Agricultural Marketing Service
Census Bureau
National Oceanic and Atmospheric Administration
Federal Energy Regulatory Commission
Agency for Healthcare Research and Quality
Children and Families Administration
Food and Drug Administration
Health Resources and Services Administration
National Institutes of Health
Coast Guard
Indian Affairs Bureau
Drug Enforcement Administration
Federal Aviation Administration
National Highway Traffic Safety Administration
Alcohol and Tobacco Tax and Trade Bureau
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
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Office of Personnel Management.
Final rule.
The Office of Personnel Management (OPM) is issuing a final rule to define Johnson County, Indiana, as an area of application county to the Hardin-Jefferson, Kentucky, nonappropriated fund (NAF) Federal Wage System (FWS) wage area. This change is necessary because there is one NAF FWS employee working in Johnson County, and the county is not currently defined to a NAF wage area.
Madeline Gonzalez, by telephone at (202) 606-2858 or by email at
On September 20, 2019, OPM issued a proposed rule (84 FR 49483) to define Johnson County, IN, as an area of application county to the Hardin-Jefferson, KY, NAF FWS wage area.
The Federal Prevailing Rate Advisory Committee (FPRAC), the national labor-management committee responsible for advising OPM on matters concerning the pay of FWS employees, reviewed and recommended these changes by consensus.
The proposed rule had a 30-day comment period, during which OPM received no comments.
This action is not a “significant regulatory action” under the terms of Executive Order (E.O.) 12866 (58 FR 51735, October 4, 1993) and is therefore not subject to review under E.O. 12866 and 13563 (76 FR 3821, January 21, 2011).
This rule is not an Executive Order 13771 regulatory action because this rule is not significant under E.O. 12866.
OPM certifies that this rule will not have a significant economic impact on a substantial number of small entities because they will affect only Federal agencies and employees.
We have examined this rule in accordance with Executive Order 13132, Federalism, and have determined that this rule will not have any negative impact on the rights, roles and responsibilities of State, local, or tribal governments.
This regulation meets the applicable standard set forth in Executive Order 12988.
This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.
This action pertains to agency management, personnel, and organization and does not substantially affect the rights or obligations of nonagency parties and, accordingly, is not a “rule” as that term is used by the Congressional Review Act (Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)). Therefore, the reporting requirement of 5 U.S.C. 801 does not apply.
This rule does not impose any new reporting or record-keeping requirements subject to the Paperwork Reduction Act.
Administrative practice and procedure, Freedom of information, Government employees, Reporting and recordkeeping requirements, Wages.
Accordingly, OPM amends 5 CFR part 532 as follows:
5 U.S.C. 5343, 5346; § 532.707 also issued under 5 U.S.C. 552.
Agricultural Marketing Service, USDA.
Final rule.
This final rule implements a recommendation from the Washington Apricot Marketing Committee (Committee) to increase the assessment rate established for the 2019-2020 and subsequent fiscal periods. The assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.
Effective February 6, 2020.
Dale Novotny, Marketing Specialist, or Gary Olson, Regional Director, Northwest Marketing Field Office, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA; Telephone: (503) 326-2724, Fax: (503) 326-7440, or Email:
This action, pursuant to 5 U.S.C. 553, amends regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This rule is issued under Marketing Order No. 922, as amended (7 CFR part 922), regulating the handling of apricots grown in designated counties of Washington. Part 922 (referred to as the “Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Committee locally administers the Order and is comprised of apricot growers and handlers operating within the area of production.
The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Orders 13563 and 13175. This final rule falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review. Additionally, because this rule does not meet the definition of a significant regulatory action, it does not trigger the requirements contained in Executive Order 13771. See OMB's Memorandum titled “Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017, titled `Reducing Regulation and Controlling Regulatory Costs' ” (February 2, 2017).
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the Order now in effect, Washington apricot handlers are subject to assessments. Funds to administer the Order are derived from such assessments. The assessment rate will be applicable to all assessable Washington apricots for the 2019-2020 fiscal period, and continue until amended, suspended, or terminated.
The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to a marketing order may file with USDA a petition stating that the order, any provision of the marketing order, or any obligation imposed in connection with the marketing order is not in accordance with law and request a modification of the marketing order or to be exempted therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.
The Order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. Committee members are familiar with the Committee's needs and with the costs of goods and services in their local area and can formulate an appropriate budget and assessment rate. The Committee discussed the assessment rate in a public meeting where all directly affected persons have an opportunity to participate and provide input.
This final rule increases the assessment rate from $1.00 to $2.86 per ton of Washington apricots handled for the 2019-2020 and subsequent fiscal periods. The higher rate is necessary to fund the Committee's 2019-2020 fiscal period budgeted expenditures. Based on input received from growers at an annual meeting, the 2019 crop of Washington apricots is expected to be unusually low because of the effects of late season frost on budding orchard trees. The Committee believes that increasing the assessment rate will allow the Committee to fully fund its 2019-2020 budgeted expenses.
The Committee held a well-publicized meeting May 8, 2019, at which all interested parties were encouraged to participate in the discussions. However, the Order's quorum requirement was not met and the Committee was not able to conduct official business. The following day, the Committee voted by email and unanimously recommended 2019-2020 fiscal period expenditures of $8,325 and an assessment rate of $2.86 per ton of apricots handled. The 2019-2020 fiscal period budgeted expenses are unchanged from the prior year. The assessment rate of $2.86 is $1.86 higher than the $1.00 per ton rate currently in effect.
The Committee recommended the assessment rate increase due to the anticipated reduced production level in 2019 resulting from a late season frost that damaged the crop. The 2018 crop was also smaller than the Committee had anticipated by 2,036 tons, which resulted in the Committee using more funds from its financial reserve than expected.
The major expenditures recommended by the Committee for the 2019-2020 fiscal period include $4,000 for program management contract services provided by the Washington State Fruit Commission, $2,600 for annual audit and legal expenses, $1,300 for Committee travel and meeting expenses, and $425 for administrative expenses. In comparison, the aforementioned expense categories budgeted for the 2018-2019 fiscal period were the same amounts.
The assessment rate recommended by the Committee was derived by considering anticipated expenses, expected apricot sales, and the amount of funds available in the authorized reserve. Expected income derived from handler assessments of $9,438 (3,300 tons of apricots at $2.86 per ton), would be adequate to cover budgeted expenses of $8,325 and contribute $1,113 to the Committee's financial reserve. Funds in the reserve (estimated to be $7,211 at the beginning of the 2019-2020 fiscal period) would be kept within the maximum permitted by § 922.142(a) by not exceeding the expenses of approximately one fiscal period.
The assessment rate established in this final rule will continue in effect
The Committee will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA would evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's budget for subsequent fiscal periods would be reviewed and, as appropriate, approved by USDA.
Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this final rule on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions so that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act are unique in that they are brought about through group action of essentially small entities acting on their own behalf.
There are approximately 315 growers and 13 handlers of apricots in the regulated production area subject to regulation under the Order. Small agricultural service firms are defined by the Small Business Administration (SBA) as those having annual receipts of less than $30,000,000, and small agricultural producers are defined as those having annual receipts of less than $1,000,000 (13 CFR 121.201).
According to data from USDA's Market News Service, the 2018 season average f.o.b. price for Washington apricots was approximately $25.07 per carton. The Committee reported that the industry shipped 3,964 tons for the season, which equals approximately 528,533 cartons (3,964 tons at an approximate net weight of 15 pounds per carton). Using the number of handlers, and assuming a normal distribution, most handlers would have average annual receipts of less than $30,000,000 ($25.07 times 528,533 equals $13,250,331 divided by 13 handlers equals $1,019,256 per handler).
In addition, based on USDA National Agricultural Statistics Service data, the weighted average grower price for the 2018 season was $1,330 per ton of apricots. Based on grower price, shipment data, and the total number of Washington apricot growers, and assuming a normal distribution, the average annual grower revenue is below $1,000,000 ($1,330 times 3,964 tons equals $5,272,120 divided by 315 growers equals $16,737 per grower). Thus, most growers and handlers of Washington apricots may be classified as small entities.
This final rule increases the assessment rate collected from handlers for the 2019-2020 and subsequent fiscal periods from $1.00 to $2.86 per ton of Washington apricots handled. The Committee unanimously recommended 2019-2020 fiscal period expenditures of $8,325 and the $2.86 per ton assessment rate. The assessment rate of $2.86 is $1.86 higher than the rate for the 2018-2019 fiscal period.
The Committee estimates that the industry will handle 3,300 tons of fresh, Washington apricots during the 2019-2020 fiscal period. Thus, the $2.86 per ton rate should provide $9,438 in assessment income. Income derived from handler assessments would be adequate to cover all budgeted expenses. In addition, the Committee anticipates adding $1,113 to its monetary reserve in the 2019-2020 fiscal period.
The major expenditures recommended by the Committee for the 2019-2020 fiscal period include $4,000 for program management contract services provided by the Washington State Fruit Commission, $2,600 for annual audit and legal expenses, $1,300 for Committee travel and meeting expenses, and $435 for administrative expenses. Those budgeted expenditures are unchanged from the previous fiscal period.
The higher assessment rate is necessary to cover all the Committee's 2019-2020 fiscal period budgeted expenditures and replenish its financial reserve. The Committee has had to draw from its monetary reserve to partially fund program activities during previous fiscal periods.
Prior to arriving at this budget and assessment rate, the Committee considered maintaining the current assessment rate of $1.00 per ton. However, after grower input and discussions at its May 8, 2019, meeting, the anticipated crop was downgraded from 5,500 to 3,300 tons. This amount of production at the current assessment level of $1.00 per ton would not have generated enough revenue to fund the Committee's operations for the 2019-2020 fiscal period and allow it to maintain an adequate financial reserve. Based on estimated shipments, the recommended assessment rate of $2.86 per ton of apricots should provide $9,438 in assessment income. The Committee determined assessment revenue will be adequate to cover all budgeted expenditures for the 2019-2020 fiscal period and allow it to make a small contribution to its financial reserve. Reserve funds will be kept within the amount authorized in the Order.
A review of historical data and preliminary information pertaining to the upcoming fiscal period indicates that the average grower price for the 2019-2020 season should be approximately $800-$1,600 per ton of Washington apricots. Therefore, the estimated assessment revenue for the 2019-2020 marketing year as a percentage of total grower revenue will be between 0.18 and 0.36 percent.
This action increases the assessment obligation imposed on handlers. While assessments impose some additional costs on handlers, the costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to growers. However, these costs would be offset by the benefits derived by the operation of the Order.
The Committee's meetings are widely publicized throughout the Washington apricot industry. All interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the May 8, 2019, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Interested persons were invited to submit comments on this rule, including the regulatory and information collection impacts of this action on small businesses.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the Order's information collection requirements have been previously approved by the OMB and assigned OMB No. 0581-0189, Fruit Crops. No changes in those requirements will be necessary because of this action. Should any changes become necessary, AMS will submit them to OMB for approval.
This final rule will not impose any additional reporting or recordkeeping requirements on either small or large Washington apricot handlers. As with all Federal marketing order programs, reports and forms are periodically
AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.
A proposed rule concerning this action was published in the
A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at:
After consideration of all relevant material presented, including the information and recommendation submitted by the Committee and other available information, it is hereby found that this rule will tend to effectuate the declared policy of the Act.
Apricots, Marketing agreements, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, 7 CFR part 922 is amended as follows:
7 U.S.C. 601-674.
On and after April 1, 2019, an assessment rate of $2.86 per ton is established for Washington apricots handled in the production area.
Federal Aviation Administration (FAA), DOT.
Final special conditions; request for comments.
These special conditions are issued for the Airbus Defense and Space (Airbus) Model C-295 airplane. This airplane will have novel or unusual design features when compared to the state of technology envisioned in the airworthiness standards for transport category airplanes. The Airbus Model C-295 airplane will have non-rechargeable lithium battery installations. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
This action is effective on Airbus on January 7, 2020. Send comments on or before February 21, 2020.
Send comments identified by Docket No. FAA-2019-1103 using any of the following methods:
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Nazih Khaouly, Airplane and Flight Crew Interface Section, AIR-671, Transport Standards Branch, Policy and Innovation Division, Aircraft Certification Service, Federal Aviation Administration, 2200 South 216th Street, Des Moines, Washington 98198; telephone and fax 206-231-3160; email
Section 1205 of the FAA Reauthorization Act of 1996 requires the FAA to consider the extent to which Alaska is not served by transportation modes other than aviation and to establish appropriate regulatory distinctions when modifying airworthiness regulations that affect intrastate aviation in Alaska. In consideration of this requirement and the overall impact on safety, the FAA does not intend to require non-rechargeable lithium battery special conditions for design changes that only replace a 121.5 megahertz (MHz) emergency locator transmitter (ELT) with a 406 MHz ELT that meets Technical Standard Order C126b, or later revision, on transport airplanes operating only in Alaska. This will support our efforts of encouraging operators in Alaska to upgrade to a 406 MHz ELT. These ELTs provide significantly improved accuracy for lifesaving services to locate an accident site in Alaskan terrain. The FAA considers that the safety benefits from upgrading to a 406 MHz ELT for
The substance of these special conditions has been published in the
The FAA invites interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.
The FAA will consider all comments received by the closing date for comments. The FAA may change these special conditions based on the comments received.
On September 19, 2014, Airbus applied to the European Union Aviation Safety Agency (EASA) for a change to EASA Type Certificate No. EASA.A.186 to install non-rechargeable lithium batteries in the Airbus Model C-295 airplane. On December 18, 2018, EASA forwarded an Airbus application to the FAA to validate this same change in the Model C-295 airplane for FAA Type Certificate No. A21NM. On November 22, 2019, Airbus filed for an extension to their original EASA application, which resulted in an agreement that December 20, 2014 be the new application date. The Airbus Model C-295 airplane is a twin engine, transport category airplane configured for freighter use, with a maximum takeoff weight of 46,300 pounds.
The FAA is issuing these special conditions for non-rechargeable lithium battery installations on the Airbus Model C-295 airplane. The current battery requirements in title 14, Code of Federal Regulations (14 CFR) part 25 are inadequate for addressing an airplane with non-rechargeable lithium batteries.
Under the provisions of 14 CFR 21.101, Airbus must show that the Model C-295 airplane, as changed, continues to meet the applicable provisions of the regulations listed in Type Certificate No. A21NM, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.
If the Administrator finds that the applicable airworthiness regulations (
Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.
In addition to the applicable airworthiness regulations and special conditions, the Airbus Model C-295 airplane must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34, and the noise certification requirements of 14 CFR part 36.
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.
The Airbus Model C-295 airplane will incorporate the following novel or unusual design features:
The Airbus C-295 airplane will have non-rechargeable lithium battery installations.
The FAA derived the current regulations governing installation of batteries in transport category airplanes from Civil Air Regulations (CAR) 4b.625(d) as part of the recodification of CAR 4b that established 14 CFR part 25 in February 1965. This recodification basically reworded the CAR 4b battery requirements, which are currently in § 25.1353(b)(1) through (4). Non-rechargeable lithium batteries are novel and unusual with respect to the state of technology considered when these requirements were codified. These batteries introduce higher energy levels into airplane systems through new chemical compositions in various battery cell sizes and construction. Interconnection of these cells in battery packs introduces failure modes that require unique design considerations, such as provisions for thermal management.
Recent events involving rechargeable and non-rechargeable lithium batteries prompted the FAA to initiate a broad evaluation of these energy storage technologies. In January 2013, two independent events involving rechargeable lithium-ion batteries revealed unanticipated failure modes. A National Transportation Safety Board (NTSB) letter to the FAA, dated May 22, 2014, which is available at
On July 12, 2013, an event involving a non-rechargeable lithium battery in an ELT installation demonstrated unanticipated failure modes. The United Kingdom's
Some known uses of rechargeable and non-rechargeable lithium batteries on airplanes include:
• Flight deck and avionics systems such as displays, global positioning systems, cockpit voice recorders, flight data recorders, underwater locator beacons, navigation computers, integrated avionics computers, satellite network and communication systems, communication management units, and remote-monitor electronic line-replaceable units;
• Cabin safety, entertainment, and communications equipment, including emergency locator transmitters, life rafts, escape slides, seatbelt air bags, cabin management systems, Ethernet switches, routers and media servers, wireless systems, internet and in-flight entertainment systems, satellite televisions, remotes, and handsets;
• Systems in cargo areas including door controls, sensors, video surveillance equipment, and security systems.
Some known potential hazards and failure modes associated with non-rechargeable lithium batteries are:
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Special condition no. 1 of these special conditions requires that each individual cell within a non-rechargeable lithium battery be designed to maintain safe temperatures and pressures. Special condition no. 2 addresses these same issues but for the entire battery. Special condition no. 2 also requires the battery be designed to prevent propagation of a thermal event, such as self-sustained, uncontrollable increases in temperature or pressure from one cell to adjacent cells.
Special condition nos. 1 and 2 are intended to ensure that the non-rechargeable lithium battery and its cells are designed to eliminate the potential for uncontrollable failures. However, a certain number of failures will occur due to various factors beyond the control of the battery designer. Therefore, other special conditions are intended to protect the airplane and its occupants if failure occurs.
Special condition nos. 3, 7, and 8 are self-explanatory.
Special condition no. 4 makes it clear that the flammable-fluid fire protection requirements of § 25.863 apply to non-rechargeable lithium battery installations. Section 25.863 is applicable to areas of the airplane that could be exposed to flammable fluid leakage from airplane systems. Non-rechargeable lithium batteries contain an electrolyte that is a flammable fluid.
Special condition no. 5 requires that each non-rechargeable lithium battery installation not damage surrounding structure or adjacent systems, equipment, or electrical wiring from corrosive fluids or gases that may escape in such a way as to cause a major or more-severe failure condition.
While special condition no. 5 addresses corrosive fluids and gases, special condition no. 6 addresses heat. Special condition no. 6 requires that each non-rechargeable lithium battery installation have provisions to prevent any hazardous effect on airplane structure or systems caused by the maximum amount of heat the battery installation can generate, due to any failure of it or its individual cells. The means of meeting special condition nos. 5 and 6 may be the same, but the requirements are independent and address different hazards.
These special conditions apply to all non-rechargeable lithium battery installations in lieu of § 25.1353(b)(1) through (4) at Amendment 25-123, or § 25.1353(c)(1) through (4) at earlier amendments. Those regulations remain in effect for other battery installations.
These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
As discussed above, these special conditions are applicable to the Airbus Model C-295 airplane. Should Airbus apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.
These special conditions are not applicable to changes to previously certified non-rechargeable lithium battery installations where the only change is either cosmetic or to relocate the installation to improve the safety of the airplane and occupants. Previously certified non-rechargeable lithium battery installations, as used in this paragraph, are those installations approved for certification projects applied for on or before the effective date of these special conditions. A cosmetic change is a change in appearance only, and does not change any function or safety characteristic of the battery installation. These special conditions are also not applicable to unchanged, previously certified non-rechargeable lithium battery installations that are affected by a change in a manner that improves the safety of its installation. The FAA determined that these exclusions are in the public interest because the need to meet all of the special conditions might otherwise deter these design changes that improve safety.
This action affects only certain novel or unusual design features on one model of airplane. It is not a rule of general applicability.
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(f), 106(g), 40113, 44701, 44702, 44704.
In lieu of § 25.1353(b)(1) through (4) at Amendment 25-123, or § 25.1353(c)(1) through (4) at earlier amendments, each non-rechargeable lithium battery installation must:
1. Be designed to maintain safe cell temperatures and pressures under all foreseeable operating conditions to prevent fire and explosion.
2. Be designed to prevent the occurrence of self-sustaining, uncontrollable increases in temperature or pressure.
3. Not emit explosive or toxic gases, either in normal operation or as a result of its failure that may accumulate in hazardous quantities within the airplane.
4. Meet the requirements of § 25.863.
5. Not damage surrounding structure or adjacent systems, equipment, or electrical wiring from corrosive fluids or gases that may escape in such a way as to cause a major or more-severe failure condition.
6. Have provisions to prevent any hazardous effect on airplane structure or systems caused by the maximum amount of heat it can generate due to any failure of it or its individual cells.
7. Have a failure-sensing and warning system to alert the flightcrew if its failure affects safe operation of the airplane.
8. Have a means for the flightcrew or maintenance personnel to determine the battery charge state if the battery's function is required for safe operation of the airplane.
A battery system consists of the battery and any protective, monitoring, and alerting circuitry or hardware inside or outside of the battery. It also includes vents (where necessary) and packaging. For the purpose of these special conditions, a “battery” and “battery system” are referred to as a battery.
Drug Enforcement Administration, Department of Justice.
Final rule.
This final rule adopts, without change, an interim final rule with request for comments published in the
The effective date of this final rulemaking is January 7, 2020.
Scott A. Brinks, Diversion Control Division, Drug Enforcement Administration; Mailing Address: 8701 Morrissette Drive, Springfield, Virginia 22152; Telephone: (202) 598-6812.
The Improving Regulatory Transparency for New Medical Therapies Act (Pub. L. 114-89) was signed into law on November 25, 2015. This law amended the Controlled Substances Act (CSA) and states that in cases where the Drug Enforcement Administration (DEA) receives notification from The Department of Health and Human Services (HHS) that the Secretary has approved an application under section 505(c) of the Federal Food, Drug, and Cosmetic Act (FDCA), the DEA is required to issue an interim final rule, with opportunity for public comment and to request a hearing, controlling the drug not later than 90 days after receiving such notification from HHS and subsequently to issue a final rule. 21 U.S.C. 811(j). When controlling a drug pursuant to section 811(j), the DEA must apply the scheduling criteria of subsections 811(b), (c), and (d) and section 812(b). 21 U.S.C. 811(j)(3).
Solriamfetol (2-amino-3-phenylpropyl carbamate) is a new molecular entity with central nervous system (CNS) stimulant properties. Solriamfetol primarily acts as a dopamine and norepinephrine reuptake inhibitor and does not bind to any other receptors that are typically associated with abuse, such as opioid or cannabinoid receptors, GABAergic, and other ion channels. On December 20, 2017, Jazz Pharmaceuticals, Inc. (Sponsor) submitted a new drug application (NDA) to the Food and Drug Administration (FDA) for SUNOSI (solriamfetol) 75 and 150 mg oral tablets. On March 19, 2019, DEA received from HHS a scientific and medical evaluation document (dated March 8, 2019) prepared by the FDA related to solriamfetol. Pursuant to 21 U.S.C. 811(b), this document contained an eight-factor analysis of the abuse potential of solriamfetol, along with HHS' recommendation to control solriamfetol under schedule IV of the CSA. Subsequently, on March 20, 2019, the DEA received notification that the FDA, on that same date, approved the NDA for SUNOSI (solriamfetol), under section 505(c) of the FDCA, to improve wakefulness in adult patients with excessive daytime sleepiness associated with narcolepsy or obstructive sleep apnea (OSA).
On June 17, 2019, the DEA published an interim final rule [84 FR 27943] to make solriamfetol (including its salts, isomers, and salts of isomers whenever the existence of such salts, isomers, and salts of isomers is possible) a schedule IV controlled substance. Interested persons were provided a 30 day comment period in which to submit comments on this rulemaking in accordance with 21 U.S.C. 811(j)(3) and 21 CFR 1308.43(g). In addition, interested persons were provided an opportunity to file a request for hearing or waiver of hearing pursuant to 21 U.S.C. 811(j)(3) and 21 CFR 1308.44. The deadline for submitting comments or requests for hearing/waiver of hearing was July 17, 2019. The DEA received one comment and did not receive any requests for hearing or waiver of hearing.
In response to the interim final rule, the DEA received one comment. The commenter indicated that all clinical studies on solriamfetol are supported by the sponsor of the NDA for solriamfetol and thus subject to conflicts of interests. This commenter further stated that long-term adverse health effects (including adverse effects on the cardiovascular system) of solriamfetol have not been studied and such effects need to be considered.
Based on the rationale set forth in the interim final rule, the DEA adopts the interim final rule, without change.
