain of the Port DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking §  Section U.S.C. United States Code II. Background Information and Regulatory History

On October 17, 2018, Pyrotecnico, Inc., of New Castle, PA, notified the Coast Guard that it will be conducting a fireworks display from 11:55 p.m. on December 31, 2018, to 12:30 a.m. on January 1, 2019, sponsored by the City of Annapolis, MD. The fireworks are to be launched from a barge in Spa Creek, in Annapolis, MD. Additional details were received on November 5, 2018. In response, on November 27, 2018, the Coast Guard published a notice of proposed rulemaking (NPRM) titled “Safety Zone for Fireworks Display; Spa Creek, Annapolis, MD” (83 FR 60802). 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 December 12, 2018, we received seven comments.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Delaying the effective date of this rule would be impracticable and contrary to the public interest because immediate action is needed to mitigate the potential safety hazards associated with a fireworks display in this location.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port (COTP) Maryland-NCR has determined that potential hazards associated with the planned fireworks display on December 31, 2018, will be a safety concern for anyone within a 400-foot radius of the fireworks barge. This rule is needed to ensure safety of vessels on the navigable waters within 400 feet of the fireworks barge on Spa Creek before, during, and after the scheduled event.

As noted above, we received 7 public submissions to the docket responding to our NPRM published November 27, 2018. We thank all of the commenters for taking time to review the NPRM and submit comments regarding this action.

The majority of commenters expressed support for the rule, but there were some concerns. Below in this section we have presented our summaries of comments in italics, and have stated our responses after each summary.

Winds during winter could carry burning embers and projectiles farther than the 400 feet distance established for the zone. The 400 feet from the fireworks barge is an insufficient distance and the safety zone should be increased in size.

The minimum safe distance from the fireworks barge used by the Coast Guard to determine the size of the safety zone is based on industry standards for outdoor aerial fireworks set by the National Fire Protection Association (NFPA). The NFPA standard for this fireworks display is 280 feet from the discharge site. At the request of the contracted fireworks company, Pyrotecnico, the Coast Guard is using 400 feet for the size of its safety zone, which is an increase of more than 40 percent above the safe distance set by the NFPA.

Like people and property, the protection of wildlife should be considered and any fireworks that end up in the waterway should be recovered and disposed of following the display.

After completing the required analysis for the rule, the Coast Guard has determined that this rulemaking will not have a significant effect on the human environment. In accordance with applicable environmental laws, this analysis is of the action being taken by the Coast Guard, the creation of the safety zone, not the underlying triggering event—the fireworks, which appear to be the commenter's source of concern with respect to wildlife. The Coast Guard agrees that considering the effects of fireworks on the environment is important; however, it is up to the event sponsor to determine the appropriate level of clean up for falling debris and the potential impact of the fireworks on wildlife.

There are no changes in the regulatory text of this rule from the proposed rule in the NPRM.

This rule establishes a temporary safety zone from 11 p.m. on December 31, 2018, through 1 a.m. on January 1, 2019. The safety zone will cover all navigable waters within 400 feet of the fireworks barge in Spa Creek located within 400 feet of the fireworks barge in approximate position latitude 38°58′32.48″ N, longitude 076°28′57.55″ W, located at Annapolis, MD. The duration of the safety zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled fireworks display. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative.

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. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

This regulatory action determination is based on the size, duration, and time-of-day of the safety zone. This zone covers the entire navigable channel. Although vessel traffic will not be able to safely transit around this safety zone, the impact will be for 2 hours during the evening when vessel traffic in Spa Creek is normally low. The Coast Guard will issue a Broadcast Notice to Mariners via VHF-FM marine channel 16 about 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 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 contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

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 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 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. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

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 and Commandant Instruction M16475.1D, 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 a safety zone lasting 2 hours that prohibits entry within a portion of Spa Creek. 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. 01. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES .

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

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

I. Background

In FR Doc. 2018-24238 of November 14, 2018 (83 FR 56922), there were technical and typographical errors that are identified and corrected in the Correction of Errors section below. The provisions in this correction document are effective as if they had been included in the document published on November 14, 2018. Accordingly, the corrections are effective January 1, 2019.

On page 57029, we inadvertently made several technical and typographical errors by referencing the final rule instead of the proposed rule. We are correcting those errors by replacing references to “this rule” and “this final rule” with the correct reference to the Calendar Year (CY) 2019 End-Stage Renal Disease Prospective Payment System, Durable Medical Equipment, Prosthetics, Orthotics and Supplies (CY 2019 ESRD PPS DMEPOS) proposed rule.

Under 5 U.S.C. 553(b) of the Administrative Procedure Act (APA), the agency is required to publish a notice of the proposed rule in the Federal Register before the provisions of a rule take effect. Similarly, section 1871(b)(1) of the Social Security Act (the Act) requires the Secretary of the Department of Health and Human Services to provide for notice of the proposed rule in the Federal Register and provide a period of not less than 60 days for public comment. In addition, section 553(d) of the APA, and section 1871(e)(1)(B)(i) of the Act mandate a 30-day delay in effective date after issuance or publication of a rule. Sections 553(b)(B) and 553(d)(3) of the APA provide for exceptions from the notice and comment and delay in effective date requirements; in cases in which these exceptions apply, sections 1871(b)(2)(C) and 1871(e)(1)(B)(ii) of the Act provide exceptions from the notice and 60-day comment period and delay in effective date requirements of the Act as well. Section 553(b)(B) of the APA and section 1871(b)(2)(C) of the Act authorize an agency to dispense with normal rulemaking requirements for good cause if the agency makes a finding that the notice and comment process is impracticable, unnecessary, or contrary to the public interest. In addition, both section 553(d)(3) of the APA and section 1871(e)(1)(B)(ii) of the Act allow the agency to avoid the 30-day delay in effective date where such delay is contrary to the public interest and an agency includes a statement of support.

We believe that this correcting document does not constitute a rulemaking that would be subject to the notice and comment or delayed effective date requirements of the APA or section 1871 of the Act. This document simply corrects technical and typographical errors in the preamble, but does not make substantive changes to the policies or payment methodologies that were adopted in the final rule. As a result, this correcting document is intended to ensure that the information in the final rule accurately reflects the policies adopted in that document.

Even if this were a rulemaking to which the notice and comment and delayed effective date requirements applied, we find there is good cause to waive such requirements. Undertaking further notice and comment procedures to incorporate the corrections in this document in the final rule or delaying the effective date of the corrections would be contrary to the public interest to ensure that the rule accurately reflects our policies as of the date they take effect. Further, such procedures would be unnecessary because we are not making any substantive revisions to the final rule, but rather, we are simply correcting the Federal Register document to reflect the policies we previously proposed, received public comment on, and subsequently finalized in the final rule. For these reasons, we believe that we have good cause to waive the notice and comment and delay in effective date requirements.

In FR Doc. 2018-24238 of November 14, 2018 (83 FR 56922), make the following corrections:

1. On page 57029, first column, second full paragraph,

a. In line 16, the reference “this rule” is corrected to read “the CY 2019 ESRD PPS DMEPOS proposed rule”.

b. In line 17, the reference “this final rule” is corrected to read “the CY 2019 ESRD PPS DMEPOS proposed rule”.

2. On page 57029, second column, second full paragraph, in lines 27 and 28, the reference “this final rule” is corrected to read “the CY 2019 ESRD PPS DMEPOS proposed rule”.

I. Background

In FR Doc. 2018-24243 of November 21, 2018 (83 FR 58818), there were a number of technical and typographical errors that are identified and corrected in the Correction of Errors section of this correcting document. The provisions in this correction document are effective as if they had been included in the document that appeared in the November 21, 2018 Federal Register . Accordingly, the corrections are effective January 1, 2019.

On page 58822, we are correcting the section “Payment of Drugs, Biologicals, and Radiopharmaceuticals If Average Sales Price (ASP) Data Are Not Available” to remove the language that suggests that drugs with pass-through status with partial quarter WAC-based pricing are not paid at WAC + 3, which is incorrect. This correction is necessary to conform the introductory language regarding OPPS payment policy for drugs, biologicals, and radiopharmaceuticals with WAC-based pricing with the policy adopted in the final rule to pay for these drugs, biologicals, and radiopharmaceuticals, including those with pass-through status, at WAC + 3 percent.

On page 58825, the headings for subsections “c. Impact of the Changes to the Hospital OQR Program” and “d. Impact of the Changes to the ASCQR Program” were alphabetically mislabeled and are corrected to be “g. Impact of the Changes to the Hospital OQR Progam” and “h. Impact of the Changes to the ASCQR Program,” respectively.

On page 58833, Healthcare Common Procedure Coding System (HCPCS) code P9072 (Platelets, pheresis, pathogen reduced or rapid bacterial tested, each unit) was cited in a comment in error. The correct HCPCS code is “P9073” not “P9072”.

On page 58834, we transposed two numbers in the Healthcare Common Procedure Coding System (HCPCS) code P9037 (Platelets, pheresis, leukocytes reduced, irradiated, each unit). The correct HCPCS code is “P9037”, not “P9073”.

On page 58880, in “Table 12.—New Level II HCPCS Codes Effective April 1, 2018,” we incorrectly stated that the Medicare Ambulatory Payment Classification (APC) assignment for HCPCS code C9749 (Repair nasal stenosis w/imp) is “APC 5164,” rather than “APC 5165.” The correct APC assignment for this code is APC 5165, which we finalized on page 58922.

On page 58909, under section “6. Endovascular Procedures (APCs 5191 through 5194)” of the “OPPS APC-Specific Policies” section, we inadvertently omitted a summary of a public comment and our response related to new calendar year (CY) 2019 Common Procedural Terminology (CPT) code 33274. Therefore, we are revising the discussion to include the comment and response.

On pages 58894 to 58897, we occasionally stated the wrong APC assignment for procedure code C9734 (Focused ultrasound ablation/therapeutic intervention, other than uterine leiomyomata, with magnetic resonance (mr) guidance) for CY 2018 and CY 2019. The correct APC assignment for procedure code C9734 is APC 5114 for CY 2018 and APC 5115 for CY 2019.

On page 58928 of the “OPPS APC-Specific Policies” section, we inadvertently omitted a summary of a public comment and response related to existing CPT code 47382 and new CY 2019 CPT code 95983. Therefore, we are adding a new subsection titled “21. Other Procedures/Services” that includes this comment and response.

On page 58954, in “Table 37.—Drugs and Biologicals For Which Pass-through Payment Status Expires December 31, 2018,” we included an incorrect Pass-Through Payment Effective Date for HCPCS code Q5101. The correct Pass-Through Payment Effective Date for HCPCS code Q5101 is 01/01/2016, not 07/01/2015.

On page 58958, in Table 38.—Drugs and Biologicals With Pass-through Payment Status in CY 2019,” we included an incorrect Pass-Through Payment Effective Date for HCPCS code J7328. The correct Pass-Through Payment Effective Date for HCPCS code J7328 is 04/01/2017, not 01/01/16.

On page 58969, we inadvertently stated, “We also are finalizing our proposal to retain our established policy to assign new skin substitute products with pricing information to the low cost group.” We are correcting the word “with” to read “without” to clarify that skin substitutes without pricing information are assigned to the low cost group, consistent with our established policy, which is described on page 58967.

The ASC payment system uses the same APC classification groupings as the OPPS; however, ASC payment indicators and OPPS status indicators are not compatible across the two payment systems. In our final rule ratesetting for CY 2019, we inadvertently carried over OPPS C-APC status indicators in our ASC ratesetting process. This error impacted the application of our multiple procedure discounting rules and the calculation of the ASC weight scalar, which led to the calculation of incorrect ASC payment rates. Accordingly, on page 59079, in our response to a comment regarding our process of applying a weight scalar in calculation of ASC payment rates, and on page 59169, we are correcting our weight scalar in ASC payment rate calculations of “0.8792” to “0.8800.”

Additionally, on pages 59079, 59080 and 59169, we inadvertently excluded certain core-based statistical areas (CBSAs) and, therefore, incorrectly calculated the wage index budget neutrality factor that we applied to the 2018 ASC conversion factor. We previously calculated a wage index adjustment of 1.0004. We have recalculated the wage index adjustment taking into account the appropriate CBSAs, resulting in a corrected wage index adjustment of “1.0000.”

On pages 59080 and 59169, we are correcting the final CY 2019 conversion factor of $46.551 for ASCs who meet quality reporting requirements and the final CY 2019 conversion factor of $45.639 for ASCs who do not meet quality reporting requirements. These conversion factors are incorrect because they utilize the incorrect wage index adjustment. The correct conversion factors, calculated utilizing the correct wage index adjustment, are “$46.532” and “45.621” for ASCs that meet quality reporting requirements and for ASCs that do not meet quality reporting requirements, respectively.

On page 59170, we are correcting our estimate of the increase in aggregate payments for ancillary items and services of 79 percent for CY 2019. The correct percentage is 68 percent, which accounts for removing HCPCS code 0474T from our list of covered surgical procedures and, therefore, no longer includes any estimated 2019 spending from HCPCS code 0474T. Further, on page 59170 in “Table 63.—Estimated Impact of the CY 2019 Update to the ASC Payment System on Aggregate CY 2019 Medicare Program Payments by Surgical Specialty or Ancillary Items and Services Group”, we are correcting the figure in the third column, titled “Estimated CY 2019 Percent Change” for the Ancillary Items and Services Group to reflect the change from 79 percent to 68 percent.

On page 59171, in “Table 64.—Estimated Impact of the CY 2019 Update to the ASC Payment System on Aggregate Payments for Selected Procedures”, we are correcting the figures in the fourth column of the table titled “Estimated CY 2019 Percent Change” to account for payment rates changes from the corrected ASC weight scalar and corrected ASC conversion factor.

On page 59088, first column, first full paragraph, the word “retaining” is corrected to “removing.” We inadvertently included the wrong word.

On page 59100 through 59102, the table footnoting for the Hospital OQR Program Measure Set for both the CY 2020 and CY 2021 Payment Determinations are corrected. Specifically, the footnote pertaining to OP-26 is removed from the un-numbered tables titled “Hospital OQR Program Measure Set for the CY 2020 Payment Determination” and “Hospital OQR Program Measure Set for the CY 2021 Payment Determination and Subsequent Years.” The measure is no longer in the program beginning with the CY 2020 payment determination. In addition, for both tables, the National Quality Forum (NQF) status for OP-8: MRI Lumbar Spine for Low Back Pain and OP-33: External Beam Radiotherapy for Bone Metastases is updated to indicate that the NQF endorsement for these measures was removed. Furthermore, in both tables, we added an additional footnote to OP-31 to indicate “Measure voluntarily collected as set forth in section XIII.D.3.b. of the CY 2015 OPPS/ASC final rule with comment period (79 FR 66946 through 66947).” Subsequently, asterisks for the remaining footnotes are renumbered, as are the corresponding notations under the measure name in both tables. As a result of the renumbering, both tables are revised such that OP-37a, OP-37b, OP-37c, OP-37d, and OP-37e correspond with the appropriate footnote reading “Measure reporting delayed beginning with CY 2018 reporting and for subsequent years as discussed in section XIII.B.5. of the CY 2018 OPPS/ASC final rule with comment period (82 FR 59432 through 59433).”

On page 59117, second column, first paragraph, the word “retaining” is corrected to “removing.” We inadvertently included the wrong word.

On page 59129, first column, second paragraph, the language, “Furthermore, this is the only measure in the ASCQR Program measure set that deals with cataract surgery, which is commonly performed in the ASC setting. If it is removed, the program will have a gap in coverage for this clinical area. As a result, we now believe that meaningful information can be provided to consumers regarding those facilities” is removed. This text pertains only to the Hospital OQR Program; it is factually inaccurate with respect to the ASCQR Program, since the ASC-14:Unplanned Anterior Vitrectomy measure also includes cataract surgery, and was erroneously included.

We are summarizing below the errors we have corrected in the addenda available on the internet at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The addenda that are available on the internet have been updated to reflect the revisions discussed in this correcting document.

In Addendum B (Final OPPS Payment by HCPCS Code for CY 2019), we corrected the following:

• CPT code 0100T (Prosth retina receive&gen): APC revision from APC 1906 (New Technology—Level 51 ($130,001-$145,000)) to APC 1908 (New Technology—Level 52 ($145,001-$160,000)). In the preamble text, CPT code 0100T had been assigned to APC 1908. This action ensures the information in Addendum B reflects the APC assignment that was finalized in the preamble.

• CPT code 0474T (Insj aqueous drg dev io rsvr): Status indicator revision from status indicator “J1” (Hospital Part B Services Paid Through a C-APC) to status indicator “E1” (Not Paid by Medicare) because the device associated with this procedure was withdrawn from marketing in September 2018 and the procedure is no longer separately payable under the OPPS.

• HCPCS code A6460: We made a typographical error in listing the HCPCS short descriptor. Specifically, we are correcting the short descriptor from “Arg II ext com/sup/acc misc” to “Synthetic drsg <= 16 sq in”.

• HCPCS code A6461: We made a typographical error in listing the HCPCS short descriptor. Specifically, we are correcting the short descriptor from “Enzyme cartridge enteral nut” to “Synthetic drsg >16 <=48 sq in”.

• HCPCS code C9752 (Intraosseous des lumb/sacrum): We made a typographical error in listing the APC assignment. Specifically, we are correcting the APC assignment from APC 5155 (Level 5 Airway Endoscopy) to APC 5115 (Level 5 Musculoskeletal Procedures).

In Addendum C (Final HCPCS Codes Payable Under the 2019 OPPS by APC), we corrected the following:

• APC 1906 (New Technology—Level 51 ($130,001-$145,000)): Deleted HCPCS code 0100T from the list We inadvertently listed the code in this APC when it should have been listed under APC 1908 (New Technology—Level 52 ($145,001-$160,000)), as correctly listed in the preamble and Addendum B of the CY 2019 OPPS/ASC final rule with comment period.

• APC 1908 (New Technology—Level 52 ($145,001-$160,000)): Added HCPCS code 0100T to the list.

• APC 5115 (Level 5 Musculoskeletal Procedures): We made a typographical error by assigning HCPCS code C9752 to APC 5155 (Level 5 Airway Endoscopy) when it should have been assigned to APC 5115. Specifically, we are correcting the APC assignment for HCPCS code C9752 to APC 5115.

• APC 5155 (Level 5 Airway Endoscopy): Removed HCPCS code C9752 from the list.

• APC 5492 (Level 2 Intraocular Procedures): Deleted CPT code 0474T from the list because the device associated with this procedure was withdrawn from marketing in September 2018 and the procedure is no longer separately payable under the OPPS.

In Addendum P (Device-Intensive Procedures for CY 2019), we corrected the following errors in both tabs, 2019 FR Device Intensive List and 2019 FR HCPCS Offsets:

• CPT code 0100T: Revised the APC assignment from APC 1906 to APC 1908 and the final payment rate. We inadvertently listed the code in APC 1906 when it should have been listed under APC 1908 (New Technology—Level 52 ($145,001-$160,000)), as correctly listed in Addendum B of the CY 2019 OPPS/ASC final rule.

• CPT code 0474T: Removed from the list because the device associated with this procedure was withdrawn from marketing in September 2018 and this procedure is no longer separately payable under the OPPS.

• HCPCS code C9752: Added to the list along with the associated status indicator, APC, final CY 2019 payment rate, device offset percentage, and device offset amount, because we inadvertently omitted this code from Addendum P. This code should have received device-intensive status based on the CY 2019 policy to apply device-intensive status with a default device offset set at 31 percent for new HCPCS codes describing procedures requiring the implantation or insertion of a medical device that do not yet have associated claims data until claims data are available to establish the HCPCS code-level device offset for the procedures adopted in the final rule.

• HCPCS code C9754 (Perc av fistula, direct): Added to the list along with the associated status indicator, APC, final CY 2019 payment rate, device offset percentage, and device offset amount, because we inadvertently omitted this code from Addendum P. This code should have received device-intensive status based on the CY 2019 policy to apply device-intensive status with a default device offset set at 31 percent for new HCPCS codes describing procedures requiring the implantation or insertion of a medical device that do not yet have associated claims data until claims data are available to establish the HCPCS code-level device offset for the procedures adopted in the final rule.

• HCPCS code C9755 (Rf magnetic-guide av fistula): Added to the list along with the associated status indicator, APC, final CY 2019 payment rate, device offset percentage, and device offset amount, because we inadvertently omitted this code from Addendum P. This code should have received device-intensive status based on the CY 2019 policy to apply device-intensive status with a default device offset set at 31 percent for new HCPCS codes describing procedures requiring the implantation or insertion of a medical device that do not yet have associated claims data until claims data are available to establish the HCPCS code-level device offset for the procedures adopted in the final rule.

• In the tab titled “2019 FR Device Intensive List,” we inadvertently excluded CPT code 33285 (Insj subq car rhythm mntr) from the list. Therefore, we added this code along with the associated status indicator, APC, final CY 2019 payment rate, device offset percentage, and device offset amount to the list. This code should have received device-intensive status based on the device-intensive policy adopted in the final rule.

In the tab titled “2019 FR HCPCS Offsets,” the first bullet of the header was corrected from “*List of HCPCS codes payable under the OPPS that are designated as device-intensive procedures.” to “*List of all HCPCS codes payable under the OPPS that describe a clinical service including both those that are designated as device-intensive and those that are not designated as device intensive” because this tab in Addendum P includes device offsets for all codes for which we have data.

To view the corrected CY 2019 OPPS status indicators, APC assignments, relative weights, copayment rates, device-intensive status, and short descriptors for Addenda A, B, C, and P that resulted from these technical and typographical corrections, we refer readers to the Addenda and supporting files that are posted on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Select “CMS-1695-CN2” from the list of regulations. All corrected Addenda for this correcting document are contained in the zipped folder titled “2019 OPPS Final Rule Addenda” at the bottom of the page for CMS-1695-CN2.

In Addendum AA, we inadvertently mislabeled several CPT codes in the “Subject to Multiple Procedure Discounting” column. As discussed in section II.A.2 of this correction notice, we inadvertently carried over OPPS C-APC status indicators in our ASC ratesetting process. This error impacted the application of our multiple procedure discounting rules and the calculation of the ASC weight scalar, and ASC payment rates. Accordingly, we have updated Addenda AA to accurately reflect the list of CPT codes that are subject to multiple procedure discounting.

As stated in the CY 2018 final rule with comment period (83 FR 59409), ASC device intensive procedures are those with a HCPCS code-level device offset percentage greater than the threshold when calculated according to the standard OPPS APC ratesetting methodology, among other criteria. In inputting OPPS APC rate data into the ASC payment system for the CY 2019 OPPS/ASC final rule, several procedures were inadvertently assigned incorrect payment indicators. Accordingly, we have reviewed the ASC payment system data for consistency with the OPPS APC rates and have corrected the payment indicators for the following procedures in Addendum AA:

• CPT Code 19298: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 28435: Revised the payment indicator from “J8” to “A2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 28446: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 32550: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 33210: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 33226: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 33274: Revised the payment indicator from “G2” to “J8” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 33285: Revised the payment indicator from “G2” to “J8” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 36560: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 36563: Revised the payment indicator from “J8” to “A2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 36578: Revised the payment indicator from “J8” to “A2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 36583: Revised the payment indicator from “J8” to “A2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 36904: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 37211: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 37212: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 43274: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 43276: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 44384: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 47554: Revised the payment indicator from “J8” to “A2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 58356: Revised the payment indicator from “J8” to “P3” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• CPT code 65125: Revised the payment indicator from “J8” to “G2” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• HCPCS code C9752 (Intraosseous des lumb/sacrum): Revised the payment indicator from “G2” to “J8” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• HCPCS code C9754 (Perc av fistula, direct): Revised the payment indicator from “G2” to “J8” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

• HCPCS code C9755 (RF magnetic-guide AV fistula): Revised the payment indicator from “G2” to “J8” in addition to the payment weight and payment rate; this code had inadvertently been assigned the incorrect payment indicator in the final rule.

We also corrected the following in Addendum AA:

• CPT code 0100T: Updated the payment rate from $134,051.87 to $141,780.75 to reflect the New Tech APC to which this code was assigned in the CY 2019 OPPS/ASC final rule with comment period.

• CPT code 0474T: Removed the code from the list because the device associated with this procedure was withdrawn from marketing in September 2018 and this procedure is no longer separately payable under the ASC payment system.

• CPT code 28540: Revised the payment indicator from “P3” to “P2” in addition to the payment rate; the revised OPPS-based payment rate for CPT code 28540 is less than the PFS-based payment rate and the corrected payment indicator reflects this fact.

• HCPCS code C9753 (Intraosseous destruct add'l): Added to Addendum AA with a payment indicator of “N1”; this is a new code beginning January 1, 2019 and had inadvertently been left out of Addendum AA in the final rule.

In Addendum BB, we corrected the following:

• CPT code 74485 (Dilation urtr/urt rs&i): Revised the payment indicator to “N1”; this code had inadvertently been assigned no payment indicator in the final rule.

To view the corrected final CY 2019 ASC payment indicators, payment weights, payment rates, and multiple procedure discounting indicator for Addenda AA and BB that resulted from these technical corrections, we refer readers to the Addenda and supporting files on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/ASC-Regulations-and-Notices.html. Select “CMS-1695-CN2” from the list of regulations. All corrected ASC addenda for this correcting document are contained in the zipped folder entitled “Addendum AA, BB, DD1, DD2, and EE” at the bottom of the page for CMS-1695-CN2.

Under 5 U.S.C. 553(b) of the Administrative Procedure Act (APA), the agency is required to publish a notice of the proposed rule in the Federal Register before the provisions of a rule take effect. Similarly, section 1871(b)(1) of the Act requires the Secretary to provide for notice of the proposed rule in the Federal Register and provide a period of not less than 60 days for public comment. In addition, section 553(d) of the APA, and section 1871(e)(1)(B)(i) of the Act mandate a 30-day delay in effective date after issuance or publication of a rule. Sections 553(b)(B) and 553(d)(3) of the APA provide for exceptions from the notice and comment and delay in effective date of the APA requirements; in cases in which these exceptions apply, sections 1871(b)(2)(C) and 1871(e)(1)(B)(ii) of the Act provide exceptions from the notice and 60-day comment period and delay in effective date requirements of the Act as well. Section 553(b)(B) of the APA and section 1871(b)(2)(C) of the Act authorize an agency to dispense with normal rulemaking requirements for good cause if the agency makes a finding that the notice and comment process is impracticable, unnecessary, or contrary to the public interest. In addition, both section 553(d)(3) of the APA and section 1871(e)(1)(B)(ii) of the Act allow the agency to avoid the 30-day delay in effective date where such delay is contrary to the public interest and an agency includes a statement of support.

We believe that this correcting document does not constitute a rulemaking that would be subject to the notice and comment or delayed effective date requirements. This correcting document corrects technical and typographical errors in the preamble, addenda, payment rates, and tables included or referenced in the CY 2019 OPPS/ASC final rule with comment period but does not make substantive changes to the policies or payment methodologies that were adopted in the final rule with comment period. The corrections made through this correcting document are intended to ensure that the information in the CY 2019 OPPS/ASC final rule with comment period accurately reflects the policies adopted in that rule.

In addition, even if this were a rule to which the notice and comment procedures and delayed effective date requirements applied, we find that there is good cause to waive such requirements. Undertaking further notice and comment procedures to incorporate the corrections in this document into the final rule with comment period or delaying the effective date would be contrary to the public interest because it is in the public's interest for providers to receive appropriate payments in as timely a manner as possible, and to ensure that the CY 2019 OPPS/ASC final rule with comment period accurately reflects our methodologies and policies as of the date they take effect and are applicable.

Furthermore, such procedures would be unnecessary, as we are not making substantive changes to our payment methodologies or policies, but rather, we are simply implementing correctly the methodologies and policies that we previously proposed, received comment on, and subsequently finalized. This correcting document is intended solely to ensure that the CY 2019 OPPS/ASC final rule with comment period accurately reflects these methodologies and policies. Therefore, we believe we have good cause to waive the notice and comment and effective date requirements.

In FR Doc. 2018-24243 of November 21, 2018 (83 FR 58818), make the following corrections:

1. On page 58822, third column, second bullet point, in the section titled “Payment of Drugs, Biologicals, and Radiopharmaceuticals If Average Sales Price (ASP) Data Are Not Available,” in lines 3 through 11, the sentence “For CY 2019, we are making payment for separately payable drugs and biologicals that do not have pass-through payment status and are not acquired under the 340B Program at wholesale acquisition cost (WAC)+3 percent instead of WAC+6 percent if ASP data are not available” is replaced with “For CY 2019, we are making payment for separately payable drugs and biologicals that have partial quarter wholesale acquisition cost (WAC)-based pricing and are not acquired under the 340B Program at WAC+3 percent instead of WAC+6 percent if ASP data are not available.”

2. On page 58825, first column,

a. The first section heading “c. Impact of the Changes to the Hospital OQR Program” is corrected to read “g. Impact of the Changes to the Hospital OQR Program”.

b. The second section heading “d. Impact of the Changes to the ASCQR Program” is corrected to read “h. Impact of the Changes to the ASCQR Program”.

3. On page 58833, last column, last partial paragraph, in line 8, the code “P9072” is corrected to read “P9073”.

4. On page 58834, first column, first partial paragraph, in lines 3 and 7, the code “P9073” is corrected to read “P9037”.

5. On page 58880, Table 12.—New Level II HCPCS Codes Effective April 1, 2018, in the last row, last column, titled “Final CY 2019 APC” for CY 2018 and CY 2019 HCPCS Code C9749, the figure “5164” is corrected to read “5165”.

6. On page 58894, first column, last paragraph, in the fourth line from the bottom of the paragraph, in the phrase “In addition, we proposed to continue to assign the services described by HCPCS code C9734 . . .”, the words “continue to” are removed.

7. On page 58895, last column, last paragraph, in line 13, the reference to “APC 5114” is corrected to read “APC 5115”.

8. On page 58897, in Table 17.—CY 2019 Status Indicator (SI), APC Assignment, and Payment Rate for the Magnetic Resonance Image Guided High Intensity Focused Ultrasound (MRgFUS) Procedures, in the row for CPT/HCPCS Code C9734, in the column “CY 2018 OPPS APC,” the figure “5115” is corrected to read “5114”.

9. On page 58909, third column, after the first full paragraph that ends with “. . . at each level and clinical homogeneity.” and before the following paragraph, which begins with “Comment: Several commenters believed that the current structure . . . ,” the following text is added:

In addition, we received a comment related to CPT code 33274 (Transcatheter insertion or replacement of permanent leadless pacemaker, right ventricular, including imaging guidance (for example, fluoroscopy, venous ultrasound, ventriculography, femoral venography) and device evaluation (for example, interrogation or programming), when performed). We note that in Addendum B to the CY 2019 OPPS/ASC proposed rule, we proposed to assign CPT code 33274 to APC 5194 (Level 4 Endovascular Procedures), which is the same APC assignment as its predecessor code 0387T (Transcatheter insertion or replacement of permanent leadless pacemaker, ventricular), which was effective January 1, 2015 and deleted on December 31, 2018. CPT code 33274 was listed as 33X05 (the 5-digit CMS placeholder code) in Addendum B with the short descriptor and Addendum O with the long descriptor of the CY 2019 OPPS/ASC proposed rule. We also assigned the code to comment indicator “NP” in Addendum B to the proposed rule to indicate that the code is new for CY 2019 with a proposed APC assignment and that public comments would be accepted on the proposed APC assignment. We note that CPT code 33274 will be effective January 1, 2019. Although the code is new for CY 2019, the service associated with CPT code 33274 was previously described by CPT codes 0387T, which will be deleted on December 31, 2018.

Comment: We received a comment to the CY 2019 OPPS/ASC proposed rule requesting the assignment of CPT code 33274 from APC 5194 (Level 4 Endovascular Procedures) to APC 5224 (Level 4 Pacemaker and Similar Procedures).

Response: We appreciate the suggestion, however, as noted above, CPT code 33274 is assigned to the same APC as its predecessor code 0387T. Accordingly, we do not believe that a change in APC is warranted at this time.

10. On page 58928, third column, after the first full paragraph ending with “Addendum B is available via the internet on the CMS website.” and before Table 35, the following section and text are added:

For CY 2019, we proposed to continue to assign CPT code 47382 (Ablation, 1 or more liver tumor(s), percutaneous, radiofrequency) to APC 5361.

Comment: A commenter requested the reassignment of CPT code 47382 from APC 5361 (Level 1 Laparoscopy and Related Services) to APC 5362 (Level 2 Laparoscopy and Related Services).

Response: Based on the latest hospital outpatient claims data used for this final rule with comment period, we disagree that CPT code 47382 should be assigned to APC 5362 for CY 2019. Our analysis of the claims data show a geometric mean cost of approximately $6,063 for CPT code 47382, based on 2,220 single claims (out of 2,242 total claims), which is significantly less than the geometric mean cost of about $7,809 for APC 5362. We believe that APC 5361 is the most appropriate APC assignment for CPT code 47382 based on its clinical and resource homogeneity to the other procedures assigned to this APC.