As indicated above, solriamfetol has been a schedule IV controlled substance by virtue of the interim final rule issued by DEA in June 2019. Thus, this final rule does not alter the regulatory requirements applicable to handlers of solriamfetol that have been in place since that time. Nonetheless, for informational purposes, we restate here those requirements. Solriamfetol is subject to the CSA's schedule IV regulatory controls and administrative, civil, and criminal sanctions applicable to the manufacture, distribution, reverse distribution, dispensing, importing, exporting, research, and conduct of instructional activities and chemical analysis with, and possession involving schedule IV substances, including, but not limited to, the following:
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This final rule, without change, affirms the amendment made by the interim final rule that is already in effect. Section 553 of the Administrative Procedure Act (APA) (5 U.S.C. 553) generally requires notice and comment for rulemakings. However, 21 U.S.C. 811 provides that in cases where a new drug is (1) approved by HHS and (2) HHS recommends control in CSA schedule II-V, the DEA shall issue an interim final rule scheduling the drug within 90 days. Additionally, the law specifies that the rulemaking shall become immediately effective as an interim final rule without requiring the DEA to demonstrate good cause. The DEA issued an interim final rule on June 17, 2019 and solicited public comments on that rule. Section 811 further states that after giving interested persons the opportunity to comment and to request a hearing, “the Attorney General shall issue a final rule in accordance with the scheduling criteria of subsections (b), (c), and (d) of this section and section 812(b) of” the CSA. 21 U.S.C. 811(j)(3). The DEA is now responding to the comment submitted by the public and issuing the final rule, in conformity with the APA and the procedure required by 21 U.S.C. 811.
In accordance with 21 U.S.C. 811(a) and (j), this scheduling action is subject to formal rulemaking procedures performed “on the record after opportunity for a hearing,” which are conducted pursuant to the provisions of 5 U.S.C. 556 and 557. The CSA sets forth the procedures and criteria for scheduling a drug or other substance. Such actions are exempt from review by the Office of Management and Budget (OMB) pursuant to section 3(d)(1) of Executive Order 12866 and the principles reaffirmed in Executive Order 13563.
This final rule is not an Executive Order 13771 regulatory action pursuant to Executive Order 12866 and OMB guidance.
This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate drafting errors and ambiguity, minimize litigation, provide a clear legal standard for affected conduct, and promote simplification and burden reduction.
This final rule does not have federalism implications warranting the application of Executive Order 13132. The final rule does not have 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.
This final rule does not have tribal implications warranting the application of Executive Order 13175. It does not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612) applies to rules that are subject to notice and comment under section 553(b) of the APA. Under 21 U.S.C. 811(j), the DEA was not required to publish a general notice of proposed rulemaking prior to this final rule. Consequently, the RFA does not apply.
In accordance with the Unfunded Mandates Reform Act (UMRA) of 1995, 2 U.S.C. 1501
This action does not impose a new collection of information requirement under the Paperwork Reduction Act of 1995. 44 U.S.C. 3501-3521. This action would not impose recordkeeping or reporting requirements on State or local governments, individuals, businesses, or organizations. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
This final rule is not a major rule as defined by the Congressional Review Act (CRA), 5 U.S.C. 804. This rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of U.S.-based companies to compete with foreign based companies in domestic and export markets. However, pursuant to the CRA, the DEA has submitted a copy of this final rule to both Houses of Congress and to the Comptroller General.
Administrative practice and procedure, Drug traffic control, Reporting and recordkeeping requirements.
Bureau of Indian Affairs, Interior.
Final rule.
This final rule revises one section of our regulations to provide that the current list of areas in Indian Country with Courts of Indian Offenses (also known as CFR Courts) will be published and updated in the
This rule takes effect on January 7, 2020.
Elizabeth Appel, Director, Office of Regulatory Affairs & Collaborative Action, (202) 273-4680;
Generally, Courts of Indian Offenses operate in those areas of Indian country where Tribes retain jurisdiction over Indians that is exclusive of State jurisdiction, but where Tribal courts have not been established to fully exercise that jurisdiction. The Code of Federal Regulations, at 25 CFR 11.100, currently lists each Tribe for which Courts of Indian Offenses have been established.
On occasion, a Court of Indian Offenses is established or re-established or, alternatively, a Court of Indian Offenses ceases operation because BIA and a Tribe enter into a contract or compact for the Tribe to provide judicial services or the Tribe establishes a court system that meets regulatory requirements. Each time one of these changes occurs, the list of Courts of Indian Offenses must be updated for public transparency. Because the list of Courts of Indian Offenses is directly in § 11.100, a rulemaking is required to change the list. During the time it takes to conduct a rulemaking, the list in the Code of Federal Regulations is not accurate.
On July 23, 2019, BIA published a proposed rule to remove the list of CFR Courts from the regulations and instead require the BIA to publish the current list and any updates to the current list in the
This final rule allows enables BIA to keep the list of CFR Courts updated and accurate, improving transparency for Tribal members and the public who wish to know what areas in Indian Country have CFR Courts established. The rule also revises § 11.104 to clarify that the list would no longer be published directly in § 11.100, but rather would be published in accordance with the directions in § 11.100 to publish in the
Executive Order (E.O.) 12866 provides that the Office of Information and Regulatory Affairs (OIRA) at the Office of Management and Budget (OMB) will review all significant rules. OIRA has determined that this rule is not significant.
E.O. 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the Nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. The E.O. directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. E.O. 13563 emphasizes further that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. We have developed this rule in a manner consistent with these requirements.
This action is not an E.O. 13771 regulatory action because this rule is not significant under Executive Order 12866.
The Department of the Interior certifies that this document will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:
(a) Will not have an annual effect on the economy of $100 million or more.
(b) Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.
(c) Will not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of the U.S.-based enterprises to compete with foreign-based enterprises.
This rule does not impose an unfunded mandate on State, local, or Tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local, or Tribal governments or the private sector. A statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531
This rule does not effect a taking of private property or otherwise have taking implications under E.O. 12630. A takings implication assessment is not required.
Under the criteria in section 1 of E.O. 13132, this rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement. A federalism summary impact statement is not required.
This rule complies with the requirements of E.O. 12988. Specifically, this rule: (a) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and (b) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.
The Department of the Interior strives to strengthen its government-to-government relationship with Indian Tribes through a commitment to consultation with Indian Tribes and recognition of their right to self-governance and Tribal sovereignty. We have evaluated this rule under the Department's consultation policy and under the criteria in E.O. 13175 and have determined there are no substantial direct effects on Federally recognized Indian Tribes that will result from this rulemaking because BIA consults on an individual basis with each Tribe for which there is a change in the status of their CFR Court.
The Paperwork Reduction Act (PRA), 44 U.S.C. 3501
This rule does not constitute a major Federal action significantly affecting the quality of the human environment. A detailed statement under the National Environmental Policy Act of 1969 (NEPA) is not required because this is an administrative and procedural regulation. (For further information see 43 CFR 46.210(i)). We have also determined that the rule does not involve any of the extraordinary circumstances listed in 43 CFR 46.215 that would require further analysis under NEPA.
This rule is not a significant energy action under the definition in E.O. 13211. A Statement of Energy Effects is not required.
We are publishing this final rule with an immediate effective date, as allowed under 5 U.S.C. 553(d)(3). Good cause for an immediate effective date exists because the delay in publishing this rule would inhibit access to justice for Tribal members and likely obstruct speedy trial rights for members of those Tribes coming under the jurisdiction of the CFR court.
Courts, Indians-law.
For the reasons stated in the preamble, the Department of the Interior, Bureau of Indian Affairs, amends 25 CFR part 11 as follows:
5 U.S.C. 301; R.S. 463, 25 U.S.C. 2; R.S. 465, 25 U.S.C. 9; 42 Stat. 208, 25 U.S.C. 13; 38 Stat. 586, 25 U.S.C. 200.
(a) A list of the areas in Indian Country where Courts of Indian Offenses are established is available on the Bureau of Indian Affairs website (
(b) The Director, Bureau of Indian Affairs, will maintain on the Bureau of Indian Affairs website (
(a) The regulations in this part continue to apply to each area in Indian Country listed in accordance with § 11.100 until either:
Farm Credit Administration.
Proposed rule.
The Farm Credit Administration (FCA, we, or our) proposes amending the regulation governing how a Farm Credit bank presents information on its related associations when preparing annual bank financial statements on a stand-alone basis. We propose to provide an additional presentation option that would allow the related association financial information to be in a supplement.
You may send us comments on or before March 9, 2020.
We offer a variety of methods for you to submit comments. For accuracy and efficiency reasons, commenters are encouraged to submit comments by email or through FCA's website. As facsimiles (fax) are difficult for us to process and achieve compliance with section 508 of the Rehabilitation Act, we are no longer accepting comments submitted by fax. Regardless of the method you use, please do not submit your comment multiple times via different methods. You may submit comments by any of the following methods:
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You may review copies of comments we receive at our office in McLean, Virginia, or on our website at
The objective of the proposed rule is to improve shareholder access to district financial information by providing an additional method of presenting financial information on a bank's related associations to those banks preparing annual financial statements on a stand-alone basis.
FCA regulation § 620.2(g) currently provides a Farm Credit bank with two alternatives for reporting information on its related associations within the bank's Annual Report to Shareholders. The first alternative, located in § 620.2(g)(1), allows each bank to issue a combined or consolidated report on the Farm Credit bank and its related associations. This presentation requires using a footnote disclosure that summarizes the bank's “stand-alone” balance sheet and income statement. The second alternative, located in § 620.2(g)(2), allows issuance of a bank's annual financial statements on a stand-alone basis, where limited financial information on the bank's related associations is placed in a footnote. This footnoted information may be unaudited but must include a condensed statement of condition and statement of income for the related associations. The § 620.2(g)(2) alternative was primarily added to the regulation in recognition of the creation of the Agricultural Credit Bank (ACB).
When adding the § 620.2(g)(2) alternative in 1997, FCA explained that because both methods of presenting combined bank and related association financial information were consistent with Generally Accepted Accounting Principles (GAAP) provisions at the time, FCA made both alternatives available to all the banks.
In November 2018, all four of the Farm Credit banks jointly requested that FCA amend § 620.2(g)(2) by allowing disclosure of related association financial information in a separate supplement to a bank's Annual Report to Shareholders instead of through use of a footnote within the annual report. We evaluated the merits of the banks' request and concluded permitting use of a supplement instead of a footnote in a bank's Annual Report to Shareholders could be beneficial so initiated this rulemaking. Nothing in this proposed rulemaking affects quarterly reporting requirements.
FCA has consistently stated that the relationship between a bank and its related associations is an important one that warrants discussion in the financial statements and reports provided by the banks. Further, we believe that a bank's shareholders need financial information not just on the bank but also on the
We propose revising § 620.2(g)(2) to allow a Farm Credit bank to use either a footnote or a supplement to provide financial information on its related associations when preparing the bank's annual financial statements on a stand-alone basis. Specifically, we propose adding regulatory language to § 620.2(g)(2) that would allow Farm Credit banks issuing the bank's financial statements on a stand-alone basis within its Annual Report to Shareholders to provide financial information on their related associations either through footnote or a supplement if such a presentation is both allowable under GAAP and serves as the most meaningful disclosure presentation for the bank's shareholders. We believe permitting use of a supplement could facilitate shareholders locating and understanding district information. However, to preserve flexibility in how the annual report of a bank is presented, we are not proposing to remove the existing method of reporting information on a bank's related associations within a footnote.
As proposed, all information provided through use of either a footnote or a supplement would still be considered part of the bank's annual report and therefore subject to the same accuracy, distribution, and internal control requirements of the annual report itself. We are proposing language specifying this to ensure the use of a supplement is not considered a separate, financial report. Further, we are specifically proposing that if a supplement presentation is used, it be distributed along with the bank's annual report. We do not believe allowing separate distribution of the supplement would achieve the stated purpose of facilitating shareholder comprehension of the financial condition of the bank and its district operations, including those of its related associations. All the financial information needs to be available to shareholders at the same time to accomplish that goal. Also, we believe the proposed requirement to have the supplement distributed along with the annual report information that it addresses will have little financial consequence to the bank's annual report distribution costs. A Farm Credit bank using the § 620.2(g)(2) presentation method is allowed under FCA regulation § 620.4(b)(1) to distribute its annual report exclusively through website postings, absent a significant event posing a material effect on the bank's related associations.
We also propose that if a supplement is used that the supplement be referenced within the body of the bank's annual report. We propose requiring a reference to the supplement within the annual report to ensure shareholders know where the additional information is available. We believe this proposed requirement is in keeping with recognizing the supplement is a part of the annual report and, just as the report would direct the reader to a footnote or appendix, it should direct the reader to the supplement.
We propose adding language to § 620.2(g)(2) that the summary financial information on associations included as part of the bank's annual report be presented on a combined basis with the bank's information. FCA believes that shareholder and investors use the combined financial information to evaluate the operations and financial position of the district. Proposed changes to § 620.2(g)(2) would facilitate this use by requiring combined financial information of each bank and its related associations. Although the supplemental district information required by § 620.2(g)(2) is not a full set of financial statements, we believe the proposed condensed statements will provide information that is meaningful to stakeholders and investors, without providing the extensive detail captured in the Systemwide audited reports.
We are also proposing language to clarify that the current § 620.2(g)(2) option for banks to issue the related associations' financial information on an unaudited basis extends to all the financial information provided for the related associations, whether in a footnote or the proposed supplement. Currently, some may believe only the condensed statements of income and condition named in the rule text may be unaudited. It is our intent that the proposed language removes any perceived ambiguities in the existing rule text of § 620.2(g)(2) regarding which information may be unaudited. This clarification would not affect the existing requirement that the footnote or the proposed supplement disclose the basis of presentation if different from the presentation of the bank-only annual financial statements.
Additionally, we propose amending the § 620.2(g)(2) regulatory text to emphasize that the financial information provided by a bank on its related associations (when preparing annual bank financial statements on a stand-alone basis) is not limited to the named condensed statements of income and condition. We propose this change because we believe additional information is, and should be, provided as part of the bank's annual report. Examples of district information that we would expect to see in either the footnote or proposed supplement of a bank's annual report include, but are not limited to, the following:
• The nature of business relationships between System entities within the bank's district;
• Summary of District financial information for the preceding three years;
• Summary of district loan portfolio, discussing concentration risks and significant changes in credit quality, nonperforming assets, past due loans, loan loss allowance and reserves, and loan aging analysis within the district as compared to previous years.
• A description of combined association investments;
• Districtwide capital levels and regulatory ratios;
• Summary of key districtwide income statement line items and profitability measures; and
• A description of any qualified and nonqualified districtwide defined pension plan(s), including each plan's current funding status, accrued benefit obligation and projected benefit obligation, and key actuarial assumptions.
We believe the proposed change, along with the above list of items, will provide meaningful transparency on the financial condition of each Farm Credit District.
Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601
Accounting, Agriculture, Banks, banking, Reporting and recordkeeping requirements, Rural areas.
For the reasons set forth in the preamble the FCA proposes to amend 12 CFR part 620 as follows:
Secs. 4.3, 4.3A, 4.19, 5.9, 5.17, 5.19 of the Farm Credit Act (12 U.S.C. 2154, 2154a, 2207, 2243, 2252, 2254); sec. 424 of Pub. L. 100-233, 101 Stat. 1568; sec. 514 of Pub. L. 102-552, 106 Stat. 4102.
(g) Each Farm Credit institution shall present its reports in accordance with generally accepted accounting principles and in a manner that provides the most meaningful disclosure to shareholders.
(1) Any Farm Credit institution that presents its annual and quarterly financial statements on a combined or consolidated basis shall also include in the report the statement of condition and statement of income of the institution on a stand-alone basis. The stand-alone statements may be in summary form and shall disclose the basis of presentation if different from accounting policies of the combined or consolidated statements.
(2) Any Farm Credit bank that prepares its annual financial statements on a stand-alone basis must also provide financial information on its related associations as part of its annual report. The information on the related associations must be presented on a combined basis with the bank's financial information and, at a minimum, include both a condensed statement of condition and a statement of income. The combined bank and association financial information may either be in the footnotes of the bank's annual report or located in a supplement to the report. All combined information provided through either a footnote or a supplement will be considered part of the bank's annual report, subject to the same annual report preparation, distribution, and accuracy requirements of part 620.
(i) The combined bank and association financial information may be unaudited but must disclose the basis of presentation if different from accounting policies used for the bank-only financial statements.
(ii) If the combined bank and association financial information is presented in the form of a supplement, the supplement must be referenced within the bank's annual report and accompany the annual report when distributed.
Federal Communications Commission.
Proposed rule.
The Federal Communication Commission proposes to amend its rules to allow AM broadcasters to use all-digital transmissions. All-digital AM broadcasting has the potential to provide a more reliable and robust radio signal than analog, as well as auxiliary digital services.
Comments may be filed on or before March 9, 2020 and reply comments may be filed on or before April 6, 2020. Written comments on the Paperwork Reduction Act proposed information collection requirements must be submitted by the public, Office of Management and Budget (OMB), and other interested parties on or before March 9, 2020.
You may submit comments, identified by MB Docket No. 19-311, by any of the following methods:
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James Bradshaw, Deputy Division Chief, Media Bureau, Audio Division (202) 418-2739; Christine Goepp, Attorney Advisor, Media Bureau, Audio Division, (202) 418-7834. For additional information concerning the Paperwork Reduction Act (PRA) information collection requirements contained in this document, contact Cathy Williams at 202-418-2918, or via the internet at
This is a summary of the Commission's Notice of Proposed Rulemaking (
The
1. Currently, the AM broadcasting service suffers from interference and reception issues caused in part by increased emissions from various consumer electronic devices as well as broadcast sources. As a result, many AM stations are constrained to low-fidelity voice formats such as talk radio. Under the current rules, AM and FM stations are permitted to broadcast using either an analog signal or the hybrid analog and digital system licensed by Xperi Corporation under the brand name HD Radio. Although many FM stations have converted to hybrid broadcasting, various technical and other issues have prevented the widespread adoption of hybrid broadcasting by AM stations. Many AM stations believe that all-digital broadcasting represents a unique opportunity for AM broadcasters to improve their ability to reach the listening public and thus may be the single greatest hope for AM revitalization. All-digital AM broadcasting has the potential to improve signal “robustness”—or resistance to interference and other impairments—as well as the ability to transmit auxiliary information to accompany the main audio programming.
2. To test the effectiveness of all-digital AM broadcasting, the not-for-profit industry organization NAB Labs (now PILOT) conducted a series of AM all-digital performance field tests at nine radio stations, followed by laboratory testing of potential all-digital interference. These tests were summarized in two technical papers presented at the 2015 and 2016 NAB Broadcast Engineering Conference Proceedings and are available for review and comment in MB Docket 19-311. In addition, one AM station, WWFD(AM), Frederick, Maryland, has been operating with an all-digital signal under an experimental license for more than a year. An analysis of the WWFD experiment was presented at the 2019 NAB Broadcast Engineering and Information Technology Conference and is available in MB Docket 19-311.
3. The data on record indicate that all-digital broadcasting has the potential to benefit AM stations and their listeners, particularly regarding audio quality and listenable signal coverage area. However, none of the all-digital test results available to date have been evaluated by the National Radio Systems Committee (NRSC), although all-digital operation is included in NRSC-5-D, an NRSC standard. Moreover, the record suggests that there may be certain areas that warrant further investigation, such as compliance with applicable power limits and the effects of noise on useful all-digital coverage area. Therefore, the Commission seeks comment on what additional data, if any, would be helpful in evaluating the full benefits and potential risks and/or costs of all-digital broadcasting. It invites commenters to place any other relevant data or studies that might be or become available in the record in this proceeding for public review.
4. In the
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11. The Commission tentatively concludes that co-channel interference is more of a concern with all-digital broadcasting than adjacent channel interference. By design, all-digital AM is less likely to cause interference to adjacent channel signals than hybrid operation, due to the relocation of the digital carriers to the center of the channel. The Commission tentatively agrees with NAB Labs that all-digital operation is not likely to create additional interference to adjacent channel signals. It seeks comment on this tentative conclusion and on the likelihood of all-digital adjacent channel interference. Would all-digital operation cause less adjacent-channel interference than hybrid operation?
12. The Commission seeks comment on co-channel interference and asks for comments addressing the co-channel interference studies conducted by NAB Labs. This testing indicated that all-digital interference typically degrades analog signal-to-noise ratios approximately 10.5 dB more than an equal amount of analog interference. However, the NAB Labs field testing of one subject station, WSWW, indicated that impairment to analog co-channel stations was essentially equivalent irrespective of whether WSWW was operating with an analog or an all-digital AM signal. The Commission seeks comment on these lab results and on the potential impact of all-digital signals on co-channel analog stations both in and outside their protected contours.
13. The Commission notes that when it authorized hybrid operations, it accepted a certain amount of interference potential (in that case, mostly adjacent-channel) outside other stations' protected contours in return for the benefits of digital operation. It asks whether this reasoning apply equally to the potential for co-channel interferences as a result of all-digital operation.
14. The Commission seeks comment on ways to minimize the likelihood of co-channel interference from all-digital stations and to resolve impermissible interference if it occurs. For currently-authorized AM hybrid stations, if interference is anticipated or occurs, the licensee may adjust the power level of the primary digital subcarriers downward by as much as 6 dB. If actual interference occurs within another station's protected service contour and the respective licensees are unable to reach agreement on a voluntary power reduction, the Commission staff may order power reductions for the primary digital carriers or, in extreme cases, termination of IBOC operation. Is this streamlined procedure effective; and, if so, should it govern claims of all-digital interference within the protected contours of the affected station? Should the Commission consider adopting additional protections and/or complaint procedures to allow affected stations to object to all-digital interference even outside their protected contours? How can it best gather information regarding instances of excessive interference if a future power reduction is required? What is the appropriate balance between protecting reception of analog stations outside their protected contours and maximizing all-digital coverage?
15. The Commission seeks comment on the potential of digital-to-digital interference, including whether co-channel interference would be reduced if all AM stations became digital. It also seeks comment on whether the increased power and bandwidth occupancy of the digital carriers might affect adjacent channel digital transmissions. What would be the impact of all-digital stations on hybrid stations? Would all-digital operation be more likely to affect co-channel all-digital stations but not adjacent hybrid stations?
16. Finally, the Commission seeks comment on whether to allow AM all-digital operation at night. It notes that the Commission did not initially approve nighttime hybrid broadcasting due to the increased potential for interference through skywave propagation. NAB Labs did not evaluate potential nighttime interference by all-digital stations; however, it determined that all-digital nighttime reception was reliable to or beyond most test stations' analog predicted NIF contours. In addition, WWFD's experimental license authorizes it to operate at night. The Commission seeks comment on the effects of nighttime skywave on interference among multiple MA3 all-digital signals and between digital and analog co-channel signals. How would all-digital operation affect potential interference caused by skywave propagation? What additional study and testing might be needed to assess AM all-digital performance under nighttime propagation conditions?
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18. The Commission seeks comment on the ability of all-digital stations to comply with the proposed emissions mask requirements. The nine radio stations that NAB Labs tested in all-digital mode had some difficulty meeting the HD Radio Emissions Mask limits. For this reason, NAB Labs suggests that a possible future study regarding emissions compliance could be appropriate. The Commission seeks comment on whether these compliance issues also implicate the test stations' ability to comply with 47 CFR 73.44. In general, are there specific characteristics of all-digital AM operation, particularly using existing AM facilities, that pose challenges to emissions mask compliance, and if so, how should these issues be approached?
19. The Commission seeks comment on the advisability of mandating compliance with the HD Radio Emissions Mask, given that the NRSC has not evaluated it and the NAB Labs testing indicated that all-digital stations might have difficulty complying with it. The Commission asks whether it should wait to approve all-digital operation until the HD Radio Emissions Mask as it relates to MA3 all-digital operation has been evaluated and/or formally endorsed by the NRSC.
20. Finally, the Commission seeks comment on how signal power should best be measured in all-digital broadcasting mode, for the purposes of compliance with 47 CFR 73.44, 73.51, 73.1590, and the HD Radio Emissions Mask. What procedures and equipment would give the most accurate results? Should the Commission specify what types of measurements will be acceptable to demonstrate compliance with the Commission's rules? Due to the peak-to-average ratio of the MA3 mode, which is significantly higher than that of standard amplitude modulation, the power level meter on some transmitters may not read accurately. Do the majority of digital transmitters include measurement tools capable of accurately monitoring compliance with the proposed operating power and emissions mask limitations?
21. The Commission tentatively concludes that it should impose a 1 Hz carrier frequency tolerance standard on AM stations to improve all-digital reception. NAB Labs reports that undesired analog signals that are further off-frequency (
22. The Commission proposes that any station commencing all digital operation must inform the Commission using substantially the same notification procedure currently applicable to hybrid operations (
23. The Commission tentatively concludes that all-digital AM stations should be subject to the 47 CFR 73.1250 requirement for all free digital stations to participate in the nationwide emergency alert system (EAS). As noted above, all-digital stations are anticipated to cover the same broadcast area with a clearer, more listenable signal—including during emergencies—and will be required to broadcast EAS alerts. Nonetheless, analog-only listeners would only receive EAS alerts from local stations that broadcast an analog signal. The Commission seeks comment on the effect of a voluntary transition to all-digital broadcasting on the EAS system and how best to maximize consumer access to emergency information if local AM stations are allowed to convert to all-digital broadcasting.
24. The Commission seeks comment on the effect of all-digital operations on travelers' information stations (TIS, also called highway advisory radio), which are operated by some state or local governments to disseminate local traffic and weather advisories. TIS facilities are limited to a 10-watt transmitter output power, antenna height no greater than 15 meters, and a coverage radius of 3 km. What would the effect of all-digital operation be on the TIS service?
25. The Commission notes that, in general, radio stations operating in a digital format must comply with the service rules and public interest obligations applicable to analog stations, such as rules relating to station logs, public file, political broadcasting, contests, sponsorship identification, and so on. It asks whether there any service, programming, operational, or technical rules applicable to digital services generally that should be reconsidered or modified for all-digital operation. AM stations are currently authorized to operate with the hybrid AM IBOC system as tested by the NRSC. Other than the HD Radio Emissions Mask, are there other technical aspects to the NRSC-5-D Standard that should be re-examined for all-digital operation?
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28. The Commission observes that the WWFD conversion process was technically challenging and that WWFD continues to experience transmitter issues that prevent full use of the secondary and tertiary digital carriers. Therefore, it asks how likely it is that AM broadcasters, particularly early adopters, will encounter similar technical obstacles. What technical support will be available to converting AM broadcasters and/or their engineering consultants? Is extensive site rehabilitation likely to be necessary for other (particularly older) AM facilities? If so, what level of expertise and expense is likely to be required to duplicate the WWFD experiment? On the other hand, will some legacy AM antenna systems that are unable to pass digital carriers in the MA1 mode be capable of doing so using MA3?
29. Also factored into the cost of conversion borne by any station opting to go all-digital is any loss of existing analog listeners who do not either migrate to an associated translator or acquire an all-digital receiver. In the case of WWFD, this loss was minimized by migrating most listeners to an FM channel, converting the AM station to all-digital, and then promoting the all-digital AM signal on the FM translator. Currently, over half of AM stations have FM translators. The Commission invites comment on whether the acquisition of FM translators resulting from the AM Revitalization proceeding will allow AM broadcasters greater freedom to experiment with their AM signals as with WWFD. If successful, would a transition to all-digital AM ease the industry pressure to enhance protections for FM translators despite their well-established status as a secondary service? The Commission also seeks comment on whether all-digital translator rebroadcasting or digital synchronous booster stations would further improve the reliability and coverage of MA3 signals.
30. The Commission seeks comment on its conclusion that a voluntary conversion process would allow each AM broadcaster to make the determination whether to assume the associated risks and expenses based on their own assessment of the state of the individual market and the future viability of their analog AM signal. It notes that adoption of the hybrid HD Radio system by AM broadcasters has been relatively lukewarm compared to FM, with fewer than 250 a.m. stations broadcasting in hybrid mode. This low rate of hybrid adoption is due to multiple factors, including reception issues with the hybrid analog signals, limited signal robustness and reception range caused by the relatively low amplitude of the digital sidebands in relation to the analog carrier, and adjacent channel interference caused by the wider bandwidth of hybrid signals. In addition, the hybrid mode is more likely to require replacement of the entire antenna system than all-digital. The Commission seeks comment on the technical and economic factors that might encourage more widespread adoption of all-digital broadcasting within the AM service.
31. The Commission seeks comment on the overall readiness of AM listeners to transition to digital broadcasting. To determine the overall likelihood of successful AM conversion to all-digital, it seeks additional comment on the degree of market penetration of digital receivers nationwide, including car and portable receivers, as well as information regarding the quality and cost of such receivers. Are portable (non-vehicle) HD receivers readily available and affordable? How many HD Radio receivers that have been sold in the past are currently still in operation?
32. The Commission seeks comment on the impact that stations converting to all-digital operations could have on listeners with analog-only receivers. What is the estimated size of this audience, and their estimated frequency of use of such receivers? In a market with very few stations, a single station's conversion to all-digital could reduce options for analog-only listeners. The Commission thus seeks comment on whether preserving the long-term economic viability of an AM station and the public benefit of improved service to some listeners would justify the present-day loss of service to other listeners. What steps, if any, could the Commission or broadcast industry take to minimize service disruption and the impact of all-digital conversion on consumers? For example, should it require a station converting to all-digital to notify its listeners that it will be converting to all digital and additional information such as when the transition will take place, what the new service area will be, and what type of receiver will be necessary to continue receiving broadcasts from that station? If so, what should be the timing and frequency of such on-air announcements? Are there any analogies from other broadcast transitions that would be instructive in this regard?
33. The Commission seeks comments on the costs and benefits associated with this proposal, as well as the costs and benefits of any other alternative approaches to addressing the issues raised in this
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Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.
• All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW, Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20743.
• U.S. Postal Service First Class, Express, and Priority mail must be addressed to 445 12th Street SW, Washington, DC 20554.
35.
36.
37. This proceeding shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's
38. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies proposed in the
39. The Commission initiates this rulemaking proceeding to obtain comments regarding its proposal to allow AM broadcasters to broadcast an all-digital signal using the HD Radio in-band-on-channel (IBOC) mode known as MA3. Specifically, the Commission seeks comment on the following issues relating to all-digital operation: (1) Audio quality and signal coverage; (2) digital carrier power limits and emissions mask compliance; (3) interference potential; (4) spectrum efficiency and auxiliary digital services; (5) conversion costs and procedures; (6) availability of digital receivers and industry demand for digital broadcasting; (7) emergency alert and travelers' information systems; (8) adoption of the NRSC-5-D Standard for digital broadcasting; and (9) a stricter carrier frequency tolerance standard for all AM stations. The new rules proposed are designed to improve the economic viability of many AM stations by providing the option to convert to all-digital broadcasting, including an improved audio signal and the ability to provide other digital information to consumers. This option is seen as a natural outgrowth of the fact that—due to the AM Revitalization proceeding—more than half of AM stations are now able to reach their traditional analog audience by means of an FM translator.
40. The proposed action is authorized pursuant to sections 1, 4(i), 4(j), 301, 303, 307, 308, 309, and 316 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 301, 303, 307, 308, 309, and 316.
41. 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. 5 U.S.C. 603(b)(3). The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 5 U.S.C. 601(6). In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. The rules
42.
43. Apart from the U.S. Census, the Commission has estimated the number of licensed commercial AM radio stations to be 4,406 and the number of commercial FM radio stations to be 6,726 for a total number of 11,132, along with 8,126 FM translator and booster stations. This number is derived from subtracting the total number of noncommercial educational AM stations (204) from the total number of licensed AM stations (4610). As of September 2019, 4,294 a.m. stations and 6,739 FM stations had revenues of $41.5 million or less, according to Commission staff review of the BIA Kelsey Inc. Media Access Pro Television Database (BIA). In addition, the Commission has estimated the number of noncommercial educational FM radio stations to be 4,179. NCE stations are non-profit, and therefore considered to be small entities. Therefore, we estimate that the majority of radio broadcast stations are small entities.
44. The
45. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance 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.
46. In the
47. None.
48. Accordingly,
49.
50.
Radio, Reporting and recordkeeping requirements, Incorporation by reference.
For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows:
47 U.S.C. 154, 155, 301, 303, 307, 309, 310, 334, 336, 339.
(h) All-digital AM station. An AM station broadcasting an IBOC waveform that consists solely of digitally modulated subcarriers and the unmodulated AM carrier.
(a) Broadcast radio stations using IBOC must transmit at least one over-the-air digital audio programming stream at no direct charge to listeners.
(a) The licensee of an AM or FM station, or the permittee of a new AM or FM station which has commenced program test operation pursuant to § 73.1620, may commence interim hybrid IBOC DAB operation with digital facilities which conform to the technical specifications specified for hybrid DAB operation in the First Report and Order in MM Docket No. 99-325, as revised in the Media Bureau's subsequent Order in MM Docket No. 99-325. In addition, the licensee of an AM station, or the permittee of a new AM station that has commenced program test authority pursuant to § 73.1620, may commence all-digital IBOC operation with digital facilities that conform to the requirements set out in the First Report and Order in MB Docket No. 19-311 and MB Docket No. 13-249. An AM or FM station may transmit IBOC signals during all hours for which the station is licensed to broadcast.
(b) In situations where interference to other stations is anticipated or actually occurs, hybrid or all-digital AM licensees may, upon notification to the Commission, reduce the power of the primary DAB sidebands by up to 6 dB. Any greater reduction of sideband power requires prior authority from the Commission via the filing of a request for special temporary authority or an informal letter request for modification of license.
(c) Hybrid IBOC AM stations must use the same licensed main or auxiliary antenna to transmit the analog and digital signals.
(d) FM stations may transmit hybrid IBOC signals in combined mode;
(1) Must be a licensed auxiliary antenna of the station;
(2) Must be located within 3 seconds latitude and longitude from the analog antenna;
(3) Must have a radiation center height above average terrain between 70 and 100 percent of the height above average terrain of the analog antenna.
Unless expressly authorized otherwise, all DAB stations must conform to the technical specifications set out in the NRSC-5-D In-band/on-channel Digital Radio Broadcasting Standard (Apr. 2017) (incorporated by reference, see § 73.8000).
Licensees must provide notification to the Commission in Washington, DC, within 10 days of commencing IBOC digital operation or reverting from all-digital to analog operation.
(a) Every digital notification must include the following information:
(1) Call sign and facility identification number of the station;
(2) Date on which IBOC operation commenced;
(3) Name and telephone number of a technical representative the Commission can call in the event of interference;
(4) A certification that the operation will not cause human exposure to levels of radio frequency radiation in excess of the limits specified in § 1.1310 of this chapter and is therefore categorically excluded from environmental processing pursuant to § 1.1306(b) of this chapter. Any station that cannot certify compliance must submit an environmental assessment (“EA”) pursuant to § 1.1311 of this chapter and may not commence IBOC operation until such EA is ruled upon by the Commission.
(b) Every AM digital notification must also include the following information:
(1) Certification that the IBOC DAB facilities conform to the NRSC-5-D standard.
(2) Transmitter power output; if separate analog and digital transmitters are used, the power output for each transmitter;
(3) If applicable, any reduction in an AM station's primary digital carriers;
(c) Every FM digital notification must also include the following information:
(1) Certification that the IBOC DAB facilities conform to the NRSC-5-D standard;
(2) FM digital effective radiated power used and certification that the FM analog effective radiated power remains as authorized;
(3) If applicable, the geographic coordinates, elevation data, and license file number of the auxiliary antenna employed by an FM station as a separate digital antenna;
(4) If applicable, for FM systems employing interleaved antenna bays, a certification that adequate filtering and/or isolation equipment has been installed to prevent spurious emissions in excess of the limits specified in § 73.317;
(a) AM stations. The departure of the carrier frequency for monophonic transmissions or center frequency for stereophonic transmissions may not exceed ±1 Hz from the assigned frequency.
(a) * * * For information on the availability of this material at NARA, email
(e) The National Radio Systems Committee, Principal Contacts: David Layer,
(1) NRSC-5-D In-band/on-channel Digital Radio Broadcasting Standard (Apr. 2017).
(2) [Reserved].
Federal Communications Commission
Proposed rule.
In this document, the Commission seeks comment on whether to update our rules concerning notice that cable operators must provide to subscribers and local franchise authorities (LFAs) regarding service or rate changes in order to reduce potential consumer confusion. Specifically, we
Comments due on or before February 6, 2020; reply comments due on or before February 21, 2020.
For additional information on this proceeding, contact Brendan Murray,
This is a summary of the Commission's Notice of Proposed Rulemaking (
In today's video marketplace, retransmission consent and program carriage negotiations are often concluded within days—if not hours—of the expiration of existing agreements. And in those cases, it is frequently unclear, 30 days prior to a contract's expiration, whether a new agreement will be reached, there will be a short-term extension, or programming will be dropped. This uncertainty raises difficult questions regarding what notice cable operators should be required to provide to subscribers and when they should be required to provide it. On the one hand, subscribers must receive meaningful information regarding their programming options so they can make informed decisions about their service. On the other hand, inaccurate or premature notices about theoretical programming disruptions that never come to pass can cause consumer confusion and lead subscribers to change providers unnecessarily.
This Notice of Proposed Rulemaking (
The Commission adopted regulations implementing these notice and customer service requirements through several decisions issued in 1993. In 1999, the Commission revised and streamlined the cable television notice requirements contained throughout Part 76 of the Commission's rules and consolidated them into a newly created Subpart T. As part of that reorganization, the Commission moved to § 76.1601 a requirement that cable operators provide written notice to any broadcast television station and all of the system's subscribers at least 30 days prior to either deleting from carriage or repositioning that station. In addition, the Commission consolidated three other notice requirements into § 76.1603. Currently, § 76.1603 requires cable operators to: (1) Notify customers “of any changes in rates, programming services, or channel positions as soon as possible in writing,” and “a minimum of thirty (30) days in advance of such changes if the change is within the control of the cable operator;” (2) “notify subscribers 30 days in advance of any significant changes in the other information required by § 76.1602”; (3) “give 30 days written notice to both subscribers and local franchising authorities before implementing any rate or service change,” stating the precise amount of any rate change and a brief explanation in readily understandable fashion of the cause of the rate change; and (4) “provide written notice to a subscriber of any increase in the price to be charged for the basic service tier or associated equipment at least 30 days before any proposed increase is effective” and no more than 60 days if the equipment is provided to the consumer without charge under § 76.630 because the operator encrypts the basic service tier. Notably, these rules only apply to cable operators and not to other MVPDs.
In 2011, the Commission sought comment on whether to revise § 76.1601 “to require that notice of potential deletion of a broadcaster's signal be given to consumers once a retransmission consent agreement is within 30 days of expiration, unless a renewal or extension has been executed, and regardless of whether the station's signal is ultimately deleted.” The Commission noted that while adequate advance notice of retransmission consent disputes can allow consumers
More recently, in response to a service notice change complaint that the Media Bureau ultimately dismissed at the complainant's request, Charter filed a letter urging us not to adopt an interpretation of § 76.1603 that would require that cable operators “provide a 30-day advance notice to subscribers any time negotiations over the carriage of a channel enter the final month of an agreement solely because the channel might be dropped.” Such an interpretation, they maintain, would “harm[ ] consumers and disserve[ ] the public interest in ensuring fair bargaining.” Charter explains that “[n]egotiations between cable operators and programmers or broadcasters usually come down to the final 30 days of an agreement—indeed, often down to the final day or hours.” And Charter notes that “[t]he vast majority of those negotiations—as many as 99 percent—end successfully, but a few do not.” Moreover, Charter contends any failed negotiations are not strictly within the cable operator's control. Accordingly, “Charter proposes that the Commission clarify that the 30-day advance notice requirement does not apply when a cable operator and a programmer or a broadcaster remain in carriage negotiations, even during the final 30 days of an agreement. If those negotiations fail and the channel goes dark as a result, the cable operator would be required to provide notice to subscribers `as soon as possible.' ”
Earlier this year, the Commission, in response to parties' feedback to the
Charter asserts that providing 30-days' advance notice of a potential channel deletion is often impractical because “[n]egotiations between cable operators and programmers or broadcasters usually come down to the final 30 days of an agreement—indeed, often down to the final day or hours.” It maintains that requiring a cable operator to notify its subscribers and LFAs 30 days in advance “any time negotiations over the carriage of a channel enter the final month of an agreement solely because the channel might be dropped harms consumers and disserves the public interest in ensuring fair bargaining.” Charter proposes that if “negotiations fail and the channel goes dark as a result,” a cable operator should be required to provide notice “as soon as possible.”
We seek comment on Charter's proposal and other ways we can make consumer notice more effective in the context of failed carriage negotiations. Specifically, if a channel is deleted because of a failure of negotiations in the last 30 days of a contract, should we require cable operators to provide notice of the deletion “as soon as possible” after the failure occurs, as Charter proposes? If so, how should we define “as soon as possible,” and would this provide subscribers sufficient notice? How would we determine when negotiations have failed so as to trigger the requirement? Is there an alternative event that could be used to trigger the notice requirement short of a blackout? The Commission has previously said that retransmission consent negotiations are under the “control of both parties to the negotiations, and thus, failure to reach retransmission consent agreement would not be an excuse for failing to provide notice.” While the Commission correctly acknowledged that there are two parties in “control” of the retransmission consent negotiations, we question, based on the experience the Commission has gained observing various retransmission consent disputes over the past eight years, whether
We seek comment on the impact to subscribers to the extent that we make clear that cable operators must provide channel deletions notices to subscribers “as soon as possible” in the case of retransmission consent and program carriage negotiations that fail during the last 30 days of a contract. We seek comment on whether requiring notice “as soon as possible” in these circumstances, rather than 30 days in advance, would be beneficial to subscribers because the notice they would receive would be clearer and more meaningful. As Charter points out, premature notices “could create significant subscriber confusion, leading subscribers to unnecessarily change their cable provider, which could be costly for consumers.” Assuming negotiations usually come down to the final 30 days, as Charter maintains, does requiring 30-days' notice anytime an agreement could not be reached create unnecessary subscriber confusion? Does the practice of agreeing to short-term extensions of carriage agreements while negotiations are ongoing add to this confusion? Or, is there a benefit to consumers in receiving 30-day advance notices even if such notices turn out not to be accurate that outweighs any harms? If the rules are revised to allow notice to be given to consumers only after a negotiation has failed and a channel has been deleted, could this practice cause other unintended harms for consumers? Should cable operators be required to provide notice at a time other than 30 days before loss of service in the context of a retransmission consent negotiation, such as a week or 48 hours before expiration of a contract? Do the available online video programming alternatives to traditional MVPD services eliminate the need for subscribers to have advance notice of any potential blackouts, as Charter suggests? Given that subscribers may have access to blacked out programming via online sources, does that reduce or eliminate the need to switch providers in order to continue receiving the blacked out content? Are there other factors that impact a consumer's ability to change providers in the event of a loss of programming? Is there a way to ensure that subscribers have sufficient warning that they may no longer have access to programming without unnecessarily alerting them every time carriage negotiations could result in an impasse? Are there ways for the Commission to track the use and effectiveness of these notices? Should cable operators be required to include these notices in their online public files?
How do cable operators comply with our notice rules today when faced with the prospect of failed retransmission consent and program carriage negotiations? Specifically, to what extent do cable operators currently provide notice 30 days in advance when negotiations may fail, and what mechanism do they use to provide notice in situations where it is unclear whether the channel in question will remain available? How often do those notices alert subscribers that they may lose a channel when the subscriber's service ultimately does not change because the cable operator and programmer negotiate a carriage agreement during the last 30 days of the expiring carriage agreement? How common is it for there to be multiple extensions of existing retransmission consent agreements, and do cable operators provide subscriber notice of each extension? Are there ways that cable operators currently keep subscribers informed of ongoing negotiations with content providers or expiring contracts that could be used here? What type of notice, if any, do other non-cable MVPDs, that are not regulated under § 76.1603, provide to their subscribers in such instances?
As stated above, the statute allows cable operators to provide notice to subscribers using “any reasonable written means.” We seek comment on the “written means” by which the cable operator should give notice were we to adopt an approach requiring notice as soon as possible following failed negotiations. Are there any “reasonable written means” in the context of carriage negotiation failures that would not be reasonable in situations outside of the retransmission consent or program carriage context? For example, NCTA states that cable operators may use “channel slates”—notices that would replace the video feed in the event of a blackout—in order to quickly notify subscribers of a service change in the event of a negotiation failure. We seek comment on whether this mechanism would constitute a “reasonable written means” for alerting subscribers of failed negotiations because it is the most targeted means to alert all affected subscribers as soon as possible. We also seek comment on whether newspaper notice is a reasonable written means in this context given the distinct possibility that the notice would not reach all, or many of, the affected subscribers in a timely manner. That is, even assuming that the affected cable subscriber actually subscribed to a newspaper, it is not clear whether that particular newspaper would contain the requisite notice or that the subscriber would read it in time to make an informed decision about potential service changes.
We seek comment on whether the Commission has authority to revise its rule mandating 30-days advance notice to LFAs of any basic tier rate increase to instead require such notice only if required by an LFA. Section 623(b)(2) of the Act requires the Commission to “prescribe, and periodically thereafter revise, regulations to carry out its obligations” under section 623(b)(1) to ensure that the rates for the basic service tier are reasonable. And section 623(b)(6), in turn, provides that such regulations “shall require a cable operator to provide 30 days' advance notice to a franchising authority of any increase proposed in the price to be charged for the basic service tier.” But Congress directed the Commission to “prescribe, and periodically thereafter revise” its regulations adopted pursuant to section 623(b). We seek comment on whether the Commission has authority to revise this rule as described given these statutory provisions.
We note that multiple provisions of the Communications Act give LFAs the authority to require this type of notice independent of the Commission's rules. Any individual LFA that wishes to be notified of rate or service changes may require such notices through the cable franchising process or pursuant to their authority under section 632(a) of the Act to “establish and enforce . . . customer service requirements of the cable operator.” Further, section 624(h) of the Act explicitly states that an LFA may require a cable operator to “provide 30 days' advance written notice of any change in channel assignment or in the video programming service provided over any such channel.” Given these statutory provisions, should we eliminate § 76.1603(c) altogether and allow LFAs to require this information under their own authority? Would LFAs be unreasonably burdened by having to require explicitly that cable operators under their jurisdiction provide this information? Is such a notice requirement already typically included in local franchise agreements or State or local franchise requirements?
Second, we propose to revise §§ 76.1603(b) and 76.1603(c) to clarify the notice obligations owed to subscribers and LFAs respectively. Currently, paragraph (b) applies only to subscribers, while paragraph (c) applies to both subscribers and LFAs. Both sections require cable operators to give notice of any changes in rates, programming services, or channel positions. In order to eliminate the redundancies in the notice requirements applicable to subscribers in paragraphs (b) and (c), we propose to revise § 76.1603(b) to explain what notice must be given to subscribers and § 76.1603(c) to explain what notice must be given to LFAs.
Third, we note that § 76.1603(d)'s requirement that cable operators notify subscribers about changes in rates for equipment that is provided without charge under § 76.630 was adopted pursuant to section 624A of the Act. We seek comment on whether to delete this requirement from § 76.1603, because it is duplicative of language in § 76.630(a)(1)(vi).
Fourth, we seek comment on whether to delete § 76.1603(e) of our rules as redundant of the statutory requirement in section 632(c). That is, the language contained in § 76.1603(e), “any reasonable written means at its sole discretion” mirrors the statutory requirement. Moreover, currently both § 76.1603(b) and (c) require written notifications of service and rate changes to subscribers. Thus, it is not clear what the requirement in § 76.1603(e) adds. We seek comment on the extent to which we need to elaborate in § 76.1603(b) or elsewhere what constitutes “reasonable written means” under the Act.
Other stakeholders have suggested that the §§ 76.1601 or 76.1603 notice requirements include much information that does not actually assist subscribers in making decisions about their cable service. Does the volume of information required by these notice rules and the frequency with which notices must be given inundate subscribers with information that does not assist them in making decisions about their cable service? Would subscribers benefit more from more targeted notices? What information do subscribers actually require to make informed decisions about whether to continue or discontinue their cable service?