Therefore, after consideration of the public comment we received, we are finalizing our proposal, without modification, to assign CPT code 47382 to APC 5361 for CY 2019. The final CY 2019 payment rate for the code can be found in Addendum B to this final rule with comment period (which is available via the internet on the CMS website).

In addition, for CY 2019, we proposed to assign CPT code 95983 (Electronic analysis of implanted neurostimulator pulse generator/transmitter (for example, contact group[s], interleaving, amplitude, pulse width, frequency [Hz], on/off cycling, burst, magnet mode, dose lockout, patient selectable parameters, responsive neurostimulation, detection algorithms, closed loop parameters, and passive parameters) by physician or other qualified health care professional; with brain neurostimulator pulse generator/transmitter programming, first 15 minutes face-to-face time with physician or other qualified health care professional) to APC 5741 (Level 1 Electronic Analysis of Devices). We note that in Addendum B to the CY 2019 OPPS/ASC proposed rule, CPT code 95983 was listed as 95X85 (the 5-digit CMS placeholder code) in Addendum B with the short descriptor and Addendum O with the long descriptor of the CY 2019 OPPS/ASC proposed rule. We also assigned the code to comment indicator “NP” in Addendum B to the proposed rule to indicate that the code is new for CY 2019 with a proposed APC assignment and that public comments would be accepted on the proposed APC assignment. We note that CPT code 95983 will be effective January 1, 2019.

Comment: A commenter requested the assignment of CPT code 95983 from APC 5741 (Level 1 Electronic Analysis of Devices) to APC 5742 (Level 2 Electronic Analysis of Devices).

Response: Based on input from our medical advisors and our review of the procedure, we believe that CPT code 95983 is appropriately placed in APC 5741 since it shares similar characteristics as other electronic analysis services in the APC. Therefore, after consideration of the public comment we received, we are finalizing our proposal, without modification, to assign CPT code 95983 to APC 5741 for CY 2019. The final CY 2019 payment rate for the code can be found in Addendum B to this final rule with comment period (which is available via the internet on the CMS website).

We will reevaluate the APC assignments for CPT code 47382 and 95983 for the next rulemaking cycle. We remind hospitals that we review, on an annual basis, the APC assignments for all items and services paid under the OPPS.

11. On page 58954, Table 37, last column, the Pass-Through Payment Effective Date for CY 2019 HCPCS code Q5101 that reads “07/01/2015” is corrected to read “01/01/2016”.

12. On page 58958, Table 38, last column, the Pass-Through Payment Effective Date for CY 2018 and CY 2019 HCPCS code J7328 that reads “01/01/2016” is corrected to read “04/01/2017”.

13. On page 58969, second column, in line 3, the word “with” is corrected to read “without”.

14. On page 59079,

a. Second column, last partial paragraph, in line 4, the figure “0.8792” is corrected to read “0.8800”.

b. Third column, last partial paragraph, in line 4, the figure “1.0004” is corrected to read “1.0000”.

15. On page 59080,

a. First column, first partial paragraph,

(1) In line 2, the figure “$46.551” is corrected to read “$46.532”.

(2) In line 8, the figure “1.0004” is corrected to read “1.0000”.

(3) In line 13, the figure “$45.639” is corrected to read “$45.621”.

b. Second column, second full paragraph, in line 7, the figure “$46.551” is corrected to read “$46.532.”

16. On page 59088, first column, first full paragraph, in line 12, the word “retaining” is corrected to read “removing”.

17. On pages 59100 and 59101, the un-numbered table—Hospital OQR Program Measure Set for the CY 2020 Payment Determination, and the footnotes for the table, are corrected to read as follows:

18. On page 59102, the un-numbered table—Hospital OQR Program Measure Set for the 2021 Payment Determination and Subsequent years, and the footnotes for the table, are corrected to read as follows:

19. On page 59117, the word “retaining” is corrected to read “removing”.

20. On page 59129, first column, first full paragraph,

a. In lines 1 through 10, the following text is removed: “Furthermore, this is the only measure in the ASCQR Program measure set that deals with cataract surgery, which is commonly performed in the ASC setting. If it is removed, the program will have a gap in coverage for this clinical area. As a result, we now believe that meaningful information can be provided to consumers regarding those facilities.”

b. In Lines 10 through 16, the following text is moved to the end of the previous paragraph: “In addition, when this measure was made voluntary in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66984) commenters stated that the measure would promote and improve care coordination among providers.”

21. On page 59169, first column,

a. First full paragaraph, in line 10, the figure “0.8792” is corrected to read “0.8800”.

b. Last paragraph, in line 26, the figure “1.0004” is corrected to read “1.0000”.

c. Last paragraph, in the third line from the bottom, the figure “$46.555” is corrected to read “$46.532”.

22. On page 59170,

a. Third column, first partial paragraph, in line 5, the figure “79 percent” is corrected to read “68 percent”.

b. In Table 63.—Estimated Impact of the CY 2019 Update to the ASC Payment System on Aggregate CY 2019 Medicare Program Payments by Surgical Speciality or Ancillary Items and Services Group, in the last row, third column, titled “Estimated CY 2019 Percent Change” for Ancillary items and services, the figure “79” is corrected to read “68”.

23. On page 59171, Table 64.—Estimated Impact of the CY 2019 Update to the ASC Payment System on Aggregate Payments for Selected Procedures, the fourth column, “Estimated CY 2019 Percent Change,” is corrected to read as follows:

The NFIP enables property owners to purchase Federal flood insurance that is not otherwise generally available from private insurers. In return, communities agree to adopt and administer local floodplain management measures aimed at protecting lives and new construction from future flooding. Section 1315 of the National Flood Insurance Act of 1968, as amended, 42 U.S.C. 4022, prohibits the sale of NFIP flood insurance unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed in this document no longer meet that statutory requirement for compliance with program regulations, 44 CFR part 59. Accordingly, the communities will be suspended on the effective date in the third column. As of that date, flood insurance will no longer be available in the community. We recognize that some of these communities may adopt and submit the required documentation of legally enforceable floodplain management measures after this rule is published but prior to the actual suspension date. These communities will not be suspended and will continue to be eligible for the sale of NFIP flood insurance. A notice withdrawing the suspension of such communities will be published in the Federal Register .

In addition, FEMA publishes a Flood Insurance Rate Map (FIRM) that identifies the Special Flood Hazard Areas (SFHAs) in these communities. The date of the FIRM, if one has been published, is indicated in the fourth column of the table. No direct Federal financial assistance (except assistance pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act not in connection with a flood) may be provided for construction or acquisition of buildings in identified SFHAs for communities not participating in the NFIP and identified for more than a year on FEMA's initial FIRM for the community as having flood-prone areas (section 202(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4106(a), as amended). This prohibition against certain types of Federal assistance becomes effective for the communities listed on the date shown in the last column. The Administrator finds that notice and public comment procedures under 5 U.S.C. 553(b), are impracticable and unnecessary because communities listed in this final rule have been adequately notified.

Each community receives 6-month, 90-day, and 30-day notification letters addressed to the Chief Executive Officer stating that the community will be suspended unless the required floodplain management measures are met prior to the effective suspension date. Since these notifications were made, this final rule may take effect within less than 30 days.

National Environmental Policy Act. FEMA has determined that the community suspension(s) included in this rule is a non-discretionary action and therefore the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) does not apply.

Regulatory Flexibility Act. The Administrator has determined that this rule is exempt from the requirements of the Regulatory Flexibility Act because the National Flood Insurance Act of 1968, as amended, Section 1315, 42 U.S.C. 4022, prohibits flood insurance coverage unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed no longer comply with the statutory requirements, and after the effective date, flood insurance will no longer be available in the communities unless remedial action takes place.

Regulatory Classification. This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism. This rule involves no policies that have federalism implications under Executive Order 13132.

Executive Order 12988, Civil Justice Reform. This rule meets the applicable standards of Executive Order 12988.

Paperwork Reduction Act. This rule does not involve any collection of information for purposes of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

Accordingly, 44 CFR part 64 is amended as follows:

The NFIP enables property owners to purchase Federal flood insurance that is not otherwise generally available from private insurers. In return, communities agree to adopt and administer local floodplain management measures aimed at protecting lives and new construction from future flooding. Section 1315 of the National Flood Insurance Act of 1968, as amended, 42 U.S.C. 4022, prohibits the sale of NFIP flood insurance unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed in this document no longer meet that statutory requirement for compliance with program regulations, 44 CFR part 59. Accordingly, the communities will be suspended on the effective date in the third column. As of that date, flood insurance will no longer be available in the community. We recognize that some of these communities may adopt and submit the required documentation of legally enforceable floodplain management measures after this rule is published but prior to the actual suspension date. These communities will not be suspended and will continue to be eligible for the sale of NFIP flood insurance. A notice withdrawing the suspension of such communities will be published in the Federal Register .

In addition, FEMA publishes a Flood Insurance Rate Map (FIRM) that identifies the Special Flood Hazard Areas (SFHAs) in these communities. The date of the FIRM, if one has been published, is indicated in the fourth column of the table. No direct Federal financial assistance (except assistance pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act not in connection with a flood) may be provided for construction or acquisition of buildings in identified SFHAs for communities not participating in the NFIP and identified for more than a year on FEMA's initial FIRM for the community as having flood-prone areas (section 202(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4106(a), as amended). This prohibition against certain types of Federal assistance becomes effective for the communities listed on the date shown in the last column. The Administrator finds that notice and public comment procedures under 5 U.S.C. 553(b), are impracticable and unnecessary because communities listed in this final rule have been adequately notified.

Each community receives 6-month, 90-day, and 30-day notification letters addressed to the Chief Executive Officer stating that the community will be suspended unless the required floodplain management measures are met prior to the effective suspension date. Since these notifications were made, this final rule may take effect within less than 30 days.

National Environmental Policy Act. FEMA has determined that the community suspension(s) included in this rule is a non-discretionary action and therefore the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) does not apply.

Regulatory Flexibility Act. The Administrator has determined that this rule is exempt from the requirements of the Regulatory Flexibility Act because the National Flood Insurance Act of 1968, as amended, Section 1315, 42 U.S.C. 4022, prohibits flood insurance coverage unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed no longer comply with the statutory requirements, and after the effective date, flood insurance will no longer be available in the communities unless remedial action takes place.

Regulatory Classification. This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism. This rule involves no policies that have federalism implications under Executive Order 13132.

Executive Order 12988, Civil Justice Reform. This rule meets the applicable standards of Executive Order 12988.

Paperwork Reduction Act. This rule does not involve any collection of information for purposes of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

Accordingly, 44 CFR part 64 is amended as follows:

The Corporation for National and Community Service (CNCS) is a federal agency that engages millions of Americans in service through its AmeriCorps, Senior Corps, and Volunteer Generation Fund programs to further its mission to improve lives, strengthen communities, and foster civic engagement through service and volunteering. For more information, visit NationalService.gov .

The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Sec. 701 of Pub. L. 114-74) (the “Act”), which is intended to improve the effectiveness of civil monetary penalties and to maintain the deterrent effect of such penalties, requires agencies to adjust the civil monetary penalties for inflation annually.

CNCS has two civil monetary penalties in its regulations. A civil monetary penalty under the Act is a penalty, fine, or other sanction that is for a specific monetary amount as provided by Federal law or has a maximum amount provided for by federal law and is assessed or enforced by an agency pursuant to federal law and is assessed or enforced pursuant to an administrative proceeding or a civil action in the federal courts. ( See 28 U.S.C. 2461 note).

The inflation adjustment for each applicable civil monetary penalty is determined using the percent increase in the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October of the year in which the amount of each civil money penalty was most recently established or modified. In the December 14, 2018, OMB Memo for the Heads of Executive Agencies and Departments, M-19-04, Implementation of Penalty Inflation Adjustments for 2019, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, OMB published the multiplier for the required annual adjustment. The cost-of-living adjustment multiplier for 2019, based on the CPI-U for the month of October 2018, not seasonally adjusted, is 1.02522.

CNCS identified two civil penalties in its regulations: (1) The penalty associated with Restrictions on Lobbying (45 CFR 1230.400) and (2) the penalty associated with the Program Fraud Civil Remedies Act (45 CFR 2554.1).

The civil monetary penalties related to Restrictions on Lobbying (Section 319, Pub. L. 101-121; 31 U.S.C. 1352) range from $19,639 to $196,387. Using the 2019 multiplier, the new range of possible civil monetary penalties is from $20,134 to $201,340.

The Program Fraud Civil Remedies Act of 1986 (Pub. L. 99-509) civil monetary penalty has an upper limit of $11,181. Using the 2019 multiplier, the new upper limit of the civil monetary penalty is $11,463.

This final rule adjusts the civil monetary penalty amounts related to Restrictions on Lobbying (45 CFR 1230.400) and the Program Fraud Civil Remedies Act of 1986 (45 CFR 2554.1). The range of civil monetary penalties related to Restrictions on Lobbying increase from “$19,639 to $196,387” to “$20,134 to $201,340.” The civil monetary penalties for the Program Fraud Civil Remedies Act of 1986 increase from “up to $11,181” to “up to $11,463.”

CNCS finds, under 5 U.S.C. 553(b)(3)(B), that there is good cause to except this rule from the public notice and comment provisions of the Administrative Procedure Act, 5 U.S.C. 553(b). Because CNCS is implementing a final rule pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which requires CNCS to update its regulations based on a prescribed formula, CNCS has no discretion in the nature or amount of the change to the civil monetary penalties. Therefore, notice and comment for these proscribed updates is impracticable and unnecessary. As an interim final rule, no further regulatory action is required for the issuance of this legally binding rule. If you would like to provide technical comments, however, they may be submitted until January 28, 2019.

CNCS has determined that making technical changes to the amount of civil monetary penalties in its regulations does not trigger any requirements under procedural statutes and Executive Orders that govern rulemaking procedures.

This rule is effective January 15, 2019. The adjusted civil penalty amounts apply to civil penalties assessed on or after January 15, 2019, when the violation occurred after November 2, 2015. If the violation occurred prior to November 2, 2015, or a penalty was assessed prior to August 1, 2016, the pre-adjustment civil penalty amounts in effect prior to August 1, 2106, will apply.

For the reasons discussed in the preamble, under the authority of 42 U.S.C. 12651c(c), the Corporation for National and Community Service amends chapters XII and XXV, title 45 of the Code of Federal Regulations as follows:

This is a summary of the Commission's Report and Order, released October 24, 2018. A full-text version may be obtained at the following internet address: https://www.fcc.gov/document/fcc-spurs-competition-rural-business-data-services-0 .

1. In 1990, the Commission began the process of encouraging carriers to move from rate-of-return to incentive regulation by adopting price cap rules governing the largest incumbent LECs' interstate access charges and allowing other incumbent LECs to elect price cap regulation voluntarily. Price cap regulation was designed to “reward companies that became more productive and efficient, while ensuring that productivity and efficiency gains are shared with ratepayers.” Through a series of subsequent decisions, the Commission allowed other carriers to convert voluntarily from rate-of-return to price cap regulation.

2. Since then, the Commission has taken additional steps to transition certain services and revenues of rate-of-return carriers from rate-of-return regulation to other more efficient forms of regulation. In 2011, as part of comprehensive universal service and intercarrier compensation reform, the Commission imposed rate caps on rate-of-return carriers' switched access services, removing those services from the obligations that accompany traditional rate-or-return regulation. In the USF/ICC Transformation Order, 76 FR 73830, November 29, 2011, the Commission also changed its method for calculating high-cost universal service support received by rate-of-return affiliates of price cap carriers. Specifically, the Commission began to treat rate-of-return operating companies affiliated with price-cap holding companies as price cap LECs for the purposes of the Connect America Fund (CAF) Phase I distribution mechanism. As a result, rate-of-return carriers affiliated with price-cap companies now receive the same type of fixed universal service support that their price cap affiliates receive.

3. Two years ago, the Commission gave rate-of-return carriers the option of receiving forward looking, model-based universal service support based on the Alternative Connect America Cost Model (A-CAM), which more than 200 carriers opted to receive (A-CAM carriers). The Commission observed that “the carriers that choose to take the voluntary path to the model are electing incentive regulation for common line offerings.” Consequently, for A-CAM carriers, only their BDS offerings are currently subject to rate-of-return regulation.

4. In 2016, the Commission also adopted the Alaska Plan Order, 81 FR 69696, October 7, 2016, which allowed Alaskan rate-of-return carriers to elect fixed universal service support on a state-wide basis for a defined term in exchange for committing to deployment obligations. Specifically, the Commission provided a one-time opportunity for Alaskan rate-of-return carriers to elect to receive universal service support frozen at adjusted 2011 levels for a 10-year term in exchange for meeting individualized performance benchmarks to offer voice and broadband services. Subsequently, in 2016, the Wireline Competition Bureau (Bureau) authorized 13 Alaskan rate-of-return carriers to receive universal service support under the Alaska Plan (Alaska Plan carriers). Similar to A-CAM carriers, Alaska Plan carriers receive fixed universal service support that is not based on current cost, and only file cost studies for purposes of their BDS offerings.

5. In addition to encouraging carriers to migrate from cost-based to incentive regulation, over time the Commission has reduced ex ante pricing regulation in favor of relying on competition to the extent possible. In 1999, the Commission granted pricing flexibility to price cap carriers that provided service in areas where carriers could demonstrate threshold levels of deployment by competitive providers. Pricing flexibility allowed eligible carriers to offer BDS using contract tariffs, volume and term discounts and, in markets that demonstrated higher levels of competition, at unregulated rates. Beginning in 2007, the Commission granted forbearance from dominant carrier regulation, including tariffing and pricing regulation, to a number of price cap incumbent LECs for their newer packet-based broadband services. These forbearance orders concluded that forbearance from dominant carrier regulation was warranted given the existence of competition for these newer services, which ensured that rates and practices for these services remained just and reasonable, adequately protected consumers, and was in the public interest.

6. In 2017, the Commission adjusted BDS pricing regulation to the reality of a dynamically competitive BDS market in areas where incumbent LECs were subject to price cap regulation. The Commission premised its reductions in ex ante pricing regulation in part on a substantial data collection and in part on its predictive judgment that dynamic and growing competition in the BDS market, driven increasingly by the emergence of cable competition, would allow reliance on competition rather than regulation to ensure rates remain just and reasonable. The BDS Order, 82 FR 25660, June 2, 2017, represented yet another step in the process of reducing dominant carrier regulation in response to the growth of competition. In that order, the Commission found that reducing government intervention and allowing market forces to continue working would further spur entry, innovation, and competition in BDS markets served by price cap carriers. The Commission applied ex ante pricing regulation “only where competition is expected to materially fail to ensure just and reasonable rates” and stated its preference to rely “on competition rather than regulation, wherever purchasers can realistically turn to a supplier beyond the incumbent LEC.” Based on the record before it, the Commission found that, on balance, competition was sufficient to ensure just and reasonable rates for packet-based business data services, TDM transport services, and higher bandwidth ( i.e., above a DS3-level) TDM services (including OCn services) in the absence of ex ante pricing regulation in areas served by price cap carriers. It also adopted a competitive market test for lower bandwidth TDM end user channel terminations ( i.e., DS3-level and lower) in price cap areas and refrained from ex ante pricing regulation of those services in areas deemed competitive by that test.

7. Recently, the Eighth Circuit Court of Appeals upheld all aspects of the BDS Order save the portions of the order affecting price cap carriers' TDM transport service, which it vacated and remanded on notice grounds—namely that the Commission had not provided sufficient notice that it might relieve those services of ex ante pricing regulation.

8. After the Commission adopted changes to its rules governing price cap carriers' BDS offerings, ITTA and USTelecom (together, Petitioners) filed a petition seeking the same regulatory treatment of BDS offerings for rate-of-return carriers receiving fixed support as that the Commission had recently adopted for price cap carriers (Joint Petition). According to Petitioners, rate-of-return regulation deters investment in networks and harms competition. Petitioners argue that the inflexibility of rate-of-return regulation makes it difficult to justify and fund upgrades to their rural networks. They point out that for rate-of-return carriers, “the need to perform annual cost studies now applies only with respect to BDS.” As a result, they argue that the expense associated with conducting cost studies and complying with other rate-of-return expenses are difficult to recover and burden rate-of-return carriers receiving fixed support but not their competitors. The Bureau sought and received comment on the Joint Petition.

9. Upon review of the record received in response to the Joint Petition, earlier this year, the Commission released a notice of proposed rulemaking ( NPRM ), 83 FR 22923, May 17, 2018, proposing to allow A-CAM and other rate-of-return carriers that receive fixed universal service support to voluntarily migrate their lower speed TDM-based BDS offerings to incentive regulation. The Commission also sought comment on adopting a competitive market test to determine when the market for lower speed TDM-based BDS offerings offered by rate-of-return carriers that receive fixed support are sufficiently competitive to justify eliminating ex ante pricing regulation of such offerings. Additionally, the NPRM sought comment on eliminating ex ante pricing regulation for such carriers' packet-based and higher speed TDM-based BDS offerings nationwide, while maintaining oversight authority through sections 201, 202, and 208 of the Communications Act of 1934, as amended (the Communications Act or the Act) to ensure BDS rates and practices remain just and reasonable.

10. Upon review of the record, we allow rate-of-return carriers receiving fixed universal service support to choose to migrate their BDS offerings to a new, comprehensive, lighter-touch regulatory framework that is better aligned to the competitive realities of the BDS markets they serve. The framework we adopt includes voluntary incentive regulation with pricing flexibility for electing carriers' lower capacity (DS3 and below) TDM transport and end user channel termination services. We also adopt a competitive market test for such carriers' lower capacity TDM end user channel termination services to identify competition by study area. In electing carriers' study areas that the competitive market test deems competitive, we eliminate ex ante pricing regulation for lower capacity TDM end user channel termination services. We also remove ex ante pricing regulation from electing carriers' packet-based and higher capacity (above a DS3 bandwidth level) TDM services and grant forbearance from tariffing requirements for those services. To reduce the burden of legacy rate-of-return regulation on electing carriers, we also grant forbearance from cost assignment and separations rules and related reporting requirements, because we determine that such action is warranted by the non-cost-based regulation that will apply to electing carriers and the competitive circumstances of their BDS markets.

11. We find that adopting the lighter-touch incentive regulatory framework proposed by the Commission for electing carriers will remove unnecessary regulatory burdens and encourage competition. Based on the record before us, we decline at this time to relieve electing carriers' lower capacity TDM transport (at or below a DS3-level) of ex ante pricing regulation nationwide, as Petitioners sought. Instead we allow electing carriers to move their lower speed TDM transport services to incentive regulation. Additionally, we adopt a competitive market test tailored to rate-of-return carriers' study areas, which will allow us to properly evaluate competition in the areas served by electing carriers and remove ex ante pricing regulation for end user channel terminations in areas deemed competitive, instead of basing our decision on the competitive characteristics of areas served by price cap carriers.

12. We decline to adopt Petitioners' proposal to apply to electing carriers' BDS offerings the regulatory framework and the results of the price cap competitive market test adopted in the BDS Order for price cap carriers' BDS offerings. Petitioners argue that applying the price cap BDS rules to electing rate-of-return carriers would result in regulatory parity that “would promote competition and make the rules less complex.” TDS Telecom asserts that adopting a separate incentive regulatory framework is unnecessary. The price cap BDS rules, however, were based on an analysis of BDS competition in areas served by price cap carriers, consistent with our obligation to ensure that the rates charged by common carriers are just and reasonable. The Commission found sufficient evidence of competition in these areas to discipline pricing and therefore adopt a lighter touch regulatory framework for these carriers. That same history and record of competition for BDS services does not exist in the study areas served by rate-of-return carriers that Petitioners seek to have covered by price cap BDS regulation. Thus, we find that adopting a separate, albeit largely parallel, regulatory framework for rate-of-return carriers receiving fixed support will be better suited to their circumstances.

13. Consistent with the Commission's proposal and the Joint Petition, we allow all rate-of-return carriers receiving fixed universal service support to voluntarily elect to move their BDS offerings out of rate-of-return regulation to the new lighter touch framework we adopt today. Carriers eligible to make this election include A-CAM carriers, rate-of-return carriers receiving fixed support by virtue of being affiliated with price cap carriers, Alaska Plan carriers, and rate-of-return carriers that accept future offers of A-CAM support or otherwise transition away from legacy support mechanisms. The first three types of carriers receive fixed or model-based universal service support, rather than receiving high-cost support based on their costs, and therefore are currently required to prepare cost studies only for their BDS offerings. Relieving these carriers of rate-of-return regulation for their BDS will save them the expense of preparing burdensome cost studies only for those offerings.

14. Similarly, to the extent the Commission provides future offers of A-CAM support or otherwise transitions carriers away from legacy support mechanisms, carriers that receive such support will only have to prepare cost studies for purposes of their BDS offerings. Therefore, if the Commission announces future offers of A-CAM support or otherwise transitions carriers away from legacy support mechanisms, the actions we take in this Order will allow carriers eligible for or subject to such transitions to elect the same lighter touch regulatory framework we provide for other rate-of-return carriers that receive fixed support, and may provide further incentives for rate-of-return carriers to elect to receive non-legacy, fixed or model-based support. This will further the Commission's longstanding objective of providing universal service support based on forward-looking efficient costs as opposed to actual costs that may be less efficient.

15. Consistent with Commission precedent, we do not require all rate-of-return carriers receiving fixed support to migrate their BDS offerings away from rate-of-return regulation to the new framework, but instead allow each carrier to voluntarily make that determination based on its circumstances. When the Commission adopted price cap regulation in 1990, it made price cap regulation voluntary for all but the largest incumbent LECs. At that time, the Commission expressed concern that assigning one productivity factor on a mandatory basis to all LECs, regardless of size, could prove unduly burdensome for smaller and mid-sized carriers that may have fewer opportunities than larger companies to achieve cost savings and efficiencies. Commenters echoed those concerns in this proceeding. By making the election voluntary, we ensure that only carriers that can achieve sufficient efficiencies are likely to elect incentive regulation; our new framework will not, therefore, impose additional burdens on smaller carriers that cannot achieve such efficiencies.

16. We also adopt the Commission's proposal to require electing carriers to elect incentive regulation at the holding company-level for study areas in all states where that carrier receives fixed support. Commenters do not oppose requiring holding company-level election. AT&T requests that the Commission “require that any A-CAM carrier that elects incentive regulation have that election apply across all its study areas” because this prevents “internal cost shifting among study areas.” Holding company-level election will maximize the regulatory efficiencies achieved by incentive regulation, including maximizing cost savings from the elimination of cost studies for all electing carriers. It is also consistent with the Commission's past practices. For example, the Commission gave rate-of-return carriers the opportunity to elect between A-CAM and legacy cost-based support at a state-wide level. Likewise, the Commission required Alaska Plan carriers to elect fixed, frozen support on a state-wide basis. Requiring rate-of-return carriers receiving fixed support to elect regulatory treatment at the holding company-level is also consistent with the underlying premise of price cap regulation, which assumed a broad representation of carrier operations to provide a basis for establishing an industry-wide productivity factor.

17. We provide eligible carriers with two opportunities to elect to move their BDS offerings out of rate-of-return regulation—one to be effective as of July 1, 2019 and a second effective as of July 1, 2020—to encourage them to take advantage without undue delay of the benefits that will be realized by electing carriers under the new framework and to discourage potential gaming opportunities. We provide two opportunities to elect this new regulatory framework, in recognition of the fact that some carriers may not have sufficient time to assess their options in time for the July 1, 2019 effective date. Providing a second opportunity to elect incentive regulation will facilitate carriers' ability to assess incentive regulation for their BDS and ultimately enhance participation in the new regulatory framework, which will further reduce unnecessary regulatory burdens and positively impact competition in electing carriers' BDS markets.

18. Some commenters recommend that we provide an “annual opportunity to elect the new regime” based on “business strategy and compliance measures.” Giving eligible carriers an annual opportunity to elect incentive regulation, however, would also give them an incentive to increase their operating costs and rate base under rate-of-return regulation in order to raise rates prior to electing incentive regulation, then realize additional profits by cutting costs under incentive regulation at the expense of ratepayers. By providing only two opportunities to elect to move to the new framework, we discourage such gaming opportunities.

19. We prohibit electing carriers from returning their study areas to rate-of-return regulation. One of the rationales for the Commission's “all-or-nothing” rules for price cap carriers is to prevent carriers from potentially switching back and forth between rate-of-return and price cap regulation to take advantage of uneven cycles of investment. We are likewise concerned with potential gaming opportunities for electing carriers if they are allowed to switch back and forth between rate-of-return and incentive regulation. Electing carriers could inflate their revenues by opting-out of incentive regulation, building a larger rate base under rate-of-return regulation in order to raise rates, and then, returning to incentive regulation or opting into price cap regulation, thus reducing costs back to an efficient level. These gaming opportunities would distort carriers' decisions to invest and frustrate the public interest because ratepayers would not see the benefit of capped and decreased rates in the manner intended under incentive regulation. Further, in the 1990 Price Cap Order, 55 FR 42375, October 19, 1990, the Commission determined that for price cap regulation to work effectively and for incentives to develop and influence carrier behavior and earnings, an electing carrier must make a permanent commitment. We similarly find, that for incentive regulation to work properly, the election must be permanent. Accordingly, a carrier's voluntary election of incentive regulation will be irrevocable.

20. AT&T requests that the “Commission decline to waive the `all-or-nothing' rule for these carriers and require that any A-CAM carrier that elects incentive regulation have that election apply across all its study areas and, even more critically, across all of its interstate services within a study area.” The all-or-nothing rule AT&T cites, however, applies to price cap carriers, not to rate-of-return carriers that elect incentive regulation. While the incentive regulation rules we adopt for electing carriers impose price caps on some of the BDS services offered by electing carriers, electing carriers do not become price cap carriers by virtue of their election; therefore the all-or- nothing rule is simply not applicable here.

21. We allow electing carriers' switched access services to remain subject to the multi-year transition provided for rate-of-return carriers in the USF/ICC Transformation Order. We therefore decline to adopt AT&T's recommendation that electing carriers be required to convert all their services to price cap regulation, including their switched access services, which—compared to price-cap carriers' switched access services—benefit from a longer transition to bill-and-keep and no phase-out of Connect America Fund Intercarrier Compensation replacement support.

22. According to AT&T “[w]hile different transitions for price cap carriers and rate-of-return carriers may have made sense in 2011, those distinctions should not unfairly benefit carriers” electing incentive regulation and could lead to cost-shifting between types of services. We disagree with AT&T's assertion that electing carriers will “unfairly benefit” from our decision not to convert all of their offerings to incentive regulation. The Commission adopted different intercarrier compensation transitions in the context of a complex rulemaking that were the result of a careful analysis of a variety of factors and policy considerations, including the differential impact of universal service and intercarrier compensation reform on price cap as compared to rate-of-return carriers. As TDS Telecom explains, in the intervening seven years, carriers have relied on those transitions to plan their businesses and make investments. Changing those transitions at this point would disrupt these settled expectations and potentially undermine, rather than encourage, investment and innovation in electing carriers' BDS markets. We also find AT&T's concerns about cost-shifting unfounded because switched access rates were capped and therefore removed from cost-based regulation in 2011 by the USF/ICC Transformation Order, eliminating the incentive for inappropriate cost shifting.

23. Following the same logic, we decline to adopt AT&T's proposal that we require electing carriers to exit the National Exchange Carrier Association (NECA) tariff pool for their “switched and special access services to avoid additional complexities in the annual tariff review process and to avoid potential gaming.” As Petitioners argue, AT&T “fails to explain how any cost shifting would be useful given the switched access rules [that cap rates].” Moreover, the scrutiny inherent in the part 61 tariff review process helps reduce the risk of cost-shifting or other gaming by pool participants. We do, however, require electing carriers currently participating in the NECA traffic-sensitive tariff pool for their BDS or special access service offerings to remove their BDS and special access offerings from the pool since those services will be subject to incentive regulation.

24. We find that the lighter touch regulatory framework we adopt provides electing carriers the right balance of relief from the burdensome aspects of rate-of-return regulation and pricing discipline. The efficiencies gained from reducing regulatory burdens on electing carriers, including the increased flexibility to compete in the market, will foster network investment and impose downward pressure on prices. We also find here, as we did in the BDS Order, that “minimiz[ing] unnecessary government intervention . . . allows market forces to continue working to spur entry, innovation, and competition.”

25. In this section, we provide direction on implementing the voluntary incentive regulation we adopt today for electing carriers' lower capacity ( i.e., at or below a DS3-level) TDM transport and end user channel termination services as part of our comprehensive lighter touch regulatory framework for electing carriers' BDS. We treat electing carriers' lower capacity TDM transport and end user channel terminations differently from packet-based and higher speed TDM-based BDS offerings because the record shows that packet-based offerings are subject to competition that will ensure just and reasonable rates for those services. By contrast, the record shows that demand for lower speed TDM-based transport and end user channel terminations services is shrinking as purchasers increasingly prefer higher speed and packet-based services. Recognizing that the market is transitioning to new technologies, we provide protections for lower speed TDM-based transport and end user channel termination services. Based on the current record, we preserve ex ante pricing regulation for lower speed TDM-based transport services and adopt a competitive market test that will preserve ex ante pricing regulation in those study areas where we predict there is a substantial likelihood that competition will fail to ensure just and reasonable rates for the lower capacity TDM-based end user channel termination services.