For example, should we eliminate the requirement in § 76.1603(b) that cable operators notify subscribers 30 days in advance of any significant changes in the information reported in annual notices required by § 76.1602, as NCTA and Frontier request? NCTA contends that this notice requirement “imposes unnecessary burdens on operators to provide change notices,” and that “much of this information is of little value to customers and readily available on company websites.” Would consumers be able to obtain such information elsewhere if this requirement were eliminated? Should we consider a more targeted rule that requires 30-day notice of only certain specified changes, such as changes in channel position, rather than notice of significant changes to any of the information delineated in § 76.1602?
We also seek comment on whether we should amend the notice requirements with respect to multiplexed broadcast signals. Specifically, we question the continued relevance of the language in § 76.1603(c) that states: “[f]or the purposes of the carriage of digital broadcast signals, the operator need only identify for subscribers, the television signal added and not whether that signal may be multiplexed during certain dayparts.” The Commission originally adopted this rule eight years prior to the full-power digital transition. Now that it has been more than 10 years since the digital transition, is this rule still relevant? This language, based on the Commission's predictive judgment regarding a nascent service, appears to exempt multicast programming streams that air only during certain dayparts
This
We do not propose any specific steps to treat small entities differently from other entities because we see no statutory authority for such treatment. We seek comment on this analysis. The NPRM's proposals would reduce the burdens on all cable operators, including small operators, because the operators would not need to provide as many notices. Likewise, they could reduce the burdens on small local governments, which would not have to review as many filings. We believe, however, that some subscriber and LFA notice is necessary to effectuate the requirements of the Communications Act and provide subscribers and LFAs with information they need to make reasoned decisions.
Cable Television, Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 76 as follows:
47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 303a, 307, 308, 309, 312, 315, 317, 325, 338, 339, 340, 341, 503, 521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556, 558, 560, 561, 571, 572, 573.
A cable operator shall provide written notice to any broadcast television station at least 30 days prior to either deleting from carriage or repositioning that station.
(b) Cable operators shall provide written notice to subscribers of any changes in rates, services, or any of the other information required to be provided to subscribers by § 76.1602 using any reasonable written means at the operator's sole discretion. Notice shall be provided to subscribers at least 30 days in advance of the change, unless the change results from circumstances outside of the cable operator's control (including failed retransmission consent or program carriage negotiations during the last 30 days of a contract), in which case notice shall be provided as soon as possible. Notice of rate changes shall include the precise amount of the rate change and explain the reason for the change in readily understandable terms. Notice of changes involving the addition or deletion of channels shall individually identify each channel affected.
(c) Upon the request of the local franchising authority, cable operators shall provide written notice to local franchising authorities of any changes in rates or services using any reasonable written means at the operator's sole discretion. Notice shall be provided to local franchising authorities 30 days in advance of the change, unless the change results from circumstances outside of the cable operator's control (including failed retransmission consent or program carriage negotiations during the last 30 days of a contract), in which case notice shall be provided as soon as possible. Notice of rate changes shall include the precise amount of the rate change and explain the reason for the change in readily understandable terms. Notice of changes involving the addition or deletion of channels shall individually identify each channel affected.
National Aeronautics and Space Administration.
Proposed rule.
NASA is proposing to amend the NASA Federal Acquisition Regulation Supplement (NFS) to add new text that requires covered contractors and subcontractors at all tiers to use electronic parts that are currently in production and purchased from the original manufacturers of the parts, their authorized dealers, or suppliers who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers. If the contractor does not purchase electronic parts as described above, they must purchase the parts from a NASA identified supplier or contractor-approved supplier. The contractor will then assume responsibility and be required to inspect, test and validate authentication of the parts. The contractor will also be required to obtain traceability information and provide this information to the contracting officer upon request. The selection of contractor-approved suppliers is subject to review and audit by the contracting officer.
Comments on the proposed rule should be submitted in writing to the address shown below on or before March 9, 2020, to be considered in the formation of a final rule.
Submit comments identified by NFS Case 2017-N010, using any of the following methods:
○
○
○
Dorice Kenely, NASA HQ, Office of Procurement, Policy, Training and Pricing Division, LP-011, 300 E Street SW, Washington, DC 20456-0001. Telephone 202-358-0443; facsimile 202-358-3082.
This proposed rule implements section 823(c)(2)(B) of Public Law 115-10, the National Aeronautics and Space Administration Transition Authorization Act of 2017. In this Section Congress stated it found in a 2012 Investigation by the Committee on Armed Services counterfeit electronic parts in the Department of Defense supply chain. From 2009 through 2010 the investigation uncovered 1,800 cases and over 1,000,000 counterfeit parts. This exposed the threat counterfeit parts pose to service members and national security. Since 2010, the Comptroller General of the United States has discussed in three reports the risks and challenges associated with counterfeit parts and counterfeit prevention at both the Department of Defense and NASA, including inconsistent definitions of counterfeit parts, poorly targeted quality control practices, and other potential
With this rule, NASA is proposing to revise the NASA Federal Acquisition Regulation Supplement (NFS) to add new text requiring a covered contractor, defined as a contractor supplying an electronic part or a product that contains an electronic part, and their subcontractors at all tiers to use electronic parts that are currently in production and purchased from the original manufacturers, their authorized dealers, or suppliers who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers. If the contractor does not purchase electronic parts as described above they must purchase the parts from a NASA identified supplier or contractor-approved supplier. The contractor then assumes responsibility and be required to inspect, test and validate authentication of the part. The contractor will also be required to obtain traceability information and provide this information to the contracting officer upon request. The selection of contractor-approved suppliers is subject to review and audit by the contracting officer.
The following NFS subparts, 1812 “Acquisition of Commercial Items”, 1831 “Contract Cost Principles and Procedures” and 1846 “Quality Assurance” are being revised to add language to implement the requirements of the NASA Transition Authorization Act of 2017 by: Defining the term counterfeit electronic parts (1846 “Quality Assurance”); requiring covered contractors and subcontractors at all tiers to use parts that are currently in production and purchased from the original manufacturers of the parts, their authorized dealers, or suppliers who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers and identifying requirements when the contractor doesn't use those electronic parts (1846 “Quality Assurance”); and making the cost of corrective actions involving counterfeit parts unallowable unless the contractor meets the requirements stated in the proposed policy (1831 “Contract Cost Principles and Procedures”).
The additional definitions within the proposed policy to the NFS can be found in the DFARS 252.246-7007 and 252.246-7008, addressing the same subject, Detection and Avoidance of Counterfeit Parts. The proposed changes to the NFS will apply to all procurements involving electronic parts, end items, components, parts, or assemblies containing electronic parts, or services, if the covered contractor will supply electronic parts or components, parts, or assemblies containing electronic parts as part of the service.
NASA is aware of one occurrence of a suspect counterfeit part within the last 17 years, as reported in Government Industry Data Exchange Program (GIDEP). Given what appears to be a low occurrence of counterfeit parts in NASA procurements, NASA anticipates the proposed rule will impose a limited burden on NASA contractors.
Both the FAR final rule entitled, “Federal Acquisition Regulation: Reporting of Nonconforming Items to the Government-Industry Data Exchange Program (FAR Case 2013-002)” published at 84 FR 64680, and this NFS rule pertain to the topic of counterfeit parts and suspected counterfeit parts, however discernable differences do exist between the two rule as they are implementing separate acts. The FAR rule is implementing sections 818(c)(4) and (c)(5) of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2012 (Pub. L. 112-81, 10 U.S.C. 2302 Note) while the NFS rule is implementing section 823 of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Pub. L. 115-10).
The following highlights the similarities and differences between these two rules:
The FAR Council determined that the FAR rule does not apply to commercial items, including commercially available off-the-shelf (COTS) items, or to contract at or below the simplified acquisition threshold (SAT). NASA has determined that the NFS rule applies to commercial items, including COTS items, and to contracts at or below the SAT. Section 823 of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Pub. L. 115-10) does not provide for any exemptions to the requirements being implemented via this rule.
While both rules pertain to the topic of counterfeit parts and suspected counterfeit parts, the rules differ in the scope of items to which the regulations apply. The FAR rule has a broader application in the types of items that are covered under the new requirements. Specifically, the FAR rule is applicable to all items that are subject to higher-level quality standards in accordance with the clause at FAR 52.246-11, Higher-Level Contract Quality Requirement; all items that the contracting officer, in consultation with the requiring activity determines to be critical items for which use of the clause is appropriate; and for the acquisition of services, if the contractor will furnish, as part of the service, any items that meet the criteria specified in paragraphs (a)(1) through (a)(2) of this section. In addition, the FAR rule covers acquisitions that exceeds the simplified acquisition threshold and are by, or for, the Department of Defense for electronic parts or end items, components, parts, or materials containing electronic parts. Based on the requirements of section 823 of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Pub. L. 115-10), the NFS rule applies only to electronic parts for use in a safety or mission critical applications.
The FAR rule requires two reporting requirements which are currently cleared under OMB Control number 9000-0187 titled Reporting of Nonconforming Items to the Government-Industry Data Exchange Program (FAR Case 2013-002)—FAR Sections affected: 52.246-26. One requirement is the submission of a report to GIDEP when the contractor becomes aware or has reason to suspect, such as through inspection, testing, record review, or notification from another source (
The second reporting requirement is a notification to the contracting officer after becoming aware or having reason to suspect, such as through inspection, testing, record review, or notification from another source (
As required by section 823(c)(2)(B), of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Pub. L. 115-10), the NFS rule establishes that costs related to counterfeit parts, suspect counterfeit parts, or any corrective action that may be required to remedy the use or inclusion of such parts is unallowable unless a specific set of criteria is met. The FAR rule does not address the allowability of costs as it relates to the counterfeit parts, suspect counterfeit parts, or any corrective action that may be required to remedy the use or inclusion of such parts.
As required by section 823(c), of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Pub. L. 115-10), the NFS rule establishes required sources for both electronic parts that are in production or currently available in stock and separately electronic parts are not in production or currently available in stock from suppliers. The FAR rule does not address sources of items.
The objective of this rule is to implement section 823 of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Pub. L. 115-10). Section 823 does not limit the application of the requirements of the statue to non-commercial contracts or contracts above the simplified acquisition threshold. Consistent with 41 U.S.C. 1905, 1906 and 1907, the NASA Assistant Administrator for Procurement has determined that it is in the best interest of NASA to apply section 823 to the acquisition of commercial items, including COTS items, and those requirements below the SAT.
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action which was subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This is not a major rule under 5 U.S.C. 804.
This proposed rule is not expected to be subject to the requirements of E.O. 13771 because it is expected to result in no more than de minimus costs.
NASA does not expect this proposed rule to have a significant economic impact on small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601
The rule will apply to all “covered contractors.” Covered contractors, as defined by Public Law 115-10 are contractors, including small entities, that supply an electronic part, or a product that contains an electronic part to NASA. While the rule will apply to all classes of small business, it will not necessarily affect those business because the rule requires reporting only when nonconforming defective and/or suspect counterfeit parts are present or there is suspicion that counterfeit parts are present in the supply chain. Since this rule requires contractors and subcontractors to purchase electronic parts that are currently in production from the original manufacturer, the authorized dealers or suppliers who obtain parts exclusively from the original manufacturer or for products that are not currently in production use of a NASA identified contractor, NASA believes that there is very little risk that a contractor or subcontractor will have a counterfeit part in the supply chain and thus very little risk that a small contractor will have to report. As reported in FPDS, NASA has had contract obligations with 3,120, 3,023 and 2,805 small business contractors in 2016, 2017 and 2018, respectively and no counterfeit parts were found in the supply chain. Further, based on the initial scope of the rule, NASA has assessed the number of commercial item acquisitions for electronic items procured above and below the simplified acquisition threshold and believe the impact of this proposed rule will be minimal. An analysis of data for the last three fiscal years from the FPDS revealed the following:
NASA invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.
The policy requires covered contractors and subcontractors to notify the applicable NASA contracting officer in writing not later than 30 calendar days after the date the covered contractor becomes aware, or has reason to suspect, that any end item, component, part or material contained in supplies purchased by NASA, or purchased by a covered contractor or subcontractor for delivery to, or on behalf of, NASA, contains a counterfeit electronic part or suspect counterfeit electronic part.
The proposed rule also requires covered contractors and subcontractors to purchase electronic parts that are currently in production from the original manufacturer, their authorized dealers or suppliers who obtain parts exclusively from the original manufacturer or their authorized dealers. Electronic parts that are not currently in production or available in stock shall be obtained from NASA identified suppliers or contractor-approved suppliers and the contractor assumes responsibility for the authenticity, inspection, testing and traceability of the part. Contractor-approved suppliers are subject to review and audit by the CO.
This proposed rule contains information collection requirements that requires the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). Accordingly, NASA has submitted a request for approval of a new information collection requirement associated with NFS Case 2017-N010 Detection and Avoidance of Counterfeit Parts to the Office of Management and Budget.
Public reporting burden for this collection of information is estimated to be 2 hours per response including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed and completing and reviewing the collection of information.
The annual reporting burden is estimated as follows based on:
Data reported via GIDEP, reveals that NASA has had only one alert of suspect counterfeit parts associated with a NASA contract within the last 17 years. Additionally, GIDEP alerts across the government have decreased since 2011 to the present. Both the one NASA specific GIDEP alert over the course of 17 years, and the downward trend of GIDEP alerts across the government substantiate the expected burden amounts.
Government procurement.
Accordingly, NASA proposes to amend 48 CFR parts 1812, 1831, 1846, and 1852 as follows:
51 U.S.C. sec. 20113(a) and 48 CFR chapter 1.
The addition reads as follows:
(f)(i) * * *
(T) 1852.246-74, Counterfeit Electronic Part Detection and Avoidance.
(a) Scope. This section implements the requirements of section 823(c)(2)(B), the NASA Transition Authorization Act of 2017 (Pub. L. 115-10).
(b) The costs of counterfeit electronic parts, suspect counterfeit electronic parts, and any corrective action that may be required to remedy the use or inclusion of such parts are unallowable, unless—
(1)(i) The covered contractor, as defined in section 1846.7001, has an operational system to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts that has been reviewed and approved by NASA or the Department of Defense pursuant to 48 CFR 244.303; and
(ii) The covered contractor, including subcontractors, notifies the applicable NASA contracting officer in writing in accordance with 1846.7002(c); or
(2) The counterfeit electronic parts or suspect counterfeit electronic parts were provided to the covered contractor as Government property in accordance with part 45 of the Federal Acquisition Regulation.
This subpart implements section 823(c), the NASA Transition Authorization Act of 2017 (Pub. L. 115-10).
(a) Prescribes policy and procedures for preventing counterfeit electronic parts and suspect counterfeit electronic parts from entering the supply chain when procuring electronic parts or end items, components, parts, or assemblies that contain electronic parts; and
(b) Applies to electronic parts when their presence in the NASA supply chain poses a danger to United States government astronauts, crew, and other personnel and a risk to the agency overall.
(c) Contracting officers, in consultation with the requiring activity, are responsible for making a determination concerning the applicability of this section and the appropriate use of the prescribed contract clauses.
“Authentic part” means a new and unmodified part produced by the original component manufacturer, or a source with the express written authority of the original manufacturer or current design activity, including an authorized aftermarket manufacturer.
“Authentication” means a process to verify that a part is not counterfeit or suspect counterfeit.
“Authorized aftermarket manufacturer” means an organization that fabricates an electronic part under a contract with, or with the express written authority of, the original component manufacturer based on the original component manufacturer's designs, formulas, and/or specifications.
“Authorized supplier” means a supplier, distributor, or an aftermarket manufacturer with a contractual arrangement with, or the express written authority of, the original manufacturer or current design activity to buy, stock, repackage, sell, or distribute the part.
“Contract manufacturer” means a company that produces goods under contract for another company under the label or brand name of that company.
“Contractor-approved supplier” means a supplier that does not have a contractual agreement with the original component manufacturer, but has been qualified as trustworthy by a contractor or subcontractor as having met prescribed counterfeit electronic part detection and avoidance system criteria using established counterfeit prevention industry standards and processes.
“Covered contractor” means a contractor that supplies an electronic part, or a product that contains an electronic part, to NASA.
“Counterfeit electronic part” means an unlawful or unauthorized reproduction, substitution, or alteration that has been knowingly mismarked, misidentified, or otherwise misrepresented to be an authentic, unmodified electronic part from the original manufacturer, or a source with the express written authority of the original manufacturer or current design activity, including an authorized aftermarket manufacturer. Unlawful or unauthorized substitution includes used electronic parts represented as new, or the false identification of grade, serial number, lot number, date code, or performance characteristics.
“Electronic part” means a discrete electronic component, including a microcircuit, transistor, capacitor, resistor, or diode, that is intended for use in a safety or mission critical application.
“Original component manufacturer” means an organization that designs and/or engineers a part and is entitled to any intellectual property rights to that part.
“Original equipment manufacturer” means a company that manufactures products that it has designed from purchased components and sells those products under the company's brand name.
“Original manufacturer” means the original component manufacturer, the original equipment manufacturer, or the contract manufacturer.
“Suspect counterfeit electronic part” means an electronic part for which credible evidence (including, but not limited to, visual inspection or testing) provides reasonable doubt that the electronic part is authentic.
The government and its contractors and subcontractors at all tiers are required to obtain electronic parts as prescribed in this section, whether the electronic parts are procured as discrete items or contained in an assembly.
(a) The covered contractor and subcontractors at all tiers shall obtain electronic parts that are in production or currently available in stock from—
(1) The original manufacturers of the parts;
(2) Their authorized dealers; or
(3) Suppliers who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers.
(b) If electronic parts are not in production or currently available in stock from suppliers as stated in paragraph (a) of this section, the covered contractor shall obtain electronic parts from NASA identified suppliers or contractor-approved suppliers for which—
(1) The covered contractor assumes responsibility for the authenticity of parts; and
(2) The covered contractor performs inspection, testing and authentication of parts; and
(3) The covered contractor obtains traceability information for the electronic parts (
(4) The selection of contractor-approved suppliers is subject to review and audit by the contracting officer.
(c) The covered contractor, including subcontractors, shall notify the applicable NASA contracting officer in writing not later than 30 calendar days after the date the covered contractor becomes aware, or has reason to suspect, that any end item, component, part or material contained in supplies purchased by NASA, or purchased by a covered contractor or subcontractor for delivery to, or on behalf of, NASA, contains a counterfeit electronic part or suspect counterfeit electronic part.
For acquisitions with covered contractors as defined in section 1846.7001, use the clause at 1852.246-74, Contractor Counterfeit Electronic Part Detection and Avoidance, in solicitations and contracts, when procuring—
(a) Electronic parts;
(b) End items, components, parts, or assemblies containing electronic parts; or
(c) Services, if the covered contractor will supply electronic parts or components, parts, or assemblies containing electronic parts as part of the service.
As prescribed in 1846.7003, use the following clause:
(a) Definitions. As used in this clause—
“Authentic part” means a new and unmodified part produced by the original component manufacturer, or a source with the express written authority of the original manufacturer or current design activity, including an authorized aftermarket manufacturer.
“Authentication” means a process to verify that a part is not counterfeit or suspect counterfeit.
“Authorized aftermarket manufacturer” means an organization that fabricates a part under a contract with, or with the express written authority of, the original component manufacturer based on the original component manufacturer's designs, formulas, and/or specifications.
“Authorized supplier” means a supplier, distributor, or an aftermarket manufacturer with a contractual arrangement with, or the express written authority of, the original manufacturer or current design activity to buy, stock, repackage, sell, or distribute the part.
“Contract manufacturer” means a company that produces goods under contract for another company under the label or brand name of that company.
“Contractor-approved supplier” means a supplier that does not have a contractual agreement with the original component manufacturer, but has been qualified by the contractor or subcontractor approved by the contractor or government as having met prescribed counterfeit electronic part detection and avoidance system criteria using established counterfeit prevention industry standards and processes.
“Counterfeit electronic part” means an unlawful or unauthorized reproduction, substitution, or alteration that has been knowingly mismarked, misidentified, or otherwise misrepresented to be an authentic, unmodified electronic part from the original manufacturer, or a source with the express written authority of the original manufacturer or current design activity, including an authorized aftermarket manufacturer. Unlawful or unauthorized substitution includes used electronic parts represented as new, or the false identification of grade, serial number, lot number, date code, or performance characteristics.
“Electronic part” means a discrete electronic component, including a microcircuit, transistor, capacitor, resistor, or diode, that is intended for use in a safety or
“Original component manufacturer” means an organization that designs and/or engineers a part and is entitled to any intellectual property rights to that part.
“Original equipment manufacturer” means a company that manufactures products that it has designed from purchased components and sells those products under the company's brand name.
“Original manufacturer” means the original component manufacturer, the original equipment manufacturer, or the contract manufacturer.
“Suspect counterfeit electronic part” means an electronic part for which credible evidence (including, but not limited to, visual inspection or testing) provides reasonable doubt that the electronic part is authentic.
(b)
(1) Obtain electronic parts that are in production by the original manufacturer or an authorized aftermarket manufacturer or currently available in stock from—
(i) The original manufacturers of the parts;
(ii) Their authorized dealers; or
(iii) Suppliers who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers;
(2) If electronic parts are not in production or currently available in stock from suppliers as stated in paragraph (b) of this clause, the covered contractor shall obtain electronic parts from NASA identified suppliers or contractor-approved suppliers for which—
(i) The covered contractor assumes responsibility for the authenticity of parts; and
(ii) The covered contractor performs inspection, testing and authentication of parts; and
(iii) The covered contractor obtains traceability information for the electronic parts (
(iv) The selection of contractor-approved suppliers is subject to review and audit by the contracting officer.
(c)
(d) Costs related to counterfeit electronic parts and suspect counterfeit electronic parts. In accordance with section 823(c)(2)(B), the NASA Transition Authorization Act of 2017 (Pub. L. 115-10), the costs of counterfeit electronic parts and suspect counterfeit electronic parts and the costs of rework or corrective action that may be required to remedy the use or inclusion of such parts are unallowable, unless—
(1) The covered contractor has a system to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts that has been reviewed and approved by NASA or the Department of Defense pursuant to 48 CFR 244.303; and
(2) The covered contractor, including a subcontractor, notifies the applicable NASA contracting officer in writing in accordance with paragraph (c) of this clause; or
(3) The counterfeit electronic parts or suspect counterfeit electronic parts were provided to the covered contractor as Government property in accordance with part 45 of the Federal Acquisition Regulation.
(e)
(f)
American Battle Monuments Commission.
Notice of performance review board appointments.
This notice provides the names of individuals who have been appointed to serve as members of the American Battle Monuments Commission Performance Review Board. The publication of these appointments is required by the Civil Service Reform Act of 1978.
These appointments are effective as of 27 December 2019.
Jamilyn Smyser, Chief of Human Resources and Administration, American Battle Monuments Commission, Courthouse Plaza II Suite 500, 2300 Clarendon Boulevard, Arlington, Virginia 22201. Telephone number: (703) 696-7969.
U.S. Census Bureau, Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. The information to be collected is the Housing Vacancy Survey, conducted in conjunction with the Current Population Survey.
To ensure consideration, written comments must be submitted on or before March 9, 2020.
Direct all written comments to Lisa A. Clement, Survey Director, Current Population and American Time Use Surveys, U.S. Census Bureau, 4600 Silver Hill Road, ADDP/CPS HQ-7H141, Washington, DC 20233 (or via the internet at
Requests for additional information or copies of the information collection instrument(s) and instructions should be directed to Tim J. Marshall, U.S. Census Bureau, ADDP/CPS HQ-7H143, Washington, DC 20233-8400, (301) 763-3806 (or via the internet at
The Census Bureau plans to request clearance from the Office of Management and Budget (OMB) for the collection of data concerning the Housing Vacancy Survey (HVS) to be conducted in conjunction with the Current Population Survey (CPS). The Census Bureau sponsors the HVS, which collects data from a sample of vacant housing units identified in the monthly CPS sample. The current clearance expires June 30, 2020.