26. Rate-of-return carriers that make this election will convert to incentive regulation for their lower capacity TDM transport and end user channel termination services as well as other generally lower capacity non-packet-based services that are commonly considered special access services. Specifically, among other matters, we adopt a methodology for electing carriers to set their initial rates, allow an unfreeze of separations category relationships for carriers that elected to freeze them in 2001, adopt a productivity factor and measure of inflation to adjust rates, and grant pricing flexibility to electing carriers for their lower capacity TDM services.

27. First, we adopt the methodology electing carriers must use to establish rates for their lower capacity TDM transport and end user channel termination services pursuant to incentive regulation. For rate-of-return carriers that file their own tariffed rates, we adopt the approach proposed in the NPRM to set initial BDS rate levels based on rates in effect on January 1, 2019 for carriers converting to incentive regulation as of July 1, 2019 and on rates in effect on January 1, 2020 for carriers that elect incentive regulation effective as of July 1, 2020. For rate-of-return carriers participating in the NECA traffic-sensitive tariff pool that elect incentive regulation effective July 1, 2019, we adopt the approach proposed in the NPRM for members exiting the pool to set their initial BDS rate levels by adjusting NECA pool rates in effect on January 1, 2019 by a net contribution or net recipient factor. Carriers electing incentive regulation as of July 1, 2020 must set their initial BDS rate levels by adjusting NECA pool rates in effect on January 1, 2020. Electing carriers will then adjust their rates using a methodology that is consistent with the price cap formulas in §§ 61.45 to 61.47 of our rules, by applying the productivity factor (X-factor), inflation factor (Gross Domestic Product-Price Index (GDP-PI)), and any required exogenous cost changes. Carriers may adjust these rates to reflect the pricing flexibility permitted by the pricing bands in the Special Access category.

28. Under rate-of-return regulation, incumbent LECs are permitted to recover through tariffed rates their revenue requirement, which is equal to their regulated operating costs plus a prescribed rate of return on their regulated rate base. Rate-of-return carriers set rates at levels that when multiplied by demand will yield revenues equal to their revenue requirement, and are targeted to earn the Commission's prescribed rate of return. Rate-of-return carriers establish rates for BDS offerings either by filing their own interstate access tariffs and cost support pursuant to § 61.38 or § 61.39 of our rules or, for most rate-of-return carriers, by participating in the NECA traffic-sensitive tariff and traffic-sensitive pool. NECA sets the BDS rates in the traffic-sensitive tariff based on projected aggregate costs (or average schedule settlements) and demand of all pool members, which are targeted to earn the authorized rate of return for NECA pool members.

29. When the Commission launched price cap regulation in 1990, it found that interstate access rates as they existed on July 1, 1990, six months prior to the date price caps went into effect on January 1, 1991, were the most reasonable basis from which to set initial rate levels under price cap regulation. In other words, those rates created the starting point for the indexing of rates under price cap regulation—setting their price cap index, actual price index and service band index at a value of 100. The price cap index is adjusted by the productivity offset (X-factor) and inflation (GDP-PI) for the first year, and each year thereafter. The Commission reasoned that interstate rates that existed on July 1, 1990 “while perhaps not perfect, in general represent the best that rate-of-return regulation can produce.”

30. Beginning with the Windstream Order, the Commission granted several waivers allowing price cap carriers to convert their rate-of-return study areas to price cap regulation. Carriers were, among other things, required to establish initial price cap indexes using the rates in effect on January 1 of the conversion year, six months prior to the July 1 effective date of conversion, the demand from the preceding year, and required to target their rates using the X-factor in effect at that time. In the 2012 Average Schedule Conversion Order, the Commission permitted several rate-of-return carriers to, among other things, withdraw their average schedule study areas from the NECA pool and convert them to price cap regulation. In that order, the Commission approved a methodology for establishing initial price cap rates using existing NECA pool tariffed rates adjusted to reflect the extent to which the exiting study areas were either a net contributor to, or a net recipient from, the NECA pool.

31. Carriers Currently Filing Their Own Tariffs. Consistent with past practice, we adopt the proposal in the NPRM for carriers that currently file their own tariffs to use existing tariffed rates to set their initial BDS rates under incentive regulation. Carriers first will set their price cap indexes based on their tariffed interstate special access rates in effect on January 1, 2019, or based on those rates in effect on January 1, 2020 for carriers electing to convert to incentive regulation effective July 1, 2020. The price cap indexes ( i.e., the price cap index, actual price index, and service band index) will be assigned values of 100 as starting points, which correspond to rate levels in effect on January 1, 2019 or on January 1, 2020, as applicable. Carriers then will adjust the price cap index and the pricing band limits for each service category or subcategory consistent with §§ 61.45 through 61.47 of our rules, by applying the X-factor (2.0%), inflation factor (GDP-PI), and any required exogenous cost changes. Carriers, next, will set rates so that the actual price index, calculated pursuant to § 61.46, does not exceed the price cap index, and the service band indexes for each service category or subcategory, calculated pursuant to § 61.47, do not exceed the pricing band limits for each category or subcategory, for the first year of incentive regulation and each year thereafter.

32. Carriers Participating in NECA Pool. We also adopt the approach proposed in the NPRM for electing carrier study areas exiting the NECA traffic-sensitive tariff pool to establish their initial BDS rates under incentive regulation by multiplying the NECA pool rate in effect on January 1, 2019 by a net contribution or net recipient factor or by doing so using the NECA pool rate in effect on January 1, 2020 for carriers electing conversion in 2020. No commenters opposed this proposal. Electing carriers exiting the NECA pool will adjust the NECA pool rate to reflect the extent they are either a net contributor or net recipient in order to ensure their rates are just and reasonable. Each NECA pool member receives a settlement from the pool based on its costs plus a pro rata share of the earnings, or based on its settlement pursuant to the average schedule formulas. NECA pool rates are lower than necessary for a net recipient to recover its revenue requirement, or higher than necessary for a net contributor to recover its revenue requirement and must be adjusted by the extent to which the existing study area is a net contributor to, or net recipient from, the NECA pool in order to satisfy the just and reasonable standard. Without an adjustment, electing carriers' BDS rates would be either artificially high or low going forward.

33. First, to determine the appropriate net contributor or net recipient factor, electing carriers exiting the pool effective July 1, 2019 will determine their interstate special access revenue for the period July 1 to December 31, 2018. An electing carrier exiting the NECA tariff shall determine its pool settlements to be used in developing the factor based on costs for the period July 1 through December 31, 2018, which reflects the first six months of tariff year 2018-19, the 12-month period for which the costs underlying the January 1, 2019 rates were projected. The pool settlements shall be adjusted to reflect the 10.5% rate of return which was used to establish the revenue requirement for the January 1, 2019 rates. Second, carriers will calculate the difference between the exiting pool member's interstate special access revenues for July 1 to December 31, 2018 and special access pool settlements reflecting the authorized rate of return for this same period. Third, this net contribution or net recipient amount will then be divided by interstate special access revenues for the same period to produce a percent net contribution or net recipient factor. Fourth, carriers shall proportionately adjust their special access NECA pool rates in effect on January 1, 2019 downward by the net contribution factor or upward by the net recipient factor. Finally, carriers will adjust these rates further consistent with §§ 61.45 through 61.47 of our rules, in the manner described above for carriers that file their own tariffs, to set their initial BDS rates for the first year of incentive regulation. Carriers electing to exit the NECA pool effective July 1, 2020 will use the same methodology to adjust their rates but using the corresponding dates that are one year later.

34. We agree with Petitioners that recommend that initial rates be based on the existing tariffed rates at the time of a carrier's election of incentive regulation. AT&T and Sprint disagree and argue that the Commission should adjust initial BDS rates to account for the rate-of-return transition that is currently underway. The Commission adopted a six-year transition in 2016 to reduce the then-11.25% rate of return by 25 basis points per year until the rate of return reaches 9.75% in 2021. AT&T and Sprint argue that the Commission should adjust electing carriers' initial BDS rates to reflect the fully-transitioned 9.75% rate of return or, at a minimum, Sprint argues that the Commission should adjust the price capped rates each year during the rate-of-return transition until it ends in 2021. AT&T claims that “[s]etting electing A-CAM carriers' initial rate-of-return at the 9.75% level immediately upon converting to price cap, while not completely correcting, would help alleviate any rate disparities and aligns with the Commission's finding that a 9.75% rate of return is more than reasonable.”

35. We find that existing tariffed rates targeting the transitional 10.5% rate of return in effect is the more appropriate rate from which to launch incentive regulation for carriers electing to convert to incentive regulation effective July 1, 2019. AT&T and Sprint fail to accord any significance to the Commission's decision to implement changes in the prescribed rate of return over six years and the reasons for such a measured and lengthy transition. In granting a six-year transition, the Commission acknowledged that “for almost 25 years, rate-of-return carriers have made significant infrastructure investments . . . and that represcribing the rate of return will have a financial impact on these carriers.” Rate-of-return carriers' business plans and long-term capital investments are typically based on an expected multi-year revenue stream. The Commission determined that an immediate transition to a 9.75% rate of return would disrupt these carriers' reasonable reliance on these expected revenues. The Commission also recognized that “rate-of-return incumbent LECs have been subject to significant regulatory changes in recent years, and that such changes are occurring at a time when these carriers are attempting to transition their networks and service offerings to a broadband world.” Reflecting the balance of the six-year transition whether through a one-time adjustment, or through a series of three adjustments, would abandon this careful transition and would likely disrupt electing carriers' ability to invest in upgrading and transitioning their networks to provide broadband in the rural communities they serve.

36. We also find that once a carrier elects incentive regulation, its rates should be based on that form of regulation and not effectively a hybrid or combination of rate-of-return and incentive regulation, which would be the result were we to adopt the annual adjustment the Commission has applied to carriers that are subject to cost-based rate-of-return regulation as proposed by Sprint. Capping BDS rates of an electing carrier that will be subject to incentive regulation and reducing them annually by the X-factor going forward will be sufficient to ensure these rates are just and reasonable while at the same time creating the right incentives to operate efficiently—a goal we cannot expect to achieve by continuing to overlay rate-of-return obligations on top of an incentive regulation scheme. An annual 25 basis point adjustment would also be more administratively burdensome to implement. Rather than perpetuating policies associated with an inefficient rate-of-return system, we look to the ongoing operation of incentive regulation to spur carriers to be more efficient and productive than they were under rate-of-return regulation using X-factor-based rate reductions.

37. Finally, as some commenters explain, reducing initial BDS rate levels to account for the rate-of-return transition would “reduce the motivation of a carrier to opt into incentive regulation” contrary to the goals of this Order and the Commission's preference for incentive-based regulation. If initial BDS rates were adjusted to the fully-transitioned rate of return of 9.75%, carriers would be able to earn a higher return and revenue during the rate-of-return regulation transition that ends in 2021 than by moving to incentive regulation. This outcome is contrary to the Commission's long-standing policy preferring incentive-based regulation over rate-of-return regulation and encouraging conversions to incentive-based regulation. Incentive regulation will encourage electing carriers to be more efficient than they were under rate-of-return regulation, and pass some of these efficiencies on to consumers through rate reductions (or rates that are lower than otherwise) through the application of a price cap formula that reflects a properly calculated X-factor. Accordingly, we seek to encourage carriers to adopt incentive regulation by allowing electing carriers to set their initial rates under incentive regulation based on rates reflecting the transitional rate of return currently in effect.

38. We agree with Petitioners that initial rates for lower capacity TDM transport and end user channel termination services should be based on existing tariffed deemed lawful rates—rates that target the effective transitional rate of return. We therefore set initial rates for carriers electing to convert to incentive regulation as of July 1, 2019 for lower capacity TDM transport and end user channel termination services based on electing carriers' tariffed rates in effect on January 1, 2019, six months prior to when incentive regulation goes into effect on July 1, 2019. Similarly, initial rates for carriers electing to convert to incentive regulation as of July 1, 2020 will be based on the tariffed rates in effect on January 1, 2020. Existing tariffed rates filed pursuant to section 204(a)(3) of the Act that take effect, without prior suspension and investigation, are deemed lawful and conclusively presumed to be just and reasonable. Setting initial rates based on existing tariffed rates, as noted by commenters, is “consistent with the methodologies used in the past when rate-of-return carriers have converted to price cap regulation.” Further, the selection of tariffed rates in effect on a date that precedes the effective date of incentive regulation helps prevent rapid aggregate price increases in the period leading up to the incentive regulation that would inflate price cap baseline rates. Accordingly, price cap indexes under incentive regulation will be initially set at a value of 100 based on rates in effect on January 1, 2019 for carriers electing incentive regulation as of July 1, 2019, and on rates in effect on January 1, 2020 for carriers electing incentive regulation as of July 1, 2020. Business data services rates for carriers accepting future offers of A-CAM support or otherwise transition away from legacy support mechanisms will be effective on July 1 in the year following their election.

39. We give electing carriers subject to the category relationships freeze of our separations rules, including any such carriers that accept future offers of A-CAM support or otherwise transition away from legacy support mechanisms, the opportunity to opt out of that freeze. We agree with Petitioners and WTA that the category relationships freeze creates a cost recovery hardship for certain carriers and a distortion in rates that should not be incorporated into rates that electing carriers set for lower capacity circuit-based business data services under incentive regulation.

40. Background. Rate-of-return incumbent LECs use their networks and other resources to provide both interstate and intrastate services. The Commission's part 36 jurisdictional separations rules are designed to help prevent the recovery of the same costs from both the interstate and intrastate jurisdictions and require that rate-of-return incumbent LECs divide their costs and revenues between the respective jurisdictions. The jurisdictional separations analysis begins with categorizing the incumbent LEC's regulated costs and revenues, a process requiring that the incumbent LEC assign the regulated investments, expenses, and revenues recorded in its part 32 accounts to various part 36 categories. The incumbent LEC then directly assigns to the interstate or intrastate jurisdiction, or allocates between those jurisdictions, the costs or revenues in each part 36 category.

41. In 1997, the Commission initiated a proceeding to comprehensively reform its jurisdictional separations rules and referred that matter to the Federal-State Joint Board on Jurisdictional Separations (Joint Board) for preparation of a recommended decision. In the 2001 Separations Freeze Order, 66 FR 33202, June 21, 2001, the Commission froze the jurisdictional separations rules to allow time for the Joint Board to develop recommendations on comprehensive separations reform. Also, in that Order, the Commission granted rate-of-return carriers a one-time option to freeze their category relationships, enabling each carrier to determine whether such a freeze would be beneficial “based on its own circumstances and investment plans.” Carriers that elected this freeze assign regulated costs to separations categories based on separations category relationships from 2001, rather than on current data. Presently, approximately 28 rate-of-return carriers that receive fixed high-cost universal service support operate under this category relationships freeze.

42. The Commission has repeatedly extended the separations freeze. The most recent extension is set to expire on December 31, 2018. In the 2018 Separations Freeze Extension proceeding, the Commission proposed to extend the separations freeze for 15 years, while providing a one-time opportunity for carriers that had elected to freeze their category relationships to opt out of that freeze and categorize their costs based on current data rather than separations category results from 2001. The Commission has not yet acted on that proposal.

43. Category Relationships Unfreeze. The category relationships freeze has now been in place for more than 17 years, and our rules prohibit carriers that elected that freeze from withdrawing from it. Rate-of-return carriers that chose to freeze their category relationships in 2001 assign costs within part 32 accounts to categories using their separations category relationships from 2000. This means that these companies are still separating their costs based on the technologies and services that were in place in 2000, instead of being able to adjust the amounts assigned to separations categories to reflect the current network costs and services that would allow these carriers to properly recover their costs. Investment by carriers is becoming more weighted toward BDS and away from switched access and common line categories. Thus, we agree with Petitioners that the result is that some, if not all, carriers with frozen category relationships are unable to recover their BDS costs from BDS customers or from NECA traffic sensitive pool settlements.

44. We therefore allow electing carriers to unfreeze and update their category relationships in conjunction with setting their initial rates, which will enable such carriers to more closely align their BDS rates with their underlying costs as they set initial incentive regulation rates. Once an electing carrier implements incentive regulation rates for its BDS, it will no longer need to comply with the separations rules by virtue of our action below forbearing from application of the separations and other cost assignment rules to electing carriers. This, in turn, will allow the carriers and their customers to benefit from the efficiencies of incentive regulation.

45. The Commission originally allowed rate-of-return carriers the flexibility to choose whether to freeze their category relationships because those carriers' size, cost structures, and investment patterns vary widely. For similar reasons, we conclude that the burden on electing carriers, were we to require all impacted carriers to unfreeze and update their category relationships, would outweigh any benefits, and thus grant these carriers the flexibility to choose. For example, some carriers may have based their current business plans and investment on a continuation of the freeze since it has been in effect for such a long period and compelling these carriers to unfreeze their categories now could be disruptive. Further, it would impose a disproportionate burden on companies with cost structures that have not changed significantly enough to warrant the administrative costs that these carriers would incur in updating their relationships. Moreover, the process of unfreezing and updating category relationships is resource-intensive, requiring carriers to develop detailed analyses for new categorization cost studies. As a result, we recognize that some electing carriers may choose not to unfreeze their category relationships in conjunction with setting initial incentive regulation rates for lower capacity circuit-based business data services because of the administrative costs they would incur in updating these relationships. We see no need to require that electing carriers incur these costs, particularly since one of the principal goals of this proceeding is to reduce unnecessary regulatory burdens.

46. In adopting this option, we reject NARUC's contention that we are violating section 410(c) of the Communications Act by failing to meaningfully consult with, and receive a recommendation from the Joint Board. Section 410(c) applies only to the extent the Commission engages in “the jurisdictional separation of common carrier property and expenses between interstate and intrastate operations.” Here, we are not engaged in that process. Instead, we are determining which costs electing carriers should use to calculate their incentive regulation rates for lower capacity circuit-based BDS. In allowing electing carriers to set those rates using data from 2018, rather than 2000, we make no change to the jurisdictional separations rules.

47. As set forth more fully below, we direct each electing carrier that chooses to update its separations category relationships to conduct two cost studies for 2018 and to use those cost studies in determining its initial incentive regulation rates. In so doing, we are exercising our authority over interstate rates and are not in any way requiring state commissions to make similar intrastate adjustments. On the contrary, our forbearance from application of the separations rules to electing carriers will allow the states to adopt their own rules for determining the costs carriers incur in providing intrastate services to the extent they have authority under state law.

48. Moreover, even if we were to interpret 410(c) so broadly as to be applicable to the opportunity we provide electing carriers to unfreeze their category relationships, our actions are not in conflict with our obligations under section 410(c). In 2009, the Commission asked the Joint Board to consider whether the Commission should allow carriers a one-time opportunity to unfreeze their separations category relationships and requested that the Joint Board prepare a recommended decision on that matter. No recommendation has been forthcoming. Section 410(c) directs that, after a referral, the Joint Board “shall prepare a recommended decision for prompt review and action by the Commission.” Nothing in section 410(c) obligates the Commission to wait indefinitely for a recommended decision before acting. We conclude that the only reasonable interpretation of this statutory language allows the Commission to act unilaterally where, as here, an issue has been pending before the Joint Board for more than nine years without a recommended decision. Any contrary interpretation would allow the Joint Board to indefinitely delay Commission action. Congress could not have intended that result while requiring that that the Commission act promptly once the Joint Board issues a recommended decision.

49. Section 410(c) also requires that the Commission “afford the State members of the Joint Board an opportunity to participate in its deliberations” on “decisional action[s]” regarding matters that have been referred to the Joint Board. To the extent this provision can be read as applying to this proceeding, the notice and comment periods and permit-but-disclose rules governing this proceeding have provided plenty of opportunity for the state members of the Joint Board to voice their opinions on allowing electing carriers to opt out of the category relationships freeze.

50. Implementation. To ensure that updated category relationships are properly reflected in incentive regulation rates, we require each electing carrier that chooses to update its frozen category relationships to conduct two 2018 cost studies—one based on frozen category relationships and one based on unfrozen relationships. To determine its incentive regulation rates for BDS, the carrier shall divide the BDS costs under the revised 2018 cost study by the BDS costs determined in the original 2018 cost study using frozen category relationships to develop a rate adjustment factor. The carrier shall apply this factor to the initial (prior to adjustments for the X-factor, inflation factor, and any exogenous cost changes) rates established in accordance with the procedures explained elsewhere in this Order to set the carrier's initial rates for lower capacity circuit-based BDS under incentive regulation. The carrier shall adjust these rates for the X-factor, inflation factor, and any exogenous cost changes and may adjust these rates to reflect any pricing flexibility allowed among services within the special access basket. Carriers that elect incentive regulation effective as of July 1, 2020 will follow these directions, except that if an electing carrier chooses to update its frozen category relationships it will conduct two 2019 cost studies and use the results of these cost studies to complete the steps described in this paragraph.

51. Unfreezing separations category relationships could result in a carrier recovering the same costs through higher BDS rates and unchanged switched access recovery. Incorporating updated category relationships into the 2018 cost study, or 2019 cost study for carriers electing the January 1, 2020 effective date, will change the costs assigned to the switched access category just as it will for BDS. The USF/ICC Transformation Order capped all interstate switched access rates at 2011 levels, subject to specified reductions over time. We do not permit electing carriers to increase their switched access rate caps. Unless cost reductions to interstate switched access are reflected in a carrier's revised base period revenue amount, a carrier will double-recover costs through its interstate switched access rates. To account for this effect, an electing carrier that unfreezes its separations category relationships must calculate the difference between the interstate switched access costs in the two 2018 cost studies. Each electing carrier must adjust its base period revenue by an amount equal to the interstate switched access cost difference between the two 2018 cost studies before applying the annual 5% reduction to the base period revenue. This is the process that the Commission employed in the Eastex proceeding. Carriers electing a January 1, 2020 effective date will do the same with 2019 cost studies.

52. An electing carrier that participates in the NECA interstate switched access tariff must report to NECA the interstate switched access cost difference between the two 2018, or, 2019, studies and its revised base period revenue amount. These procedures protect both carriers and customers from any unintended consequences of moving BDS from rate-of-return regulation to incentive regulation. Any electing carrier that opts out of the category relationships freeze shall include, in its 2019 or 2020, respectively, annual filing, workpapers showing how it implemented the measures set forth above. This does not eliminate the need for an electing carrier to adjust its Eligible Recovery for any other instances of double recovery. Finally, we require NECA to reflect these base period revenue changes in its settlement procedures.

53. We find that these measures provide a reasonable and not unduly burdensome method for ensuring that costs shifted from an electing carrier's unfreezing of its category relationships are carried forward into its incentive regulation rates for BDS without any double-recovery. Each electing carrier that chooses to update its category relationships will necessarily need to perform detailed calculations to implement that choice. We minimize the associated burdens by specifying that the electing carrier adjust its business data service rates to account for the changes in the category relationships using the 2018 cost study, or the 2019 cost study for carriers electing to convert effective July 1, 2020, that this Order requires of all electing carriers and therefore will impose only a minimal incremental burden on electing carriers.

54. We retain the special access basket, categories and subcategories, and the attendant rules governing the allowed annual rate adjustments for price cap regulation for incentive regulation. Commenting parties support this approach. The category and sub-category requirements limit the degree to which a carrier can raise rates for particular groups of services in any given year. Each electing carrier that elects incentive regulation must set its initial price cap indexes for the special access basket and associated service band indices at 100 and use the rate adjustment rules for price cap carriers contained in §§ 61.45 to 61.48 of our rules, as appropriate, to reflect the prescribed productivity factor, the inflation factor, and any required exogenous cost adjustment in the price cap index. These steps will ensure that the carrier's actual price index does not exceed its price cap index, and that its service band indexes for each category or subcategory do not exceed their upper limits.

55. Consistent with the price cap BDS Order, we adopt 2.0% as the productivity factor (X-factor) and the Gross Domestic Product-Price Index (GDP-PI) as the inflation factor used to adjust price cap indexes in the first year of incentive regulation, and each year thereafter. As proposed in the NPRM, we decline to incorporate a consumer productivity dividend adjustment into the X-factor.

56. Background. Under price cap regulation, the price cap index seeks to replicate the beneficial cost-reducing incentives of a competitive market by limiting the prices that a price cap LEC may charge for services. After price cap carriers set initial price cap indexes based on going-in rate levels, these indexes are adjusted annually based primarily on the productivity factor (X-factor) and inflation factor (GDP-PI) as well as any exogenous cost adjustments. The X-factor adjustment is intended to capture the amount by which incumbent LECs could be expected to outperform economy-wide productivity gains and to pass those gains on to consumers in the form of lower prices. In the past, the Commission has also applied a consumer productivity dividend adjustment to the X-factor to capture for ratepayers a portion of the benefits from expected productivity gains exceeding those incumbent LECs had historically achieved under rate-of-return regulation. The inflation factor is intended to adjust prices to capture economy-wide rates of inflation. Historically, the Commission has used the U.S. Department of Commerce's Bureau of Economic Analysis's GDP-PI, a chain-weighted index of overall national prices, as the inflation factor.

57. In the BDS Order, the Commission adopted for price cap carriers a 2.0% productivity-based X-factor and retained GDP-PI as the inflation factor but declined to apply a consumer productivity dividend adjustment. The Commission found that 2.0% reflects its best estimate of the productivity growth that incumbent LECs will experience in the provision of BDS services relative to productivity growth in the overall economy. To determine the X-factor, the Commission applied a total factor productivity methodology, which measures the relationship between the output of goods and services to inputs. The Commission applied this methodology to the U.S. Bureau of Labor Statistics' Capital, Labor, Energy, Materials, and Services (KLEMS) dataset for the broadcasting and telecommunications industries for estimating incumbent LEC productivity and input prices. The Commission used these data to establish a zone of reasonable X-factor estimates based on four relevant time periods, and from this zone selected an X-factor of 2.0%. The Commission also retained GDP-PI as the measure of inflation. Accordingly, price cap LECs adjust their price cap indexes annually by the 2.0% X-factor and GDP-PI to ensure just and reasonable rates for these BDS services.

58. Discussion. Consistent with the BDS Order, we adopt 2.0% as the productivity factor electing carriers will use to adjust their price cap indexes. In so doing, we reaffirm the Commission's finding in the BDS Order that the 2.0% X-factor represents our best estimate of BDS productivity gains or losses relative to the general economy and is a reasonable productivity factor with which to adjust price cap indexes for purposes of incentive regulation.

59. WTA opposes adoption of the 2.0% productivity X-factor for incentive regulation, contending that “given increasing broadband-related labor costs and the fact that the typical WTA member has only 10-to-20 employees, it does not appear possible for many small A-CAM and Alaska Plan companies to achieve productivity gains of two percent each year.” We believe, however, that the 2.0% X-factor is the most reliable estimate of BDS productivity growth for carriers generally, including smaller carriers. The 2.0% X-factor was the product of an economically-sound total factor productivity methodology, consistent with past Commission practice, using the only reliable and internally consistent dataset in the record in the BDS proceeding, KLEMS, for measuring incumbent LEC productivity and input prices. WTA focuses on one type of input price—labor costs—for which KLEMS captures telecommunications industry trends, including broadband-related trends, for carriers of all sizes. WTA implicitly assumes that its members' labor costs will rise more quickly (or fall more slowly) than price cap carriers' labor costs. Even if we were to accept this assumption, WTA does not address whether other factors affecting BDS productivity growth, such as changes in BDS demand, offset any disparity in the rate of change in labor costs.

60. The Commission sought comment on alternative X-factors for electing carriers but received no data or other information that would allow us to calculate an alternative X-factor. And while WTA provides anecdotal data on a selected portion of its members' costs, it has “not submitted the company-specific input price and output data that we would need to quantify” the extent to which its members' productivity growth and ability to recover costs deviate from the industry average. In the BDS Order, the Commission declined to adjust the X-factor to account for conflicting and unquantifiable evidence in the record that the KLEMS dataset overstated or understated productivity growth. And the Eighth Circuit Court of Appeals upheld the Commission's decision not to adjust the KLEMS dataset “in light of the conflicting evidence on what sort of adjustment was appropriate.” In these circumstances, we see no valid basis on which to adopt an alternative X-factor.

61. Notwithstanding WTA's concerns, we believe that most electing carriers will be able to achieve the 2.0% X-factor. Petitioners support our use of a 2.0% X-factor, even though they state that rate-of-return carriers may generally achieve lower productivity growth than price cap carriers, and TDS Telecom endorses the regulatory framework adopted in the BDS Order that includes a 2.0% X-factor. Given that rate-of-return carriers receiving fixed support are not required to move to incentive regulation, carriers unable to achieve the 2.0% X-factor will avoid any harm by simply not electing incentive regulation. The voluntary nature of incentive regulation therefore renders moot any risk involved in attempting today to determine what an appropriate productivity factor would be for this group of carriers. Carriers themselves are in the best position to determine whether they will benefit from incentive regulation and we have afforded them that flexibility.

62. Inflation Factor. We adopt GDP-PI as the inflation factor as proposed in the NPRM. No commenter opposed this proposal. As we found in the BDS Order, there is no alternative measure of inflation presented in the record that is as accurate as GDP-PI in the medium- and long-term and that is not susceptible to carrier influence or manipulation. Accordingly, electing carriers will adjust their price cap indexes by GDP-PI during the first year of incentive regulation, and each year thereafter.

63. Consumer Productivity Dividend. We decline to incorporate a consumer productivity dividend adjustment into the X-factor adopted in this Order. No commenter opposed this proposal in the NPRM. In the BDS Order, the Commission found that the 2.0% X-factor reflected all anticipated future BDS productivity growth and declined to include a consumer productivity dividend adjustment in the X-factor. For similar reasons, and to avoid regulatory disparity with price cap regulation, we decline to include a consumer productivity dividend in the X-factor for incentive regulation.

64. After reviewing the record, we adopt the proposal in the NPRM that exogenous costs be allocated based on a ratio of BDS revenues to total revenues from all regulated services and an electing carrier's universal service support payments. Exogenous costs are those costs that are beyond the control of the carrier, as determined by the Commission. We agree with Petitioners that allowing exogenous cost adjustments is appropriate. When costs are beyond the carrier's control, they are often of a nature that is not reflected in the measurement of productivity. It is therefore appropriate to allow adjustments to reflect exogenous events upon Commission approval.

65. We reject Sprint's proposal that any exogenous cost changes should be limited by applying the ratio of BDS revenues to total enterprise revenues. Sprint does not define “total enterprise revenues” or explain why it would result in a more relevant comparison to BDS revenues than using total regulated revenues, and we find it too expansive for use here. The exogenous costs being allocated are those associated with regulated services as determined by the part 64 allocation rules for assigning costs associated with non-regulated activities. Thus, we find that regulated BDS revenues compared to all regulated revenues and related support receipts is the most relevant relationship to allocate a portion of exogenous costs related to regulated services to BDS.

66. Finally, we will not require electing carriers to incur the costs of filing a short form tariff review plan as price cap carriers are required to do. In recent years, the Bureau has waived the requirement that price cap LECs file the short form, finding that it would provide little value to the Commission, industry, and consumers. We find that the short form tariff review plan would also provide little value to the Commission, industry, and consumers in conjunction with incentive regulation for electing carriers. We accordingly do not require its filing.

67. We adopt the low-end adjustment mechanism proposed in the NPRM to provide an appropriate backstop to ensure that electing carriers are not subject to protracted periods of low earnings. A below-normal rate of return over a prolonged period could threaten a carrier's ability to raise the capital necessary to provide modern, efficient services to customers. The low-end adjustment mechanism will permit a one-time adjustment to a single year's BDS rates to avoid back-to-back annual earnings below a set benchmark. This course should allow electing carriers to meet their existing obligations to debtholders and attract sufficient capital while continuing to provide BDS.

68. We reject Sprint's argument that any low-end adjustment should be allowed only if a sharing mechanism is adopted for a carrier's earnings. A sharing mechanism is a process that allocates a portion of a carrier's excess earnings under price cap regulation to the consumer through a one-time reduction in a carrier's price cap index. The Commission eliminated the sharing mechanism for price cap carriers in 1997. There is no causal link between the low-end adjustment mechanism and earnings sharing, and the two have not previously been tied together in other incentive regulation programs. The BDS Order allowed a low-end adjustment without a sharing mechanism and Sprint provides no convincing basis for diverging from that approach.

69. We use 100 basis points below the authorized rate of return for rate-of-return carriers as the benchmark for establishing the low-end adjustment as we did in the BDS Order. This approach will approximate the transition to the authorized rate of return of 9.75%. A carrier asserting a claim for a low-end adjustment bears the burden of showing that its return is below the prescribed benchmark and that the revised rate(s) are consistent with the benchmark.