Collection of the HVS in conjunction with the Current Population Survey began in 1956, and serves a broad array of data users. The HVS provides the only quarterly statistics on rental vacancy rates and homeownership rates for the United States, the four census regions, the 50 states and the District of Columbia, and the 75 largest metropolitan statistical areas (MSAs). Private and public sector organizations use these rates extensively to gauge and analyze the housing market with regard to supply, cost, and affordability at various points in time.
Policy analysts, program managers, budget analysts, and congressional staff use these data to advise the executive and legislative branches of government with respect to the number and characteristics of units available for occupancy and the suitability of housing initiatives. These data are a component of consumer expenditure statistics. They also are used to project mortgage demand and to measure the adequacy of the supply of rental and homeowner units. In addition, investment firms use the HVS data to analyze market trends and for economic forecasting.
The HVS is collected by both personal visit and telephone interviews in conjunction with the CPS interviewing. The Census Bureau conducts HVS interviews using computer-assisted interviewing with landlords or other knowledgeable people concerning vacant housing units identified in the monthly CPS sample and meeting certain criteria.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meeting.
The New England Fishery Management Council (Council) is scheduling a public meeting of its Groundfish Advisory Panel to consider actions affecting New England fisheries in the exclusive economic zone (EEZ). Recommendations from this group will be brought to the full Council for formal consideration and action, if appropriate.
This meeting will be held on Tuesday, January 21, 2020 at 12:30 p.m.
The meeting will be held at the Four Points Sheraton, One Audubon Road, Wakefield, MA 01880; Phone: (781) 245-9300.
Thomas A. Nies, Executive Director, New England Fishery Management Council; telephone: (978) 465-0492.
The Groundfish Advisory will discuss Amendment 23: Groundfish Monitoring to review the draft Environmental Impact Statement (DEIS) and recommend preliminary preferred alternatives to the Groundfish Committee. They will also receive an overview of the Council's 2020 priorities. Other business may be discussed as necessary.
Although non-emergency issues not contained in this agenda may come before this group for discussion, those issues may not be the subject of formal action during these meetings. Action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council's intent to take final action to address the emergency.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Thomas A. Nies, Executive Director, at (978) 465-0492, at least 5 days prior to the meeting date. This meeting will be recorded. Consistent with 16 U.S.C. 1852, a copy of the recording is available upon request.
16 U.S.C. 1801
National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before March 9, 2020.
Direct all written comments to Adrienne Thomas, PRA Officer, NOAA, 151 Patton Avenue, Room 159, Asheville, NC 28801 (or via the internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Dr. Stephen Stohs, Southwest Fisheries Science Center—La Jolla Laboratory, La Jolla, CA 92037, (858) 546-7084,
This request is for a review of a regular submission (extension without change of a currently approved information collection).
The Southwest Fisheries Science Center—La Jolla Laboratory (SWFSC) proposes to collect information from the different types of fishing vessels operating in the U.S. West Coast Commercial Swordfish Fishery (WCCSF). Requested information will include different components of operating costs and earnings for the various types of vessels in the U.S. west coast commercial swordfish fleet.
This economic data collection effort for the WCCSF will improve the SWFSC's capability to do the following: (1) Describe and monitor economic performance (
A standardized survey will be administered via in-person interview, telephone interview and/or mail to all WCSF participants.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
NMFS and the Assessment Oversight Panel will convene the Red Hake Stock Structure Research Track Assessment Peer Review Meeting for the purpose of reviewing the stock structure of Red Hake. The Research Track Assessment Peer Review is a formal scientific peer-review process for evaluating and presenting stock assessment results to managers for fish stocks in the offshore U.S. waters of the northwest Atlantic. Assessments are prepared by Stock Assessment Workshop (SAW) working groups and reviewed by an independent panel of stock assessment experts called the Assessment Oversight Panel (AOP). The public is invited to attend the presentations and discussions between the review panel and the scientists who have participated in the stock assessment process.
The public portion of the Red Hake Stock Structure Research Track Assessment Peer Review Meeting will be held from March 9, 2020-March 12, 2020. The meeting will commence on March 12, 2020 at 5:00 p.m. Eastern Standard Time. Please see
The meeting will be held in Stephen H. Clark Conference Room in the Aquarium Building of the National Marine Fisheries Service, Northeast Fisheries Science Center (NEFSC), 166 Water Street, Woods Hole, MA 02543.
Michele Traver, 508-495-2195; email:
For further information, please visit the NEFSC website at
Daily Meeting Agenda—Red Hake Stock Structure Research Track Peer Review Meeting (Subject to Change; All times are approximate and may be changed at the discretion of the Peer Review Chair).
The meeting is open to the public; however, during the `Report Writing' session on Wednesday, March 11th, and Thursday, March 12th, the public should not engage in discussion with the Peer Review Panel.
This meeting is physically accessible to people with disabilities. Special requests should be directed to Michele Traver, 508-495-2195, at least 5 days prior to the meeting date.
National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
To ensure consideration, written or on-line comments must be submitted on or before March 9, 2020.
Direct all written comments to Adrienne Thomas, PRA Officer, NOAA, 151 Patton Avenue, Room 159, Asheville, NC 28801 (or via the internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Jerod Cook, (907) 772-2285;
The Marine Mammal Protection Act (MMPA) (16 U.S.C. 1361
The information required by 50 CFR 216.23 is of two types. Applications: Information is required to identify the applicant as a tanner/agent in order to preclude prosecution under the MMPA and to determine that he/she has an acceptable record keeping program to accurately account for those marine mammal products received. This information serves as a deterrent for those individuals who might use this registration program for entering prohibited marine mammal products into interstate commerce. Reports: Information is also needed annually to evaluate the agent/tanner's activities during the year, and his/her procedures for bookkeeping and yearly inventory to assure NMFS, the Marine Mammal Commission, and the general public that prohibited marine mammal products were not being transshipped through registered agents.
The reporting requirements are: Report in writing to the Assistant Administrator for Fisheries, NMFS, any changes in the facts stated in Registrant's applications for this Certificate of Registration within 30 days of such change; maintain current records of each transaction authorized stating the marine mammals or marine mammal parts or products involved, from whom received, any processing accomplished, to whom returned, and the date of each such transaction. These records shall be kept separate and apart from other records maintained in the ordinary course of business and shall be retrained for not less than three years; and annually, during the month of January, send certified copies of such records (annual report) to the Assistant Administrator for Fisheries.
Paper documentation is submitted to meet the requirements found at 50 CFR 216.23(c).
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; issuance of two incidental harassment authorizations.
In accordance with the regulations implementing the Marine Mammal Protection Act (MMPA) as amended, notification is hereby given that NMFS has issued two consecutive incidental harassment authorizations (IHA) to the Alaska Department of Transportation and Public Facilities (ADOT&PF) to incidentally harass, by Level A and Level B harassment, marine mammals during two years of activity related to ferry berth improvements and construction in Tongass Narrows, near Ketchikan, AK.
The Phase 1 Authorization is effective from March 1, 2020 to February 28, 2021. The Phase 2 Authorization is effective from March 1, 2021 to February 28, 2022.
Rob Pauline, Office of Protected Resources, NMFS, (301) 427-8401. Electronic copies of the application and supporting documents, as well as a list of the references cited in this document, may be obtained online at:
The MMPA prohibits the “take” of marine mammals, with certain exceptions. Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
Authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s) and will not have an unmitigable adverse impact on the availability of the species or stock(s) for taking for subsistence uses (where relevant). Further, NMFS must prescribe the permissible methods of taking and other “means of effecting the least practicable adverse impact” on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of such species or stocks for taking for certain subsistence uses
On September 11, 2018, NMFS received a request from ADOT&PF for two consecutive IHAs to take marine mammals incidental to ferry berth improvements and construction in Tongass Narrows, near Ketchikan, Alaska. The application was deemed adequate and complete on June 11, 2019. ADOT&PF's request was for take of a small number of eight species of marine mammals, by Level B harassment. Of those eight species, three (harbor seal (
ADOT&PF is planning to make improvements to existing ferry berths and construct new ferry berths on Gravina Island and Revilla Island in Tongass Narrows, near Ketchikan in southeast Alaska. These ferry facilities provide the only public access between the city of Ketchikan, AK on Revillagigedo (Revilla) Island, and the Ketchikan International Airport on Gravina Island (see Figure 1-2 in application). The project's activities that have the potential to take marine mammals, by Level A harassment and Level B harassment, include vibratory and impact pile driving, drilling operations for pile installation (rock socketing), and vibratory pile removal.
Planned construction includes the installation of new ferry facilities and the renovation of existing structures. The marine construction associated with the planned activities will occur during two distinct year-long phases, and take associated with these phases would be authorized in separate, consecutive IHAs. Phase 1, which primarily includes both improvement of existing facilities and construction of new facilities on both islands, is planned to occur between March 1, 2020 to February 28, 2021, and Phase 2, which includes the improvement/refurbishing of existing facilities on both islands, is planned to occur from March 1, 2021, to February 28, 2022.
In September 2019, as the ADOT&PF progressed its plans for the 2020 construction season in Tongass Narrows, it became clear that considerations associated with the contracting strategy for the project would likely result in two or three construction sites that could be active concurrently during Phase 1. It is not anticipated that more than one construction site will be active at any time during Phase 2. When the proposed IHAs (84 FR 34134; July 17, 2019) was published, concurrent pile driving and removal activities were not expected to occur. However, on October 23, 2019, ADOT&PF submitted a memorandum to NMFS that outlined the changes to the project including concurrent pile driving and removal activities which resulted in revised monitoring zones and take estimates. All other information had been previously analyzed in the FR Notice for the two Proposed IHAs and remains unchanged. The underwater activities that may affect marine mammals, including species listed under the Endangered Species Act (ESA), still include only vibratory and impact pile installation, vibratory pile removal, and drilling of rock sockets. Pile numbers and sizes also remain consistent with the information in the proposed IHAs (84 FR 34134; July 17, 2019).
Section 101(a)(5)(D) specifies that “the Secretary shall authorize [incidental take by harassment] for periods of not more than 1 year.” In this case, the ADOT&PF knew that it would take two years to complete the entire project, and knew which activities would be conducted in each of the two years. NMFS had sufficient information to determine which species would be affected, the estimated amount and type of take that would result from the activities, and the estimated impacts to subsistence use from ADOT&PF's activities over each of the two years of the project. Thus NMFS determined that the proposed activities met all statutory requirements and developed appropriate mitigation, monitoring, and reporting requirements for both years. It is therefore appropriate for NMFS to issue IHAs for each of the two consecutive years of the project.
In-water construction of Phase 1 is scheduled to begin on March 1, 2020 and continue through February 28, 2021. In-water construction of Phase 2 is scheduled to begin on March 1, 2021 and continue through February 28, 2022. However, in-water pile installation/removal (including drilling) may occur simultaneously at one or more component sites during Phase 1 only. Pile installation will occur intermittently over the work period, for durations of minutes to hours at a time depending on weather, construction and mechanical delays, marine mammal shutdowns, and other potential delays and logistical constraints. There are approximately 101 days of in-water construction planned for Phase 1 assuming that two pieces of equipment are used concurrently on 30 percent of planned driving days. Use of three hammers on some days will further reduce the total number of days of pile installation. ADOT&PF anticipates that Phase 2 will require 27 days of in-water construction and will not include any concurrent pile installation or removal activities.
The Tongass Narrows project is located within the City of Ketchikan, Alaska. Improvements and new construction on Revilla Island will occur approximately 2.6 miles north of downtown Ketchikan. A detailed description of the area is provided in the proposed IHAs (84 FR 34134; July 17, 2019) and is not repeated here. Please see that document for more information.
As discussed earlier, this project is composed of two consecutive phases with take of marine mammals from each phase authorized through separate IHAs. When necessary, the description of activity is broken down by phase below, but information relevant to both phases is presented together. Planned activities with potential to take marine mammals include the noise generated by drilling of rock sockets into bedrock for steel pipe piles, vibratory removal of steel pipe piles, vibratory installation of sheet piles, and vibratory and impact installation of steel pipe piles. Each phase of the project will include different activities that are described in detail in the following sections.
ADOT&PF has revised its contracting approach and will use multiple contractors at different locations during Phase 1. While this change may result in up to three construction sites being active during the same timeframe during Phase 1, it will not change the construction phasing or the amount or extent of activity completed in either Phase 1 or Phase 2. The potential exists during Phase 1 for pile installation or removal to occur at all three locations on the same day and it is likely that two or three hammers or a combination of hammers and down-the-hole (DTH) drills will be used on the same day.
Four methods of pile installation are planned. These include use of vibratory and impact hammers, DTH drilling of rock sockets, and installation of tension anchors at some locations. Most piles will be installed vertically (plumb), but some will be installed at an angle (battered). Tension anchors will be used to secure some piles to the bedrock to withstand uplift forces. Rock sockets will be drilled at other locations where overlying sediments are too shallow to adequately secure the bottom portion of the pile. Some piles will be seated in rock sockets as well as anchored with tension anchors. A vibratory hammer will be used to install 44 temporary template piles, no greater than 20 inches in diameter, to a depth of 25 feet or less. The total duration of vibratory installation and subsequent removal of temporary piles will be approximately 22 hours spread over multiple days as shown in Table 2, and will take place within the same days as permanent pile installation. Installation and removal of temporary piles is therefore not anticipated to add to the overall estimated 101 days of pile installation and removal for Phase 1 as described in the footnote for Table 1.
The steel sheet piles for the bulkheads are of a Z-shape. Each pile is approximately 28 to 30 inches wide, and they interlock together to form a continuous wall. These sheet piles will be installed into the existing ground at elevations varying from +8 inches to +26 inches mean lower low water. Most of this work is expected to be done at lower tides so that in-water pile driving work is minimized. However, some installation work below the tidal elevations (in water) can be expected. The ground where the sheet piles will be installed is comprised of existing rubble mound slopes. Some excavation work will be needed to temporarily remove the large rocks prior to driving the sheet piles.
As shown in Table 1, it is estimated that some piles will require 50 strikes from the impact hammer and others will require 200 strikes. In general, projects on Gravina Island will require approximately 50 strikes and projects on Revilla Island will require approximately 200 strikes. These differences are based on sediment characteristics, depth to bedrock, and the planned need for further drilling once at bedrock.
Each of the four permanent project components in Phase 1 will include installation of steel pipe piles that are 18, 24, or 30 inches in diameter. Temporary piles installed and removed during Phase 1 to support templates for permanent piles will be a maximum of 20 inches in diameter. Two of the components (Revilla and Gravina New Ferry Berths) will require the installation of steel sheet piles that will comprise the bulkhead abutments and are 27.6 or 30.3 inches in width. These sheet piles will be installed using vibratory driving at elevations varying from +8 inches to +26 inches mean lower low-water. Most of this work is expected to be done at lower tides so that in-water pile driving work is minimized. However, some installation work below the tidal elevations (in water) can be expected. The ground where the sheet piles will be installed is comprised of existing rubble mound
The estimated installation and removal rates for Phase 1 are 1.5 permanent pipe piles per day, 10 permanent sheet piles per day, and 4 to 6 temporary piles per day. Different types of piles may be installed or removed within a day.
Project components are briefly described below and Table 1 shows the number and size of piles broken down by the individual components of Phase 1. For additional information on how these piles will be configured, and what structures they will make up, please refer to the IHA Application.
The two project components in Phase 2 will include installation of steel pipe piles that are 16, 24 and 30 inches in diameter as shown in Table 3. Methods for vibratory and impact installation of temporary and permanent piles, drilling of rock sockets, and installation of tension anchors will be consistent with those described above. The estimated installation and removal rate for Phase
One 24-inch diameter pile will be installed at the existing Revilla ferry berth. Fifteen 24-inch diameter piles and eight 30-inch-diameter piles will be installed at the existing Gravina ferry berth. A total of 10 piles will be removed to accommodate upgrades to the existing Revilla Island and Gravina Island ferry berths. One 24-inch pile will be removed from the floating fender dolphin at the existing Revilla ferry berth. The nine 16-inch-diameter piles that support the three existing dolphins at the Gravina ferry berth will also be removed. It is anticipated that, when possible, existing piles will be extracted by directly lifting them with a crane. A vibratory hammer will be used if necessary to extract piles that cannot be directly lifted. Installation of sheet piles is not planned during Phase 2.
Mitigation, monitoring, and reporting measures are described in detail later in this document (please see the
A notice of NMFS's proposal to issue an IHA to ADOT&PF was published in the
NMFS had assumed that impacts from tension anchoring were discountable because the anchoring process does not generate steel-on-steel drilling noise and because the anchoring noise occurs in isolation from the water column. In one instance, NMFS did use JASCO sound source verification data from DTH drilling at Kodiak Pier 1. NMFS used this to establish a proxy source level of 167.7 dB RMS for rock anchor drilling (cited as both Warner and Austin 2016; and Denes
A recent report by Reyff and Heyvaert (2019) recorded a level of 157 dB RMS for rock anchor drilling near Skagway, AK. The authors noted that this report represents a small amount of data, which was highly variable, and the conditions at testing sites need to be considered before applying the findings to projects at other locations. The authors treated rock anchor drilling as a continuous noise and calculated that the Level B harassment isopleth was 205 meters. By comparison, the calculated distance to the 120 dB rms threshold for continuous noise using a source level of 166 dB rms (Denes
The Commission further commented that the source value of 166 dB RMS used by NMFS for DTH/rock socketing was too low considering that Reyff and Heyvaert (2019) reported a value of 179 dB RMS. The value used by NMFS was adopted from DTH drilling at Kodiak and represents the median from Denes
There is also some uncertainty about whether these sound sources should be classified as impulsive or continuous noise sources, since they often contain characteristics of both. The classification selected would have a significant effect on the size of the resulting Level A harassment and Level B harassment zones. Here DTH/rock socketing is treated as a continuous noise source because it does not demonstrate rapid rise times and decay of sound pressure level that is typical of impulsive noises
For these particular IHAs, NMFS has determined that the potential impacts to marine mammals from tension anchoring are discountable. NMFS also determined it is appropriate to adopt 166 dB RMS as a proxy for DTH/rock socket drilling. NMFS will continue to investigate noise characteristics associated with these relatively new pile driving technologies. We will also work on the development of guidance that could be used by future applicants when submitting applications for incidental take authorizations that utilize these methods.
The Commission's comment likely reflects concern regarding the potential for cumulative impacts or cumulative effects to occur. NMFS has determined that the concurrent operation of up to three driving devices would result in a negligible impact to affected species. The required mitigation and monitoring measures in combination with the short duration of any overlapping activities (27 days at most, but likely much fewer), would result in potential impacts to marine mammals that are both temporary and relatively minor. Further, NMFS does not expect that cumulative impacts to marine mammals associated with the potential overlap of two IHAs would affect the reproduction or survival of any individual marine mammals, let alone annual rates of recruitment or survival, either alone or in combination with other past, present, or ongoing activities. Additionally, we note two important facts: (1) The MMC appears to suggest that if the activities authorized in Phase 1 overlapped with the activities of Phase 2, then the impacts would necessarily be greater—but this is not a justified assumption. While some individual(s) could potentially be temporarily exposed to higher sound levels in a slightly larger area across a day or several, if that happened it would mean that the pile driving would take fewer days to complete overall, which could potentially reduce the overall impact to the exposed animals; and (2) while it is important to consider cumulative impacts in the context of NEPA (which we have), as with any two independent IHAs, the small numbers and negligible impact determinations are made in the context of the impacts of each of the specified activities considered in each of the separate IHAs.
As described above, ADOT&PF realized in August 2019 that its contracting strategy for this project would likely result in two or three
The extent to which the use of more than one hammer or DTH drill could occur within a day or simultaneously is unknown and difficult to quantify. Use of more than one hammer for pile installation on the same day (whether simultaneous or not) would result in a reduction in the total number of days of pile installation by increasing the number of piles that can be installed per day. The overall number of days of pile installation would decrease with use of two or three pieces of equipment. With two pieces of equipment used on 30 percent of construction days, the anticipated project duration would be reduced from a total of 144 days as described in the proposed IHAs to 101 days as described in this document. Take estimates for all species uthorized for take, except for Minke whale have been revised and all changes are noted in the
Sections 3 and 4 of the application summarize available information regarding status and trends, distribution and habitat preferences, and behavior and life history, of the potentially affected species. Additional information regarding population trends and threats may be found in NMFS's Stock Assessment Reports (SARs;
Table 5 lists all species with expected potential for occurrence in waters near Ketchikan, Alaska and summarizes information related to the species or stock, including regulatory status under the MMPA and ESA and potential biological removal (PBR), where known. For taxonomy, we follow Committee on Taxonomy (2016). PBR is defined by the MMPA as the maximum number of animals, not including natural mortalities, that may be removed from a marine mammal stock while allowing that stock to reach or maintain its optimum sustainable population (as described in NMFS's SARs). While no mortality is anticipated or authorized here, PBR and annual serious injury and mortality from anthropogenic sources are included here as gross indicators of the status of the species and other threats.
Marine mammal abundance estimates presented in this document represent the total number of individuals that make up a given stock or the total number estimated within a particular study or survey area. NMFS's stock abundance estimates for most species represent the total estimate of individuals within the geographic area, if known, that comprises that stock. For some species, this geographic area may extend beyond U.S. waters. All managed stocks in this region are assessed in NMFS's U.S. Alaska SARs (
All species that could potentially occur in the project areas are included in Table 5. However, the spatial occurrence of gray whale and fin whale is such that take is not expected to occur, and they are not discussed further beyond the explanation provided here. Gray whales have not been reported by any local experts or recorded in monitoring reports and it would be extremely unlikely for a gray whale to enter Tongass Narrows or the small portions of Revillagigedo Channel this project will impact. Similarly for fin whale, sightings have not been reported and it would be unlikely for a fin whale to enter the project area as they are generally associated with deeper, offshore waters.
A detailed description of the species likely to be affected by the Tongass Narrows Ferry Terminal Modifications and Improvements project, including brief introductions to the species and relevant stocks as well as available information regarding population trends and threats, and information regarding local occurrence, were provided in the proposed IHAs (84 FR 34134; July 17, 2019). Since that time, we are not aware of any changes in the status of these species and stocks; therefore, detailed descriptions are not provided here. Please refer to that
The effects of underwater noise from ADOT&PF's activities have the potential to result in behavioral harassment of marine mammals in the vicinity of the action area. The proposed IHAs (84 FR 34134; July 17, 2019) included a discussion of the effects of anthropogenic noise on marine mammals, therefore that information is not repeated here; please refer to that
The main impact associated with ADOT&PF's activities would be temporarily elevated sound levels and the associated direct effects on marine mammals. The project would not result in permanent impacts to habitats used directly by marine mammals, such as haulout sites, but may have potential short-term impacts to food sources such as forage fish, and minor impacts to the immediate substrate during installation and removal of piles during the pile driving project. These potential effects are discussed in detail in the proposed IHAs (84 FR 34134; July 17, 2019), therefore that information is not repeated here; please refer to that
This section provides an estimate of the number of incidental takes that are reasonably expected to occur and, therefore, are authorized through these IHAs, which informed both NMFS' consideration of “small numbers” and the negligible impact determinations.
Harassment is the only type of take expected to result from these activities. Except with respect to certain activities not pertinent here, section 3(18) of the MMPA defines “harassment” as any act of pursuit, torment, or annoyance, which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
Authorized takes would primarily be by Level B harassment, as use of the sources (
As described previously, no mortality is anticipated or authorized for this activity. Below we describe how the take is estimated.
Generally speaking, we estimate take by considering: (1) Acoustic thresholds above which the best available science indicates marine mammals will be behaviorally harassed or incur some degree of permanent hearing impairment; (2) the area or volume of water that will be ensonified above these levels in a day; (3) the density or occurrence of marine mammals within these ensonified areas; and (4) and the number of days of activities. We note that while these basic factors can contribute to a basic calculation to provide an initial prediction of takes, additional information that can qualitatively inform take estimates is also sometimes available (
Using the best available science, NMFS has developed acoustic thresholds that identify the received level of underwater sound above which exposed marine mammals would be reasonably expected to be behaviorally harassed (equated to Level B
Level B Harassment for non-explosive sources—Though significantly driven by received level, the onset of behavioral disturbance from anthropogenic noise exposure is also informed to varying degrees by other factors related to the source (
Both phases of ADOT&PF's planned activity include the use of continuous (vibratory pile driving/removal and drilling) and impulsive (impact pile driving) sources and, therefore, both the 120 and 160 dB re 1 μPa (rms) thresholds are applicable.