70. Finally, as the Commission proposed in the NPRM, electing carriers that exercise downward pricing flexibility (for example, by entering into a contract tariff with a customer), or use generally accepted accounting principles (GAAP) rather than the part 32 Uniform System of Accounts, will be ineligible for a low-end adjustment. No party has opposed this limitation to the availability of the low-end adjustment mechanism. This limitation is consistent with that imposed in the BDS Order, and we see no reason to diverge from that approach here.

71. We adopt the proposal in the NPRM to grant pricing flexibility to electing carriers for their lower capacity TDM transport and end user channel termination services under incentive regulation similar to the pricing flexibility the Commission granted to price cap carriers' lower capacity TDM end user channel terminations in areas deemed non-competitive. We agree with commenters that permitting electing carriers to offer contract tariff pricing and volume and term discounts will benefit both carriers and customers and will promote competition in electing carriers' BDS markets. Requiring that electing carriers also maintain generally available tariff rates for their lower capacity TDM transport and end user channel termination services will ensure that the rates of customers that do not negotiate contract-based or term and volume discounted rates for such services will continue to be just and reasonable. Additionally, we condition this grant of pricing flexibility on the requirement that electing carriers remove contract tariff demand from the relevant incentive regulation basket for purposes of determining their price cap indexes and actual price indexes, which will ensure that those customers that do not negotiate contract tariffs will not cross-subsidize customers that do.

72. As part of our framework for moving electing carriers to less intrusive pricing regulation of their BDS offerings, we adopt a competitive market test to identify those areas served by electing carriers where competition or potential competition for lower speed (DS3 or less) TDM end user channel termination services justifies removing ex ante pricing regulation for those services. In adopting a competitive market test for electing carriers, we are guided by the Commission's previous work in developing a competitive market test for price cap carriers' BDS offerings. At the same time, we are persuaded by commenters that argue that the competitive market test should rely on evidence of competition in the study areas served by electing carriers.

73. We adopt a competitive market test for electing carriers that is based on a modified version of the second prong of the BDS Order competitive market test, which uses publicly available Form 477 data to measure whether a cable operator offers a minimum of 10/1 Mbps in 75% of census blocks in a study area served by a price cap provider. We will apply this test in electing carriers' study areas, and in those study areas deemed competitive by the competitive market test, we remove ex ante pricing regulation of lower capacity TDM end user channel terminations.

74. We are also constrained in the development of a competitive market test by the limited availability of data in the record regarding competition for BDS services in the study areas served by eligible rate-of-return carriers. We decline, however, to adopt any of the options we proposed in the NPRM for a competitive market test that would require a new data collection. Commenters strongly oppose a new information collection, arguing it would be burdensome and unnecessary. We agree. A new information collection for electing carriers would be especially burdensome given their relatively smaller size. The Commission similarly declined to require a new data collection even for larger price cap carriers in the BDS Order, as part of deciding to update the price cap competitive market test results, finding that the burdens would outweigh the benefits, and the burden of collecting the information would be considerable. Additionally, the burdens associated with an information collection could reduce incentives for eligible carriers to elect incentive regulation, counter to our goals. A simple, administrable test will ensure more resources are available for competition and deployment in electing carriers' study areas.

75. In the NPRM, we sought comment on whether to include lower capacity TDM transport services in the competitive market test. Given the lack of data in our record, we find that including such transport services would be unworkable at this time. We therefore decline to adopt a competitive market test for lower capacity TDM transport in electing carriers' study areas.

76. In this section, we address appropriate criteria for a competitive market test for electing carriers' lower speed TDM end user channel termination services, including the appropriate product market, number of competitors in a market, and geographic market.

77. Product market. When defining a product market, to ensure our action affects an appropriate group of services, we look to which services are sufficiently similar to reasonably be considered substitutes. We find the Commission's analysis of the relevant market in the BDS Order to be applicable to the current situation, and, therefore find the relevant product market includes circuit- and packet-based business data services, legacy hybrid-fiber-coaxial, and copper. For the same reason, we find that the product market also includes unbundled network elements, dark fiber, and fixed wireless services and facilities used to provision BDS. These services play competitive roles in BDS markets. While the Commission did not find best-efforts services to be close substitutes for all types of BDS in the BDS Order, we acknowledge here as the Commission did there that they nonetheless place a degree of competitive pressure on BDS suppliers, particularly for lower capacity services. Further, we believe a best-efforts supplier with its own ubiquitous wireline network has strong incentives to supply BDS to locations where it currently does not, and all the more so to the extent that an existing supplier is charging supra-competitive prices. We also continue to expect that suppliers exercising any short-term market power generally will be constrained by supply-side substitution over the medium term (3-5 years) in locations where other providers, such as cable companies, offer best-efforts or other telecommunications services over their own facilities. We therefore find that the product market analysis that the Commission conducted for price cap areas in the BDS Order applies equally to electing carrier areas.

78. Competition Within a Study Area. We must also determine the appropriate level of competition for any competitive market test. The Commission, in the BDS Order determined that a “combination of either one competitive provider with a network within a half mile from a location served by an incumbent LEC or a cable operator's facilities in the same census block as a location with demand will provide competitive restraint” more effectively than legacy regulation. The Commission decided that a “nearby” BDS competitor provides sufficient competition after analyzing three findings: (1) The geographic scope within which a likely BDS provider can realistically compete with an incumbent LEC; (2) a finding that one competitor in addition to the incumbent LEC provides a reasonable degree of competition; and, (3) the benefits of competition outweigh the potential unintended costs of regulation.

79. We do not have data showing where there is a competitive provider with a network half a mile from a location served by carriers eligible to elect the lighter touch regulatory framework we adopt today. We do, however, have Form 477 data which is organized on a census block-level. We can therefore identify the census blocks served by an electing carrier where cable broadband services are also deployed. We find it appropriate to use cable broadband in the census blocks that comprise the electing carrier's study area as a proxy for competition because, as the Commission previously determined, “cable companies have focused investment on building fiber networks for higher-bandwidth Ethernet services, which is enabling them to overcome limitations of traditional coaxial-based cable systems that cannot meet higher bandwidth demand.” Cable providers have shifted to offering “higher (and more competitive) bandwidths. At the same time, cable operators' best efforts (and Ethernet over Hybrid Fiber-coaxial (EoHFC)) services continue to compete effectively against incumbent LECs' lower speed TDM services. The Commission also found that because cable operators have “aggressive[ly] deploy[ed]” it was “highly likely the cable-only measure found in the Form 477 data will capture the vast bulk of additional deployments; it is likely that most non-cable competitive extension of business data services networks will occur where cable is also deploying or has already deployed.” This rationale is equally applicable to electing carriers' provision of BDS in their study areas.

80. As the Commission found in the BDS Order, and as the Eighth Circuit Court affirmed, a single wireline competitor provides a substantial competitive effect by disciplining rates, terms, and conditions to just and reasonable levels. In industries with large sunk costs, such as wireline providers, the largest impact occurs with the entry of a second provider, with added benefits from additional competitors declining thereafter. This is because the presence of a nearby provider is likely to prevent or mitigate substantial abuse of market power, either through lack of innovation or high prices. This finding is not challenged in the record. Consistent with the analysis in the BDS Order, we find that the effect of a single BDS competitor is sufficient to limit anticompetitive behavior, and that the presence of a cable network offering a minimum of 10/1 Mbps broadband service in 75% of the census blocks in a study area is sufficient to deem a study area competitive for the purposes of the competitive market test for electing carriers.

81. Geographic Market. We find that an electing carrier's individual study area is the appropriate geographic market measure for the competitive market test because it is administratively feasible but is granular enough to capture reasonably similar competitive conditions. A study area is a geographic segment of a rate-of-return incumbent LEC's telephone operations that generally corresponds to the carrier's entire service territory within a state. Incumbent LECs determine eligibility for high-cost universal service support at the study area level, perform jurisdictional separations at the study area level and generally tariff their rates at the study area level. As a result, the Commission and the industry have substantial experience administering rules on a study area basis. What's more, a study area is granular enough to capture reasonably similar competitive conditions. Rate-of-return study areas vary in size but are significantly smaller than metropolitan statistical areas and generally smaller than counties and are therefore sufficiently granular to assess competitive conditions. Given their mostly rural nature, the average size of a rate-of-return study area is 992.82 square miles, compared to the average county, 1,180.40 square miles, and the average metropolitan statistical area, 2,720.95 square miles. Adopting study areas as the geographic market also avoids risk of competitive overlap by, for example, a rate-of-return study area crossing county lines that are deemed competitive and noncompetitive.

82. We also reject other proposals in the record, including suggestions to build a competitive market test for electing carriers that uses counties or census blocks as the relevant geographic market. We agree with Smithville that the selection of counties for use in the price cap competitive market test was “a well-documented effective approach for competitive area evaluation for larger price cap carriers that operate service areas dimensioned at statewide levels but does not work well for carriers that have sub-county service areas.” To the extent such proposals seek to assess competition in electing carriers' study areas based on competition elsewhere within the county, we reject that proposition—any competitive market test must be based on the competitive conditions each carrier faces, not those another carrier faces somewhere else in a county. Additionally, some study areas cross county lines. Using counties would potentially require us to subdivide study areas along county boundaries, which would involve unreasonable administrative burdens and could lead to varying treatment of a single study area depending on the counties in which it is located.

83. In response to the 2017 Public Notice, Smithville argues that using census blocks to assess competition in electing carriers' study areas would be a better approach. We decline to adopt census blocks as a geographic measure for our competitive market test. The Commission previously found that census blocks or census tracts are too numerous to efficiently administer. Additionally, they can be impacted by changes in demand as small as a single building and could lead to a patchwork of different regulations that vary from census block-to-census block, or even building-to-building. Study areas, on the other hand, are more administratively feasible because there are a limited number of study areas eligible to elect our BDS regulatory framework.

84. In this section, we describe the specific structure of the electing carriers' competitive market test we adopt for electing carriers' lower capacity TDM end user channel termination services. In determining whether electing carriers with lower capacity TDM-based end user channel termination services (at a DS3 or below), face sufficient competition to allow competition, rather than ex ante pricing regulation, to ensure rates are just and reasonable, we adopt a competitive market test modeled on a modified version of the second prong of the existing price cap competitive market test using data from census blocks served by electing carriers. The second prong of the price cap competitive market test uses Form 477 data to measure whether a cable operator offers a minimum of 10/1 Mbps broadband service in 75% of the census blocks in the price-cap service areas within a county. Having decided that we will use only existing data to gauge competition in the study areas served by an electing carrier, for purposes of the electing carriers' competitive market test, if a cable operator or other competitive provider offers a minimum of 10/1 Mbps broadband service in 75% of the census blocks in an electing carrier's study area, we will deem the study area competitive.

85. We set 10 Mbps downstream and 1 Mbps upstream as minimum thresholds for a cable operator's service to be included in the competitive market test. Setting a minimum threshold ensures that the networks that supply these services are reasonable proxies for the type of network facilities needed to deliver BDS. As we observed in the BDS Order, “when a cable provider is capable of providing internet broadband service within any census block, then generally they have the incentive to make the incremental investment necessary to serve locations with BDS demand in that census block, especially over the medium term.” Cable operators are continuing to invest in and upgrade the capacities of their networks, which give us reasonable assurance that these networks will be capable of providing BDS competition over the short- to medium-term. Additionally, the 10/1 Mbps threshold is also the threshold that rate-of-return carriers accepting fixed A-CAM support are required to offer to funded locations.

86. Using Form 477 data for electing carriers' study areas is administratively simple for both the Commission and electing carriers. We already regularly require providers to update their Form 477 submissions, so we do not need to undertake a new data collection. Another benefit of the new electing carriers' competitive market test is the incorporation of the 78 rate-of-return-only counties that cannot be analyzed using the price cap competitive market test. Had we decided to allow electing carriers to opt-in to the price cap competitive market test, the competitive status of electing carriers serving any of those 78 rate-of-return-only counties would have been unresolved because they were not included in the original analysis.

87. We recognize that under the electing carriers' competitive market test, a relatively small percentage of electing carriers' study areas will be deemed competitive at this time. The current result of the competitive market test we adopt today for rate-of-return carriers receiving fixed support is consistent with the rural nature and the nascent deployment of cable in many eligible carriers' study areas. We expect the number of electing carriers' study areas deemed competitive by the competitive market test will increase as competition grows and cable companies expand their reach. This administratively simple competitive market test ensures that all carriers are included in the electing carriers' competitive market test and will have an opportunity to be deregulated as competition develops.

88. Notwithstanding Petitioners' and some other commenters' request that we use the results of the price cap competitive market test adopted by the Commission in the BDS Order to determine where ex ante pricing regulation should be removed from electing carriers' lower capacity TDM end user channel termination services, we decline to do so. In arguing that the Commission should use the BDS Order price cap competitive market test for electing rate-of-return carriers, some commenters claim “the same marketplace analyses the Commission undertook for price cap carriers apply equally to BDS provided by model-based rate-of-return carriers.” While using the results of the existing competitive market test to determine whether an area served by an electing carrier is competitive would be fast, no data in the record support that approach. In fact, the result of the competitive market test we adopt for electing carriers, which results in very few study areas being deemed competitive, underscores our finding that application of the price cap competitive market test results to electing carriers—which would result in far more electing carriers' study areas being deemed competitive—would not accurately measure competition in the geographic areas served by rate-of-return carriers receiving fixed support.

89. The BDS Order relied upon the largest information collection in the history of the Commission to analyze and determine the competitive nature of price cap carrier study areas. Even if a county contained both price cap and rate-of-return study areas, the Commission's analysis only included the price cap study area. The Commission created the price cap competitive market test after a thorough review of the 2015 Collection, Form 477 data, and established the specific test metrics based upon an informed knowledge of the level of competition that existed and was necessary to protect consumers in the absence of regulation. Petitioners, however, offer no data showing the extent of BDS competition in areas served by rate-of-return carriers that receive fixed support. Instead, they argue that the level of competition on a county-by-county basis for price cap carriers' lower capacity TDM-based BDS offerings is comparable to the level of competition for lower capacity TDM-based BDS offerings of rate-of-return carriers that receive fixed support. The principal support Petitioners offer for this assertion is a study that purports to demonstrate that price cap rural areas immediately proximate to certain A-CAM study areas exhibit sufficiently similar characteristics that we should include A-CAM study areas in the same competitive market test that we used for price cap carriers. We find the Petitioners' study unpersuasive.

90. The study suffers from several methodological defects. First, the study is not based on a representative sample of electing carriers' study areas. Instead, it relies solely on Consolidated Communications' rate-of-return study areas. We are doubtful, for example, that the Consolidated study areas are a good proxy for the Alaska rate-of-return carriers that are eligible to elect our new regulatory framework. Second, two of the study's principal metrics (population and housing density) are unlikely to be the critical drivers of competitive BDS deployment.

91. Additionally, in some instances the study compares non-urbanized price cap areas with areas served by rate-of-return carriers that receive fixed support that include urbanized areas. These areas are not comparable. At least some of the counties included in the study's comparison were deemed non-competitive by the price cap competitive market test. Inclusion in the price cap competitive market test of A-CAM areas in these instances would have no effect on the regulatory status of these study areas. The study does not directly compare study areas with high cable presence with competitive counties and study areas with low cable presence with non-competitive counties, as would be expected if the study was trying to show similarities.

92. The study also compares the percentage of census blocks with cable broadband availability between price cap and nearby A-CAM areas and claims that, on average, “the percentage of Census blocks in Consolidated tracts with cable service (21%) is similar to the surrounding rural price cap tracts (28%).” But the study's use of average percentages obscures wide variations in percentage cable broadband deployment. For price cap study areas, cable broadband deployment was found to be 3.88% to 68.68%. For A-CAM study areas, broadband deployment in areas varied from 0.00% to 89.60%. The study further attempts to compare price cap areas with nearby A-CAM areas by claiming that the differences in the percentage of cable broadband deployment between the two sets of areas are small, “only 15 percentage points.” This is not small.

93. The study also does not state whether it limited its analysis of cable deployment in rate-of-return study areas to those deployments offering a minimum of 10/1 Mbps. The study may have included residential cable deployments at speeds lower than the threshold the Commission established for the price cap competitive market test. Any such deployments should not be included in a comparison of price cap and nearby A-CAM areas.

94. We are also unable to rely on the conclusions in the Petitioners' study since it is based on a misplaced reliance on inaccuracies inherent in the structure of the price cap competitive market test—inaccuracies the Commission acknowledged when it adopted the competitive market test in the BDS Order. In the BDS Order, the Commission conceded that its county-based competitive market test unavoidably included a relatively small number of areas that would be inappropriately regulated or inappropriately deregulated. It explained that the only competitive market test that would be free of such inaccuracies would be one that would be run at a building level—with over a million buildings with BDS demand, an administratively unworkable option. It adopted percentage thresholds for both prongs of the competitive market test and employed certain statistical tools to ensure those thresholds were set at levels that would minimize inaccuracies. It further reasoned that competitive options would become available for many of these areas in the short- to medium-term given the dynamic nature of the BDS marketplace.

95. The Petitioners' study attempts to compare A-CAM areas to some of the very price cap areas most likely to contain these inaccuracies and to argue that these inaccuracies justify inclusion of rural A-CAM areas in the price cap competitive market test. Extrapolating from the characterization of peripheral parts of price cap study areas to A-CAM areas is likely to exacerbate these inaccuracies. And unnecessarily so, since the competitive market test we adopt offers a simple way of estimating competition in A-CAM study areas. Further, these are areas the study concedes typically lack even the most basic evidence of BDS competition. Areas where there is little evidence of competition are also likely areas where there is little to no demand for BDS.

96. Given these methodological and conceptual flaws, we conclude that the Petitioners' study fails to establish the comparability of price cap and nearby A-CAM areas or provide a reasonable basis on which to include A-CAM areas in the price cap competitive market test. We therefore decline to apply the results of the price cap competitive market test to electing carriers' serving areas.

97. Consistent with the BDS Order competitive market test, we eliminate ex ante pricing regulation of circuit-based end user channel terminations at or below a DS3 level in study areas deemed competitive by the electing carriers' competitive market test. We direct the Bureau to release a Public Notice that lists the results of the competitive market test, and to provide the information on the Commission's website. We will re-run the electing carriers' competitive market test every three years to assess whether any additional electing carriers' study areas meet the 75% threshold. This will identify any additional electing carriers' study areas that should be deemed competitive. We believe a three-year timeframe balances the need to ensure the electing carriers' competitive market test remains accurate and the Commission's desire to avoid disrupting contracts and burdening carriers with overly frequent updates. The sunk and irreversible cost of providing business data services and deploying a network represents the biggest barrier to entry for providers. Once the barrier is overcome, the marginal cost of operating is low, so it is unlikely that competition will exit. Thus, electing carriers' study areas deemed competitive will not be reassessed.

98. To avoid confusion from both carriers and businesses stemming from updates from the price cap competitive market test and the electing carriers competitive market test, we direct the Wireline Competition Bureau to re-run the three-year updates for both the BDS Order price cap competitive market test, and the electing carriers competitive market test concurrently. Thus, the electing carriers' competitive market test will initially be re-run in 2020, at the same time as the BDS Order price cap competitive market test, to align the tests' timing. The re-running of these tests will coincide with the initial running of the test for carriers electing to convert to incentive regulation as of July 1, 2020. After that, both tests will be re-run every three years. This approach will make it easier for stakeholders to determine the regulatory status of price cap and rate-of-return BDS providers since the results will be published all at once and ease the burden on Commission resources. The Bureau shall release a Public Notice that lists newly competitive counties (for price cap areas) and study areas (for electing carriers' study areas) and shall also provide this information on the Commission's website. As with the BDS Order competitive market test, parties may challenge the results of the electing carriers' competitive market test by filing petitions for reconsideration or by seeking full Commission review through an application for review.

99. We remove ex ante pricing regulation from electing carriers' lower capacity TDM end user channel termination services offered in study areas that are deemed competitive by the electing carriers' competitive market test. Such services are presumed to be subject to sufficient competitive pressure that removing this layer of regulation will not result in excessive rates. Removing this layer of regulation will reduce unnecessary regulatory burdens and will enable these carriers to contribute to BDS competition in their markets. Such services in such areas will be relieved of ex ante pricing regulation and detariffed in the same manner and with the same transition provisions as we adopt today for electing carriers' packet-based and higher capacity TDM BDS. As with packet-based and higher capacity TDM BDS, we continue to maintain our oversight over these TDM services pursuant to sections 201, 202, and 208 of the Act to ensure rates for these services remain just and reasonable. Lower capacity TDM transport and end user channel termination services in areas deemed noncompetitive by the competitive market test will continue to be subject to the incentive regulation and pricing flexibility we adopt today.

100. We conclude that electing carriers' packet-based and higher capacity TDM-based BDS offerings above a DS3 bandwidth level (which includes both higher capacity TDM end user channel terminations and higher capacity TDM transport) should not be subject to ex ante pricing regulation and direct electing carriers to detariff these services following a transition period. Our decision to end ex ante pricing regulation for electing carriers' packet-based and higher capacity TDM BDS offerings will facilitate competition for and deployment of these packet-based and higher capacity TDM services and is consistent with the Commission's statutory obligation to ensure that rates are just and reasonable.

101. In the BDS Order, after reviewing an extensive record, the Commission found that in price cap markets nationwide there was no compelling evidence of incumbent LEC market power for packet-based and higher capacity circuit-based BDS. Specifically, the record demonstrated that demand for these services was increasing, prices were declining, and competitive investment was growing significantly. The Commission also determined that the price cap BDS market for packet-based and higher capacity TDM-based offerings had the characteristics of a bidding market such that even competitors that did not have pre-existing facilities to serve a potential customer were nonetheless capable and willing to bid on requests for proposals by customers, particularly those with higher bandwidth needs.

102. The record in this proceeding lacks the comprehensive and voluminous data collection available to the Commission in the price cap BDS proceeding. But, we recognize that re-creating such a similarly detailed data collection would have been more difficult for rate-of-return carriers that receive fixed support, because they have vastly fewer resources to produce such information and the benefits of such a data collection would likely be far outweighed by its costs. Instead, we draw parallels where we can from our conclusions in the BDS Order to inform our analysis of the record in this proceeding.

103. In the BDS Order, the fact that the Commission could not find compelling evidence to suggest market power in packet-based and higher capacity TDM BDS in price cap markets suggests that the same circumstances could exist in electing carriers' BDS markets. A variety of companies are investing in next generation networks, not legacy networks, to compete via different technologies, which is consistent with a lack of market power. Additionally, demand for high speed BDS exists nationwide. Customer requests for proposals (RFPs) are not restricted to price cap areas but seek proposals for service wherever they have demand. Thus, the characteristics of a bidding market that exist in price cap areas are also likely to be present in areas served by rate-of-return carriers that receive fixed support.

104. Relatedly, there is evidence that the deployment of fiber and sales of packet-based BDS such as Ethernet continue to grow substantially and pervasively. Analysts report that, for the first time, fiber-connected commercial building penetration exceeded 50% in 2017—the availability of optical fiber connectivity to large and medium size commercial buildings in the U.S. increased from 49.6% in 2016 to 54.8% in 2017. In 2018, 98% of our nation's elementary and secondary school districts are served by fiber optic or other high speed connections. An analyst's equipment revenue forecast for 2017 to 2022 projects that Ethernet access and aggregation will grow 9% annually. The record in this proceeding shows that these growth trends are also apparent in A-CAM carriers' served areas. For example, TDS Telecom, Great Plains, and Consolidated report a four-year average annual growth rate in Ethernet sales from December 2014 to 2017 of 10.7%, 15.4%, and 38.3%, respectively. Over the same periods, these carriers report declines in legacy BDS in study areas that were similar to declines in legacy BDS in price cap areas. At the same time, consistent with the Commission's findings in the BDS Order, analysts report actual and forecasted growth in cable revenues, deployment and market share for small to national enterprise customers that are significantly contributing to overall growth and competition in the BDS market.

105. There are other reasons to believe market power for packet-based and higher capacity TDM business data services is not present in areas served by rate-of-return carriers that receive fixed support. The record shows that large customers have significant bargaining leverage over relatively smaller rate-of-return carriers that receive fixed support, limiting what the carriers may negotiate when bidding on contracts. For example, ex ante pricing regulation is unnecessary to protect large and powerful entities, such as wireless carriers, that purchase large quantities of BDS.

106. The Commission has repeatedly emphasized its preference for relying on competition instead of regulation. We seek to minimize the burdens of regulation while ensuring that rates and practices remain just and reasonable. The Commission previously identified packet-based services as the “future of business data services” that are also “readily scalable.” While legacy TDM BDS is declining, carriers, including rate-of-return carriers that receive fixed support, are generally investing aggressively to deploy high speed networks in their study areas. The record shows growing demand for packet-based and higher capacity TDM BDS consistent with the Commission's findings in the BDS Order, and we find the record persuasive.

107. Removing ex ante pricing regulation for packet-based and higher capacity TDM services, will also encourage innovation. As the Commission has previously found, the potential unintended costs of regulation are far greater for new services. The Commission has concluded that ex ante pricing regulation for these services should not be imposed even with “insufficiently robust competition” because it would be difficult to administer such complex regulations. We are keenly aware of the risk that heavy-handed regulation could discourage competitive investment which would have long-term negative consequences on competitive deployment over time.

108. These considerations also apply to the study areas of rate-of-return carriers that receive fixed support. Innovation does not stop at the borders of a price cap carrier's study areas. The record shows that all providers are accelerating their deployment of next generation packet-based services in response to customer demand. We find that the sensitivity of new and growing services to imprecise regulation, particularly rate regulation, is a factor in areas served by rate-of-return carriers receiving fixed support as well as areas served by price cap carriers. For that reason, consistent with our decision in the BDS Order, we find that the costs and potential risks of ex ante pricing regulation for packet-based and higher capacity TDM business data services exceed the benefits and we therefore eliminate such regulation. This result provides regulatory parity between electing carriers and price cap carriers in their provision of packet-based and higher capacity TDM business data services which will benefit consumers.

109. We eliminate ex ante pricing regulation on the provision of these services by electing carriers to hasten deployment of advanced services and because competition and the size of purchasers of these services is sufficient to protect consumers. We affirm, however, that the Commission retains authority under sections 201, 202, and 208 of the Act to ensure that packet-based and higher capacity TDM BDS rates and practices are just, reasonable, and not unreasonably discriminatory. The availability of the protections of sections 201 and 202, and the importance of the formal fast-track complaint process of section 208, will provide sufficient protection against unreasonable rates and practices in this increasingly competitive market.

110. We take a series of additional steps to ensure electing carriers will be able fully to implement the BDS regulatory framework we adopt today, including adopting deadlines for implementing incentive regulation, forbearing from cost assignment and jurisdictional separations rules, forbearing from § 54.1305 reporting requirements, forbearing from section 203 tariffing requirements, allowing electing carriers to elect to use GAAP accounting instead of part 32 accounting, and adopting certain transitional timeframes to facilitate the detariffing of electing carriers' packet-based and higher capacity TDM offerings.

111. We adopt the following requirements to implement voluntary incentive regulation for electing carriers. We adopt the proposal in the NPRM to make incentive regulation for electing carriers effective as of July 1, 2019 and add a second election date option for carriers that will be effective July 1, 2020. We agree with Petitioners that a January 1, 2019 effective date would be the least burdensome for carriers because cost studies are performed on a calendar year basis and “would benefit customers and competition alike.” However, a January 1, 2019 effective date is not practicable because the rules adopted in this Order contain new or modified information collection requirements triggering Paperwork Reduction Act review by the Office of Management and Budget (OMB), a process which takes approximately five months to complete. A January 1, 2019 effective date would also provide insufficient time for electing carriers in the traffic-sensitive NECA pool to remove their BDS offerings from the pool. Our rules require that annual access charge tariff filings be filed with a scheduled effective date of July 1. As such, a July 1 effective date is consistent with current tariffing procedures and will simplify the implementation of the changes adopted in this Order.

112. Similarly, we adopt July 1 as the effective date for any future election. July 1 is the most efficient effective date because allowing carriers accepting future offers of A-CAM support to set their initial rates on another date would add cost and complexity to the process. Petitioners suggest using a January 1 effective date but doing so would require an electing carrier to make an additional tariff filing beyond the required July 1 annual filing. NECA, and the Commission, would have to undertake their associated review of the tariff, and NECA would be required to conduct its mid-year cost studies for the remaining pool members, calculate support for existing members, reband, and undertake other steps it would not do otherwise. Additionally, a January 1 effective date would be based on the previous year's cost study. Relying on year-old data would undermine the validity of the tariff filings. It is possible that an electing carrier could prepare a cost study for only a portion of the current year and multiply the results of the study to estimate a year's data, but that approach creates additional burdens for carriers, complicates NECA's implementation, and would still not represent a fully accurate picture of the carrier's costs and demand. When considered together, we find that using July 1 as a deadline for setting initial rates in any future A-CAM offer is the most efficient and feasible approach.

113. Electing carriers currently in the NECA pool are required to notify NECA by March 1, 2019 that they will not participate in the upcoming NECA traffic-sensitive tariff for their BDS offerings consistent with § 69.3 of our rules. Similarly, NECA pool carriers that elect to convert to incentive regulation effective July 1, 2020, must notify NECA that they will not participate in the NECA traffic-sensitive pool for BDS offerings by March 1, 2020. NECA pool carriers that accept future offers of A-CAM support and elect the incentive regulation framework we adopt today or otherwise transition away from legacy support mechanisms must notify NECA by March 1 of their election year consistent with § 69.3. The Commission proposed requiring electing carriers to provide the Bureau with 120 days' notice of their election to facilitate implementation of the revised tariffs but we now agree with Petitioners that opposed granting so much advanced notice. Accordingly, we require electing carriers electing to convert to incentive regulation effective July 1, 2019 to provide the Bureau with notice of their election by May 1, 2019. Carriers that elect our second incentive regulation option date, effective July 1, 2020, must notify the Bureau by May 1, 2020. Carriers that accept future offers of A-CAM support and carriers that otherwise transition away from legacy support mechanisms must provide notice of their election or transition to the Bureau by May 1 of the year of election or transition. Electing carriers that choose to update their separations category relationships pursuant to this Order shall include information to that effect in these notices to NECA and the Bureau.

114. As part of implementing our new regulatory framework for electing carriers' BDS, we grant forbearance from certain existing Commission rules and statutory requirements, including our tariffing obligations for electing carriers' packet-based and higher capacity ( i.e., above a DS3 bandwidth level) TDM business data services and lower capacity TDM end user channel termination services in study areas deemed competitive; our Cost Assignment Rules; and our § 54.1305 reporting requirements, for electing carriers' lower capacity ( i.e., at or below a DS3 bandwidth level) TDM transport and end user channel termination services. Forbearance will be effective July 1, 2019 for carriers electing incentive regulation of their business data services as of July 1, 2019, and July 1, 2020 for carrier's electing incentive regulation as of July 1, 2020. Section 10 of the Act requires that the Commission forbear from applying any provision of the Act, or any of the Commission's regulations, if the Commission determines that: (1) Enforcement of the provision or regulation is not necessary to ensure that a telecommunications carrier's “charges, practices, classifications or regulations” are “just and reasonable and are not unjustly or unreasonably discriminatory,” (2) enforcement of the provision or regulation is “not necessary for the protection of consumers,” and (3) forbearance is consistent with the public interest. In making the public interest determination, the Commission must also consider, pursuant to section 10(b), “whether forbearance from enforcing the provision or regulation will promote competitive market conditions.” We find that granting forbearance in these instances will meet the statutory forbearance requirements and will facilitate electing carriers' transition to incentive regulation, putting them on a footing similar to that of price cap carriers in their provision of BDS.

115. In order to effectuate our light-touch regulatory framework for packet-based and higher capacity TDM business data services above the DS3 bandwidth level, we grant forbearance, pursuant to section 10 of the Act, from section 203 tariffing requirements for these services offered by electing carriers. In addition, we grant forbearance for lower capacity TDM end user channel terminations offered in electing carriers' study areas deemed competitive by the competitive market test. Forbearance from section 203 tariffing obligations is warranted under section 10 of the Act, is consistent with our finding that electing carriers lack market power in packet-based and higher capacity TDM business data services, and end user channel terminations in study areas deemed competitive by the competitive market test, and will enhance competition and deployment of these next generation services.

116. Forbearance from section 203 tariffing requirements for packet-based and higher capacity TDM BDS offerings above the DS3 bandwidth level, and for lower capacity TDM end user channel terminations in study areas deemed competitive by the competitive market test, satisfies all three prongs of the forbearance analysis. First, pursuant to section 10(a)(1), we conclude in the context of growing demand for high speed services detariffing these services will promote competitive market conditions, which will result in lower prices and better services, thus ensuring that electing carriers' relevant charges, practices, classifications, and regulations are just and reasonable and not unreasonably discriminatory. Similarly, the existence of demonstrated competition for end user channel terminations in markets deemed competitive will restrain anticompetitive behavior, lower prices, increase innovation, and protect consumers from charges, practices, classifications, and regulations that are not just and reasonable and unreasonably discriminatory. Competition will serve to limit electing carriers' behavior. Absent forbearance, as commenters argue, Commission regulation could have the inverse effect and harm competition and network deployment.

117. We also conclude that, pursuant to section 10(a)(2), enforcement of our tariffing requirements for these services is “not necessary for the protection of consumers.” Indeed, by encouraging competition, granting forbearance from tariffing of these services will benefit consumers by increasing deployment and lowering cost. Competition among carriers and the roll-out of next generation packet-based and higher capacity TDM circuit-based BDS will lower prices and provide new services. In study areas deemed competitive, competition will also protect consumers. The Commission has previously found that tariffs were originally required to protect consumers but they are unnecessary if a provider faces competitive pressures. If an electing carrier harms a consumer the consumer can switch to other competitors present in the study area. This threat protects consumers. Of course, in the event that there is risk of consumer harm, sections 201, 202, and 208 remain applicable to enforce the Commission's rules and protect consumers' welfare. Based on competition in the market and our statutory mandate as a backstop, we find that section 203 is not necessary to protect consumers in electing carriers' packet-based and higher capacity TDM markets, and for lower capacity TDM end user channel termination in study areas deemed competitive by the electing carriers' competitive market test.

118. Third, we conclude that forbearance from these statutory and regulatory requirements is in the public interest. Forbearance from the tariffing requirement for these packet-based and higher capacity TDM services and for lower capacity TDM end user channel terminations in markets deemed competitive will promote competition, reduce compliance costs, increase investment and innovation, and facilitate the technology transitions. We therefore find that application of section 203 is not necessary under sections 10(a)(1) and 10(a)(2), and is in the public interest, consistent with sections 10(a)(3) and 10(b).

119. In light of our decision to relieve electing carriers of the obligation to conduct cost studies, we grant electing carriers forbearance, pursuant to section 10 of the Act, from the Commission's Cost Assignment Rules for their BDS services, although we grant forbearance for their lower capacity ( i.e., at or below a DS3 bandwidth level) TDM transport and end user channel termination services after they have set initial rates for those offerings. Additionally, electing carriers that participate in the NECA pool must conduct cost studies for the calendar year prior to their election and the first half of the year of their election to comply with their pool settlement requirements.

120. Background. The Cost Assignment Rules generally require carriers to assign costs to build and maintain the network and revenues from services provided to specific categories. Categories include nonregulated or regulated service, the intrastate or interstate jurisdiction, and specific access services, such as local switching or common line. The Cost Assignment Rules also govern the accounting treatment of transactions between a carrier and its affiliate, such as the sale or transfer of assets between regulated and nonregulated affiliates. In addition, the rules include certain reporting requirements, which depend on the availability of data produced by the Cost Assignment Rules.

121. As part of the regulatory accounting process, carriers first record their costs, including investments and expenses, into various accounts in accordance with the Uniform System of Accounts (USOA) prescribed by part 32 of the Commission's rules. Next, using the Cost Assignment Rules in part 64, carriers directly assign, or allocate if direct assignment is not possible, the costs and revenues associated with their regulated and nonregulated activities. After costs and revenues are divided between those that are regulated and nonregulated, interstate and intrastate costs and revenues are separated as provided in part 36. Federal and state regulatory jurisdictions apply their own ratemaking processes to the amounts assigned to each jurisdiction. Finally, the access charge rules in part 69 require carriers to separate regulated interstate costs into interexchange costs and access costs, and then apportion the latter among access categories or elements.

122. The Commission adopted the Cost Assignment Rules to help ensure that carriers charge just and reasonable rates for the services they provide. The Commission adopted the Cost Assignment Rules prior to 1991 when all incumbent LECs were subject to rate-of-return regulation, so that it could set rates that allowed carriers to recover their costs and earn a specific return on their regulated investment. Subsequently, the Commission moved away from rate-of-return regulation for the larger incumbent LECs. In its place, it adopted price cap regulation, a form of incentive regulation that seeks to “harness the profit-making incentives common to all businesses to produce a set of outcomes that advance the public interest goals of just, reasonable, and nondiscriminatory rates, as well as a communications system that offers innovative, high quality services.”

123. In 2008, the Commission granted AT&T conditional forbearance from the Cost Assignment Rules. The Commission conditioned the forbearance on, among other things, requiring AT&T to retain part 32 Uniform System of Accounts data and submit a compliance plan describing in detail how it would fulfill its statutory and regulatory requirements. The Commission granted similar conditional forbearance from the Cost Assignment Rules to Verizon and Qwest. Subsequently, Qwest, Verizon, and AT&T obtained conditional forbearance from certain financial reporting requirements that relied on the Cost Assignment Rules. In 2013, the Commission extended the conditional forbearance granted the three carriers to all price cap carriers.

124. In the Part 32 Order, 82 FR 20833, May 4, 2017, the Commission terminated the conditions that the Commission placed on a variety of carriers granted forbearance from our Cost Assignment Rules. The Commission noted that forbearance was expressly premised on the continued availability of part 32 accounting data and the filing of compliance plans consistent with that condition. The Commission determined that continuing to maintain these costly requirements on the speculation that at some point the Commission might do something with them failed any cost-benefit analysis.

125. Discussion. We find that applying the Cost Assignment Rules to electing carriers is no longer necessary to ensure that charges and practices are just, reasonable, and not unjustly or unreasonably discriminatory; to protect consumers; or to protect the public interest. Much of the reasoning in the Commission's earlier decisions to grant price cap LECs forbearance from the Cost Assignment Rules applies equally to rate-of-return carriers receiving fixed support that elect incentive regulation. With respect to ensuring charges, practices, classifications, and regulations are just and reasonable and not unjustly or unreasonably discriminatory, as discussed above, the Cost Assignment Rules were developed when the incumbent LECs' interstate rates and many of their intrastate rates were set under rate-based, cost-of-service regulation. Because the incentive regulation we adopt severs for BDS the direct link between regulated costs and prices just as price cap regulation did, a carrier is not able automatically to recoup misallocated nonregulated costs by raising BDS rates, thus reducing incentives to shift nonregulated costs to regulated services. To the extent incentives remain, we find our positive experience with the waivers of the all-or-nothing rule provides confidence that the additional costs of maintaining the Cost Assignment Rules outweighs any possible benefit of maintaining them. There is no reason to impose on electing carriers cost assignment requirements that were “designed to parallel the level of detail in the cost-of-service calculations that LECs performed to develop their rates for interstate access services.” Moreover, if the need arises for cost data from electing carriers, we find there are less costly ways to meet that need.

126. With respect to the second prong of the forbearance test, protecting consumers, the Commission adopted the Cost Assignment Rules in part to help protect consumers from improper cross-subsidization of competitive services provided on an integrated basis with noncompetitive services by dominant providers with individual market power. Because the rates for regulated services and the determination of the level of universal service support are no longer tied to accounting costs, electing carriers will have no incentive to shift costs between regulated and nonregulated services, or to services receiving universal service support, thus the consumer protection issues that animate the Cost Assignment Rules are not relevant for electing carriers.

127. We also find that forbearing from the Cost Assignment Rules for electing carriers is in the public interest. Because neither rates nor universal service support will be cost-based for electing carriers, relieving electing carriers of the expense of compliance with the Cost Assignment Rules will allow electing carriers to offer more competitive rates and more innovative service, thus furthering the public interest.

128. Finally, section 10(b) requires us to consider, as part of our analysis of the public interest prong, whether forbearance will promote competitive market conditions. We agree with Petitioners, TDS Telecom and other commenters that contend that forbearance will enhance competition. Eliminating unnecessary regulation will generally reduce electing carriers' costs and, in turn, benefit consumers through lower rates and/or more vibrant competitive offerings. Because other providers of similar services are not subject to the rules, it also promotes competition by providing a more level playing field. Moreover, as noted above, we find that sufficient protections remain in place to prevent anti-competitive cross-subsidization.

129. We note that there still may be instances in which an electing carrier seeks some other type of relief from the Commission that requires supporting cost assignment data. In such instances, the burden is on the carrier to retain data sufficient to make the required showing to the Commission in support of such a carrier-initiated request.

130. As part of our forbearance from the Cost Assignment Rules, we also forbear from the NECA data reporting requirement in § 54.1305 of our rules and, by extension, from the related requirement to update information shared with NECA. Under the Commission's rules, incumbent LECs are required to report unseparated loop cost data to NECA annually. Price cap carriers and their affiliates have been exempt from this obligation since the Commission adopted the USF/ICC Transformation Order and various price cap cost assignment forbearance orders. This reporting requirement depends on the availability of data produced by the Cost Assignment Rules. As part of the forbearance adopted in this Order, we cease to require data that would otherwise be reported as part of a cost study. Retaining this obligation is thus inconsistent with our grant of forbearance and is inconsistent with past price cap carrier forbearance grants. Retaining this obligation would also eliminate one of the core incentives for rate-of-return carriers to elect incentive regulation—cost savings from the elimination of the obligation to undertake cost studies.

131. Granting forbearance from NECA reporting requirements satisfies all three prongs of the forbearance analysis. The NECA data collection requirement is not necessary to ensure that carrier charges and practices are just and reasonable, as evidenced by the fact that price cap carriers have been operating without NECA reporting for nearly six years without issue. While no longer including electing carriers' data in the calculation of the national average cost per loop will affect that calculation, we do not think that any impact it may have outweighs the benefits of removing these reporting obligations. Since the very goal of incentive regulation is to disconnect cost and rates to promote competition in the marketplace, reporting cost data to NECA is also unnecessary to protect consumers. Additionally, because forbearance from enforcing these rules is necessary to obtain the benefit of reducing unnecessary regulatory compliance costs this Order seeks, forbearance is consistent with the public interest. Retaining the data collection and reporting requirements of §§ 54.1305 and 54.1306 would force electing carriers to continue to perform annual cost studies and would thus eliminate one of the chief sources of cost savings of this Order. Forbearing from these requirements will promote competition by allowing these resources to be redirected to increase network investment and to accelerate the technology transition from legacy circuit-based services to packet-based services such as Ethernet.

132. We allow electing carriers the option of using generally accepted accounting principles (GAAP) for keeping their accounts. The only commenters that oppose allowing electing carriers to use GAAP accounting incorrectly argue that for electing carriers part 32, cost studies and other protections are necessary because “these electing carriers would continue to have certain of their interstate services under rate-of-return.” In fact, as explained by Petitioners, all of the interstate telecommunications services offered by electing carriers will either be (1) subject to incentive regulation, (2) not subject to ex ante pricing regulation, or (3) capped and transitioning downward by the terms of the rate-of-return intercarrier compensation rules. Thus, there is no significant reason to continue to maintain burdensome part 32 accounting for electing carriers.

133. The Commission recently revised its part 32 accounting rules to allow price cap LECs to elect to use GAAP in recording and reporting their financial data, subject to two targeted accounting requirements. We subject electing carriers that choose to use GAAP accounting to the same data provisioning requirements as price cap carriers, including the requirements relating to the calculation of pole attachment rates. Electing carriers may either (a) calculate an Implementation Rate Difference between the attachment rates calculated by the carrier under the Uniform System of Accounts (USOA) and under GAAP as of the last full year preceding the carrier's initial opting-out of part 32 USOA accounting requirements; or (b) comply with GAAP accounting for all purposes other than those associated with setting pole attachment rates while continuing to use the part 32 accounts and procedures necessary to establish and evaluate pole attachment rates. Electing carriers must adjust their annually computed GAAP-based rates by the Implementation Rate Difference for a period of 12 years after the election. This will free electing carriers from having to maintain two sets of books: one for financial reporting purposes consistent with GAAP and one for regulatory reporting purposes consistent with the accounting requirements of part 32.

134. Consistent with our actions in the BDS Order, our detariffing actions in this Order for electing carriers' study areas will be mandatory after a transition that will provide electing carriers sufficient time to adapt their business data services operations to a detariffing regime.

135. The transition period will begin on the date incentive regulation becomes effective for electing carriers, either July 1, 2019 or July 1, 2020, and will end thirty-six (36) months thereafter, a period that we find sufficient for electing carriers to adapt to a detariffing regime. In addition, for six (6) months following the date incentive regulation becomes effective, we require electing carriers to freeze the tariffed rates for their business data services that are no longer subject to ex ante pricing regulation, including lower speed TDM end user channel terminations in newly deregulated study areas, provided those services remain tariffed. These transition mechanisms will ensure that small businesses and other purchasers have time to adjust to the new regulatory framework we adopt.

136. Similarly, carriers electing incentive regulation in connection with a subsequent offer of A-CAM support, or carriers that the Commission otherwise transitions away from legacy support mechanisms must detariff the relevant business data services within thirty-six (36) months of the date on which their incentive-based rates take effect or their transition away from legacy support mechanisms becomes effective. Further, for six (6) months following such dates, such carriers will be required to freeze their tariffed rates for BDS that are no longer subject to ex ante pricing regulation, provided those rates remain tariffed.

137. Tariffing for these services will be permissive during the transition—we will accept new tariffs and revisions to existing tariffs for the affected services during this time period. Electing carriers may also detariff during the transition. Apart from the rate freeze noted above, carriers will no longer be required to comply with ex ante pricing regulation for these services. Once the rules adopted in this Order are effective, carriers that wish to continue filing tariffs under the permissive detariffing regime are free to modify such tariffs to reflect the new regulatory structure outlined in this Order for the affected services. This will allow carriers to be more competitive and introduce new business data services as they adapt to detariffing.

138. Electing carriers may remove the relevant portions of their tariffs for the affected services at any time during the transition, and the rate freeze does not apply to services that are no longer tariffed. Electing carriers may not file or maintain any interstate tariffs for affected business data services once the transition ends. This will prevent electing carriers from obtaining “deemed lawful” status for tariff filings that are not accompanied by cost support and invoking the filed-rate doctrine in contractual disputes with customers. Business data service providers will also be prevented from picking and choosing when they are able to invoke the protections of tariffs.

139. We do not intend our actions to disturb existing contractual or other long-term arrangements—a contract tariff remains a contract even if it is no longer tariffed. As we stated in the BDS Order, contract tariffs, term and volume discount plans, and individual circuit plans do not become void upon detariffing. All carriers are to act in good faith to develop solutions to ensure rates remain just and reasonable.

140. We adopt several other rule changes which can be found set out below. These rule changes include changes arising from this Order as well as corrections to inaccuracies in our current rules. Thus, we change (1) the cross reference to § 61.3(aa) in § 51.903(g) to § 61.3(bb), (2) the cross reference to § 61.3(ee) in § 61.41(d) to § 61.3(ff), (3) the cross reference § 61.3(x) in § 69.114 to § 61.3(ff), and (4) the cross reference to § 69.801(g) in § 69.805(a) to § 69.801(h). These cross references have been rendered inaccurate because of changes in the definitions contained in § 61.3.

141. As required by the Regulatory by the Regulatory Flexibility Act of 1980, as amended (RFA) an Initial Regulatory Flexibility Analysis (IRFA) was incorporated into the Notice of Proposed Rulemaking ( NPRM ) for the rate-of-return business data services (BDS) proceeding. The Commission sought written public comment on the proposals in the NPRM, including comment on the IRFA. The Commission received no comments on the IRFA. Because the Commission amends its rules in this Report and Order, the Commission has included this Final Regulatory Flexibility Analysis (FRFA). This present FRFA conforms to the RFA.

142. In the NPRM, the Commission proposed to adopt a form of incentive regulation for the provision of business data services by rate-of-return carriers receiving fixed universal service support, conduct a market analysis to evaluate the characteristics of BDS markets served by rate-of-return carriers receiving fixed support, and adopt a new lighter touch regulatory framework for these carriers' BDS that in most respects parallels the framework recently adopted for price cap carriers in the BDS Order. This Order provides a new framework for BDS offered by rate-of-return carriers that receive fixed support that minimizes unnecessary regulatory burdens on certain rate-of-return carriers and allows market forces to foster appropriate incentives for these carriers to be efficient, to innovate and to compete.

143. In this Order, the Commission takes the next step in a series of steps to encourage carriers to move from rate-of-return to incentive regulation, and to remove ex ante pricing regulation where competitive conditions justify doing so. This Order focuses on allowing rate-of-return carriers that currently receive fixed high-cost universal service support to voluntarily elect to transition out of rate-of-return regulation for their BDS offerings. In so doing, the Commission amends its rules to allow such carriers to move their lower capacity time division multiplexing (TDM) circuit-based transport and end user channel termination offerings to incentive regulation while providing a path for those carriers that elect our new framework (electing carriers) to demonstrate that their lower capacity circuit-based end user channel termination offerings are competitive, and therefore should not be subject to ex ante pricing regulation. We also remove ex ante pricing regulation from electing carriers' higher capacity circuit-based and their packet-based BDS offerings.

144. Allowing rate-of-return carriers that receive fixed support to move their BDS offerings away from rate-of-return regulation will help drive competition for BDS offerings in the communities served by those carriers. It will also reduce unnecessary regulatory burdens faced by electing carriers. They will no longer be required to provide cost-based justification for their BDS rates and will therefore no longer need to conduct annual cost studies to justify those rates. They will also no longer be required to file tariffs for their packed-based and higher capacity TDM-based end user channel terminations offerings in areas deemed competitive. The regulatory burdens on electing carriers, most of which are small entities, will be vastly reduced.

145. We take these steps while affirming our core statutory obligations pursuant to sections 201, 202, and 208 of the Communications Act to ensure that the rates and practices of these carriers' BDS remain just, reasonable and not unreasonably discriminatory. Collectively, these actions will streamline regulation, and spur entry, investment, innovation, and competition in the affected BDS markets to the benefit of businesses and other institutional users that rely on these services.

146. The Commission did not receive comments specifically addressing the rules and policies proposed in the IRFA.

147. The Chief Counsel did not file any comments in response to this proceeding.

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

149. Our proposed action, if implemented, may, over time, affect small entities that are not easily categorized at present. We therefore describe here, at the outset, three comprehensive, statutory small entity size standards. First, as of 2013, the SBA estimates there are an estimated 28.8 million small businesses nationwide—comprising some 99.9% of all businesses. In addition, a “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Nationwide, as of 2007, there were approximately 1,621,315 small organizations. Finally, the term “small governmental jurisdiction” is defined generally as “governments of cities, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.” Census Bureau data for 2012 indicate that there were 90,056 local governmental jurisdictions in the United States. We estimate that, of this total, as many as 89,195 entities may qualify as “small governmental jurisdictions.” Thus, we estimate that most governmental jurisdictions are small.

150. internet Service Providers (Broadband). Broadband internet service providers include wired ( e.g., cable, DSL) and VoIP service providers using their own operated wired telecommunications infrastructure fall in the category of Wired Telecommunication Carriers. Wired Telecommunications Carriers are comprised of establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies. The SBA size standard for this category classifies a business as small if it has 1,500 or fewer employees. U.S. Census data for 2012 show that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Consequently, under this size standard the majority of firms in this industry can be considered small.

151. Wired Telecommunications Carriers. The U.S. Census Bureau defines this industry as “establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired communications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution, and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry.” The SBA has developed a small business size standard for Wired Telecommunications Carriers, which consists of all such companies having 1,500 or fewer employees. Census data for 2012 show that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Thus, under this size standard, the majority of firms in this industry can be considered small.

152. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent LEC services. The closest applicable size standard under SBA rules is for the category Wired Telecommunications Carriers as defined above. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 3,117 firms operated in that year. Of this total, 3,083 operated with fewer than 1,000 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by the rules and policies adopted. A total of 1,307 firms reported that they were incumbent local exchange service providers. Of this total, an estimated 1,006 have 1,500 or fewer employees.

153. Competitive Local Exchange Carriers (Competitive LECs), Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate NAICS Code category is Wired Telecommunications Carriers, as defined above. Under that size standard, such a business is small if it has 1,500 or fewer employees. U.S. Census data for 2012 indicate that 3,117 firms operated during that year. Of that number, 3,083 operated with fewer than 1,000 employees. Based on this data, the Commission concludes that the majority of Competitive LECS, CAPs, Shared-Tenant Service Providers, and Other Local Service Providers, are small entities. According to Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive local exchange services or competitive access provider services. Of these 1,442 carriers, an estimated 1,256 have 1,500 or fewer employees. In addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or fewer employees. Also, 72 carriers have reported that they are Other Local Service Providers. Of this total, 70 have 1,500 or fewer employees. Consequently, based on internally researched FCC data, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are small entities.

154. We have included small incumbent LECs in this present RFA analysis. As noted above, a “small business” under the RFA is one that, inter alia, meets the pertinent small business size standard ( e.g., a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.” The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent LECs are not dominant in their field of operation because any such dominance is not “national” in scope. We have therefore included small incumbent LECs in this RFA analysis, although we emphasize that this RFA action has no effect on Commission analyses and determinations in other, non-RFA contexts.

155. Interexchange Carriers (IXCs). Neither the Commission nor the SBA has developed a definition for Interexchange Carriers. The closest NAICS Code category is Wired Telecommunications Carriers as defined above. The applicable size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees. U.S. Census data for 2012 indicates that 3,117 firms operated during that year. Of that number, 3,083 operated with fewer than 1,000 employees. According to internally developed Commission data, 359 companies reported that their primary telecommunications service activity was the provision of interexchange services. Of this total, an estimated 317 have 1,500 or fewer employees. Consequently, the Commission estimates that the majority of IXCs are small entities that may be affected by our rules.

156. Local Resellers. The SBA has developed a small business size standard for the category of Telecommunications Resellers. The Telecommunications Resellers industry comprises establishments engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households. Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. Mobile virtual network operators (MVNOs) are included in this industry. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that 1,341 firms provided resale services during that year. Of that number, all operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of these prepaid calling card providers can be considered small entities.

157. Toll Resellers. The Commission has not developed a definition for Toll Resellers. The closest NAICS Code Category is Telecommunications Resellers. The Telecommunications Resellers industry comprises establishments engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households. Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. Mobile virtual network operators (MVNOs) are included in this industry. The SBA has developed a small business size standard for the category of Telecommunications Resellers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that 1,341 firms provided resale services during that year. Of that number, 1,341 operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of these resellers can be considered small entities. According to Commission data, 881 carriers have reported that they are engaged in the provision of toll resale services. Of this total, an estimated 857 have 1,500 or fewer employees. Consequently, the Commission estimates that the majority of toll resellers are small entities.

158. Other Toll Carriers. Neither the Commission nor the SBA has developed a definition for small businesses specifically applicable to Other Toll Carriers. This category includes toll carriers that do not fall within the categories of interexchange carriers, operator service providers, prepaid calling card providers, satellite service carriers, or toll resellers. The closest applicable NAICS Code category is for Wired Telecommunications Carriers as defined above. Under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees. Census data for 2012 show that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of Other Toll Carriers can be considered small. According to internally developed Commission data, 284 companies reported that their primary telecommunications service activity was the provision of other toll carriage. Of these, an estimated 279 have 1,500 or fewer employees. Consequently, the Commission estimates that most Other Toll Carriers are small entities that may be affected by rules adopted pursuant to the Order.

159. Operator Service Providers (OSPs). Neither the Commission nor the SBA has developed a small business size standard specifically for operator service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. According to Commission data, 33 carriers have reported that they are engaged in the provision of operator services. Of these, an estimated 31 have 1,500 or fewer employees and two have more than 1,500 employees. Consequently, the Commission estimates that the majority of OSPs are small entities.

160. Wireless Telecommunications Carriers (except Satellite). This industry comprises establishments engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular services, paging services, wireless internet access, and wireless video services. The appropriate size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees. For this industry, U.S. Census data for 2012 show that there were 967 firms that operated for the entire year. Of this total, 955 firms had employment of 999 or fewer employees and 12 had employment of 1000 employees or more. Thus under this category and the associated size standard, the Commission estimates that the majority of wireless telecommunications carriers (except satellite) are small entities.

161. The Commission's own data—available in its Universal Licensing System—indicate that, as of October 25, 2016, there are 280 Cellular licensees that will be affected by our actions today. The Commission does not know how many of these licensees are small, as the Commission does not collect that information for these types of entities. Similarly, according to internally developed Commission data, 413 carriers reported that they were engaged in the provision of wireless telephony, including cellular service, Personal Communications Service, and Specialized Mobile Radio Telephony services. Of this total, an estimated 261 have 1,500 or fewer employees, and 152 have more than 1,500 employees. Thus, using available data, we estimate that the majority of wireless firms can be considered small.

162. Wireless Communications Services. This service can be used for fixed, mobile, radiolocation, and digital audio broadcasting satellite uses. The Commission defined “small business” for the wireless communications services (WCS) auction as an entity with average gross revenues of $40 million for each of the three preceding years, and a “very small business” as an entity with average gross revenues of $15 million for each of the three preceding years. The SBA has approved these definitions.

163. Wireless Telephony. Wireless telephony includes cellular, personal communications services, and specialized mobile radio telephony carriers. As noted, the SBA has developed a small business size standard for Wireless Telecommunications Carriers (except Satellite). Under the SBA small business size standard, a business is small if it has 1,500 or fewer employees. According to Commission data, 413 carriers reported that they were engaged in wireless telephony. Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees. Therefore, a little less than one third of these entities can be considered small.

164. Because section 706 requires us to monitor the deployment of broadband using any technology, we anticipate that some broadband service providers may not provide telephone service. Accordingly, we describe below other types of firms that may provide broadband services, including cable companies, MDS providers, and utilities, among others.

165. Cable and Other Subscription Programming. This industry comprises establishments primarily engaged in operating studios and facilities for the broadcasting of programs on a subscription or fee basis. The broadcast programming is typically narrowcast in nature ( e.g. limited format, such as news, sports, education, or youth-oriented). These establishments produce programming in their own facilities or acquire programming from external sources. The programming material is usually delivered to a third party, such as cable systems or direct-to-home satellite systems, for transmission to viewers. The SBA has established a size standard for this industry stating that a business in this industry is small if it has 1,500 or fewer employees. The 2012 Economic Census indicates that 367 firms were operational for that entire year. Of this total, 357 operated with less than 1,000 employees. Accordingly, we conclude that a substantial majority of firms in this industry are small under the applicable SBA size standard.

166. Cable Companies and Systems (Rate Regulation). The Commission has developed its own small business size standards for the purpose of cable rate regulation. Under the Commission's rules, a “small cable company” is one serving 400,000 or fewer subscribers nationwide. Industry data indicate that there are currently 4,600 active cable systems in the United States. Of this total, all but eleven cable operators nationwide are small under the 400,000-subscriber size standard. In addition, under the Commission's rate regulation rules, a “small system” is a cable system serving 15,000 or fewer subscribers. Current Commission records show 4,600 cable systems nationwide. Of this total, 3,900 cable systems have fewer than 15,000 subscribers, and 700 systems have 15,000 or more subscribers, based on the same records. Thus, under this standard as well, we estimate that most cable systems are small entities.

167. Cable System Operators (Telecom Act Standard). The Communications Act also contains a size standard for small cable system operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1% of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” There are approximately 52,403,705 cable video subscribers in the United States today. Accordingly, an operator serving fewer than 524,037 subscribers shall be deemed a small operator if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. Based on available data, we find that all but nine incumbent cable operators are small entities under this size standard. The Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million. Although it seems certain that some of these cable system operators are affiliated with entities whose gross annual revenues exceed $250 million, we are unable at this time to estimate with greater precision the number of cable system operators that would qualify as small cable operators under the definition in the Communications Act.

168. All Other Telecommunications. “All Other Telecommunications” is defined as follows: This U.S. industry is comprised of establishments that are primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing internet services or voice over internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry. The SBA has developed a small business size standard for “All Other Telecommunications,” which consists of all such firms with gross annual receipts of $32.5 million or less. For this category, census data for 2012 show that there were 1,442 firms that operated for the entire year. Of these firms, a total of 1,400 had gross annual receipts of less than $25 million. Consequently, we estimate that the majority of All Other Telecommunications firms are small entities that might be affected by our action.

169. Recordkeeping and Reporting. The rule revisions adopted in the Order include changes that will require electing rate-of-return carriers receiving fixed universal service support to make various revisions to their business data service tariffs. For example, rate-of-return carriers receiving fixed support that elect incentive regulation will be required to file Tariff Review Plans and incentive regulation tariffs for their lower capacity TDM BDS. Packet-based BDS and higher capacity TDM BDS end user channel termination and lower capacity TDM BDS end user channel terminations offered by electing carriers in study areas deemed competitive by a competitive market test will be relieved of ex ante pricing regulation and will be subject to permissive detariffing for a period of 36 months at which time they will be subject to mandatory detariffing.

170. The Commission also incorporates a productivity factor (X-factor) of 2.0% and GDP-PI as the inflation factor used to adjust price cap indexes in the first year of incentive regulation, and each year thereafter for electing carriers. Electing carriers will be required to revise their rates and tariff review plans for business data services in filings with the Commission to reflect the new X-factor. Finally, the Commission grants forbearance from the requirement in § 54.1305 of our rules annually to report unseparated loop costs and other accounting data to NECA.

171. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include (among others) the following four alternatives: (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

172. Incentive Regulation. In the Order, the Commission sheds burdensome rate-of-return regulation in favor of lighter touch incentive regulation for electing carriers' lower capacity TDM transport and end user channel termination services. Additionally, the Commission adopted the proposal in the NPRM to grant pricing flexibility to electing carriers' lower capacity TDM transport and end user channel termination services under incentive regulation similar to the pricing flexibility the Commission granted to price cap carriers' lower capacity TDM end user channel terminations in areas deemed non-competitive in the BDS Order. The pricing flexibility available to electing carriers, most of which are small entities, will enable them to sell their BDS using contract tariffs and term and volume discounts, enhancing their ability to respond to competition.

173. Competitive Market Test. The Commission sought comment on four options for a competitive market test for electing rate-of-return carriers that receive fixed support. The option we selected is one of the least burdensome options and relies on existing Form 477 data, avoiding any additional burdensome data collection. We did not adopt the proposal to use both prongs of the BDS Order competitive market test to assess the competitiveness of study areas served by rate-of-return carriers that receive fixed support despite its apparent simplicity because we found methodological and conceptual flaws in the proposal and in the study submitted by Petitioners to support the proposal. Among the flaws the Commission identified is that the study does not claim to be based on a representative sample of model-based rate-of-return carriers that receive fixed support, the study compares non-urbanized price cap areas with model-based rate-of-return areas that in some instances include urbanized areas, and some of the relevant counties included in the study were deemed non-competitive by the price cap competitive market test. Further, the Commission declined to adopt the other two options from the NPRM which would have required costly, time consuming, burdensome data collections. Instead, the Order found that the record supports adopting the second option from the NPRM which uses the second prong of the BDS Order competitive market test that is based on Form 477 data. As a result, ex ante pricing regulation of lower capacity TDM end user channel terminations will no longer apply in study areas served by rate-of-return carriers that receive fixed support that are deemed competitive.

174. Packet-based and Higher Capacity TDM Business Data Services. The Commission removed ex ante pricing regulation for electing rate-of-return carriers' packet-based and higher capacity TDM business data services and directed electing carriers to detariff these services following a transition period. This action is consistent with the Commission's preference to minimize the burdens of regulation.

175. X-factor. Rate-of-return carriers that receive fixed support that elect incentive regulation are required to file revised annual access charge tariffs every year, which become effective on July 1. The annual filings include submission of tariff review plans that are used to support revisions to the rates, including revisions that pertain to the X-factor. To ease the burden on the industry in connection with this filing, and because base period demand and the value of GDP-PI reflected in the price cap indices typically are not updated during a tariff year, the Commission permits electing carriers to use, in their filings implementing the 2.0% X-factor, the same base period demand and value of GDP-PI as in the prior year's annual filing.

176. Periodic Revision to Competitive Market Test. Related to the competitive market test proposal, the Commission also proposed future periodic data collections to allow for market test updates for determining competitive and non-competitive areas. The periodic collections could have resulted in a significant reporting burden on small entities. Instead, the Commission adopted a process for updating the competitive market test every three years using the data from Form 477 that is already routinely filed by providers and thus entails no additional recordkeeping or reporting burden.

177. Forbearance. The Commission granted forbearance, pursuant to section 10 of the Act, from the Cost Assignment Rules for electing carriers, subject to the requirement relating to the calculation of pole attachment rates. The Commission found that the Cost Assignment Rules are no longer necessary to ensure that charges and practices are just, reasonable, and not unjustly or unreasonably discriminatory; to protect consumers; and to protect the public interest. The Commission found that the rules were no longer necessary for carriers converting to incentive regulation and that eliminating unnecessary regulation will generally reduce providers' costs and provide a more level playing field because other providers of similar services are not subject to these requirements.

178. Detariffing. To minimize economic impact, the Commission provides a transition period to provide electing rate-of-return carriers that receive fixed support with sufficient time to detariff their business data services. The Commission does not intend its actions to disturb existing contractual or other long-term arrangements, which it grandfathered and which continue to remain in effect for the length of the contract.

179. The Commission will send a copy of the Report and Order, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act. In addition, the Commission will send a copy of the Report and Order, including this FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Order and FRFA (or summaries thereof) will also be published in the Federal Register .