Level A harassment for non-explosive sources—NMFS' Technical Guidance for Assessing the Effects of Anthropogenic Sound on Marine Mammal Hearing (Version 2.0) (NMFS, 2018) identifies dual criteria to assess auditory injury (Level A harassment) to five different marine mammal groups (based on hearing sensitivity) as a result of exposure to noise from two different types of sources (impulsive or non-impulsive).
These thresholds are provided in Table 6 below. The references, analysis, and methodology used in the development of the thresholds are described in NMFS 2018 Technical Guidance, which may be accessed at
Here, we describe operational and environmental parameters of the activity that will feed into identifying the area ensonified above the acoustic thresholds, which include source levels and transmission loss coefficient.
The sound field in the project area is the existing background noise plus additional construction noise from the project. Marine mammals are expected to be affected via sound generated by the primary components of the project (
Vibratory hammers produce constant sound when operating, and produce vibrations that liquefy the sediment surrounding the pile, allowing it to penetrate to the required seating depth. An impact hammer would then generally be used to place the pile at its intended depth. The actual durations of each installation method vary depending on the type and size of the pile. An impact hammer is a steel device that works like a piston, producing a series of independent strikes to drive the pile. Impact hammering typically generates the loudest noise associated with pile installation.
In order to calculate distances to the Level A harassment and Level B harassment sound thresholds for piles of various sizes being used in this project, NMFS used acoustic monitoring data from other locations to develop source levels (see Table 7). Note that piles of differing sizes have different sound source levels (SSLs).
Empirical data from recent ADOT&PF sound source verification (SSV) studies were used to estimate sound source levels from Ketchikan for vibratory and impact driving of 30-inch steel pipe piles and Kodiak for drilling (Denes
For vibratory driving of 24-inch steel piles, data from a Navy pile driving project in the Puget Sound, WA was reviewed (Navy, 2015). From this
For vibratory driving of both 27.6-inch and 30.3-inch sheet piles, ADOT&PF used a source level of 160 dB rms. These source levels were reported in Caltrans (2015) summary tables for 24-inch steel sheet piles, and NMFS concurs that this value was an acceptable proxy.
Finally, ADOT&PF used source values of 177 dB SEL and 190 dB rms for impact driving of 24-inch and 18-inch steel piles. These values were determined based on summary values presented in Caltrans (2015) for impact driving of 24-inch steel piles. NMFS concurs that the same source value was an acceptable proxy for impact driving of 18-inch steel piles.
ADOT&PF plans to employ the simultaneous use of two or more noise sources which can create overlapping sound fields that result in additive effects of sound from the different hammers under certain conditions (NMFS 2018, WSDOT 2019). The combined source levels can be calculated using rules of decibel addition described below and shown in Table 8. Overlapping sound fields created by use of more than one hammer are handled differently for impact and vibratory hammers. The use of two impact hammers simultaneously is unlikely to result in the two hammers operating in synchrony therefore, the sound pressure levels will not be adjusted regardless of the distance between the hammers. In this case, each impact hammer will be considered to have its own independent harassment zones. Sound from two or more continuous sources near the same location results in louder sound levels than from a single source. NMFS is treating DTH drilling as a continuous noise source for this project and it will be considered a similar noise to vibratory hammering. The sound levels from continuous sources cannot be added by standard addition because the decibel is measured on a logarithmic scale. For example, two sounds of equal level (plus or minus 1 dB) combine to raise the sound level by 3 dB. However, if two sounds differ by more than 10 dB, there is no combined increase in the sound level; the higher output covers any other sound. For marine mammal monitoring purposes, if the isopleth from one sound source encompasses a second sound source over a free sound field (
For simultaneous use of three or more hammers or DTH drills, the three pieces with the highest noise levels must be identified. The same rules for decibel addition are then applied to the two lowest source levels of the three. The resulting combined source level is then added to the third remaining source level using the same rules. For example, if two DTH hammers (166 dB rms each) are used simultaneously with vibratory installation of a 24-inch pile (161 dB rms), first the two lowest levels are added together using the rules of decibel addition: 166−161 = 5, and therefore 1 dB is added to 166 dB as shown in Table 8, resulting in a combined noise level of 167 dB for the two pieces of equipment. Then 167 is added to the noise level of the third piece of equipment, 166. Since 167−166 is 1, 3 dB are added to 167, resulting in a combined noise level for all equipment of 170 dB as shown in Table 8.
At this stage in project planning, it is difficult to predict when or where each of the two or three contractors or construction crews may be working, and therefore, is also difficult to predict which combinations of activities might occur simultaneously and for how long. The Phase 1 sound source levels were calculated for all possible combinations of pile installation and removal using two and three vibratory hammers and/or two DTH drills and are shown in Tables 9, 10, 11, and 12. The combined
Simultaneous in-water pile installation and removal will not occur during Phase 2 of the Tongass Narrows Project, and therefore this possibility was not analyzed. As described in the proposed IHAs, in-water pile installation and removal on the Revilla Island side of the Narrows during Phase 2 will be limited to no more than 2 hours, and, as agreed by ADOT&PF, the IHA will require that those 2 hours not coincide with in-water pile installation/removal on Gravina Island.
Transmission loss (TL) is the decrease in acoustic intensity as an acoustic pressure wave propagates out from a source. TL parameters vary with frequency, temperature, sea conditions, current, source and receiver depth, water depth, water chemistry, and bottom composition and topography. The general formula for underwater TL is:
This formula neglects loss due to scattering and absorption, which is assumed to be zero here. The degree to which underwater sound propagates away from a sound source is dependent on a variety of factors, most notably the water bathymetry and presence or absence of reflective or absorptive conditions including in-water structures and sediments. Spherical spreading occurs in a perfectly unobstructed (free-field) environment not limited by depth or water surface, resulting in a 6 dB reduction in sound level for each doubling of distance from the source (20*log[range]). Cylindrical spreading occurs in an environment in which sound propagation is bounded by the water surface and sea bottom, resulting in a reduction of 3 dB in sound level for each doubling of distance from the source (10*log[range]). A practical spreading value of fifteen is often used under conditions, such as at Tongass Narrows, where water generally increases with depth as the receiver moves away from pile driving locations, resulting in an expected propagation environment that would lie between spherical and cylindrical spreading loss conditions.
Using the practical spreading model, ADOT&PF determined underwater noise would fall below the behavioral effects threshold of 120 dB rms for marine mammals at a maximum radial distance of 12,023 m for rock socket drilling. This distance determines the maximum Level B harassment zone for the project. Other activities, including vibratory and impact pile driving, will have smaller Level B harassment zones. All Level B harassment isopleths are reported in Table 13 and Table 14 below. It should be noted that based on the geography of Tongass Narrows and the surrounding islands, sound will not reach the full distance of the Level B harassment isopleth in all directions. Generally, due to interaction with land, only a thin slice of the possible area is ensonified to the full distance of the Level B harassment isopleth.
The Level B harassment zone distance was determined based on calculating the combination of simultaneously installed piles, and their resulting combined source level through decibel addition, as shown in Table 14. For each combined source level, the Level B harassment is consistent, regardless of the combination of equipment. Level B harassment zones range from 7,356 meters (vibratory installation of two sheet piles or two 24-inch round piles simultaneously) to 21,544 meters (drilling for two piles and simultaneous vibratory installation of a 30-inch pile).
These larger zones are truncated to the southeast by islands, which prevent propagation of sound in that direction beyond the confines of Tongass Narrows. To the northwest of Tongass Narrows, combined sound levels that equal or exceed 167 dB rms extend into Clarence Strait before attenuating to sound levels that are presumably below 120 dB rms. The maximum size of the ensonified area in Clarence Strait is 21.3 square kilometers (km
In some cases, Level B harassment zones for pile combinations are smaller than the Level B harassment zone for DTH drilling with a single drill, which is 12,023 meters (Table 14). Only the Level B harassment zones for pile combinations equal to or exceeding 167 dB rms extend past the 12,023-meter zone analyzed in the proposed IHAs. All combinations of two vibratory hammers result in Level B harassment zones that are smaller than 12,023 meters in radius (Table 9). To reach the 167 dB rms threshold with only vibratory pile installation (no DTH drilling), three vibratory hammers would have to simultaneously install 30-inch piles Table 11). It is possible, but unlikely, that this would occur, given that the New Gravina Island Shuttle Ferry Berth/Related Terminal Improvements Project includes vibratory installation of only eight 30-inch piles for 15 minutes each, or a total of 2 hours of vibratory installation; the remaining 66 piles for this project are 24 inches in diameter.
ADOT&PF assumes that the 2 hours of simultaneous installation of 30-inch piles represents 2 days maximum when the Project's Level B harassment zone could briefly exceed 12,023 meters. All other combinations of three vibratory hammers will have Level B harassment zones that are smaller than 12,023 meters in radius and are confined within Tongass Narrows, and effects to this area were analyzed in the proposed IHAs.
Combinations of one DTH drill with a vibratory hammer, two DTH drills, and two DTH drills with a vibratory hammer also have source levels that equal or exceed 167 dB rms (Tables 9, 10, 11, and 12) and Level B harassment zones that exceed 12,023 meters (Table 14). No DTH drilling will occur during construction on Revilla Island. One or two DTH drills could be used for construction of the New Gravina Island Shuttle Ferry Berth/Related Terminal Improvements Project and the Gravina Freight Facility and Gravina Airport Ferry Layup Facility on the same day and/or simultaneously.
Use of at least one DTH drill simultaneously with a second DTH drill or one or two vibratory hammers is the most likely combination of multiple pieces of equipment that would result in Level B harassment zones that exceed 12,023 meters. It is estimated that construction of the New Gravina Island Shuttle Ferry Berth will require the most DTH drilling, with an estimated 49 days at a production rate of 1.5 piles per day (approximately 180 minutes of DTH drilling per day). On the days when DTH drilling occurs, simultaneous use of one or more vibratory hammers or a second DTH drill could also occur, resulting in a Level B harassment zone that potentially could exceed 12,023 meters for a brief period each day.
In total, the Level B harassment zone could exceed the previously analyzed 12,023 meters on up to 51 days (2 days when three 30-inch piles are likely to be installed simultaneously plus 49 days when a DTH drill could be used in combination with a second DTH drill or vibratory hammers, for 51 days total). However, use of multiple pieces of equipment, whether simultaneous or on the same day, results in an increased production rate as more piles per day are installed. This decreases the total number of days of pile installation from 144 to 101 days (duration of the project) and decreases the number of days when the Level B harassment zone size could exceed 12,023 meters.
When the NMFS Technical Guidance (2016) was published, in recognition of the fact that ensonified area/volume could be more technically challenging to predict because of the duration component in the new thresholds, we developed a User Spreadsheet that includes tools to help predict a simple isopleth that can be used in conjunction with marine mammal density or occurrence to help predict takes. We note that because of some of the assumptions included in the methods used for these tools, we anticipate that isopleths produced are typically going to be overestimates of some degree, which may result in some degree of overestimate of take by Level A harassment. However, these tools offer the best way to predict appropriate isopleths when more sophisticated 3D modeling methods are not available, and NMFS continues to develop ways to quantitatively refine these tools, and will qualitatively address the output where appropriate. For stationary sources such as impact/vibratory pile driving or drilling, the NMFS User Spreadsheet predicts the closest distance at which, if a marine mammal remained at that distance the whole duration of the activity, it would not incur PTS. Inputs used in the User Spreadsheet, and the resulting isopleths are reported below (Table 15).
Level A harassment thresholds for impulsive sound sources (impact pile driving) are defined for both SELcum and Peak SPL with the threshold that results in the largest modeled isopleth for each marine mammal hearing group used to establish the Level A harassment isopleth. In this project, Level A harassment isopleths based on SELcum were always larger than those based on Peak SPL. It should be noted that there is a duration component when calculating the Level A harassment isopleth based on SELcum, and this duration depends on the number of piles that will be driven in a day and strikes per pile. For some activities, ADOT&PF plans to drive variable numbers of piles per day throughout the project and determine at the beginning of each pile driving day, how many piles will be driven that day. Here, this flexibility has been accounted for by modeling multiple durations for the activity, and determining the relevant isopleths as shown in Table 17.
To keep the analysis simple, ADOT&PF and NMFS analyzed the highest source levels for the longest durations of pile installation that could occur within a day. For example, if seventeen 30-inch piles were installed with a vibratory hammer on a single day, the Level A harassment zone for all functional hearing groups would remain smaller than 50 meters. Only on the eighteenth 30-inch pile would the isopleth for high-frequency cetaceans exceed 50 meters. Similarly, the combined source level for vibratory installation of three 30-inch piles is 167 dB rms (Table 11). The Level A harassment zone for this source level is reached when the duration exceeds 155 minutes (2.6 hours). Only after 470 minutes (7.8 hours) of simultaneous installation of three 30-inch piles would the Level A harassment zone reach 100 meters, a production rate that is unlikely to be met or exceeded.
If two DTH drills operated within a day, 5 piles could be installed with 115 minutes of DTH drilling for each (575 minutes or 9.5 total hours), and the Level A harassment zone for all functional hearing groups would remain below 100 meters. Two DTH drills operating simultaneously would have a combined source level of 169 dB rms (Table 9); the Level A harassment zone for this source level is reached when the duration exceeds 148 minutes (4.9 hours) of simultaneous use of two DTH drills, a production rate that is also unlikely to be met or exceeded.
The scenarios evaluated above and depicted in Table 17 and Table 18 represent levels of efficiency (production rates) that are unlikely to be achieved in the field, and Level A harassment zones for all functional hearing groups remained below 100 meters in all cases presented above.
In this section we provide the information about the presence, density, or group dynamics of marine mammals that will inform the take calculations. ADOT&PF relied on a synthesis of qualitative information from local people, including biologists and the harbormaster, because of the lack of small-scale, site-specific species density or abundance information for Tongass Narrows and nearby areas. Quantitative estimates of exposure were calculated using this qualitative information and are therefore not dependent on harassment zone sizes.
It is important to remember that Level B harassment zone sizes do not increase with use of multiple hammers or DTH drills within a day, and no additional Level B harassment exposures of marine mammals are anticipated to result from use of multiple pieces of equipment within a day. As discussed above, no additional exposures are anticipated to result from combinations of an impact hammer and a continuous noise source (vibratory hammer or DTH drill), because those zones are encompassed within the area of ensonification analyzed previously. Similarly, no additional exposures are anticipated to result due to combinations of impact hammers.
However, zones sizes that result from a combination of equipment that reaches a noise level of 167 dB rms or more (Tables 9, 10, 11, and 12) extend to the northeast of Tongass Narrows and into Clarence Strait, an area that was not considered ensonified under earlier construction scenarios analyzed in the proposed IHAs. The revised exposures estimates below are based on the simultaneous use of two or more vibratory hammers or DTH drills in combinations that exceed 167 dB rms.
ADOT&PF used 51 days as the estimated number of days when the 12,023-meter Level B harassment zone isopleth could be exceeded and exposure or take of marine mammals could occur in Clarence Strait. The total number of days of in-water pile installation and removal is now estimated at 101 days (instead of 144 days), a reduction of 43 days.
For most marine mammal species, abundance in Tongass Narrows is anticipated to be greater than abundance in Clarence Strait, and the reduction in days of ensonification in Tongass Narrows negates the increase in area in Clarence Strait. This is especially the case for species that have higher abundance in nearshore and shallow waters, and less so for species that regularly occur in deeper, more open waters. It is anticipated that the ensonified area that extends into Clarence Strait will be temporary and intermittent, lasting only for a few minutes up to a few hours per day.
Steller sea lion abundance in the Tongass Narrows area is not well known. No systematic studies of Steller sea lions have been conducted in or near the Tongass Narrows area. Steller sea lions are known to occur year-round and local residents report observing Steller sea lions about once or twice per week (based on communication outlined in Section 3 of the IHA application). Abundance appears to increase during herring runs (March to May) and salmon runs (July to
For Phase 1, we anticipate that one large group (10 individuals) may be present in the Level B harassment zone once per day. However, as discussed above, we anticipate that exposure may be as much as twice this rate during March, April, May, July, August, and September, due to the increased presence of prey during periods of increased abundance (
Steller sea lions are known to swim across Clarence Strait and to use offshore areas with deeper waters, although no estimates of at-sea density or abundance in Clarence Strait are available. We estimate that a large group of 10 animals may occur in the ensonified portion of Clarence Strait each day (one group of 10 sea lions per day × 51 days = 510 individuals). Therefore, NMFS has authorized the take of 2,025 individuals (1,515 + 510 = 2,025 individuals) by Level B harassment in Tongass Narrows and Clarence Strait. This is a decrease from the 2,160 takes by Level B harassment proposed to be authorized in the proposed IHAs as concurrent driving reduced the number of anticipated driving days.
Take by Level A harassment is not expected for Steller sea lions in Phase 1, because of the small Level A harassment zones for otarrids (Table 16) and the expected effectiveness of the monitoring and mitigation measures discussed below.
During Phase 2, we anticipate Steller sea lions would be exposed at the same rate as during Phase 1. Phase 2 construction is planned to occur in the months of April, May and June. Therefore, we expect that one large group (10 individuals) may be present in the Level B harassment zone once per day for 9 days in June, with an increase to 2 large groups per day when fish runs occur for 9 days each month in April and May. Therefore, NMFS has authorized the take of 450 Steller sea lions by Level B harassment (
Take by Level A harassment is not expected for Steller sea lions in Phase 2, because of the small Level A harassment zones for otarrids (Table 16) and the expected effectiveness of the monitoring and mitigation measures discussed below.
Harbor seal densities in the Tongass Narrows area are not well known. No systematic studies of harbor seals have been conducted in or near Tongass Narrows. They are known to occur year-round with little seasonal variation in abundance (Freitag 2017 as cited in 83 FR 37473) and local experts estimate that there are about 1 to 3 harbor seals in Tongass Narrows every day, in addition to those that congregate near the seafood processing plants and fish hatcheries. Based on this knowledge, the expected maximum group size in Tongass Narrows is three individuals. Harbor seals are known to be curious and may approach novel activity. For these reasons we conservatively estimate that up to two groups of 3 harbor seals per group could be exposed to project-related underwater noise each day. Additionally, a smaller number of harbor seals could occasionally be present in the Level A harassment (PTS) zone and exposed to sound levels for a duration expected to result in take by Level A harassment. To account for these uncommon instances, ADOT&PF assumed and NMFS agrees that the equivalent of six groups of three individuals may be exposed in the Level A harassment zone during the whole of Phase 1, and the equivalent of three groups of three individuals may be exposed during the whole of Phase 2. Because of the nature of take by Level A harassment (small zone size, factoring in duration of exposure) and possibility for a marine mammal group to be spread over a relatively large area compared to the Level A harassment zone, take by Level A harassment will likely not occur to an entire group at once. Despite being expected to occur on an individual basis, these group size estimates still serve as the basis for take estimation for harbor seals.
During Phase 1, ADOT&PF and NMFS anticipate that two groups of 3 individuals (6 individuals) could be present in the Level B harassment zone once per day, for a total of 606 harbor seals (
Harbor seals are known to swim across Clarence Strait, although no estimates of at-sea density or abundance are available. It is likely that harbor seal abundance in Clarence Strait is lower than in Tongass Narrows, as harbor seals generally prefer nearshore waters. ADOT&PF and NMFS assumed that abundance of harbor seals in Clarence Strait is 5 individuals per day for a potential exposure of 255 harbor seals (5 harbor seals per day × 51 days = 255 individuals). Therefore, NMFS has authorized the take of 861 individuals by Level B harassment (606 + 255 = 861 individuals). This represents a slight increase in the number of takes estimated and proposed to be authorized in the proposed IHAs (846).
During Phase 1, it is possible, but unlikely, that harbor seals may be exposed to sound levels in the Level A harassment zone for a duration expected to result in take. As described above NMFS is authorizing take by Level A harassment for the equivalent of six groups (18 individuals) during Phase 1. This is the same number of takes estimated and proposed to be authorized in the proposed IHAs.
During Phase 2, ADOT&PF and NMFS anticipate that two groups of 3 individuals could be present in the Level B harassment zone once per day for a total of 162 takes of harbor seals by Level B harassment (
During Phase 2, ADOT&PF and NMFS conservatively anticipate that the equivalent of three groups of 3 individuals may be present in the Level A harassment zone long enough to experience injury without detection by Protected Species Observers (PSOs). Therefore, NMFS is authorizing take by Level A harassment of 9 harbor seals during Phase 2. This is the same number estimated in the proposed IHAs.
Harbor porpoises are non-migratory; therefore, our occurrence estimates are not dependent on season. Freitag (2017 as cited in 83 FR 37473) observed harbor porpoises in Tongass Narrows zero to one time per month. Harbor porpoises observed in the project vicinity typically occur in groups of one to five animals with an estimated maximum group size of eight animals (83 FR 37473, August 1, 2018, Solstice 2018). For this take estimate, we are considering a group to consist of five animals, a value on the high end of the typical group size. Based on Freitag (2017), and supported by the reports of knowledgeable locals as described in the application, ADOT&PF and NMFS estimated that during Phase 1 two groups of 5 harbor porpoises could be exposed to project-related underwater noise above the Level B harassment threshold each month for a total of 90 harbor porpoises (
Additionally, harbor porpoises may rarely enter the applicable Level A harassment zone and be exposed to sound levels for a duration expected to result in take by Level A harassment, necessitating authorized take by Level A harassment.
Harbor porpoises are known to swim across Clarence Strait and to use other areas of deep, open waters. Dahlheim et al. (2015) estimated a density of 0.02 harbor porpoises/km
NMFS, therefore, has authorized 112 harbor porpoise takes by Level B harassment (90 + 22 = 112 individuals) during Phase 1. In the proposed IHAs we had estimated and proposed to authorize 105 takes.
During Phase 1, we anticipate that 5 individuals (the equivalent of one group) may enter the Level A harassment zone undetected, and be exposed to sound levels for a duration expected to result in take by Level A harassment, approximately once during every 4 months of construction, for a total of 15 potential takes by Level A harassment. This is the same number estimated and proposed to be authorized in the proposed IHAs.
During Phase 2, NMFS estimates that two groups of harbor porpoises may be present in the Level B harassment zone each month. Therefore, NMFS has authorized a total of 30 takes by Level B harassment (
During Phase 2, we anticipate that the equivalent of two groups of 5 individuals may enter the Level A harassment zone undetected, and be exposed to sound levels for a duration expected to result in take by Level A harassment, during the 3 months of construction. Therefore, NMFS has authorized 10 takes of harbor porpoise by Level A harassment which is also the same as the number in the proposed IHAs.
Dall's porpoises are expected to only occur in Tongass Narrows a few times per year. Their relative rarity is supported by Jefferson
This species is more likely to occur in the waters of Clarence Strait, however, and the estimate of exposure for this species has increased in association with ensonification of that area. Jefferson et al. (2019) estimated an average density of 0.19 Dall's porpoises/km
Additionally Dall's porpoises may rarely be present in the applicable Level A harassment zone and be exposed to sound levels for a duration expected to result in take by Level A harassment. To account for this rare circumstance, ADOT&PF assumed and NMFS concurred that the equivalent of one group of 15 individuals may be exposed to sound levels in the Level A harassment zone for a duration expected to result in take during the whole of Phase 1. Therefore, NMFS has authorized 15 takes by Level A harassment, which is the same number that was estimated and proposed to be authorized in the proposed IHAs.