180. Paperwork Reduction Act Analysis. It was determined that the final rule makes only non-substantive changes to currently approved information collections and therefore does not require separate Paperwork Reduction Act approval. The rules are effective 60 days after publication in the Federal Register . In addition, we note that pursuant to the Small Business Paperwork Relief Act of 2002, we previously sought specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees. We describe impacts that might affect small businesses, which includes most businesses with fewer than 25 employees, in the Final Regulatory Flexibility Analysis in Section IV above.

181. Congressional Review Act. The Commission will send a copy of this Report and Order to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

182. Final Regulatory Flexibility Analysis. As required by the Regulatory Flexibility Act (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated into the NPRM. The Commission sought written public comment on the possible significant economic impact on small entities regarding the proposals addressed in the NPRM, including comments on the IRFA. Pursuant to the RFA, a Final Regulatory Flexibility Analysis is set forth in Section IV above.

183. Contact Person. For further information about this proceeding, please contact Justin Faulb, FCC Wireline Competition Bureau, Pricing Policy Division, 445 12th Street SW, Washington, DC 20554, (202) 418-1589, Justin.Faulb@fcc.gov.

184. Accordingly, it is ordered that, pursuant to sections 1, 2, 4(i)-(j), 10, 201(b), 202(a), 214, 303(r), 403, of the Communications Act of 1934, as amended, and section 706 of the Telecommunications Act of 1996, 47 U.S.C. 151, 152, 154(i)-(j), 160, 201(b), 202(a), 214, 303(r), 403, 1302, this Report and Order IS ADOPTED and shall be effective sixty (60) days after publication in the Federal Register , except to the extent expressly addressed below.

185. It is further ordered that parts 1, 32, 51, 61, and 69 of the Commission's rules, 47 CFR parts 1, 32, 51, 61, and 69, are amended as set forth below, and that such rule amendments shall be effective sixty (60) days after publication of this Report and Order in the Federal Register .

186. It is further ordered that pursuant to sections 201(b) and 202(a) of the Communications Act of 1934, as amended, 47 U.S.C. 201(b), 202(a), rate-of-return carriers electing to offer business data services shall freeze the tariffed rates for packet-based and higher capacity TDM services and for TDM end-user channel terminations at or below a DS3 in study areas deemed competitive that the rate-of-return carrier continues to tariff for six (6) months following the applicable effective date of the carrier's election.

187. It is further ordered that the Commission's Consumer & Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Report and Order to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

188. It is further ordered, that the Commission's Consumer & Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Report and Order to the Chief Counsel for Advocacy of the Small Business Administration.

The Federal Communications Commission amends 47 CFR parts 1, 32, 51, 61, and 69 as follows:

I. Background

In a Notice of Proposed Rulemaking (NPRM) published in the Federal Register (83 FR 25638) on June 4, 2018, the Department of Homeland Security, Office of the Chief Procurement Officer, proposed to remove HSAR clause 3052.219-70 and the cross-reference to it found in paragraph (a) of 48 CFR 3019.708-70.

As explained in the NPRM, on December 4, 2003, DHS published an interim final rule to establish the Department of Homeland Security Acquisition Regulation (HSAR). 68 FR 67867 (Dec. 4, 2003). On May 2, 2006, DHS published a final rule, which adopted the interim rule with some changes in response to public comment (HSAR final rule). 71 FR 25759 (May 2, 2006). The HSAR final rule finalized, among other things, HSAR clause 3052.219-70, Small Business Subcontracting Reporting Plan (48 CFR 3052.219-70). HSAR clause 3052.219-70 requires contractors to: (a) Enter the information for the Subcontracting Report for Individual Contracts (formally the Standard Form 294 (SF-294)) and the Summary Subcontract Report (formally the Standard Form 295 (SF-295)) into the Electronic Subcontracting Reporting System (eSRS) at www.esrs.gov; and (b) include HSAR clause 3052.219.70 in all subcontracts that include the clause at (FAR) 48 CFR 52.219-9. The eSRS is a web-based system, which replaces the Standard Forms 294 and 295 as the mechanism for submitting reports required by the small business subcontracting program. On June 16, 2010, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council issued a final rule amending the Federal Acquisition Regulation (FAR) to require contractors' small business subcontract reports be submitted using the eSRS, rather than Standard Forms 294 and 295. 75 FR 34260; FAR Case 2005-040 (June 16, 2010). This change to the FAR was issued under Federal Acquisition Circular 2005-42 of June 16, 2010. 75 FR 34291 (June 16, 2010). As a result of the FAR revision HSAR clause 3052.219-70 is no longer needed to provide guidance to contractors on the eSRS requirements. Therefore, DHS is amending the HSAR to remove HSAR clause 3052.219-70 and the cross-reference to it found in paragraph (a) of 48 CFR 3019.708-70.

In addition, DHS is also to amending the authority citation for part 3019 to conform with the authority of the Positive Law Codification of Title 41, United States code, “Public Contracts”. The new codification of Title 41 was enacted on January 4, 2011. 1

Interested parties were given until July 5, 2018, to comment on the proposed changes. No public comments were submitted in response to the proposed rule. Accordingly, DHS will adopt the proposal as set forth in the NPRM without change.

Executive Orders 13563 (“Improving Regulation and Regulatory Review”) and 12866 (“Regulatory Planning and Review”) 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 (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 13771 (“Reducing Regulation and Controlling Regulatory Costs”) directs agencies to reduce regulation and control regulatory costs and provides that “for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.”

The Office of Management and Budget (OMB) has not designated this rule a “significant regulatory action,” under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed it. DHS considers this rule to be an Executive Order 13771 deregulatory action. See OMB's Memorandum “Guidance Implementing Executive Order 13771, Titled `Reducing Regulation and Controlling Regulatory Costs' ” (April 5, 2017). This rule is not a major rule under 5 U.S.C. 804.

There are no quantified costs or cost savings to this rule as it simply rescinds requirements that have already been shifted to the FAR. DHS believes there are non-monetized efficiency and streamlining benefits to this rule as it removes outdated provisions of the HSAR.

This action rescinds HSAR clause 3052.219-70 and, as such, DHS certifies that this final rule will not result in a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.

The final rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

The total hours and costs associated with existing HSAR clause 3052.219-70, as set forth in HSAR OMB Control Number, 1600-0003, Post-award Contract Information, are as follows:

Estimated Respondents: 11,885.

Average Responses Annually: 3.

Total Annual Responses: 35,655.

Estimated Hours: 12.

Total Hours: 427,860.

Hourly Rate: $67.86.

Total Costs: $29,034,579.60.

For the reasons set forth above, DHS amends 48 CFR parts 3019 and 3052 as follows:

I. Rulemaking Documents A. Availability of Rulemaking Documents

For access to docket FMCSA-2018-0068 to read background documents, go to https://www.regulations.gov at any time, or to Docket Services at U.S. Department of Transportation, Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

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

The following is a list of abbreviations used in this document:

The UCR Plan and the 41 States participating in the UCR Agreement establish and collect fees from motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies. The UCR Plan and Agreement are administered by a 15-member board of directors (UCR Board); 14 appointed from the participating States and the industry, plus the Deputy Administrator of FMCSA. Revenues collected are allocated to the participating States and the UCR Plan. A maximum amount that the UCR Plan may collect is established by statute. If annual revenue collections will exceed the statutory maximum allowed, then the UCR Plan must request adjustments to the fees. 49 U.S.C. 14504a(f)(1)(E). In addition, any excess funds held by the UCR Plan after payments are made to the States and for administrative costs are retained in the UCR depository, and subsequent fees charged must be adjusted further in order to return the excess revenues held in the depository as required by 49 U.S.C. 14504a(h)(4). Adjustments in the fees are requested by the UCR Plan and approved by FMCSA. These two provisions are the reasons for the two-stage adjustment adopted in this final rule. The final rule provides for a reduction for at least the next two registration years to the annual registration fees established for the UCR Agreement.

For the 2019 registration year, the fees will be reduced below the 2017 registration fee level that was in effect by 18.62 percent to ensure that fee revenues do not exceed the statutory maximum, and to account for the excess funds held in the depository. The fees beginning with the 2020 registration year will be reduced below the 2017 level by approximately 9.9 percent. The reduction of the current 2019 registration year fees (finalized on January 5, 2018) ranges from approximately $11 to $10,282 per entity, depending on the number of vehicles owned or operated by the affected entities. The reduction in fees for 2020 and subsequent registration years ranges from approximately $5 to $3,899 per entity.

The changes imposed by this final rule reduce the fees paid by motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies to the participating States. While each motor carrier will realize a reduced burden, fees are considered by the Office of Management and Budget (OMB) Circular A-4, Regulatory Analysis, as transfer payments, not costs. Transfer payments are payments from one group to another that do not affect total resources available to society. Therefore, transfers are not considered in the monetization of societal costs and benefits of rulemakings.

This rule adjusts the annual registration fees for the UCR Agreement established by 49 U.S.C. 14504a. The requested fee adjustments are required by 49 U.S.C. 14504a because, for the registration year 2017, the total revenues collected were expected to exceed the total revenue entitlements of $107.78 million distributed to the 41 participating States plus the $5 million established for the administrative costs associated with the UCR Plan and Agreement. 1 The requested adjustments have been submitted by the UCR Plan in accordance with 49 U.S.C. 14504a(f)(1)(E)(ii), which requires the UCR Board to request an adjustment by the Secretary of Transportation (Secretary) when the annual revenues collected exceed the maximum allowed. In addition, 49 U.S.C. 14504a(h)(4) states that any excess funds held by the UCR Plan in its depository, after payments to the States and for administrative costs, shall be retained “and the fees charged . . . shall be reduced by the Secretary accordingly.”

The UCR Plan also requested approval of a revised total revenue target to be collected because of a reduction in the amount for costs of administering the UCR Agreement. No changes in the revenue entitlements to the participating States were recommended by the UCR Plan. The revised total revenue target must be approved in accordance with 49 U.S.C. 14504a(d)(7) and (g)(4).

The Secretary also has broad rulemaking authority in 49 U.S.C. 13301(a) to carry out 49 U.S.C. 14504a, which is part of 49 U.S.C. subtitle IV, part B. Authority to administer these statutory provisions has been delegated to the FMCSA Administrator by 49 CFR 1.87(a)(2) and (7). 2

The Administrative Procedure Act allows agencies to make rules effective immediately with good cause, instead of requiring publication 30 days prior to the effective date. 5 U.S.C. 553(d)(3). FMCSA finds there is good cause for this rule to be effective upon publication so that the UCR Plan and the participating States may begin collection of fees immediately for the registration year that will begin on January 1, 2019. The immediate commencement of fee collection will avoid further delay in distributing revenues to the participating States.

The legislative history of 49 U.S.C. 14504a indicates that the purpose of the UCR Plan and Agreement is both to replace the Single State Registration System (SSRS) for registration of interstate motor carrier entities with the States and to “ensure that States don't lose current revenues derived from SSRS.” Sen. Rep. 109-120, at 2 (2005). The statute provides for a 15-member board of directors for the UCR Plan to be appointed by the Secretary. The statute specifies that the UCR Board should consist of one director (either the FMCSA Deputy Administrator or another Presidential appointee) from DOT; four directors from among the chief administrative officers of the State agencies responsible for administering the UCR Agreement (one from each of the four FMCSA service areas); five directors from among the professional staffs of State agencies responsible for administering the UCR Agreement, to be nominated by the National Conference of State Transportation Specialists; and five directors from the motor carrier industry, of whom at least one must be from a national trade association representing the general motor carrier of property industry and one from a motor carrier that falls within the smallest fleet fee bracket. 49 U.S.C. 14504a(d)(1)(B).

The UCR Plan and the participating States are authorized by 49 U.S.C. 14504a(f) to establish and collect fees from motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies. The annual fees charged for registration year 2018 are set out in 49 CFR 367.40.

For carriers and freight forwarders, the fees vary according to the size of the vehicle fleets, as required by 49 U.S.C. 14504a(f). The fees collected are allocated to the States and the UCR Plan in accordance with 49 U.S.C. 14504a(h). Participating States submit a plan demonstrating that an amount equivalent to the revenues received are used for motor carrier safety programs, enforcement, or the administration of the UCR Plan and Agreement. 49 U.S.C. 14504a(e)(1)(B).

The UCR Plan and the participating States collect registration fees for each registration year, which is the same period as the calendar year. Generally, collection begins on October 1 of the previous year, and continues until December 31 of the year following the registration year. All of the revenues collected are distributed to the participating States or to the UCR Plan for administration of the UCR Agreement. No funds are distributed to the Federal government.

The statute specifies that fees are to be based on the recommendation of the UCR Board. 49 U.S.C. 14504a(d)(7)(A). In recommending the level of fees to be assessed in any registration year, and in setting the fee level, the statute states that both the UCR Board and FMCSA “shall consider” the following factors:

• Administrative costs associated with the UCR Plan and Agreement;

• Whether the revenues generated in the previous year and any surplus or shortage from that or prior years enable the participating States to achieve the revenue levels set by the UCR Board; and

• Provisions governing fees in 49 U.S.C. 14504a(f)(1).

FMCSA, if asked by the UCR Board, may also adjust the fees within a reasonable range on an annual basis if the revenues collected from the fees are either insufficient to provide the participating States with the revenues they are entitled to receive or exceed those revenues. 49 U.S.C. 14504a(f)(1)(E).

Overall, the fees assessed under the UCR Agreement must produce the level of revenue established by statute. Section 14504a(g) establishes the revenue entitlements for States that choose to participate in the UCR Plan. That section provides that a State, participating in SSRS in the registration year prior to the enactment of the Unified Carrier Registration Act of 2005, is entitled to receive revenues under the UCR Agreement equivalent to the revenues it received in the year before that enactment. Participating States that also collected intrastate registration fees from interstate motor carrier entities (whether or not they participated in SSRS) are also entitled to receive revenues of this type under the UCR Agreement, in an amount equivalent to the amount received in the year before the Act's enactment. Section 14504a(g) also requires that States that did not participate in SSRS previously, but that choose to participate in the UCR Plan, may receive revenues not to exceed $500,000 per year. The UCR Board calculates the amount of revenue to which each participating State is entitled under the UCR Agreement, which is then approved by FMCSA.

FMCSA's interpretation of its responsibilities under 49 U.S.C. 14504a in setting fees for the UCR Plan and Agreement are guided by the primacy the statute places on the need both to set and to adjust the fees so they “provide the revenues to which the States are entitled.” 49 U.S.C. 14504a(f)(1)(E)(i). The statute links the requirement that the fees be adjusted “within a reasonable range” by both the UCR Plan and FMCSA to the provision of sufficient revenues to meet the entitlements of the participating States. 49 U.S.C. 14504a(f)(1)(E); see also 49 U.S.C. 14504a(d)(7)(A)(ii).

Section 14504a(h)(4) provides additional support for this interpretation. The provision explicitly requires FMCSA to reduce the fees for all motor carrier entities in the year following any year in which the depository retains any funds in excess of the amount necessary to satisfy the revenue entitlements of the participating States and the UCR Plan's administrative costs.

On December 14, 2017, the UCR Board voted unanimously to submit a recommendation to the FMCSA to reduce the fees collected by the UCR Plan for registration years 2019 and thereafter. The recommendation was submitted to the FMCSA on January 11, 2018. 3 The requested fee adjustments are required by 49 U.S.C. 14504a because, for registration year 2017, the total revenues collected were expected to exceed the total revenue entitlements of $107.78 million distributed to the 41 participating States plus the $5 million established for “the administrative costs associated with the unified carrier registration plan and agreement.” 49 U.S.C. 14504a(d)(7)(A)(i). The maximum revenue entitlements for each of the 41 participating States, established in accordance with 49 U.S.C. 14504a(g), were set out in a table attached to the January 11, 2018, recommendation.

As indicated in the analysis attached to the January 11, 2018, recommendation letter, as of the end of November 2017, the UCR Plan had already collected $7.30 million more than the statutory maximum of $112.78 million for registration year 2017. The UCR Plan estimated that by the end of 2018, total revenues would exceed the statutory maximum by $9.17 million, or approximately 8.13 percent. The excess revenues collected would be held in a depository maintained by the UCR Plan as required by 49 U.S.C. 14504a(h)(4).

The UCR Plan's recommendation estimated the minimum projection of revenue collections for December 2017 through December 2018 by summing the collections within each of the registration years 2013 through 2015  4 and then comparing across years to find the minimum total amount. This is the same methodology used to project collections and estimate fees in the previous fee adjustment rulemaking. 83 FR 605 (January 5, 2018).

Under 49 U.S.C. 14504a(d)(7), the costs incurred by the UCR Plan to administer the UCR Agreement are eligible for inclusion in the total revenue target, in addition to the revenue entitlements for the participating States. The total revenue target for registration years 2010 to 2018, as approved in the 2010 final rule (75 FR 21993 (April 27, 2010)), has been $112,777,059.81, including $5,000,000 for administrative costs. The UCR Plan's latest recommendation included a reduction in the amount of the administrative costs to $3,500,000 for the 2019 and 2020 registration years. The reduction of $1,500,000 recommended by the UCR Plan was based on estimates of future administrative costs needed to operate the UCR Plan and Agreement. No changes in the State revenue entitlements were recommended, and the entitlement figures for 2019 and 2020 for the 41 participating States are the same as those previously approved for the years 2010 through 2018. Therefore, for registration years 2019 and 2020, the UCR Plan recommended a total revenue target of $111,277,060.

A notice of proposed rulemaking (NPRM) reflecting the recommendation from the UCR Board was published by FMCSA. 83 FR 42244 (August 21, 2018). Comments addressing both the proposed adjustment in the fees and the separate new total revenue target recommendation were due on August 31, 2018.

FMCSA received six comments on the NPRM. The commenters were: (1) Avelino Gutierrez, UCR Board Chairman, and G. Scott Morris, Board Member; (2) National Motor Freight Traffic Association, Inc.; (3) Small Business in Transportation Coalition (SBTC); (4) National School Transportation Association; (5) Kevin Johnson; and (6) “Anonymous.”

The comment was submitted by the two UCR Board members in their individual capacities and provided updated information on the actual and estimated revenue collections for the 2017 registration year.

Based on the updated information provided about actual and estimated collections, and as required by the statutory provisions involved, the fees established in this final rule have been adjusted and are slightly lower than the fees proposed in the NPRM but are still expected to enable the total revenue target to be met.

The National Motor Freight Traffic Association and Kevin Johnson both support the proposed fee adjustment.

The comment from the Small Business in Transportation Coalition (SBTC) raises several issues, not all of which are relevant to the proposed fee adjustment. 5 SBTC first asserts that the current provisions of 49 CFR 367.50 setting the fees for 2019 and subsequent years, as adopted in the final rule in Fees for Unified Carrier Registration Plan and Agreement (83 FR 605 (January 5, 2018)), are “unlawful and unenforceable.” SBTC bases that contention on the notion that the final rule was not adopted within 90 days after the submission of the fee recommendation from the UCR Plan for the adjustment made in the January 5 final rule. 49 U.S.C. 14504a(d)(7).

FMCSA notes that SBTC made the same contention regarding the effect of this statutory provision in its comments in the previous rulemaking. FMCSA rejected that contention in the January 5, 2018 final rule (see 83 FR 608) because it is now a well-established principle of administrative law that a statutory deadline for agency action cannot, in the ordinary course, bar action after the deadline unless that consequence is stated explicitly in the statute. In the leading case, Justice Marshall, in an opinion expressing the views of a unanimous Supreme Court, stated:

SBTC cannot point to any explicit statement in the provisions of 49 U.S.C. 14504a that bars action by FMCSA if the 90-day period is not met, because there is none. Thus, as explained by the Supreme Court's decisions, the appropriate remedy for SBTC or any other interest allegedly aggrieved by the Agency's failure to meet the statutory time limit is to commence an action under the Administrative Procedure Act “to compel agency action unlawfully withheld or unreasonably delayed.” 5 U.S.C. 706(1) and Brock v. Pierce County, 476 U.S. at 260, n. 7. SBTC has not sought such a remedy, and, of course, its availability is now removed by the issuance of this final rule. Cf. Telecommunications Research & Action Center v. F.C.C., 750 F.2d 70, 80 (D.C. Cir. 1984).

In addition, there are important public rights at stake that would be affected if FMCSA lost its power to act on the UCR Plan's recommendation, as contended by SBTC. The fee reduction recommended by the UCR Plan, proposed for implementation in the NPRM and now adopted in this final rule (with a minor adjustment), is necessary under the terms of two important provisions in the statute that require compliance with the statutory maximum amount of revenues to be collected by the UCR Plan and the participating States. 49 U.S.C. 14504a(f)(1)(E)(ii) and (h)(4).

SBTC renews its contention in its comment in this rulemaking that FMCSA has lost the power to act on the new proposed adjustment based on the 90-day provision in the statute. For the same reasons that this contention was rejected in the previous rulemaking, it is rejected again, and FMCSA and the Secretary have full power to act on the proposed fee recommendation.

SBTC's further contention that the fees in current section 367.50 are unenforceable for the 2019 registration year because, it alleges, proper procedures were not followed in setting the current fees for 2019, overlooks the fact that in this rulemaking the UCR Plan is recommending, and FMCSA has properly considered, proposed, and is now adopting, an adjustment in the fees for the 2019 registration year by revising 49 CFR 367.50. 83 FR 42250-51. In any event, FMCSA notes that the delay setting the fees for the 2019 registration year has not prejudiced entities subject to the registration fees. The UCR Plan has amended the UCR Agreement to provide that when an adjustment in fees is pending before FMCSA and DOT, registration and collection of fees will not begin until the effective date of the adjusted fees. Therefore, the fees established for registration year 2019 by either current 49 CFR 367.50 or its proposed amendment will not be collected by the UCR Plan and the participating States until this final rule and any adjustment in the fees for 2019 becomes effective.

Another contention by SBTC is that the UCR Plan should not be recommending, nor should FMCSA be acting on, a fee change for the 2020 registration year (see proposed 49 CFR 367.60, 83 FR 42251), claiming that it should not be done until information is available about the prior year's revenues. SBTC fails to recognize that the proposed two-step adjustment in the fees is required by the statute. As indicated in the NPRM, 49 U.S.C. 14504a(f)(1)(E)(ii) requires the fees to be reduced so that the revenues collected meet the total revenue target, and 49 U.S.C. 14504(a)(h)(4) requires a further one-year reduction in order to return to the industry excess revenues held in the depository established by the UCR Plan. Such a process necessarily relies on initial estimates and projections of revenue collections, with fee adjustments based on actual revenue collections as appropriate.

SBTC also states that the Agency would not be informed about the increase in the total actual and estimated revenues collected for the 2017 registration year. But as explained in the discussion above, the increase of $1,578,968 in the total collections available is public information and has been provided for the record in this rulemaking, and has been taken into account in setting the fees in this final rule.

The National School Transportation Association supports the proposed fee reduction. But it also requests that FMCSA and the UCR Plan reconsider recent determinations by the UCR Plan regarding the treatment of school buses for purposes of the UCR Agreement.

FMCSA does not have authority to reconsider the determination on this issue by the UCR Plan. The UCR Board has sole authority to administer the UCR Agreement in accordance with the statute. 49 U.S.C. 14504a(d)(2), (f)(2) and (f)(3). This issue is beyond the scope of this rulemaking. Therefore, the request for reconsideration cannot and will not be acted upon by FMCSA.

One anonymous comment was submitted and supported the Agency's determination in the NPRM that Executive Order (E.O.) 13771, Reducing Regulation and Controlling Regulatory Costs, was not applicable to this rulemaking. The comment was otherwise not relevant to this rulemaking.

No comments to the NPRM addressed the proposed adjustment in the total revenue target to $111,277,060.00, which reflects a reduction in the amount of the administrative costs from $5,000,000 to $3,500,000. Therefore, in accordance with 49 U.S.C. 14504a(d)(7) and (g)(4), the following table of State revenue entitlements, administrative costs, and the total revenue target under the UCR Agreement, as proposed in the NPRM, is approved. These State revenue entitlements, the administrative costs, and the total revenue target will remain in effect for 2019 and subsequent years unless and until approval of a revision occurs.

Motor carriers and other entities involved in interstate and foreign transportation in the United States that do not have a principal office in the United States are nonetheless subject to the fees for the UCR Plan. They are required to designate a participating State as a base State and pay the appropriate fees to that State. 49 U.S.C. 14504a(a)(2)(B)(ii) and (f)(4).

Under this final rule, provisions of 49 CFR 367.50 (which were adopted in the January 5, 2018, final rule) are revised to establish new reduced fees applicable only to registration year 2019. A new 49 CFR 367.60 establishes the fees for registration year 2020, which will remain in effect for subsequent registration years unless revised in the future.

FMCSA determined that this final rule is not a significant regulatory action under section 3(f) of E.O. 12866, 58 FR 51735 (October 4, 1993), Regulatory Planning and Review, as supplemented by E.O. 13563, 76 FR 3821 (January 21, 2011), Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. Accordingly, OMB has not reviewed it under that Order. It is also not significant within the meaning of DOT regulatory policies and procedures (DOT Order 2100.5 dated May 22, 1980; 44 FR 11034 (February 26, 1979)).

The changes imposed by this final rule adjust the registration fees paid by motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies to the UCR Plan and the participating States. Fees are considered by OMB Circular A-4, Regulatory Analysis, as transfer payments, not costs. Transfer payments are payments from one group to another that do not affect total resources available to society. By definition, transfers are not considered in the monetization of societal costs and benefits of rulemakings.

This rule establishes reductions in the annual registration fees for the UCR Plan and Agreement. The entities affected by this rule are the participating States, motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies. Because the State UCR revenue entitlements will remain unchanged, the participating States will not be impacted by this rule. The primary impact of this rule will be a reduction in fees paid by individual motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies. The reduction of the current 2019 registration year fees (finalized on January 5, 2018) ranges from approximately $11 to $10,282 per entity, depending on the number of vehicles owned or operated by the affected entities. The reductions in fees for subsequent registration years range from approximately $5 to $3,899 per entity.

This final rule is not an E.O. 13771 regulatory action because this rule is not significant under E.O. 12866. 6

The Regulatory Flexibility Act of 1980 (RFA) (5 U.S.C. 601 et seq. ), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) (Pub. L. 104-121, 110 Stat. 857), requires Federal agencies to consider the impact of their regulatory proposals on small entities, analyze effective alternatives that minimize small entity impacts, and make their analyses available for public comment. The term “small entities” means small businesses and not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations under 50,000. 7 Accordingly, DOT policy requires an analysis of the impact of all regulations on small entities, and mandates that agencies strive to lessen any adverse effects on these entities. Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities.

This rule will directly affect the participating States, motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies. Under the standards of the RFA, as amended by the SBREFA, the participating States are not small entities. States are not considered small entities because they do not meet the definition of a small entity in section 601 of the RFA. Specifically, States are not considered small governmental jurisdictions under section 601(5) of the RFA, both because State government is not included among the various levels of government listed in section 601(5), and because, even if this were the case, no State nor the District of Columbia has a population of less than 50,000, which is the criterion by which a governmental jurisdiction is considered small under section 601(5) of the RFA.

The Small Business Administration (SBA) size standard for a small entity (13 CFR 121.201) differs by industry code. The entities affected by this rule fall into many different industry codes. In order to determine if this rule would have an impact on a significant number of small entities, FMCSA examined the 2012 Economic Census  8 data for two different industries; truck transportation (Subsector 484) and transit and ground transportation (Subsector 485). According to the 2012 Economic Census, approximately 99 percent of truck transportation firms, and approximately 97 percent of transit and ground transportation firms, had annual revenue less than the SBA revenue threshold of $27.5 million and $15 million, respectively. Therefore, FMCSA has determined that this rule will impact a substantial number of small entities.

However, FMCSA has determined that this rule will not have a significant impact on the affected entities. The effect of this rule will be to reduce the registration fee motor carriers, motor private carriers of property, brokers, freight forwarders, and leasing companies are currently required to pay. The reduction will range from approximately $11 to $10,282 per entity, in the first year, and from approximately $5 to $3,899 per entity in subsequent years, depending on the number of vehicles owned and/or operated by the affected entities. FMCSA asserts that the reduction in fees will not have a significant impact on the affected small entities. Accordingly, I hereby certify that this rule will not have a significant economic impact on a substantial number of small entities.

In accordance with section 213(a) of the SBREFA, FMCSA wants to assist small entities in understanding this final rule so that they can better evaluate its effects on themselves and participate in the rulemaking initiative. If the final rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please consult the FMCSA point of contact, Gerald Folsom, listed in the For Further Information Contact section of this final rule.

Small businesses may send comments on the actions of Federal employees who enforce or otherwise determine compliance with Federal regulations to the Small Business Administration's 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 FMCSA, call 1-888-REG-FAIR (1-888-734-3247). DOT has a policy regarding the rights of small entities to regulatory enforcement fairness and an explicit policy against retaliation for exercising these rights.

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 $161 million (which is the value equivalent of $100 million in 1995, adjusted for inflation to 2017 levels) or more in any one year. Though this final rule will not result in any such expenditure, the Agency discusses the effects of this rule elsewhere in this preamble.

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq. ), Federal agencies must obtain approval from OMB for each collection of information they conduct, sponsor, or require through regulations. FMCSA determined that no information collection requirements are associated with this final rule. Therefore, the PRA does not apply to this final rule.

A rule has implications for federalism under section 1(a) of E.O. 13132 if it has “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” FMCSA has determined that this rule would not have substantial direct costs on or for States, nor would it limit the policymaking discretion of States. Nothing in this document preempts any State law or regulation, imposes substantial direct unreimbursed compliance costs on any State, or diminishes the power of any State to enforce its own laws. As detailed above, the UCR Board includes substantial State representation. The States have already had opportunity for input through their representatives. Accordingly, this rulemaking does not have federalism implications warranting the application of E.O. 13132.

This final rule meets applicable standards in sections 3(a) and 3(b) (2) of E.O. 12988, Civil Justice Reform, to minimize litigation, eliminates ambiguity, and reduce burden.

E.O. 13045, Protection of Children from Environmental Health Risks and Safety Risks, 62 FR 19885 (April 23, 1997), requires agencies issuing “economically significant” rules, if the regulation also concerns an environmental health or safety risk that an agency has reason to believe may disproportionately affect children, to include an evaluation of the regulation's environmental health and safety effects on children. The Agency determined this final rule is not economically significant. Therefore, no analysis of the impacts on children is required. In any event, the Agency does not anticipate that this regulatory action could in any respect present an environmental or safety risk that could disproportionately affect children.

FMCSA reviewed this final rule in accordance with E.O. 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights, and has determined it will not effect a taking of private property or otherwise have taking implications.

Section 522 of title I of division H of the Consolidated Appropriations Act, 2005, enacted December 8, 2004 (Pub. L. 108-447, 118 Stat. 2809, 3268, 5 U.S.C. 552a note), requires the Agency to conduct a privacy impact assessment of a regulation that will affect the privacy of individuals. This rule does not require the collection of personally identifiable information.

The regulations implementing E.O. 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this program.

FMCSA has analyzed this final rule under E.O. 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. The Agency has determined that this rule is not a “significant energy action” under that order because it is not a “significant regulatory action” likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, it does not require a Statement of Energy Effects under E.O. 13211.

This rule does not have Tribal implications under E.O. 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 National Technology Transfer and Advancement Act (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through OMB, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards ( e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) are standards that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, FMCSA did not consider the use of voluntary consensus standards.

FMCSA analyzed this rule for the purpose of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) and determined this action is categorically excluded from further analysis and documentation in an environmental assessment or environmental impact statement under FMCSA Order 5610.1, 69 FR 9680 (March 1, 2004), Appendix 2, paragraph 6.h. The Categorical Exclusion (CE) in paragraph 6.h. covers regulations and actions taken pursuant to the regulations implementing procedures to collect fees that will be charged for motor carrier registrations. The content in this rule is covered by this CE and the final action does not have any effect on the quality of the environment. The CE determination is available in the docket.

For the reasons discussed in the preamble, FMCSA is amending title 49 CFR chapter III, part 367 as follows:

On October 4, 2017, we published a proposed rule in the Federal Register (82 FR 46183) to list the trispot darter as a threatened species under the Act (16 U.S.C. 1531 et seq. ). Please refer to that proposed rule for a detailed description of previous Federal actions concerning this species.

Elsewhere in today's Federal Register , we propose to (1) designate critical habitat for the trispot darter under the Act; and (2) issue a rule under section 4(d) of the Act that provides measures necessary and advisable for the conservation of the trispot darter.

Please refer to the October 4, 2017, proposed rule (82 FR 46183) and the Species Status Assessment (SSA) Report for a full summary of species information. Both documents are available at http://www.regulations.gov under Docket No. FWS-R4-ES-2017-0063, and on the Service's Southeast Region website at https://www.fws.gov/southeast/.

The trispot darter is a freshwater fish found in the Coosa River System in the Ridge and Valley ecoregion of Alabama, Georgia, and Tennessee. This fish has a historical range from the middle to upper Coosa River Basin with collections in the mainstem Coosa, Oostanaula, Conasauga, and Coosawattee Rivers, and their tributaries. Currently, the trispot darter is known to occur in four populations in the Little Canoe Creek and tributaries (Coosa River), Ballplay Creek tributaries (Coosa River), Conasauga River and tributaries, and Coosawattee River and one tributary.

The trispot darter is a migratory species that utilizes distinct breeding and non-breeding habitats. From approximately April to October, the species inhabits its non-breeding habitat, which consists of small to medium river margins and lower reaches of tributaries with slower velocities. It is associated with detritus, logs, and stands of water willow, and the substrate consists of small cobbles, pebbles, gravel, and often a fine layer of silt. During low flow periods, the darters move away from the peripheral zones and toward the main channel; edges of water willow beds, riffles, and pools; and mouths of tributaries. In late fall, this migratory species shifts its habitat preference and begins movement toward spawning areas; this is most likely stimulated by precipitation, but temperature changes and decreasing daylight hours may also provide cues to begin migration. Migration into spawning areas begins approximately late November or early December with fish moving from the main channels into tributaries and eventually reaching adjacent seepage areas where they will congregate and remain for the duration of spawning, approximately until late April. Breeding sites are intermittent seepage areas and ditches with little to no flow; shallow depths (12 inches (30 centimeters) or less); moderate leaf litter covering mixed cobble, gravel, sand, and clay; a deep layer of soft silt over clay; and emergent vegetation. Trispot darters predominantly feed on mayfly nymphs and midge larvae and pupae.

The trispot darter was first described in 1963 from a single specimen collected in Cowans Creek in Cherokee County, Alabama. This species was originally described as a member of the subgenus Psychromaster and was later moved to the subgenus Ozarka in 1980 where it remains today. Currently, the trispot darter is considered a valid taxon (Service 2017, p. 6).

In our October 4, 2017, proposed rule to list the trispot darter as a threatened species (82 FR 46183), we requested that all interested parties submit written comments on the proposal by December 4, 2017. We also contacted appropriate Federal and State agencies, scientific experts and organizations, and other interested parties, and invited them to comment on the proposal. Newspaper notices inviting general public comment were published in the St. Clair News-Aegis, St. Clair Times, Chattanooga Times Free Press, Atlanta Journal Constitution, and The Daily Home. We did not receive any requests for a public hearing. All substantive information provided during the comment period has either been incorporated directly into this final determination or is addressed, by topic, below.

In accordance with our peer review policy published on July 1, 1994 (59 FR 34270), and our August 22, 2016, memorandum updating and clarifying the role of peer review actions under the Act, we solicited expert opinion from four knowledgeable individuals with scientific expertise that included familiarity with trispot darter and its habitat, biological needs, and threats. We received responses from two of the peer reviewers.

We reviewed all comments we received from the peer reviewers for substantive issues and new information regarding the information contained in the SSA Report. The peer reviewers generally concurred with our methods and conclusions, and provided additional information, clarifications, and suggestions to improve the final SSA Report. Peer reviewer comments are addressed in the following summary and were incorporated into the final SSA Report as appropriate.

(1) Comment: One peer reviewer expressed doubt that hurricanes or other large storms can negatively affect stream fish communities.

Our Response: Large storms have been found to disturb aquatic habitats to the extent that stream fish assemblages have been observed to be altered as a result (Service 2017, p. 25; Service 2011, p. 9). Recovery of stream fish communities to assemblages seen before disturbances from large storms depends on adjacent source populations and the dispersal ability of specific species. In the case of rare species with isolated populations such as the trispot darter, large storms that are capable of causing a level of disturbance that alters fish communities can pose a substantial threat. A more thorough discussion of this threat can be found in the SSA Report (Service 2017, p. 25).

(2) Comment: One peer reviewer suggested that not enough information was available on the trispot darter to infer its historical range.

Our Response: We are required to use the best available commercial and scientific information available at the time we make our determination. Available resources at the time of rulemaking have described the range of the trispot darter as the upper Coosa River system. Based on recorded occurrences of the trispot darter in the mainstem of the Coosa River and tributaries to the Coosa River in Alabama, Georgia, and Tennessee, we conclude that the historical range described as the upper Coosa River system is reasonably supported.

(3) Comment: One commenter expressed concern about the presence of the Conasauga Shale Field, a natural gas-bearing formation, within portions of the trispot darter's range. The commenter provided current research that demonstrated negative associations between hydraulic fracturing (fracking) and fish recruitment, and recommended the Service evaluate oil and gas exploration in the Conasauga Shale Field and its influence on trispot darter.

Our Response: We contacted the Alabama State Oil and Gas Board to assess the current and future status of natural gas exploration and exploitation of the Conasauga Shale Field in Alabama. Based on our correspondence, we find that fracking within the Conasauga Shale Field is unlikely to be a threat to the trispot darter within the foreseeable future. Currently, no new drilling permits have been approved, and all existing wells have been plugged and abandoned. Wells were abandoned due to low productivity and low gas prices. For these reasons, and because of low permeability of the rock formation, the Alabama State Oil and Gas Board expects that oil and gas extraction is unlikely to occur there within the foreseeable future.

(4) Comment: One commenter provided additional information on the effects of hypolimnetic releases from dams on riverine ecosystems and fish species present in tailwaters. Hypolimnetic refers to the part of a lake below the thermocline made up of water that is stagnant and of essentially uniform temperature except during the period of overturn. The commenter also noted that dams can create many kilometers of unsuitable habitat because of changes in the temperature regime from hypolimnetic flow releases. Decreases in streamflow temperature as a result of hypolimnetic releases have been shown to adversely affect darter species by increasing the probability of local extinction in cold waters downstream of dams.

Our Response: We incorporated the information from the additional studies clarifying the effects of hydropower projects on aquatic species and have added them to the appropriate sections of the SSA Report. We also recognize that currently the trispot darter is exposed to releases from the Carters Reregulation Dam. However, past research has found that operation of the reregulation dam does not affect the system's ability to provide adequate dissolved oxygen for the trispot darter (Freeman 2011, p. 10); this system also still meets State water quality and temperature standards (USACE 2015, p. 4-13). Therefore, temperature and dissolved oxygen alterations are not viewed as stressors to the trispot darter in the Coosawattee River below the Carters Reregulation Dam.

(5) Comment: One commenter noted that the overall condition of the Little Canoe Creek Management Unit (MU) is ranked as moderate even though six of the seven factors considered in the ranking scored as “low” in the October 4, 2017, proposed rule to list the trispot darter as a threatened species (82 FR 46183).

Our Response: The overall condition for the Little Canoe Creek MU presented in the proposed rule (see 82 FR 46187) and the SSA Report (version 1.0) was in error. We have corrected the condition rank in this rule and the updated SSA Report (version 1.2). However, this correction does not change our assessment of future conditions in the SSA Report, nor our conclusions presented in the October 4, 2017, proposed rule.

In preparing this final rule, we reviewed and fully considered comments from the public on the proposed rule. We did not make any substantive changes to this final rule after consideration of the comments we received. We did update the SSA Report (to version 1.2) based on comments and some additional information provided, as follows: (1) We made many small, nonsubstantive clarifications and corrections throughout the SSA Report, including ensuring consistency of colors on maps, providing details about data sources used, updating references, and making minor clarifications; and (2) we included in the updated version of the SSA Report the additional information we received regarding observations of the trispot darter, hypothesized historical range of the trispot darter, and more detailed life-history data for the species. However, the information we received during the comment period for the proposed rule did not change our determination that the trispot darter is a threatened species.

Section 4 of the Act (16 U.S.C. 1533), and its implementing regulations in title 50 of the Code of Federal Regulations at 50 CFR part 424, set forth the procedures for adding species to the Federal Lists of Endangered and Threatened Wildlife and Plants. Under section 4(a)(1) of the Act, we may list a species based on (A) the present or threatened destruction, modification, or curtailment of its habitat or range; (B) overutilization for commercial, recreational, scientific, or educational purposes; (C) disease or predation; (D) the inadequacy of existing regulatory mechanisms; or (E) other natural or manmade factors affecting its continued existence. These factors represent broad categories of natural or human-caused actions or conditions that could have an effect on a species' continued existence. In evaluating these actions and conditions, we look for those that may have a negative effect on individuals of the species, as well as other actions or conditions that may ameliorate any negative effects or may have positive effects.

We use the term “threat” to refer in general to actions or conditions that are known to or are reasonably likely to negatively affect individuals of a species. The term “threat” includes actions or conditions that have a direct impact on individuals (direct impacts), as well as those that affect individuals through alteration of their habitat or required resources (stressors). The term “threat” may encompass—either together or separately—the source of the action or condition or the action or condition itself. However, the mere identification of any threat(s) does not necessarily mean that the species meets the statutory definition of an “endangered species” or a “threatened species.” In determining whether a species meets either definition, we must evaluate all identified threats by considering the expected response by the species, and the effects of the threats—in light of those actions and conditions that will ameliorate the threats—on an individual, population, and species level. We evaluate each threat and its expected effects on the species, then analyze the cumulative effect of all of the threats on the species as a whole. We also consider the cumulative effect of the threats in light of those actions and conditions that will have positive effects on the species—such as any existing regulatory mechanisms or conservation efforts. The Secretary determines whether the species meets the definition of an “endangered species” or a “threatened species” only after conducting this cumulative analysis and describing the expected effect on the species now and in the foreseeable future.

Our assessment evaluated the biological status of the species and threats affecting its continued existence. It was based upon the best available scientific and commercial data, including the SSA Report (Service 2018, entire), and the expert opinion of the SSA team members. Please refer to chapter 3 of the SSA Report (Service 2018, pp. 17-25) for a more detailed discussion of the factors affecting the trispot darter.

As discussed above, we considered the five factors set forth in section 4(a)(1) of the Act in assessing whether the species meets the definition of an endangered or a threatened species. A multitude of natural and anthropogenic factors may impact the status of species within aquatic systems. The largest threats to the future viability of the trispot darter involve habitat degradation from factors influencing four habitat elements: Water quality, water quantity, instream habitat, and habitat connectivity (Factor A). All of these factors are exacerbated by the effects of climate change (Factor E). A brief summary of these primary stressors is presented below; for a full description of the factors, refer to chapter 4 of the SSA Report.

Activities that lead to hydrologic alteration include reservoir construction and operation, excessive water withdrawals, and an increase in impervious surfaces.

Hydrologic alteration in the system occupied by the trispot darter has two components: Increases in storm flow frequency and intensity, and a decrease in base flows, which together create a “flashy” hydrologic regime. In a natural forested system, most rainfall soaks into the soil and is carried into nearby streams via subsurface flow. Some evaporates or transpires, and a relatively small amount becomes surface runoff. In the trispot darter's system, which is urbanized with large amounts of impervious cover such as roads, parking lots, and rooftops, this cycle is altered; most stormwater hits impervious surfaces and becomes runoff, which then is channeled quickly to streams via stormwater drain pipes or ditches. Relatively little infiltrates into the soil. As a result, storm flows in the receiving stream are higher and more frequent, although briefer in duration, and base flows are lower, than in natural systems. The storm discharge of urban streams can be twice that of rural streams draining a watershed of similar size, and the frequency of channel-forming events can be 10 times that of pre-development conditions. These “flashy” stream flows and frequent, smaller high-flow events negatively affect structural habitat on which the trispot darter depends. Increases in flow frequency or intensity can result in channel widening through bank erosion or deepening to accommodate the additional discharge. This results in increased downstream sedimentation and unstable beds, both of which degrade channel complexity and feeding and refugia habitat for fish species. Increased storm flows, in addition, can cause physical washout of eggs and larval fishes, stress on adults, and negatively alter the stream's food web, affecting many fish species. There is also a decrease in channel complexity and a reduction in instream cover and natural substrates like boulders, cobble, and gravel.

Reservoirs can substantially alter hydrology downstream, especially when operated for hydroelectric power generation. Hydropeaking dams produce high flows only when power generation is needed. Hydropeaking dams, Carters Dam and Reregulation Dam, exist on the Coosawattee River. Rapid flow increases and decreases from hydropeaking can reduce stream insect abundance, potentially decreasing food availability for darters. Furthermore, managed rivers can exhibit substantially altered and novel food webs that affect native communities and their ability to withstand perturbations. Non-hydropeaking reservoirs, farm ponds, amenity lakes, and other impoundments may also substantially alter hydrologic regimes by storing water during low flow periods, effectively dampening moderate to high flows and in some cases augmenting flows. Fish are adapted to the natural seasonal variations of flow, and alterations to this regime affect their life-history strategies.

Hydrologic alteration can also lead to other stressors, such as sedimentation and a loss of connected suitable habitat.

Sedimentation can affect fish species by degrading physical habitat used for foraging, sheltering, and spawning; altering food webs and decreasing stream productivity; forcing fish to change their behaviors; and even injuring or killing individual fish. Chronic exposure to sediment has been shown to have negative impacts to fish gills, which in addition to causing gill damage can possibly reduce growth rates. Sedimentation causes reduced visibility, impacting fishes' abilities to feed and interact.

A wide range of activities (including agricultural activities, construction activities, some forestry activities if certified best management practices are not used, and dredging), as well as stormwater runoff, unpaved roads, and utility crossings, can lead to sedimentation within streams. Historical land use practices have substantially altered hydrological and geological processes such that sediments continue to be input into streams for several decades after those activities cease. Examples of these activities occurring within the range of the trispot darter include urban impacts in the Springville, Alabama, and Dalton, Georgia, areas; agricultural practices in the Conasauga River basin; and livestock access to streams in the Little Canoe Creek watershed.

Connectivity relates to a species' ability to disperse to and from habitat patches. Excess groundwater withdrawal, causing sections of streams to become dry for parts of the year, can reduce connectivity. Dams and reservoirs reduce connectivity by creating a physical barrier between fish populations and by changing habitat from flowing streams to standing water, which is not suitable habitat for this darter. Road crossings, some of which have impassible culverts that reduce connectivity, are also more prevalent in highly populated urban areas. All of these factors have occurred or are occurring in the range of the trispot darter.

This fish has adapted to occupy habitats that are surrounded by vegetation, which moderates temperature by blocking solar radiation; provides a source for terrestrial plant material that forms the base of the food web and provides shelter and foraging habitat for this fish; and helps to maintain clear, clean water and substrate through filtration. Removal of riparian vegetation can destabilize stream banks, increasing sedimentation and turbidity; increase the contaminants and nutrients that enter the water from runoff; increase water temperatures and light penetration, which also increases algae production; and alter available habitat by reducing woody plant debris and leaf litter, which in turn decreases overall stream productivity. All of these events decrease habitat suitability for the trispot darter. Removal of riparian vegetation has occurred where urban and agricultural practices are prevalent, such as increased development in Dalton, Chatsworth, and Ellijay, and occurrences of row crops and pastures in the Conasauga River basin generally.

Contaminants, including metals, hydrocarbons, pesticides, and other potentially harmful organic and inorganic compounds, can be toxic to fish and are common in urban streams, including those within the range of the trispot darter. Exposure to contaminants may cause physiological stress to the trispot darter as seen in other members of the genus Etheostoma, and streams affected by multiple sources of contaminants may induce higher levels of stress on the fish (Diamond et al. 2016; p. 133).

Contamination in the mainstem of the Coosa River by polychlorinated biphenyl (PCBs) has been attributed to past industrial activity adjacent to the river. In the Coosawattee River, PCBs caused by nonpoint sources are also identified as a source of impairment. PCBs have toxic effects to the endocrine system, nervous system, reproductive system, blood, skin, and liver of animals, and have likely impacted the trispot darter in both basins.

Pesticides and herbicides are frequently found in streams draining agricultural land uses, with herbicides being the most commonly detected. Many agricultural streams still contain dichlorodiphenyltrichloroethan (DDT) and its degradation products. Pesticides also are heavily used in urban and suburban areas, and many of these find their way into streams and groundwater. Glyphosates and other inert ingredients found in herbicides can be toxic to fish and other aquatic organisms, causing stress and reduced fitness; herbicide use where the trispot darter occurs in the Conasauaga River is prevalent and increasing.

Agriculture is a predominant land use within the range of the trispot darter. Livestock grazing is prevalent in some areas, and poultry farming is also common.

Poultry Litter: Poultry litter is a mixture of chicken manure, feathers, spilled food, and bedding material that frequently is used to fertilize pastureland or row crops. Each poultry house has an estimated ability to produce up to 100 tons of litter a year. Surface-spreading of litter results in runoff from heavy rains carrying the poultry litter into waterways, bringing phosphorus and nitrogen from manure into nearby streams. Additionally, repeated or over application of poultry litter can result in phosphorus buildup in the soil, which then runs off into streams. Excess phosphorus and nitrogen in streams increases algae and undesirable aquatic plants that rob water of oxygen, causing fish kills. Poultry litter also contains endocrine disruptors, such as estrogen, which have been identified as a significant stressor within the Conasauga River basin. Estrogens have been found in water and sediment samples within the watershed at concentrations high enough to be disruptive to the endocrine system in fish. Increased levels of estrogens affect reproductive biology and result in reduced breeding success. In a recent study of endocrine disruptors on fishes in the Conasauga River, approximately 7.5 percent of male fishes surveyed were found to have female reproductive cells in male reproductive organs.

Livestock Access to Streams: On many farms, livestock is grazed on pastures adjacent to streams and rivers, and is allowed free access to the water. Livestock accessing riparian buffers and, subsequently, the stream proper leads to habitat destruction and decreased water quality. Livestock can destabilize stream banks, which, as discussed above, creates increased sediment loads within small systems.

In addition to contributing to individual stressors such as changes in flow regime and contamination, urbanization is anticipated to increase the magnitude of nearly all other stressors, and thus is expected to affect the trispot darter across its range, which is close to the growing Atlanta metropolitan area, the expanding Chattanooga and Birmingham areas, and intervening areas with growing human populations and increasing development.

Weather events that affect stream flows are considered to be most relevant to the species. Broadly, these events include extreme storms and droughts. Increased flows can cause physical washout of eggs and larval fishes, cause stress on adults, and alter the production in a stream. Within the range of the trispot darter, extreme flows associated with hurricanes have been reported to have negative effects on stream fish populations. On the other hand, reduced baseflows due to droughts can also cause population declines, habitat loss, reduced water quality (decreased dissolved oxygen and temperature alteration) leading to death, crowding of individuals leading to stress, and decreased reproduction in stream fish populations.

Climate models for the southeastern United States project that average annual temperatures will increase, cold days will become less frequent, the freeze-free season will lengthen, temperatures exceeding 95 degrees Fahrenheit will increase, heat waves will become longer, and the number of major hurricanes will increase. While these climate models predict wide variability in weather patterns into the future, overall they suggest that the region will be subjected to more frequent large storms (hurricanes) as well as low flows from droughts.

In our analysis of the factors affecting these species, we found no evidence of population- or species-level impacts from overutilization for commercial, recreational, scientific, or educational purposes (Factor B). Also, there was no evidence of any impacts due to disease or predation (Factor C). No existing regulatory mechanisms adequately address the threats to the trispot darter such that it does not warrant listing under the Act (Factor D).

The trispot darter is recognized by Alabama, Georgia, and Tennessee as a species of concern. This species is listed as Priority 2/High Conservation Concern by the State of Alabama, endangered by the State of Georgia, and threatened by the State of Tennessee. Priority watersheds within the range of the trispot darter have been designated as Strategic Habitat Units by the Alabama Rivers and Streams Network (ARSN). ARSN is an organized partnership of state and federal entities as well as NGOs and corporations. Currently, the trispot darter is found in the Big Canoe Creek SHU and the Upper Coosa River tributaries SHU. The Strategic Habitat Unit project was developed for species restoration and enhancement. To work towards these goals, a thorough threats analysis is conducted in each SHU by partners to the ARSN, and the results of the threats analyses guide State and Federal agencies in prioritizing projects that reduce and remove the identified threats and ultimately improve habitat and water quality for listed and at risk species. The Atlantic Coast Conservancy holds a tract of land within Ballplay Creek that could offer some protection in the watershed. The U.S. Department of Agriculture's Natural Resources Conservation Service's Working Lands for Wildlife partnership within the basin will help farmers develop and implement strategies to improve water quality.

To assess viability for the trispot darter, we used the three conservation biology principles of resiliency, representation, and redundancy (together, the 3Rs). Briefly, resiliency supports the ability of the species to withstand environmental and demographic stochasticity (for example, wet or dry, warm or cold years); representation supports the ability of the species to adapt over time to long-term changes in the environment (for example, climate changes); and redundancy supports the ability of the species to withstand catastrophic events (for example, droughts, hurricanes). In general, the more redundant and resilient a species is and the more representation it has, the more likely it is to sustain populations over time, even under changing environmental conditions. Using these principles, we identified the species' ecological requirements for survival and reproduction at the individual, population, and species levels, and described the factors influencing the species' viability.

The SSA process can be categorized into three sequential stages. During the first stage, we used the 3Rs to evaluate individual life-history needs of all three darters. In the next stage, we assessed the historical and current condition of each species' demographics and habitat characteristics, including an explanation of how the species arrived at their current conditions. In the final stage of the SSA we made predictions about the species' responses to positive and negative environmental and anthropogenic influences. This process used the best available information to characterize viability as the ability of each species to sustain populations in the wild over time.

To qualitatively assess resiliency, we considered seven components that broadly relate to either the physical environment (“Habitat Elements”) or characteristics about the population specifically (“Population Elements”). Habitat elements consisted of an evaluation of physical habitat, connectivity, water quality, and hydrologic regime. Population elements consisted of an estimation of approximate abundance, the extent of occurrence (total length of occupied streams), and an assessment of occurrence complexity. Representation describes the ability of a species to adapt to changing environmental conditions over time. For trispot darters to exhibit high representation, resilient populations should occur in all ecoregions to which they are native, and maintain some level of connectivity between populations. These occupied physiographic provinces represent the ecological setting in which the darters have evolved. Redundancy is characterized by having multiple resilient and representative populations distributed throughout its range. Furthermore, these populations should maintain natural levels of connectivity between them. Connectivity allows for immigration and emigration between populations and increases the likelihood of recolonization should a population become extirpated. An overall resiliency condition was estimated by combining habitat and population elements. Population elements were weighted two times higher than habitat elements because they are considered direct indicators of population condition. Conditions were classified as “Low”, “Moderate”, or “High”.

After analyzing current conditions for the species, we described how current viability of the three darters may change over a period of 50 years. As with current conditions, we evaluated species viability in terms of resiliency at the population scale, and representation and redundancy at the species scale. In the SSA report, we described three plausible future scenarios and whether there will be a change, from current conditions, to resiliency, representation, or redundancy under each scenario. These scenarios capture the range of likely viability outcomes that the trispot darter is predicted to exhibit by the end of 2070. The future scenarios differ in two main elements of predicted change: Urbanization and climate. To forecast future urbanization, we considered future scenarios that incorporate the SLEUTH (Slope, Land use, Excluded area, Urban area, Transportation, Hillside area) model. This model simulates patterns of urban expansion that are consistent with spatial observations of past urban growth and transportation networks. Regarding climate, the Intergovernmental Panel on Climate Change utilized a suite of alternative scenarios in the Fifth Assessment Report to make near-term and long-term climate projections. In our assessments, we used these projections to help understand how climate may change in the future and what effects may be observed that impact the trispot darter.

Collection records used in the analysis were compiled and provided to the Service by State partners. These records did not exhibit standardization: The numbers of individuals collected was inconsistently recorded and sampling methods varied among records. Therefore, we were unable to analyze exact numbers collected for each record. Instead, abundance was estimated for each record categorically.

According to our analysis, all of the current management units (MUs) have resiliency ranked as “low” in the analysis (see Table 1, below). Ballplay Creek MU has a low resiliency because of reduced genetic diversity, the abundance is qualitatively low, reservoirs and poor water quality remove connectivity to other MUs, the impairment of the Coosa River within the watershed, and the extent of the occupied habitat is small. The Little Canoe Creek MU has a low resiliency to stochastic events because water quality and abundance are low (although the occurrence complexity is high), Coosa River reservoirs remove connectivity to other MUs, and the extent of the occupied habitat is small. Because of the PCBs known in the area, the Coosawattee River has low resiliency due to hydrologic alteration from the hydroelectric dam, PCBs in the river contributing to low water quality, lower abundance of fish per collection record, a small and reduced distribution, and overall simple occurrence spatial arrangement. The Conasauga River MU has low resiliency due to low water quality in the middle and lower river, low abundance of fish per collection record, a reduced population, and overall simple occurrence spatial arrangement. For aquatic species that inhabit rivers, complex spatial occurrence relates to a species occupying multiple tributaries and the main-stem river as opposed to only inhabiting the main-stem river. A more complex and dendritic (tree-like) spatial arrangement of occupied habitat will be more resilient (Service 2017, p. 27).

Historically, the trispot darter was found from the confluence of Holly Creek to Chatsworth, Georgia and is now only known from just upstream of Chatsworth. Currently, the trispot darter occupies approximately 20 percent of its historically known range. While it is clear the species has lost some of its historical range, the best available data do not indicate a declining trend in abundance in the remaining areas from historical to the present. This species is rare and difficult to detect. Combined with the inconsistent survey methodology and lack of standard collection records, this creates uncertainty in any analysis of trends or the ability to compare data across years.

A full analysis for each unit's current condition can be found in the SSA Report and the proposed rule.

For the purpose of this assessment, we define viability as the ability of the species to sustain populations in the wild over time. To address uncertainty associated with the degree and extent of potential future stressors and their impacts on species' requisites, we assessed the 3Rs using three plausible future scenarios. These scenarios were based, in part, on the results of urbanization and climate models that predict changes in habitat used by the trispot darter. The models that were used to forecast both urbanization and climate change projected 50 years into the future (the year 2070).

For example, in one scenario, current environmental regulations and policy, land use management techniques, and conservations measures remain the same over the next 50 years. We anticipate the current trend in greenhouse gas emissions to continue and moderate impacts from extreme weather events including intense drought, floods, and storm events to occur. Rapid urbanization will continue at the current estimated rate for the Piedmont region of the southeastern United States, which will increase demand for water resources and introduce multiple additional stressors into local streams and rivers. Despite an overall growth in population and increases in developed areas, some regions will remain predominantly in agriculture and experience associated water quality declines. In pace with current trends, we anticipate declines in habitat and water quantity and quality as a result of rapid urbanization, climate change, agricultural practices, and an overall lack of voluntary conservation measures being implemented. Under this scenario, two populations, Ballplay Creek and Conasauga River, are expected to become extirpated, while the remaining two, Little Canoe Creek and Coosawattee River, are projected to persist but in low resiliency condition. Because of the expected future extirpation of trispot darters predicted for Salacoa Creek (Coosawattee population) in this scenario, the fish would then be found only in the Coosawattee River mainstem (no longer in any tributaries), making it more vulnerable to catastrophic events. Redundancy decreases to two populations (Little Canoe Creek and Conasauga), which are completely isolated from one another due to the Weiss Dam. This means that genetic material will not be exchanged, reducing adaptive potential of the species. In the SSA Report, we describe conditions and results for all three scenarios that represent the likely range of plausible future outcomes for development, possible climate changes, and the species' expected response to threats. Results for our full future condition analysis for the future projections are provided in table 2, below and are discussed more fully in the SSA Report and the proposed rule.

We have carefully assessed the best scientific and commercial information available regarding the past, present, and future threats to the trispot darter. Our analysis of the trispot darter's current and future conditions, as well as the conservation efforts discussed above, show that the population and habitat factors used to determine the resiliency, representation, and redundancy for trispot darter will continue to decline such that it is likely to become in danger of extinction within the foreseeable future.

We considered whether the trispot darter is presently in danger of extinction throughout its range. The current conditions as assessed in the SSA Report show extant populations in four river systems (MUs) across its range, including 65 river miles (105 river kilometers) of occupied habitat in the Conasauga River. The best available data do not indicate a declining trend in abundance, and it is likely that the low abundance (and, therefore, low resiliency) indicated in our analysis is due to the species being naturally rare and difficult to detect. The inconsistent survey methodology and lack of standard collection records also creates uncertainty in any analysis of trends or the ability to compare data across years. While threats are currently acting on the species and many of those threats are expected to continue into the future, we did not find that the species is currently in danger of extinction throughout its range.

Based on our analysis of plausible future conditions of the trispot darter, we concluded that the resiliency, redundancy, and representation will be impacted by threats and the species will have reduced viability in the foreseeable future. While our future scenarios were developed using models that predicted out 50 years, the short lifespan of the species (2 to 3 years) and the lack of data and research specific to trispot darters regarding evidence of threats directly impacting the species creates uncertainty when predicting the species' response to threats into the future. Forecasting beyond 8 to 10 generations ( i.e., 16 to 24 years) would be speculative, and we do not have robust population data to support a foreseeable future that could accurately predict how the trispot darter may respond to threats beyond a 20-year timeframe. Accordingly, we have concluded that approximately 20 years is the appropriate foreseeable future for the trispot darter.

Our analysis concludes that 30 years beyond our foreseeable future timeframe, our range of plausible future scenarios predicts the trispot darter may continue to persist in as many as all four of the populations; however, the entire risk profile indicates that all four populations could also possibly be extirpated in 50 years. It is reasonable to assume that at an intermediate timeframe of 16 to 24 years, these scenarios will not have been realized completely; however, many populations that persist are likely to have low resiliency and continue to face threats. Considering this species' vulnerability to a loss of connectivity between breeding and nonbreeding habitats, and the effect that situation has on reproductive success, we expect negative impacts to the resiliency, redundancy, and representation of the species in the foreseeable future. The trispot darter's unique reproductive strategy of utilizing distinct areas of rivers and streams for breeding and nonbreeding habitats makes the loss of connectivity especially detrimental to viability. A lack of protected lands within the current range of the trispot darter creates more uncertainty regarding land use, threats, and the ability of these four populations to withstand the expected loss of one or two populations. This expected reduction in both the number and distribution of resilient populations is likely to make the species vulnerable to catastrophic disturbance. Therefore, on the basis of the best available scientific and commercial information, we find that the species is likely to become in danger of extinction within the foreseeable future throughout its range.

Under the Act and our implementing regulations, a species may warrant listing if it is endangered or threatened throughout all or a significant portion of its range. Because we have determined that the trispot darter is likely to become an endangered species within the foreseeable future throughout its range, we find it unnecessary to proceed to an evaluation of potentially significant portions of the range. Where the best available information allows the Services to determine a status for the species rangewide, that determination should be given conclusive weight because a rangewide determination of status more accurately reflects the species' degree of imperilment and better promotes the purposes of the statute. In this way, assigning the rangewide status to the species (rather than potentially assigning a different status based on a review of only a portion of the range) best implements the statutory distinction between threatened and endangered species. Maintaining this fundamental distinction is important for ensuring that conservation resources are allocated toward species according to their actual level of risk.

We also note that Congress placed the “all” language before the “significant portion of its range” phrase in the definitions of “endangered species” and “threatened species.” This suggests that Congress intended that an analysis based on consideration of the entire range should receive primary focus, and thus that the agencies should do a “significant portion of its range” analysis as an alternative to a rangewide analysis only if necessary. Under this reading, we should first consider whether listing is appropriate based on a rangewide analysis and proceed to conduct a “significant portion of its range” analysis if, and only if, a species does not qualify for listing as either endangered or threatened according to the “all” language. We note that this interpretation is also consistent with the 2014 Final Policy on Interpretation of the Phrase “Significant Portion of its Range” (SPR Policy) (79 FR 37578; July 1, 2014). That policy is the subject of ongoing litigation, including litigation against the Service in the United States District Court for the Northern District of California, which has vacated the “significant portion” part of the Services' SPR Policy ( Desert Survivors v. Department of the Interior, No. 16-cv-01165-JCS (N.D. Cal. Aug. 24, 2018)). However, our approach in this rule, explained above, has been reached and applied independently of the SPR Policy, and is not inconsistent with the court's holding in Desert Survivors.

Conservation measures provided to species listed as endangered or threatened species under the Act include recognition, recovery actions, requirements for Federal protection, and prohibitions against certain practices. Recognition through listing results in public awareness, and conservation by Federal, State, Tribal, and local agencies; private organizations; and individuals. The Act encourages cooperation with the States and requires that recovery actions be carried out for all listed species. The protection required by Federal agencies and the prohibitions against certain activities are discussed, in part, below.

The primary purpose of the Act is the conservation of endangered and threatened species and the ecosystems upon which they depend. The ultimate goal of such conservation efforts is the recovery of these listed species, so that they no longer need the protective measures of the Act. Subsection 4(f) of the Act requires the Service to develop and implement recovery plans for the conservation of endangered and threatened species. The recovery planning process involves the identification of actions that are necessary to halt or reverse the species' decline by addressing the threats to its survival and recovery. The goal of this process is to restore listed species to a point where they are secure, self-sustaining, and functioning components of their ecosystems.