NMFS has authorized takes during Phase 2 that are identical to what was proposed to be authorized in the proposed IHAs. ADOT&PF estimated, and NMFS concurs, that 45 Dall's porpoises could be present in the Level B harassment zone (
Pacific white-sided dolphins do not generally occur in the shallow, inland waterways of Southeast Alaska. There are no records of this species occurring in Tongass Narrows, and it is uncommon for individuals to occur in the project area. However, historical sightings in nearby areas (Dahlheim and Towell 1994; Muto
NMFS has therefore authorized 92 dolphin takes by Level B harassment for both Phase 1 and Phase 2.
Take by Level A harassment is not expected for Pacific white-sided dolphins in Phase 1 or Phase 2 because of the small Level A harassment zones for mid-frequency cetaceans and the expected effectiveness of the monitoring and mitigation measures discussed below.
Killer whales are observed in Tongass Narrows irregularly with peaks in abundance between May and July. A previous incidental take authorization in the Ketchikan area estimated killer whale occurrence in Tongass Narrows at one pod per month (Freitag 2017 as cited in 83 FR 37473). During Phase 1, ADOT&PF and NMFS estimate that one pod of 12 individuals may be present and exposed to project-related underwater noise at or above the Level B harassment threshold every month except between May and July, when two pods of 12 individuals may be present and exposed. This methodology was applied to both Tongass Narrows and Clarence Strait areas. It is also likely that any animals moving through Tongass Narrows would likely be the same animals that use Clarence Strait.
Therefore, NMFS has authorized 144 killer whale takes by Level B harassment (12 exposures per month × 6 months + 24 exposures per month × 3 months = 144 killer whales). The authorized number of takes is less than the 180 takes estimated and proposed to be authorized in the proposed IHAs since pile driving activities will now occur over a shorter time period.
During Phase 2, we anticipate that construction would occur in April, May, and June. Therefore, NMFS has authorized 60 takes of killer whale by Level B harassment (
Take by Level A harassment is not expected for killer whales in either Phase 1 or Phase 2, because of the small Level A harassment zones for mid-frequency cetaceans and the expected effectiveness of the monitoring and mitigation measures discussed below.
Humpback whales have been observed about once per week, on average, in Tongass Narrows according to local reports. Based on the estimated occurrence rate of one group of two individuals twice each week and an anticipated timeframe of pile driving to occur over the course of 144 days, NMFS proposed to authorize take of 82 humpback whales in the proposed IHAs. NMFS has used this same methodology in the final IHA to calculate that 58 (14.4 weeks × 2 groups × 2 animals/week) humpback whales could be exposed to project noise in Tongass Narrows over the anticipated 101 days of pile installation.
Local specialists agreed that about four humpback whales could pass through or near the ensonified area in Clarence Strait each day. This could result in up to 204 additional exposures of humpback whales (4 humpback whales × 51 days = 204 individuals). Therefore, NMFS has authorized take of 262 humpback whales by Level B harassment (204 + 58 = 262 humpback whales). This represents an increase of the 82 whales estimated in the proposed IHAs. Of the 262 humpback whales potentially exposed, an estimated 6.1 percent or 16 individuals (262 × 0.061 = 15.98, rounded up to 16 whales) could be from the ESA-listed Mexico Distinct Population Segment (DPS) of humpback whales based on the estimated proportion of humpback whales in Southeast Alaska that belong to the Mexico DPS (Wade
For Phase 2, NMFS has authorized a total of 16 total exposures of whales in the Level B harassment zone. This is based on the estimated occurrence rate of 2 groups of 2 individuals every 7 days and an anticipated timeframe of Phase 2 pile driving to occur over the course of 27 days (27 days/7 days per week × 2 groups × 2 animals/group = 15.4 conservatively rounded up to 16). Based on the same estimated proportion of humpback whales in Southeast Alaska that belong to the ESA-listed Mexico DPS (Wade
Take by Level A harassment is not expected for humpback whales in Phase 1 or Phase 2 because of the expected effectiveness of the monitoring and mitigation measures and detecting and avoiding take by Level A harassment via shutdowns of pile installation equipment.
Minke whales may be present in Tongass Narrows and Clarence Strait year-round. Their abundance throughout Southeast Alaska is very low, and anecdotal reports have not included minke whales near the project area. However, minke whales are distributed throughout a wide variety of habitats and could occur near the project area. Minke whales are generally sighted as individuals (Dahlheim
Based on the estimated occurrence rate of three individuals every four months, NMFS has authorized 7 takes of minke whale by Level B harassment (3 animals in a group × 1 group every 4 months = 7 individuals in 9 months) during Phase 1. This represents a reduction from the 9 takes listed in the proposed IHAs since pile driving will occur over fewer months.
Based on the estimated occurrence rate of three individuals every 4 months, we have authorized 3 takes of minke whale by Level B harassment zone during the 3 month duration of Phase 2. This is a reduction from what was published in the proposed IHAs. Due to a mathematical error, 6 minke whale takes were initially proposed to be authorized.
Take by Level A harassment is not expected for minke whales in Phase 1 or Phase 2, because of the expected effectiveness of the monitoring and mitigation measures and detecting and avoiding take by Level A harassment via shutdowns of pile installation equipment. Additionally, minke whales are expected to be uncommon in the project area so they will likely not occur in the Level A harassment zone.
In order to issue an IHA under Section 101(a)(5)(D) of the MMPA, NMFS must set forth the permissible methods of taking pursuant to the activity, and other means of effecting the least practicable impact on the species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stocks for taking for subsistence uses. NMFS regulations require applicants for incidental take authorizations to include information about the availability and feasibility (economic and technological) of equipment, methods, and manner of conducting the activity and other means of effecting the least practicable adverse impact upon the affected species or stocks and their habitat (50 CFR 216.104(a)(11)).
In evaluating how mitigation may or may not be appropriate to ensure the least practicable adverse impact on species or stocks and their habitat, as well as subsistence uses where applicable, we carefully consider two primary factors:
(1) The manner in which, and the degree to which, the successful implementation of the measure(s) is expected to reduce impacts to marine mammals, marine mammal species or stocks, and their habitat. This considers the nature of the potential adverse impact being mitigated (likelihood, scope, range). It further considers the likelihood that the measure will be effective if implemented (probability of accomplishing the mitigating result if implemented as planned), the likelihood of effective implementation (probability implemented as planned), and;
(2) the practicability of the measures for applicant implementation, which may consider such things as cost, impact on operations, and, in the case of a military readiness activity, personnel safety, practicality of implementation, and impact on the effectiveness of the military readiness activity.
In addition to the measures described later in this section, ADOT&PF must employ the following standard mitigation measures:
• Conduct briefings between construction supervisors and crews and the marine mammal monitoring team prior to the start of all pile driving activity, and when new personnel join the work, to explain responsibilities, communication procedures, marine mammal monitoring protocol, and operational procedures;
• For in-water heavy machinery work other than pile driving/removal and drilling (
• Work may only occur during daylight hours, when visual monitoring of marine mammals can be conducted;
• For any marine mammal species for which take by Level B harassment has not been requested or authorized, in-
• In the event that more than one contractor is working at the same time, they will maintain radio or cellular coordination in order to coordinate pile installation and removal and provide adequate monitoring by protected species observers; and
• If take by Level B harassment reaches the authorized limit for an authorized species, pile installation will be stopped as these species approach the Level B harassment zone to avoid additional take of them.
The shutdown zones shown in Table 21 apply when a single piece of equipment is in use. In addition, ADOT&PF will implement a shutdown zone of 100 meters for each vibratory hammer on days when it is anticipated that multiple vibratory hammers will be used. The ADOT&PF will also implement a shutdown zone of 100 meters for each DTH drill on days when it is anticipated that two DTH drills will be used. Since conservative Level A harassment isopleths calculated for various concurrent driving combinations (Table 18) do not exceed 100 meters, there is no take by Level A harassment associated with simultaneous use of multiple devices.
When two or more pieces of equipment are used simultaneously, and the noise they produce is not continuous or is a combination of continuous and impulsive, Table 21 will be followed to define the Level A harassment and Level B harassment monitoring zones for each piece of equipment.
On days when multiple pieces of equipment that produce continuous noise are used simultaneously, source levels will be determined as shown in Table 9, Table 10, Table 11, and Table 12. The calculated source level will be used to determine the Level B harassment monitoring zones in accordance with values depicted in Table 14.
During Phase 2 in-water pile installation and removal on the Revilla Island side of the Narrows will be limited to no more than 2 hours that shall not coincide with in-water pile installation/removal activities on Gravina Island.
Based on our evaluation of the applicant's required measures NMFS has determined that the mitigation measures provide the means of effecting the least practicable impact on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.
In order to issue an IHA for an activity, Section 101(a)(5)(D) of the MMPA states that NMFS must set forth requirements pertaining to the monitoring and reporting of such taking. The MMPA implementing regulations at 50 CFR 216.104(a)(13) indicate that requests for authorizations must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and of the level of taking or impacts on populations of marine mammals that are expected to be present in the planned project area. Effective reporting is critical both to compliance as well as ensuring that the most value is obtained from the required monitoring.
Monitoring and reporting requirements prescribed by NMFS should contribute to improved understanding of one or more of the following:
• Occurrence of marine mammal species or stocks in the area in which take is anticipated (
• Nature, scope, or context of likely marine mammal exposure to potential stressors/impacts (individual or cumulative, acute or chronic), through better understanding of: (1) Action or environment (
• Individual marine mammal responses (behavioral or physiological) to acoustic stressors (acute, chronic, or cumulative), other stressors, or cumulative impacts from multiple stressors.
• How anticipated responses to stressors impact either: (1) Long-term fitness and survival of individual marine mammals; or (2) populations, species, or stocks.
• Effects on marine mammal habitat (
• Mitigation and monitoring effectiveness.
Monitoring would be conducted 30 minutes before, during, and 30 minutes after pile driving/removal and drilling activities. In addition, observers shall record all incidents of marine mammal occurrence, regardless of distance from activity, and shall document any behavioral reactions in concert with distance from piles being driven or removed. Pile driving activities include the time to install or remove a single pile or series of piles, as long as the time elapsed between uses of the pile driving equipment is no more than thirty minutes.
There will be at least one PSO present at or near each construction site during in-water pile installation and removal so that all Level A harassment zones and shutdown zones are monitored by a dedicated PSO at all times. PSOs will not perform duties for more than 12 hours in a 24-hour period. PSOs would be land-based observers, positioned at the best practical vantage points. At least one other PSO for each active worksite will begin at the central
When combinations of one DTH drill with a vibratory hammer, two DTH drills, or two DTH drills with a vibratory hammer are used simultaneously, creating a Level B harassment zone that is greater than 12,023 meters in radius, one additional PSO (at least two total) will be stationed at the northernmost land-based location at the entrance to Tongass Narrows. One PSO will focus on Tongass Narrows, specifically watching for marine mammals that could approach or enter Tongass Narrows and the project area. The second PSO will look out into Clarence Strait, watching for marine mammals that could swim through the ensonified area. This monitoring requirement for concurrent driving scenarios was not included in the proposed IHAs. No additional PSOs will be required at the southern-most monitoring location because the Level B harassment zones are truncated to the southeast by islands, which prevent propagation of sound in that direction beyond the confines of Tongass Narrows. Takes by Level B harassment will be recorded by PSOs and extrapolated based upon the number of observed takes and the percentage of the Level B harassment zone that was not visible.
With this configuration, PSOs can have a full view of the Level A harassment zone and awareness of as much of the Level B harassment zone as possible. This monitoring will provide information on marine mammal occurrence within Tongass Narrows and how these marine mammals are impacted by pile installation and removal.
As part of monitoring, PSOs will scan the waters using binoculars, and/or spotting scopes, and will use a handheld GPS or range-finder device to verify the distance to each sighting from the project site. All PSOs will be trained in marine mammal identification and behaviors and are required to have no other project-related tasks while conducting monitoring. In addition, monitoring will be conducted by qualified observers, who will be placed at the best vantage point(s) practicable to monitor for marine mammals and implement shutdown/delay procedures when applicable by calling for the shutdown to the hammer operator. Each construction Contractor managing an active construction site and on-going in-water pile installation or removal will provide qualified, independent PSOs for their specific contract. The ADOT&PF environmental coordinator for the project will implement coordination between or among the PSO contractors. It will be a required component of their contracts that PSOs coordinate, collaborate, and otherwise work together to ensure compliance with project permits and authorizations. Qualified observers are trained and/or experienced professionals, with the following minimum qualifications:
• Visual acuity in both eyes (correction is permissible) sufficient for discernment of moving targets at the water's surface with ability to estimate target size and distance; use of binoculars may be necessary to correctly identify the target;
• Independent observers (
• Observers must have their CVs/resumes submitted to and approved by NMFS;
• Advanced education in biological science or related field (
• Experience and ability to conduct field observations and collect data according to assigned protocols (this may include academic experience);
• At least one observer must have prior experience working as an observer;
• Experience or training in the field identification of marine mammals, including the identification of behaviors;
• Sufficient training, orientation, or experience with the construction operation to provide for personal safety during observations;
• Writing skills sufficient to prepare a report of observations including but not limited to the number and species of marine mammals observed; dates and times when in-water construction activities were conducted; dates and times when in-water construction activities were suspended to avoid potential incidental injury from construction sound of marine mammals observed within a defined shutdown zone; and marine mammal behavior; and
• Ability to communicate orally, by radio or in person, with project personnel to provide real-time information on marine mammals observed in the area as necessary.
NMFS has issued two distinct and consecutive IHAs for these activities. In recognition of the value of marine mammal monitoring in understanding the impacts of ADOT&PF's activity, NMFS is requiring that ADOT&PF submit a preliminary marine mammal monitoring report for Phase 1 of the project (2020 through 2021) at least 4 months prior to the effective date of the second IHA and initiation of Phase 2. This preliminary report must contain all items that would be included in the draft final report, listed below under “Reporting”. This will allow NMFS to assess the impact of the activities relative to the analysis presented here, and modify the IHA for Phase 2 if the preliminary monitoring report shows unforeseen impacts on marine mammals in the area. If needed, NMFS will publish an amended proposed IHA, describing any changes but referencing the original IHA for Phase 2, and include an opportunity for the public to comment on the amended authorization.
In addition to the preliminary monitoring report discussed above, separate draft marine mammal monitoring reports must be submitted to NMFS within 90 days after the completion of both Phase 1 and Phase 2 pile driving, pile removal, and drilling activities. These reports will include an overall description of work completed, a narrative regarding marine mammal sightings, and associated PSO data sheets. Specifically, the reports must include:
• Date and time that monitored activity begins and ends;
• Construction activities occurring during each observation period;
• Weather parameters (
• Water conditions (
• Species, numbers, and, if possible, sex and age class of marine mammals;
• Description of any observable marine mammal behavior patterns, including bearing and direction of travel and distance from pile driving activity;
• Distance from pile driving activities to marine mammals and distance from the marine mammals to the observation point;
• Locations of all marine mammal observations;
• An estimate of total take based on proportion of the monitoring zone that was observed; and
• Other human activity in the area.
If no comments are received from NMFS within 30 days, that phase's draft final report will constitute the final report. If comments are received, a final report for the given phase addressing NMFS comments must be submitted within 30 days after receipt of comments.
In the event that personnel involved in the construction activities discover an injured or dead marine mammal, ADOT&PF shall report the incident to the Office of Protected Resources (OPR), NMFS and to the Alaska Regional Stranding Coordinator as soon as feasible. The report must include the following information:
• Time, date, and location (latitude/longitude) of the first discovery (and updated location information if known and applicable);
• Species identification (if known) or description of the animal(s) involved;
• Condition of the animal(s) (including carcass condition if the animal is dead);
• Observed behaviors of the animal(s), if alive;
• If available, photographs or video footage of the animal(s); and
• General circumstances under which the animal was discovered.
NMFS has defined negligible impact as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival (50 CFR 216.103). A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (
To avoid repetition, our analysis applies to all species listed in Table 5 for which take could occur (
NMFS does not anticipate that serious injury or mortality would occur as a result of ADOT&PF's planned activity. As stated in the mitigation section, shutdown zones that equal or exceed Level A harassment isopleths shown in Table 21 will be implemented. Take by Level A harassment is authorized for some species (harbor seals, harbor porpoises, and Dall's porpoises) to account for the slight possibility that these species escape observation by the PSOs within the shutdown zone. Further, any take by Level A harassment is expected to arise from, at most, a small degree of PTS because animals would need to be exposed to higher levels and/or longer duration than are expected to occur here in order to incur any more than a small degree of PTS. Additionally, and as noted previously, some subset of the individuals that are behaviorally harassed could also simultaneously incur some small degree of TTS for a short duration of time. Because of the small degree anticipated, though, any PTS or TTS potentially incurred here would not be expected to adversely impact individual fitness, let alone annual rates of recruitment or survival.
Behavioral responses of marine mammals to pile driving, pile removal, and drilling at the sites in Tongass Narrows are expected to be mild, short term, and temporary. Marine mammals within the Level B harassment zone may not show any visual cues they are disturbed by activities or they could become alert, avoid the area, leave the area, or display other mild responses that are not observable such as changes in vocalization patterns. Given that pile driving, pile removal, and drilling would occur for only a portion of the project's two years and often on nonconsecutive days (101 days in Phase 1, or 27 days in Phase 2), any harassment occurring during either phase would be temporary. Additionally, many of the species present in Tongass Narrows or Clarence Strait would only be present temporarily based on seasonal patterns or during transit between other habitats. These temporarily present species would be exposed to even smaller periods of noise-generating activity, further decreasing the impacts.
In addition, for all species except humpback whales, there are no known Biologically Important Areas (BIAs) near the project zone that would be impacted by ADOT&PF's planned activities. For humpback whales, the whole of Southeast Alaska is a seasonal BIA from spring through late fall (Ferguson
More generally, there are no known calving or rookery grounds within the project area, but anecdotal evidence from local experts shows that marine mammals are more prevalent in Tongass Narrows and Clarence Strait during spring and summer associated with feeding on aggregations of fish, meaning the area may play a role in foraging. Because ADOT&PF's activities, especially in Phase 1, could occur during any season, takes may occur during important feeding times. However, the project area represents a small portion of available foraging habitat and impacts on marine mammal feeding for all species, including humpback whales, should be minimal.
Any impacts on marine mammal prey that would occur during ADOT&PF's planned activity would have at most short-term effects on foraging of individual marine mammals, and likely no effect on the populations of marine mammals as a whole. Indirect effects on marine mammal prey during the construction are expected to be minor, and these effects are unlikely to cause substantial effects on marine mammals at the individual level, with no expected effect on annual rates of recruitment or survival.
In summary and as described above, the following factors primarily support our determination that the impacts resulting from this activity, for both Phase 1 and Phase 2, are not expected to adversely affect the species or stocks through effects on annual rates of recruitment or survival:
• No serious injury or mortality is anticipated or authorized;
• ADOT&PF will implement mitigation measures including soft-starts for impact pile driving and shutdown zones that exceed Level A harassment zones for most authorized species, which will help minimize the numbers of marine mammals exposed to injurious levels of sound, and to ensure that take by Level A harassment is at most a small degree of PTS;
• Level B harassment takes are not of a duration or intensity expected to result in impacts on reproduction or survival. Also, the only known area of specific biological importance covers a broad area of southeast Alaska for humpback whales, and the project area is a very small portion of that BIA. No other known areas of particular biological importance to any of the affected species or stocks are impacted by the activity; and
• The project area represents a very small portion of the available foraging area for all marine mammal species and anticipated habitat impacts are minor.
Only small numbers of incidental take may be authorized under Sections 101(a)(5)(A) and (D) of the MMPA for specified activities other than military readiness activities. The MMPA does not define small numbers and so, in practice, where estimated numbers are available, NMFS compares the number of individuals that may be taken to the most appropriate estimation of abundance of the relevant species or stock in our determination of whether an authorization is limited to small numbers of marine mammals. Additionally, other qualitative factors may be considered in the analysis, such as the temporal or spatial scale of the activities.
Table 19 and Table 20, in the
Further, the above percentages are based on analyzing the entire estimated take of killer whales as if it would occur to a single killer whale stock, which is extremely unlikely to occur, instead of apportioned among the three stocks that could occur in the area. Realistically, the take will be spread in some way among the stocks expected to be in the area (
For both Phase 1 and Phase 2, there was one stock, minke whale, where the lack of an accepted stock abundance value prevented us from calculating an expected percentage of the population that would be affected. The most relevant estimate of partial stock abundance is 1,233 minke whales for a portion of the Gulf of Alaska (Zerbini
In order to issue an IHA, NMFS must find that the specified activity will not have an “unmitigable adverse impact” on the subsistence uses of the affected marine mammal species or stocks by Alaskan Natives. NMFS has defined “unmitigable adverse impact” in 50 CFR 216.103 as an impact resulting from the specified activity: (1) That is likely to reduce the availability of the species to a level insufficient for a harvest to meet subsistence needs by: (i) Causing the marine mammals to abandon or avoid hunting areas; (ii) Directly displacing subsistence users; or (iii) Placing physical barriers between the marine mammals and the subsistence hunters; and (2) That cannot be sufficiently mitigated by other measures to increase the availability of marine mammals to allow subsistence needs to be met.
Harbor seals are the marine mammal species most regularly harvested for subsistence by households in Ketchikan and Saxman (A community a few miles south of Ketchikan, on the Tongass Narrows). Eighty harbor seals were harvested by Ketchikan residents in 2007, which ranked fourth among all communities in Alaska that year for harvest of harbor seals. Thirteen harbor seals were harvested by Saxman residents in 2007. In 2008, two Steller sea lions were harvested by Ketchikan-based subsistence hunters, but this is the only record of sea lion harvest by residents of either Ketchikan or Saxman. In 2012, the community of Ketchikan had an estimated subsistence take of 22 harbor seals and 0 Steller sea lion (Wolf
To comply with the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321
This action is consistent with categories of activities identified in Categorical Exclusion B4 (incidental harassment authorizations with no anticipated serious injury or mortality) of the Companion Manual for NOAA Administrative Order 216-6A, which do not individually or cumulatively have the potential for significant impacts on the quality of the human environment and for which we have not identified any extraordinary circumstances that would preclude this categorical exclusion. Accordingly, NMFS has determined that the issuance of the IHAs qualify to be categorically excluded from further NEPA review.
Section 7(a)(2) of the Endangered Species Act of 1973 (ESA: 16 U.S.C. 1531
NMFS is authorizing take of the Central North Pacific stock of humpback whales, of which a portion belong to the Mexico DPS of humpback whales, which are listed under the ESA.
The action agency are the Federal Highway Administration (FHA) and the NMFS Office of Protected Resources Permits and Conservation Division. On February 6, 2019, NMFS completed consultation with ADOT&PF for Tongass Narrows Project and issued a Biological Opinion with the FHA as an action agency. Reinitiation of formal consultation was required to add NMFS Permits and Conservation Division as an action agency and to analyze changes to the action that were not considered in the February 2019 opinion (PCTS# AKR-2018-9806/ECO# AKRO-2018-01287). The original opinion considered the effects of only one project component being constructed at a time and did not analyze potential effects of concurrent pile driving which may cause effects to the listed species that were not considered in the original opinion; therefore, reinitiation of formal consultation was required.
NMFS' Alaska Region issued a revised Biological Opinion to NMFS' Office of Protected Resources on December 19, 2019 which concluded that issuance of IHAs to ADOT&PF is not likely to jeopardize the continued existence of Mexico DPS humpback whales.
NMFS has issued two separate, consecutive IHAs to ADOT&PF for incidental take resulting from pile ferry berth improvements and construction activities in Tongass Narrows, Alaska in 2020 through 2021 (Phase 1) and 2021 through 2022 (Phase 2), including the previously discussed mitigation, monitoring, and reporting requirements that have been incorporated.
National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before March 9, 2020.
Direct all written comments to Adrienne Thomas, PRA Officer, NOAA, 151 Patton Avenue, Room 159, Asheville, NC 28801 (or via the internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to John Foster, (301) 427-8130 or
This request is for extension of a currently approved information collection.