Recovery planning includes the development of a recovery outline shortly after a species is listed and preparation of a draft and final recovery plan. The recovery outline guides the immediate implementation of urgent recovery actions and describes the process to be used to develop a recovery plan. Revisions of the plan may be done to address continuing or new threats to the species, as new substantive information becomes available. The recovery plan identifies site-specific management actions that set a trigger for review of the five factors that control whether a species remains endangered or may be reclassified from endangered to threatened (“downlisted”) or removed from listing (“delisted”), and methods for monitoring recovery progress. Recovery plans also establish a framework for agencies to coordinate their recovery efforts and provide estimates of the cost of implementing recovery tasks. Recovery teams (composed of species experts, Federal and State agencies, nongovernmental organizations, and other stakeholders) are often established to develop recovery plans. When completed, the recovery outline, draft recovery plan, and the final recovery plan will be available on our website ( http://www.fws.gov/endangered ) or from our Alabama Ecological Services field office (see FOR FURTHER INFORMATION CONTACT ).

Implementation of recovery actions generally requires the participation of a broad range of partners, including other Federal agencies, States, Tribes, nongovernmental organizations, businesses, and private landowners. Examples of recovery actions include habitat restoration ( e.g., restoration of native vegetation), research, captive propagation and reintroduction, and outreach and education. The recovery of many listed species cannot be accomplished solely on Federal lands because their range may occur primarily or solely on non-Federal lands. To achieve recovery of these species requires cooperative conservation efforts on private, State, and Tribal lands.

Following publication of this final listing rule, funding for recovery actions will be available from a variety of sources, including Federal budgets, State programs, and cost share grants for non-Federal landowners, the academic community, and nongovernmental organizations. In addition, pursuant to section 6 of the Act, the States of Alabama, Georgia, and Tennessee will be eligible for Federal funds to implement management actions that promote the protection or recovery of the trispot darter. Information on our grant programs that are available to aid species recovery can be found at: http://www.fws.gov/grants.

Please let us know if you are interested in participating in recovery efforts for the trispot darter. Additionally, we invite you to submit any new information on this species whenever it becomes available and any information you may have for recovery planning purposes (see FOR FURTHER INFORMATION CONTACT ).

Section 7(a) of the Act requires Federal agencies to evaluate their actions with respect to any species that is listed as an endangered or threatened species and with respect to its critical habitat, if any is designated. Regulations implementing this interagency cooperation provision of the Act are codified at 50 CFR part 402. Section 7(a)(2) of the Act requires Federal agencies to ensure that activities they authorize, fund, or carry out are not likely to jeopardize the continued existence of any endangered or threatened species or destroy or adversely modify its critical habitat. If a Federal action may affect a listed species or its critical habitat, the responsible Federal agency must enter into consultation with the Service.

Elsewhere in today's Federal Register , we propose to designate critical habitat for the trispot darter under the Act.

Under section 4(d) of the Act, the Service has discretion to issue regulations that we find necessary and advisable to provide for the conservation of threatened species. The Act and its implementing regulations set forth a series of general prohibitions and exceptions that apply to threatened wildlife. The prohibitions of section 9(a)(1) of the Act, as applied to threatened wildlife and codified at 50 CFR 17.31, make it illegal for any person subject to the jurisdiction of the United States to take (which includes harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect; or to attempt any of these) threatened wildlife within the United States or on the high seas. In addition, it is unlawful to import; export; deliver, receive, carry, transport, or ship in interstate or foreign commerce in the course of commercial activity; or sell or offer for sale in interstate or foreign commerce any listed species. It is also illegal to possess, sell, deliver, carry, transport, or ship any such wildlife that has been taken illegally. Certain exceptions apply to employees of the Service, the National Marine Fisheries Service, other Federal land management agencies, and State conservation agencies.

We may issue permits to carry out otherwise prohibited activities involving threatened wildlife under certain circumstances. Regulations governing permits are codified at 50 CFR 17.32. With regard to threatened wildlife, a permit may be issued for the following purposes: For scientific purposes, for the enhancement of propagation or survival, for economic hardship, for zoological exhibition, for educational purposes, for incidental taking, or for special purposes consistent with the purposes of the Act. There are also certain statutory exemptions from the prohibitions, which are found in sections 9 and 10 of the Act.

Section 4(d) of the Act specifies that, for threatened species, the Secretary shall issue such regulations as he deems necessary and advisable to provide for the conservation of the species. This discretion includes authority to prohibit by regulation with respect to a threatened species any act prohibited by section 9(a)(1) of the Act. At 50 CFR 17.31(a), the Service, by delegation from the Secretary, exercised this discretion to extend the take and other prohibitions set forth in section 9(a)(1) of the Act to all threatened species. The provisions at 50 CFR 17.31(c), however, also provide that the prohibitions included at 50 CFR 17.31(a) do not apply if the Service promulgates a rule under section 4(d) of the Act tailored to provide for the conservation needs of a specific threatened species. Elsewhere in today's Federal Register , we propose to issue a rule under section 4(d) of the Act (“4(d) rule”) that is tailored to the specific threats to and conservation needs of the trispot darter. Until a 4(d) rule is made final for this species, all prohibitions included at 50 CFR 17.31(a) apply to the trispot darter.

It is our policy, as published in the Federal Register on July 1, 1994 (59 FR 34272), to identify to the maximum extent practicable at the time a species is listed, those activities that would or would not constitute a violation of section 9 of the Act. The intent of this policy is to increase public awareness of the effect of a final listing on proposed and ongoing activities within the range of a listed species. Activities that the Service believes could potentially harm the trispot darter and result in “take” include, but are not limited to:

(1) Unauthorized handling or collecting of the species;

(2) Destruction or alteration of the species' habitat by discharge of fill material, dredging, snagging, impounding, channelization, or modification of natural or artificial wet weather conveyances or ephemeral, intermittent, or perennial stream channels or banks;

(3) Destruction of riparian habitat directly adjacent to natural or artificial wet weather conveyances or ephemeral, intermittent, or perennial stream channels that causes significant increases in sedimentation and destruction of natural stream banks or channels;

(4) Discharge of pollutants into a natural or artificial wet weather conveyances or ephemeral, intermittent, or perennial stream channels, or into areas hydrologically connected to a natural or artificial wet weather conveyances or ephemeral, intermittent, or perennial stream channel occupied by the species;

(5) Diversion or alteration of surface or ground water flow; and

(6) Pesticide/herbicide applications in violation of label restrictions.

Questions regarding whether specific activities constitute a violation of section 9 of the Act should be directed to the Alabama Ecological Services Field Office (see ADDRESSES ).

We have determined that environmental assessments and environmental impact statements, as defined under the authority of the National Environmental Policy Act, need not be prepared in connection with listing a species as an endangered or threatened species under the Endangered Species Act. We published a notice outlining our reasons for this determination in the Federal Register on October 25, 1983 (48 FR 49244).

In accordance with the President's memorandum of April 29, 1994 (Government-to-Government Relations with Native American Tribal Governments; 59 FR 22951), Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments), and the Department of the Interior's manual at 512 DM 2, we readily acknowledge our responsibility to communicate meaningfully with recognized Federal Tribes on a government-to-government basis. In accordance with Secretarial Order 3206 of June 5, 1997 (American Indian Tribal Rights, Federal-Tribal Trust Responsibilities, and the Endangered Species Act), we readily acknowledge our responsibilities to work directly with tribes in developing programs for healthy ecosystems, to acknowledge that tribal lands are not subject to the same controls as Federal public lands, to remain sensitive to Indian culture, and to make information available to tribes. There are no tribal interests affected by this rule.

A complete list of references cited in this rulemaking is available on the internet at http://www.regulations.gov and upon request from the Alabama Ecological Services Field Office (see ADDRESSES ).

The primary authors of this final rule are the staff members of the Alabama Ecological Services Field Office.

Accordingly, we amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as follows:

Regulations implemented under the authority of the Atlantic Tunas Convention Act (ATCA; 16 U.S.C. 971 et seq. ) and the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act; 16 U.S.C. 1801 et seq. ) governing the harvest of BFT by persons and vessels subject to U.S. jurisdiction are found at 50 CFR part 635. Section 635.27 subdivides the U.S. BFT quota recommended by the International Commission for the Conservation of Atlantic Tunas (ICCAT) and as implemented by the United States among the various domestic fishing categories, per the allocations established in the 2006 Consolidated Highly Migratory Species Fishery Management Plan (2006 Consolidated HMS FMP) (71 FR 58058, October 2, 2006), as amended by Amendment 7 to the 2006 Consolidated HMS FMP (Amendment 7) (79 FR 71510, December 2, 2014). NMFS is required under ATCA and the Magnuson-Stevens Act to provide U.S. fishing vessels with a reasonable opportunity to harvest the ICCAT-recommended quota.

The base quota for the General category is 555.7 mt. See § 635.27(a). Each of the General category time periods (January, June through August, September, October through November, and December) is allocated a “subquota” or portion of the annual General category quota. Although it is called the “January” subquota, the regulations allow the General category fishery under this quota to continue until the subquota is reached or March 31, whichever comes first. The baseline subquotas for each time period are as follows: 29.5 mt for January; 277.9 mt for June through August; 147.3 mt for September; 72.2 mt for October through November; and 28.9 mt for December. Any unused General category quota rolls forward within the fishing year, which coincides with the calendar year, from one time period to the next, and is available for use in subsequent time periods.

Under § 635.27(a)(9), NMFS has the authority to transfer quota among fishing categories or subcategories, after considering regulatory determination criteria provided under § 635.27(a)(8). NMFS has considered all of the relevant determination criteria and their applicability to this inseason quota. These considerations include, but are not limited to, the following:

Regarding the usefulness of information obtained from catches in the particular category for biological sampling and monitoring of the status of the stock (§ 635.27(a)(8)(i)), biological samples collected from BFT landed by General category fishermen and provided by tuna dealers provide NMFS with valuable parts and data for ongoing scientific studies of BFT age and growth, migration, and reproductive status. Additional opportunity to land BFT, and potentially over a greater portion of the January time period, would support the collection of a broad range of data for these studies and for stock monitoring purposes.

NMFS also considered the catches of the General category quota to date (including in December 2018 and during the winter fishery in the last several years), and the likelihood of closure of that segment of the fishery if no adjustment is made (§ 635.27(a)(8)(ii)). Without a quota transfer from December 2019 to January 2019 for the General category at this time, the quota available for the January period would be 29.5 mt (5.3 percent of the General category quota), and participants would have to stop BFT fishing activities once that amount is met, while commercial-sized BFT may remain available in the areas where General category permitted vessels operate. Transferring 19.5 mt of the 28.9-mt quota available for December 2019 (with 28.9 mt representing 5.2 percent of the General category quota) would result in 49 mt (8.8 percent of the General category quota) being available for the January subquota period. This quota transfer would provide additional opportunities to harvest the U.S. BFT quota without exceeding it, while preserving the opportunity for General category fishermen to participate in the winter BFT fishery at both the beginning and end of the calendar year.

Regarding the projected ability of the vessels fishing under the particular category quota (here, the General category) to harvest the additional amount of BFT before the end of the fishing year (§ 635.27(a)(8)(iii)), NMFS considered General category landings over the last several years. General category landings in the winter BFT fishery tend to straddle the calendar year as BFT may be available in late November/December and into January of the following year or later. Landings are highly variable and depend on access to commercial-sized BFT and fishing conditions, among other factors. Any unused General category quota from the January subperiod that remains as of March 31 will roll forward to the next subperiod within the calendar year ( i.e., the June-August time period). In 2018, NMFS transferred 14.3 mt of quota from the December 2018 subquota to the January 2018 subquota period, resulting in a subquota of 39 mt for the January 2018 period and a subquota of 10 mt for the December 2018 period (82 FR 60680, December 22, 2017). NMFS also transferred 10 mt from the Reserve to the General category effective February 28, resulting in an adjusted subquota of 49 mt for the January 2018 period (83 FR 9232, March 5, 2018), and closed the General category fishery for the January subquota period effective March 2, 2018. Under a one-fish General category daily retention limit ( i.e., of large medium or giant BFT, measuring 73 inches (185 cm) curved fork length (CFL) or greater) effective January 1 through March 2, a total of 59.3 mt were landed.

NMFS also considered the estimated amounts by which quotas for other gear categories of the fishery might be exceeded (§ 635.27(a)(8)(iv)) and the ability to account for all 2019 landings and dead discards. In the last several years, total U.S. BFT landings have been below the available U.S. quota such that the United States has carried forward the maximum amount of underharvest allowed by ICCAT from one year to the next. NMFS will need to account for 2018 landings and dead discards within the adjusted U.S. quota, consistent with ICCAT recommendations, and anticipates having sufficient quota to do that.

This transfer would be consistent with the current quotas, which were established and analyzed in the 2018 BFT quota final rule (83 FR 53191, October 11, 2018), and with objectives of the 2006 Consolidated HMS FMP and amendments. (§ 635.27(a)(8)(v) and (vi)). Another principal consideration is the objective of providing opportunities to harvest the full annual U.S. BFT quota without exceeding it based on the goals of the 2006 Consolidated HMS FMP and amendments, including to achieve optimum yield on a continuing basis and to optimize the ability of all permit categories to harvest their full BFT quota allocations (related to § 635.27(a)(8)(x)).

NMFS also anticipates that some underharvest of the 2018 adjusted U.S. BFT quota will be carried forward to 2019 and placed in the Reserve category, in accordance with the regulations. This, in addition to the fact that any unused General category quota will roll forward to the next subperiod within the calendar year, as well as NMFS' plan to actively manage the subquotas to avoid any exceedances, makes it likely that General category quota will remain available through the end of 2019 for December fishery participants, even with the quota transfer. NMFS also may choose to transfer unused quota from the Reserve or other categories, inseason, based on consideration of the determination criteria, as NMFS did for late 2018. NMFS anticipates that General category participants in all areas and time periods will have opportunities to harvest the General category quota in 2019, through active inseason management such as retention limit adjustments and/or the timing of quota transfers, as practicable. Thus, this quota transfer would allow fishermen to take advantage of the availability of fish on the fishing grounds, consider the expected increases in available 2019 quota later in the year, and provide a reasonable opportunity to harvest the full U.S. BFT quota.

Based on the considerations above, NMFS is transferring 19.5 mt of the 28.9-mt General category quota allocated for the December 2019 period to the January 2019 period, resulting in a subquota of 49 mt for the January 2019 period and a subquota of 9.4 mt for the December 2019 period. NMFS will close the General category fishery when the adjusted January period subquota of 49 mt has been reached, or it will close automatically on March 31, 2019, whichever comes first, and it will remain closed until the General category fishery reopens on June 1, 2019.

NMFS will continue to monitor the BFT fishery closely. Dealers are required to submit landing reports within 24 hours of a dealer receiving BFT. Late reporting by dealers compromises NMFS' ability to timely implement actions such as quota and retention limit adjustment, as well as closures, and may result in enforcement actions. Additionally, and separate from the dealer reporting requirement, General and HMS Charter/Headboat category vessel owners are required to report the catch of all BFT retained or discarded dead within 24 hours of the landing(s) or end of each trip, by accessing hmspermits.noaa.gov or by using the HMS Catch Reporting app, or calling (888) 872-8862 (Monday through Friday from 8 a.m. until 4:30 p.m.).

Under § 635.23(a)(4), NMFS may increase or decrease the daily retention limit of large medium and giant bluefin tuna over a range of zero to a maximum of five per vessel based on consideration of the relevant criteria provided under § 635.27(a)(8). However, at this time, NMFS is maintaining the default daily retention limit of one large medium or giant BFT per vessel per day/trip (§ 635.23(a)(2)) for the January 2019 General category fishery. Regardless of the duration of a fishing trip, no more than a single day's retention limit may be possessed, retained, or landed. For example (and specific to the limit that will apply beginning January 1, 2019), whether a vessel fishing under the General category limit takes a two-day trip or makes two trips in one day, the daily limit of one fish may not be exceeded upon landing. This General category retention limit is effective in all areas, except for the Gulf of Mexico, where NMFS prohibits targeting fishing for BFT, and applies to those vessels permitted in the General category, as well as to those HMS Charter/Headboat permitted vessels with a commercial sale endorsement when fishing commercially for BFT fishing commercially for BFT.

Depending on the level of fishing effort and catch rates of BFT including catches of the General category quota during the winter fishery, NMFS may determine that additional action ( e.g., quota adjustment, daily retention limit adjustment, or closure) is necessary to enhance scientific data collection from, and fishing opportunities in, all geographic areas, and to ensure available subquotas are not exceeded. If needed, subsequent adjustments will be published in the Federal Register . In addition, fishermen may call the Atlantic Tunas Information Line at (978) 281-9260, or access hmspermits.noaa.gov, for updates on quota monitoring and inseason adjustments.

The Assistant Administrator for NMFS (AA) finds that it is impracticable and contrary to the public interest to provide prior notice of, and an opportunity for public comment on, this action for the following reasons:

The regulations implementing the 2006 Consolidated HMS FMP and amendments provide for inseason retention limit adjustments to respond to the unpredictable nature of BFT availability on the fishing grounds, the migratory nature of this species, and the regional variations in the BFT fishery. Affording prior notice and opportunity for public comment to implement the quota transfer for the January 2019 subquota period at this time is impracticable and contrary to the public interest as NMFS could not have proposed this action earlier, as it needed to consider and respond to updated data and information from the 2018 General category fishery, including the recently-available December 2018 data, in deciding to transfer a portion of the December 2019 quota to the January 2019 subquota. If NMFS was to offer a public comment period now, after having appropriately considered that data, it could preclude fishermen from harvesting BFT that are legally available consistent with all of the regulatory criteria, and/or could result in selection of a retention limit inappropriately high for the amount of quota available for the period. Therefore, the AA finds good cause under 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment. For these reasons, there also is good cause under 5 U.S.C. 553(d) to waive the 30-day delay in effectiveness.

This action is being taken under § 635.27(a)(9) (Inseason adjustments), and is exempt from review under Executive Order 12866.

Regulations governing fishing activity in the Sea Scallop Access Areas can be found in 50 CFR 648.59 and 648.60. These regulations authorize vessels issued a valid Limited Access General Category (LAGC) Individual Fishing Quota (IFQ) scallop permit to fish in the Mid-Atlantic Scallop Access Area under specific conditions, including a total of 1,142 trips that may be taken during the 2018 fishing year. Section 648.59(g)(3)(iii) requires the Mid-Atlantic Scallop Access Area to be closed to LAGC IFQ permitted vessels for the remainder of the fishing year once the NMFS Greater Atlantic Regional Administrator determines that the allocated number of trips for fishing year 2018 are projected to be taken.

Based on trip declarations by LAGC IFQ scallop vessels fishing in the Mid-Atlantic Scallop Access Area, analysis of fishing effort, and other information, NMFS projects that 1,142 trips will be taken as of December 24, 2018. Therefore, in accordance with § 648.59(g)(3)(iii), NMFS is closing the Mid-Atlantic Scallop Access Area to all LAGC IFQ scallop vessels as of December 24, 2018. No vessel issued an LAGC IFQ permit may fish for, possess, or land scallops in or from the Mid-Atlantic Scallop Access Area after 0001 local time, December 24, 2018. Any LAGC IFQ vessel that has declared into the Mid-Atlantic Access Area scallop fishery, complied with all trip notification and observer requirements, and crossed the VMS demarcation line on the way to the area before 0001, December 24, 2018, may complete its trip without being subject to this closure. This closure is in effect for the remainder of the 2018 scallop fishing year, through March 31, 2019.

This action is required by 50 CFR part 648 and is exempt from review under Executive Order 12866. NMFS finds good cause under to 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment because it would be contrary to the public interest and impracticable. The Mid-Atlantic Scallop Access Area opened for the 2018 fishing year on April 19, 2018. The regulations at § 648.59(g)(3)(iii) require this closure to ensure that LAGC IFQ scallop vessels do not take more than their allocated number of trips in the area. The projected date on which the LAGC IFQ fleet will have taken all of its allocated trips in an Access Area becomes apparent only as trips into the area occur on a real-time basis and as activity trends begin to appear. As a result, NMFS can only make an accurate projection very close in time to when the fleet has taken all of its trips. To allow LAGC IFQ scallop vessels to continue to take trips in the Mid-Atlantic Scallop Access Area during the period necessary to publish and receive comments on a proposed rule would likely result in the vessels taking much more than the allowed number of trips in the Mid-Atlantic Scallop Access Area. Excessive trips and harvest from the Mid-Atlantic Scallop Access Area would result in excessive fishing effort in the area, where effort controls are critical, thereby undermining conservation objectives of the Atlantic Sea Scallop Fishery Management Plan and requiring more restrictive future management measures. Also, the public had prior notice and full opportunity to comment on this closure process when it was enacted For these same reasons, NMFS further finds, under to 5 U.S.C 553(d)(3), good cause to waive the 30-day delayed effectiveness period.

Regulations governing the summer flounder fishery are found at 50 CFR part 648, subpart G. The regulations require annual specification of a commercial quota that is apportioned on a percentage basis among the coastal states from Maine through North Carolina. The process to set the annual commercial quota and the percent allocated to each state is described in § 648.102.

The overall 2018 summer flounder commercial quota is 6,436,120 lb (2,919,375 kg) (83 FR 4165, January 30, 2018). The percent allocated to vessels landing summer flounder in Rhode Island is 15.68 percent, resulting in an initial state commercial quota of 1,009,375 lb (457,845 kg). Rhode Island's initial 2018 commercial quota was reduced to 996,373 lb (451,947 kg) due to a 2017 quota overage of 13,002 lb (5,898 kg). Rhode Island has received one quota transfer of 5,008 lb (2,272 kg) from North Carolina on February 6, 2018 (83 FR 5735), bringing its 2018 commercial quota to 1,001,381 lb (454,219 kg).

The NMFS Administrator for the Greater Atlantic Region (Regional Administrator), monitors the state commercial landings and determines when a state's commercial quota has been harvested. NMFS is required to publish notification in the Federal Register advising and notifying Federally permitted commercial vessels and dealers that, effective upon a specific date, the state's commercial quota has been harvested and no commercial quota is available for landing summer flounder in that state. The Regional Administrator has determined, based upon dealer reports and other available information, that the 2018 Rhode Island commercial summer flounder quota will be harvested by December 29, 2018.

Section 648.4(b) provides that Federal permit holders agree, as a condition of the permit, not to land summer flounder in any state that the Regional Administrator has determined no longer has commercial quota available. Therefore, effective 0001 hours, December 29, 2018, landings of summer flounder are prohibited in Rhode Island by vessels holding Federal summer flounder commercial fisheries permits for the remainder of the 2018 calendar year, unless additional quota becomes available through a transfer and is announced in the Federal Register . Effective 0001 hours, December 29, 2018, federally permitted dealers are also notified that they may not purchase summer flounder from federally permitted vessels that land in Rhode Island for the remainder of the calendar year.

This action is required by 50 CFR part 648 and is exempt from review under Executive Order 12866.

The Assistant Administrator for Fisheries, NOAA, finds good cause under 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment because it would be contrary to the public interest. This action closes the commercial summer flounder fishery for Rhode Island until January 1, 2019. The regulations at § 648.103(b) require such action to ensure that summer flounder vessels do not exceed quotas allocated to the states. If implementation of this closure was delayed to solicit prior public comment, the quota for this fishing year would be exceeded, thereby undermining the conservation objectives of the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan. The Assistant Administrator further finds, pursuant to 5 U.S.C. 553(d)(3), good cause to waive the 30-day delayed effectiveness period for the reason stated above.

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The 2018 Pacific cod TAC apportioned to vessels using jig gear in the Central Regulatory Area of the GOA is 61 metric tons (mt), as established by the final 2018 and 2019 harvest specifications for groundfish of the GOA (83 FR 8768, March 1, 2018). The Administrator, Alaska Region, NMFS, (Regional Administrator) has determined that vessels using jig gear will not be able to harvest 60 mt of the 2018 Pacific cod TAC allocated to those vessels under § 679.20(a)(12)(i)(B).

The 2018 Pacific cod TAC apportioned to catcher/processors using hook-and-line gear in the Central Regulatory Area of the GOA is 308 mt, as established by the final 2018 and 2019 harvest specifications for groundfish of the GOA (83 FR 8768, March 1, 2018). The Regional Administrator has determined that catcher/processors using hook-and-line gear will not be able to harvest 40 mt of the 2018 Pacific cod TAC allocated to those vessels under § 679.20(a)(12)(i)(B)( 3 ).

The 2018 Pacific cod TAC apportioned to catcher vessels using trawl gear in the Central Regulatory Area of the GOA is 2,275 mt, as established by the final 2018 and 2019 harvest specifications for groundfish of the GOA (83 FR 8768, March 1, 2018). The Regional Administrator has determined that catcher vessels using trawl gear will not be able to harvest 580 mt of the 2018 Pacific cod TAC allocated to those vessels under § 679.20(a)(12)(i)(B)( 4 ).

In accordance with § 679.20(a)(12)(ii)(B), the Regional Administrator has also determined that catcher vessels less than 50 feet LOA using hook-and-line gear, catcher vessels greater than or equal to 50 feet LOA using hook-and-line gear, vessels using pot gear, and catcher/processors using trawl gear currently have the capacity to harvest this excess allocation. Therefore, NMFS apportions 60 mt of Pacific cod from the jig vessel apportionment, 40 mt of Pacific cod from the hook-and-line catcher/processor apportionment, and 580 mt of Pacific cod from the trawl catcher vessel apportionment to catcher vessels less than 50 feet LOA using hook-and-line gear, catcher vessels greater than or equal to 50 feet LOA using hook-and-line gear, vessels using pot gear, and catcher/processors using trawl gear in the Central Regulatory Area of the GOA.

The harvest specifications for Pacific cod in the Central Regulatory Area of the GOA included in the final 2018 and 2019 harvest specifications for groundfish of the GOA (83 FR 8768, March 1, 2018) are revised as follows: 268 mt to catcher/processors using hook-and-line gear, 990 mt to catcher vessels less than 50 feet LOA using hook-and-line gear, 416 mt to catcher vessels greater than or equal to 50 feet LOA using hook-and-line gear, 1 mt to vessels using jig gear, 1,787 mt to vessels using pot gear, 700 mt to catcher/processors using trawl gear, and 1,695 mt to catcher vessels using trawl gear.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the reallocations of Pacific cod in the Central Regulatory Area of the GOA. Since the fishery is currently open, it is important to immediately inform the industry as to the revised allocations. Immediate notification is necessary to allow for the orderly conduct and efficient operation of this fishery, to allow the industry to plan for the fishing season, and to avoid potential disruption to the fishing fleet as well as processors. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of December 20, 2018.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

This action is required by § 679.20 and is exempt from review under Executive Order 12866.

NMFS manages the groundfish fishery in the BSAI exclusive economic zone according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The final 2018 and 2019 harvest specifications for groundfish in the BSAI (83 FR 8365, February 27, 2018) set the 2019 Aleutian Islands (AI) pollock TAC at 19,000 metric tons (mt), the 2019 Bering Sea (BS) pollock TAC at 1,383,000 mt, the 2019 BSAI Atka mackerel TAC at 72,500 mt, the 2019 BS Pacific cod TAC at 159,120 mt, and the 2019 AI Pacific cod TAC at 15,695 mt. Also set was a 2019 AI pollock ABC of 30,803 mt and a Western Aleutian Islands limit for Pacific cod at 25.6 percent of the AI Pacific cod TAC. In December 2018, the North Pacific Fishery Management Council (Council) recommended a 2019 BS pollock TAC of 1,397,000 mt, which is more than the 1,383,000 mt TAC established by the final 2018 and 2019 harvest specifications for groundfish in the BSAI. The Council also recommended increasing the AI pollock ABC to 52,887 mt from 30,803 mt. This increases some 2019 area and seasonal limits for AI pollock. The Council also recommended a 2019 BSAI Atka mackerel TAC of 57,951 mt, which is less than the 72,500 mt TAC established by the final 2018 and 2019 harvest specifications for groundfish in the BSAI. Furthermore, the Council recommended a 2019 BS Pacific cod TAC of 166,475 mt, and an AI Pacific cod TAC of 14,214 mt, which is more than the BS Pacific cod TAC of 159,120 mt, and less than the AI Pacific cod TAC of 15,695 mt established by the final 2018 and 2019 harvest specifications for groundfish in the BSAI. In addition to changes in TACs, the Council recommended changing the percentage limit of Western Aleutian Islands Pacific cod to 15.7 percent of the AI Pacific cod ABC, from the 25.6 percent of the AI Pacific cod TAC. The Council's recommended 2019 TACs, and the area and seasonal apportionments, are based on the Stock Assessment and Fishery Evaluation report (SAFE), dated November 2018, which NMFS has determined is the best available scientific information for these fisheries.

Regulations at § 679.20(a)(7)(viii) require NMFS to announce whether the AI incidental catch allowance, directed fishing allowance, CV Harvest Set-Aside, and Unrestricted Fishery, as well as the Bering Sea Trawl CV A-Season Sector Limitation will be in effect for 2019. NMFS received notification from Adak that a shoreplant will be processing AI Pacific cod in 2019. Therefore, the Pacific cod TACs in Table 9 of this inseason adjustment will be effective for 2019 and the harvest limits in Table 9B (83 FR 8365, February 27, 2018) will apply in 2019.

Steller sea lions occur in the same location as the pollock, Atka mackerel, and Pacific cod fisheries and are listed as endangered under the Endangered Species Act (ESA). Pollock, Atka mackerel, and Pacific cod are a principal prey species for Steller sea lions in the BSAI. The seasonal apportionment of pollock, Atka mackerel, and Pacific cod harvest is necessary to ensure the groundfish fisheries are not likely to cause jeopardy of extinction or adverse modification of critical habitat for Steller sea lions. NMFS published regulations and the revised harvest limit amounts for pollock, Atka mackerel, and Pacific cod fisheries to implement Steller sea lion protection measures to insure that groundfish fisheries of the BSAI are not likely to jeopardize the continued existence of the western distinct population segment of Steller sea lions or destroy or adversely modify their designated critical habitat (79 FR 70286, November 25, 2014). The regulations at § 679.20(a)(5)(i) and (ii) specify how the BS and AI pollock TAC will be apportioned. The regulations at § 679.20(a)(7) specify how the BSAI Pacific cod TAC will be apportioned. The regulations at § 679.20(a)(8) specify how the BSAI Atka mackerel TAC will be apportioned.

In accordance with § 679.25(a)(1)(iii), (a)(2)(i)(B), and (a)(2)(iv), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that, based on the November 2018 SAFE report for this fishery, the current BSAI pollock, Atka mackerel, and Pacific cod TACs are incorrectly specified. Pursuant to § 679.25(a)(1)(iii), the Regional Administrator is adjusting the 2019 BS pollock TAC to 1,397,000 mt, the 2019 BSAI Atka mackerel TAC to 57,951 mt, the 2019 BS Pacific cod TAC to 166,475 mt, and the AI Pacific cod TAC to 14,214 mt. Therefore, Table 2 of the final 2018 and 2019 harvest specifications for groundfish in the BSAI (83 FR 8365, February 27, 2018) is revised consistent with this adjustment.

Pursuant to § 679.20(a)(5)(i) and (ii), Table 5 of the final 2018 and 2019 harvest specifications for groundfish in the BSAI (83 FR 8365, February 27, 2018) is revised for the 2019 BS and AI allocations of pollock TAC to the directed pollock fisheries and to the Community Development Quota (CDQ) directed fishing allowances consistent with this adjustment. For AI pollock, the Steller sea lion protection measure final rule (79 FR 70286, November 25, 2014), sets harvest limits for pollock in the A season (January 20 to June 10) in Areas 543, 542, and 541, see § 679.20(a)(5)(iii)(B)( 6 ). In Area 541, the 2019 A season pollock harvest limit is no more than 30 percent, or 15,866 mt, of the AI ABC of 52,887 mt. In Area 542, the 2019 A season pollock harvest limit is no more than 15 percent, or 7,933 mt, of the AI ABC of 52,887 mt. In Area 543, the 2019 A season pollock harvest limit is no more than 5 percent, or 2,644 mt, of the AI pollock ABC of 52,887 mt.

Pursuant to § 679.20(a)(8), Table 7 of the final 2018 and 2019 harvest specifications for groundfish in the BSAI (83 FR 8365, February 27, 2018) is revised for the 2019 seasonal and spatial allowances, gear shares, CDQ reserve, incidental catch allowance, and Amendment 80 allocation of the BSAI Atka mackerel TAC consistent with this adjustment.

Pursuant to § 679.20(a)(7), Table 9 of the final 2018 and 2019 harvest specifications for groundfish in the BSAI (83 FR 8365, February 27, 2018) is revised for the 2019 gear shares and seasonal allowances of the BSAI Pacific cod TAC consistent with this adjustment.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would allow for harvests that exceed the appropriate allocations for pollock, Atka mackerel, and Pacific cod in the BSAI based on the best scientific information available. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of December xx, 2018, and additional time for prior public comment would result in conservation concerns for the ESA-listed Steller sea lions.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

Under § 679.25(c)(2), interested persons are invited to submit written comments on this action to the above address until January 14, 2019.

This action is required by § 679.20 and § 679.25 and is exempt from review under Executive Order 12866.