The National Marine Fisheries Service (NMFS) is responsible for monitoring and managing United States (U.S.) marine fisheries resources. Collection of information regarding fishing for large pelagic species (tunas, billfishes, swordfish, and sharks) is necessary to fulfill the following statutory requirements: Atlantic Tunas Convention Act (16 U.S.C. 971
The Atlantic Tunas Convention Act at 16 U.S.C. 971d(c)(3)(I) provides the Secretary of Commerce the authority to “require any commercial or recreational fisherman to obtain a permit from the Secretary and report the quantity of catch of a regulated species”. Section 303(a) of the Magnuson-Stevens Act specifies data and analyses to be included in Fishery Management Plans (FMPs), as well as pertinent data, which shall be submitted to the Secretary of Commerce under the plan. Recommendation One of the NMFS Marine Recreational Fishery (MRF) Policy focuses on developing “a comprehensive data acquisition and analysis system (participation, catch, effort and socio-economic data) on a regular, continuing basis” in support of the Executive Order 12962 requirement to assess the implementation and evaluate achievements of the “Recreational Fishery Resources Conservation Plan.”
Because highly migratory species are only sought on a relatively small proportion of the total marine recreational angler fishing trips made, the fishing effort directed at such species, and the resulting angler catches are generally not estimated very precisely or accurately by general (all species) recreational surveys. Therefore, the Large Pelagics Survey (LPS) was designed as a specialized survey that would focus specifically on the recreational fishery directed at large pelagic, also called highly migratory, species. This specialization has allowed higher levels of sampling needed to provide more precise and accurate estimates of pelagic fishing effort and catches of large pelagic species.
The LPS consists of two complementary surveys: A directory frame telephone survey of tuna and/or HMS permit holders to obtain fishing effort information (Large Pelagic Telephone Survey or LPTS), and a dockside survey which collects catch information and also estimates the proportion of vessels fishing for large pelagics that are not on the telephone frame (Large Pelagic Intercept Survey or LPIS). Results from the two survey components are combined to estimate total landings of Highly Migratory Species. In addition, we are requesting approval to continue to implement the Large Pelagic Biological Survey (LPBS) to collect supplemental weight and length measurements of landed fish through independent dockside sampling, as well as LPIS Validation telephone calls to validate LPIS data. Implementation of certain components will depend on fiscal year funding and NMFS priorities.
NMFS, regional fishery management councils, interstate marine fisheries commissions, and state fishery agencies use the data in developing, implementing and monitoring fishery management programs. This collection has been the key source of data used to monitor recreational quotas for the harvest of bluefin tuna in the Mid-Atlantic and southern New England regions. Catch distributions, harvested size distributions, and other indices obtained in this data collection have formed the basis of fishery management plans and used in stock assessments for Atlantic highly migratory species such as tunas, billfish, swordfish and sharks.
Dockside and telephone interviews are used. In lieu of telephone interviews, respondents may also provide information online via a web tool.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The Pacific Fishery Management Council's (Pacific Council) and The Nature Conservancy are cosponsoring a two-day workshop: Developing Future Scenarios for Climate Change in the California Current Ecosystem, which is open to the public.
The meeting will be held on Wednesday, January 22 and Thursday, January 23, 2020, from 8 a.m. until the completion of business on each day.
The meeting will be held at the Hyatt Regency Orange County, Pacific Room, 11999 Harbor Blvd., Garden Grove, CA 92840; telephone: (714) 750-1234.
Dr. Kit Dahl, Pacific Council; telephone: (503) 820-2422.
The purpose of this workshop is to create several alternative narratives (called scenarios) about what west coast fishing communities might look like in 2040. The scenarios will be developed by invited scientific experts, fishery experts, and stakeholders. The workshop is part of a broader Council effort to respond strategically to near-term climate shifts and long-term climate change, and identify strategies to increase the resiliency of west coast fisheries and fishing communities in line with an ongoing initiative of its Fishery Ecosystem Plan. Members of the public are asked to register in advance through the following link:
Although non-emergency issues not contained in the meeting agenda may be discussed, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this document and any issues arising after publication of this document that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the intent to take final action to address the emergency.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Mr. Kris Kleinschmidt, (503) 820-2412, at least 10 business days prior to the meeting date.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; availability of a Hatchery and Genetic Management Plan (HGMP) for public comment.
Notice is hereby given that the Washington Department of Fish and Wildlife (WDFW) and Public Utility District No. 1 of Douglas County (Douglas PUD) have provided a HGMP pursuant to the protective regulations promulgated for Pacific salmon and steelhead under the Endangered Species Act (ESA). The HGMP describes the release of one million summer Chinook salmon at the Wells Hatchery. This document serves to notify the public of the availability of the HGMP for comment prior to a decision by NMFS on whether to approve the proposed hatchery program.
Comments must be received at the appropriate address (see
Written responses to the addendum should be addressed to the NMFS Sustainable Fisheries Division, 1201 NE Lloyd Blvd., Suite 1100, Portland, OR 97232. Comments may be submitted by email. The mailbox address for providing email comments is:
Natasha Preston at (503) 231-2178 or by email at
The HGMP submitted by WDFW and Douglas PUD describes the release of one million subyearling summer Chinook salmon at the Wells Hatchery. The HGMP was submitted to NMFS for review under ESA Limit 5 of the 4(d) Rule. Douglas PUD's existing production of summer Chinook includes 320,000 yearlings and 484,000 subyearling Chinook. These two programs are implemented under the terms and conditions of ESA Section 10(a)(1)(B) Permit No. 23193. The HGMP describes broodstock collection, incubation, rearing, release, and monitoring and evaluation.
This increase in summer Chinook salmon production is proposed to support Washington State's Southern Resident Orca Task Force recommendation to increase the abundance of Chinook salmon in marine waters of Washington State.
Prior to approving an HGMP under limit 5 of the 4(d) Rule, NMFS must publish notification announcing the availability of the HGMP for public review and comment.
16 U.S.C. 1531
U.S. Election Assistance Commission.
EAC 2020 Elections Summit.
Tuesday, January 14, 2020, 9:00 a.m.-4:00 p.m. (EDT).
The National Press Club, 529 14th Street NW, Washington, DC 20045.
Robin Sargent, Telephone: (301) 563-3937.
The summit will be livestreamed and recorded. The recording will be made available on the EAC website at a later date.
As space is limited, attendees are encouraged to register. Registration instructions and additional event information will be posted on the EAC event web page:
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 85.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified date(s). Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
On December 30, 2019, the Commission issued an order in Docket No. EL20-12-000, pursuant to section 206 of the Federal Power Act (FPA), 16 U.S.C. 824e (2018), instituting an investigation into whether CPV Fairview, LLC's rate schedule is unjust, unreasonable, unduly discriminatory or preferential, or otherwise unlawful.
The refund effective date in Docket No. EL20-12-000, established pursuant to section 206(b) of the FPA, will be the date of publication of this notice in the
Any interested person desiring to be heard in Docket No. EL20-12-000 must file a notice of intervention or motion to intervene, as appropriate, with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, in accordance with Rule 214 of the Commission's Rules of Practice and Procedure, 18 CFR 385.214 (2019), within 21 days of the date of issuance of the order.
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that on December 16, 2019, North Baja Pipeline, LLC (North Baja) 700 Louisiana Street, Suite 700, Houston, Texas 77002, filed in Docket No. CP20-27-000, an application pursuant to section 7(c) of the Natural Gas Act (NGA) and Part 157 of the Commission's Regulations for authorization to construct and maintain its North Baja XPress Project. Specifically, the Project consists of installation of a new 31,900 ISO horsepower Titan 250 compressor unit at its existing Ehrenberg Compressor Station located in La Paz County, Arizona; and modifications to the infrastructure at North Baja's existing El Paso Meter Station in La Paz County, Arizona, and Ogilby Meter Station in Imperial County, California. Upon completion the proposed Project will create approximately 495,000 dekatherms per day of incremental firm delivery to the United States/Mexico border. North Baja estimates the total cost of the Project to be $127.2 million, all as more fully set forth in the application which is on file with the Commission and open to public inspection.
The filing may also be viewed on the web at
Any questions regarding this application should be directed to Robert Jackson, Manager, Certificates & Regulatory Administration, North Baja Pipeline, LLC, 700 Louisiana Street, Suite 700, Houston, Texas 77002, at (832) 320-5487, or email:
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: Complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (FEIS) or EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS or EA.
There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before the comment date stated below, file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit 3 copies of filings made with the Commission and must provide a copy to the applicant and to every other party in the proceeding. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.
However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commentors will be placed on the Commission's environmental mailing list and will be notified of any meetings associated with the Commission's environmental review process. Environmental commentors will not be required to serve copies of filed documents on all other parties. However, the non-party commentors will not receive copies of all documents filed by other parties or issued by the Commission and will not have the right to seek court review of the Commission's final order.
As of the February 27, 2018 date of the Commission's order in Docket No. CP16-4-001, the Commission will apply its revised practice concerning out-of-time motions to intervene in any new Natural Gas Act section 3 or section 7 proceeding.
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the eFiling link at
Environmental Protection Agency (EPA).
Notice of Availability of Draft NPDES General Permit NHG58A000.
The Director of the Water Division, U.S. Environmental Protection Agency—Region 1 (EPA), is providing a Notice of Availability for the Draft National Pollutant Discharge Elimination System (NPDES) Great Bay Total Nitrogen General Permit for certain discharges from Wastewater Treatment Facilities (WWTFs) to certain waters of the State of New Hampshire. This Draft NPDES Great Bay Total Nitrogen General Permit (“Draft General Permit”) establishes effluent limitations and requirements, effluent and ambient monitoring requirements, reporting requirements and standard conditions for 13 eligible WWTFs in New Hampshire. The Draft General Permit is available on EPA Region 1's website at
Public comments must be received by March 9, 2020.
Written comments on the Draft General Permit may be mailed to U.S. EPA Region 1, Water Division, Attn: Michael Cobb, 5 Post Office Square, Suite 100, Mail Code 06-1, Boston, Massachusetts 02109-3912, or sent via email to:
Additional information concerning the Draft General Permit may be obtained between the hours of 9 a.m. and 5 p.m. Monday through Friday, excluding holidays from Michael Cobb, U.S. EPA Region 1, Water Division, 5 Post Office Square, Suite 100, Mail Code 06-1, Boston, MA 02109-3912; telephone: 617-918-1369; email:
Concurrently with the public notice of the Draft General Permit, EPA has also submitted a letter to United States Fish and Wildlife Service (USFWS) summarizing the results of EPA's assessment of the potential effects to endangered and threatened species and their critical habitats as a result of EPA's issuance of the Draft General Permit. In this document, EPA has preliminarily concluded that the Draft General Permit will have no effect on the small whorled pogonia or Northern long-eared bat, and may affect, but is not likely to adversely affect roseate tern, red knot, or piping plover. EPA has requested that USFWS review this submittal and inform EPA whether it concurs with this preliminary finding.
This action is being taken under the Clean Water Act, 33 U.S.C. 1251
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act of 1995 (PRA), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The FCC may not conduct or sponsor a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written comments should be submitted on or before March 9, 2020. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contacts below as soon as possible.
Direct all PRA comments to Cathy Williams, FCC, via email:
For additional information about the information collection, contact Cathy Williams at (202) 418-2918.
As part of its continuing effort to reduce paperwork burdens, and as required by the PRA, 44 U.S.C. 3501-3520, the FCC invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
Licensees use FCC Form 606 to associate their FCC Registration Number (FRN) with their Wireless Telecommunications Bureau and Public Safety Homeland Security Bureau call signs and antenna structure registration numbers. The form must be submitted before filing any subsequent applications associated with the existing license or antenna structure registration that is not associated with an FRN.
The information collected in the FCC Form 606 is used to populate the Universal Licensing System (ULS) with the FRNs of licensees and antenna structure registration owners who interact with ULS.
Federal Trade Commission.
Notice and request for comment.
The Federal Trade Commission (“FTC” or “Commission”) requests that the Office of Management and Budget (“OMB”) extend for an additional three years the current Paperwork Reduction Act (“PRA”) clearance for information collection requirements of its Affiliate Marketing Rule, which applies to certain motor vehicle dealers, and its shared enforcement with the Consumer Financial Protection Bureau (“CFPB”) of the provisions (subpart C) of the CFPB's Regulation V regarding other entities (“CFPB Rule”). The existing clearance expires on January 31, 2020.
Comments must be submitted on or before February 6, 2020.
Comments in response to this notice should be submitted to the OMB Desk Officer for the Federal Trade Commission within 30 days of this notice. You may submit comments using any of the following methods:
Katherine McCarron, Attorney, Division of Privacy and Identity Protection, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Room CC-8232, Washington, DC 20580, (202) 326-2333.
Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The total estimated burden is 9,170 hours and $367,588 in associated labor costs. Commission staff estimates that the capital and non-labor costs associated with the Affiliate Marketing Rule's disclosure requirements are
On September 27, 2019, the Commission sought comment on the information collection requirements associated with the Affiliate Marketing Rule and the Commission's shared enforcement with the CFPB of the affiliate marketing provisions of Regulation V subpart C (12 CFR 1022.21). 84 FR 51163 (Sept. 27, 2019). No relevant comments were received. Pursuant to the OMB regulations, 5 CFR part 1320, that implement the PRA, 44 U.S.C. 3501
Your comment—including your name and your state—will be placed on the public record of this proceeding. Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, like anyone's Social Security number, date of birth, driver's license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, like medical records or other individually identifiable health information. In addition, do not include any “[t]rade secret or any commercial or financial information which is . . . privileged or confidential” as provided in Section 6(f) of the FTC Act 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns devices, manufacturing processes, or customer names.
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice.
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat Division has submitted to the Office of Management and Budget (OMB) a request to review and approve a revision and renewal of a previously approved information collection requirement regarding patents.
Submit comments on or before February 6, 2020.
Submit comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden to: Office of Information and Regulatory Affairs of OMB, Attention: Desk Officer for GSA, Room 10236, NEOB, Washington, DC 20503 or at
•
•
Zenaida Delgado, Procurement Analyst, at telephone 202-969-7207, or
9000-0096, Patents.
The patent coverage in Federal Acquisition Regulation (FAR) subpart 27.2 requires the contractor to report each notice of a claim of patent or copyright infringement that came to the contractor's attention in connection with performing a Government contract (FAR 52.227-2).
The contractor is also required to report all royalties anticipated or paid in excess of $250 for the use of patented inventions by furnishing the name and address of licensor, date of license agreement, patent number, brief description of item or component, percentage or dollar rate of royalty per unit, unit price of contract item, and
A 60-day notice was published in the
Agency for Healthcare Research and Quality (AHRQ), HHS.
Solicits nominations for new members of the USPSTF.
The Agency for Healthcare Research and Quality (AHRQ) invites nominations of individuals qualified to serve as members of the U.S. Preventive Services Task Force (USPSTF).
Nominations must be received in writing or electronically by March 15th of a given year to be considered for appointment to begin in January of the following year.
Submit your responses either electronically or in writing to:
Lydia Hill at
Nominations and applications are kept on file at the Center for Evidence and Practice Improvement, AHRQ, and are available for review during business hours. AHRQ does not reply to individual nominations, but considers all nominations in selecting members. Information regarded as private and personal, such as a nominee's social security number, home and email addresses, home telephone and fax numbers, or names of family members will not be disclosed to the public in accord with the Freedom of Information Act. 5 U.S.C. 552(b)(6); 45 CFR 5.31(f).
Nominations must be submitted electronically or in writing, and should include:
1. The applicant's current curriculum vitae and contact information, including mailing address, and email address; and
2. A letter explaining how this individual meets the qualification requirements and how he or she would contribute to the USPSTF. The letter should also attest to the nominee's willingness to serve as a member of the USPSTF.
AHRQ will later ask people under serious consideration for USPSTF membership to provide detailed information that will permit evaluation of possible significant conflicts of interest. Such information will concern matters such as financial holdings, consultancies, non-financial scientific interests, and research grants or contracts.
To obtain a diversity of perspectives, AHRQ particularly encourages nominations of women, members of minority populations, and persons with disabilities. Interested individuals can nominate themselves. Organizations and individuals may nominate one or more people qualified for membership on the USPSTF at any time. Individuals nominated prior to May 15, 2019, who continue to have interest in serving on the USPSTF should be re-nominated.
To qualify for the USPSTF and support its mission, an applicant or nominee should, at a minimum, demonstrate knowledge, expertise and national leadership in the following areas:
1. The critical evaluation of research published in peer-reviewed literature and in the methods of evidence review;
2. Clinical prevention, health promotion and primary health care; and
3. Implementation of evidence-based recommendations in clinical practice including at the clinician-patient level, practice level, and health-system level.
Additionally, the Task Force benefits from members with expertise in the following areas:
Candidates with experience and skills in any of these areas should highlight them in their nomination materials.
Applicants must have no substantial conflicts of interest, whether financial, professional, or intellectual, that would impair the scientific integrity of the work of the USPSTF and must be willing to complete regular conflict of interest disclosures.
Applicants must have the ability to work collaboratively with a team of diverse professionals who support the mission of the USPSTF. Applicants must have adequate time to contribute substantively to the work products of the USPSTF.
Nominated individuals will be selected for the USPSTF on the basis of how well they meet the required qualifications and the current expertise needs of the USPSTF. It is anticipated that new members will be invited to serve on the USPSTF beginning in January, 2021. All nominated individuals will be considered; however, strongest consideration will be given to individuals with demonstrated training and expertise in the areas of Family Medicine, Internal Medicine, Pediatrics, and Obstetrics and Gynecology. AHRQ will retain and may consider for future vacancies nominations received this year and not selected during this cycle.
Some USPSTF members without primary health care clinical experience may be selected based on their expertise in methodological issues such as meta-analysis, analytic modeling or clinical epidemiology. For individuals with clinical expertise in primary health care, additional qualifications in methodology would enhance their candidacy.
Under Title IX of the Public Health Service Act, AHRQ is charged with
The USPSTF, an independent body of experts in prevention and evidence-based medicine, works to improve the health of all Americans by making evidence-based recommendations about the effectiveness of clinical preventive services and health promotion. The recommendations made by the USPSTF address clinical preventive services for adults and children, and include screening tests, counseling services, and preventive medications.
The USPSTF was first established in 1984 under the auspices of the U.S. Public Health Service. Currently, the USPSTF is convened by the Director of AHRQ, and AHRQ provides ongoing scientific, administrative, and dissemination support for the USPSTF's operation. USPSTF members serve four year terms. New members are selected each year to replace those members who are completing their appointments.
The USPSTF is charged with rigorously evaluating the effectiveness, appropriateness and cost-effectiveness of clinical preventive services and formulating or updating recommendations regarding the appropriate provision of preventive services. See 42 U.S.C. 299b-4(a)(1). Current USPSTF recommendations and associated evidence reviews are available on the internet (
USPSTF members currently meet three times a year for two days in the Washington, DC area. A significant portion of the USPSTF's work occurs between meetings during conference calls and via email discussions. Member duties include prioritizing topics, designing research plans, reviewing and commenting on systematic evidence reviews of evidence, discussing and making recommendations on preventive services, reviewing stakeholder comments, drafting final recommendation documents, and participating in workgroups on specific topics and methods. Members can expect to receive frequent emails, can expect to participate in multiple conference calls each month, and can expect to have periodic interaction with stakeholders. AHRQ estimates that members devote approximately 200 hours a year outside of in-person meetings to their USPSTF duties. The members are all volunteers and do not receive any compensation beyond support for travel to in person meetings.
Office of Community Services, Administration for Children and Families, HHS.
Request for public comment.
The Office of Community Services (OCS) is requesting a three-year extension of the semi-annual reporting format for Community Economic Development (CED) grantees, the Performance Progress Report (PPR), which collects information concerning the outcomes and management of CED projects (OMB #0970-0386, expiration 6/30/2020). There are no changes requested to the form.
Written comments and recommendations for the proposed information collection should be sent directly to the following: Office of Management and Budget, Paperwork Reduction Project, Email:
Copies of the proposed collection may be obtained by emailing
The PPR will continue to be administered to all active grantees of the CED program. Grantees will be required to use this reporting tool for their semi-annual reports to be submitted twice a year. The current PPR replaced both the annual questionnaire and other semi-annual reporting formats, which resulted in an overall reduction in burden for the grantees while significantly improving the quality of the data collected by OCS. OCS seeks to renew this PPR to continue to collect quality data from grantees. To ensure the burden on grantees is not increased, but that the information collected demonstrates the full impact of the program, OCS has conducted an in-depth review of the forms and requests no changes to the PPR.
Section 680(a)(2) of the Community Services Block Grant (CSBG) Act, 42 U.S.C. 9921.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995.
Fax written comments on the collection of information by February 6, 2020.
To ensure that comments on the information collection are received, OMB recommends that written comments be faxed to the Office of Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer, Fax: 202-395-7285, or emailed to
Ila S. Mizrachi, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-7726,
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
The Tobacco Control Act (Pub. L. 111-31) amends the Federal Food, Drug, and Cosmetic Act (FD&C Act) to grant FDA authority to regulate the manufacture, marketing, and distribution of tobacco products to protect the public health and to reduce tobacco use by minors.
FDA's Center for Tobacco Products (CTP) and the National Institutes of Health maintain an interagency partnership to foster the development of the emerging field of tobacco regulatory science (TRS). This study will use the CTP, FDA Funded Trainee/Scholar Survey to gather data on the characteristics, activities, and impact of training programs funded by the CTP and other partners. This evaluation will also determine how CTP-funded research and associated training programs and activities increase knowledge and skills related to TRS and interest to pursue careers in a TRS-related field. This survey provides support to determine the extent to which programs and activities generate positive impacts to increase the number of researchers who focus on TRS and TRS-related topics, specifically within CTP's priority domains. The survey builds upon previous evaluations of trainees and training activities and provides necessary evidence to inform FDA decision making. The web survey will gather responses from Tobacco Centers of Regulatory Science (TCORS) trainees and other CTP-funded trainees and scholars. Results will provide insights and directions to support future training and funding investments.
FDA CTP will use findings from this study to determine whether its TRS training support investments lead to meaningful change that supports CTP aims, and to inform decisions about potential future investments. CTP's training support intends to build additional capacity for TRS that establishes an evidence base related to CTP's research priorities so that FDA regulations, communications, and application review are founded on rigorous, relevant scientific study.
Respondents include current and former TCORS or other CTP-funded trainees and trainee principal investigators (PIs) or training directors. PIs and training directors will be asked to provide trainee names and email addresses and encourage trainees to participate in the survey. Current and former trainees will be asked to read an informed consent and take a brief web-based survey.
In the
FDA estimates the burden of this collection of information as follows:
Table 1 summarizes the total annual burden hours estimated for this information collection. There is no cost to participants other than their time. The total estimated annualized burden hours are 143. A total of approximately 350 trainees will be invited to participate in the web survey. Burden hours were estimated based on experience with prior similar survey activities and information obtained from informal testing by contractor staff.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by March 9, 2020.
You may submit comments as follows. Please note that late, untimely filed comments will not be considered. Electronic comments must be submitted on or before March 9, 2020. The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Amber Sanford, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-8867,
Under the PRA (44 U.S.C. 3501-3521), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
The Minor Use and Minor Species Animal Health Act of 2004 (the MUMS Act) (Pub. L. 108-282) added section 572 of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 360ccc-1), which authorizes FDA to establish new regulatory procedures intended to make more medications legally available to veterinarians and animal owners for the treatment of minor animal species (species other than cattle, horses, swine, chickens, turkeys, dogs, and cats). In enacting the MUMS Act, Congress sought to encourage the development of these new animal drugs. Congress recognized that the markets for drugs intended to treat these species are so small that there are often insufficient economic incentives to motivate drug companies to develop data to support approvals. Further, Congress recognized that some minor species populations are too small or their management systems too diverse to make it practical to conduct traditional studies to demonstrate safety and effectiveness of animal drugs for such uses. As a result of these limitations, drug companies have generally not been willing or able to collect data to support legal marketing of drugs for these species. Consequently, Congress enacted the MUMS Act to provide incentives to develop new animal drugs for minor species, while still ensuring appropriate safeguards for animal and human health. Section 572 of the FD&C Act provides for a public index listing of legally marketed unapproved new animal drugs for minor species. FDA regulations in part 516 (21 CFR part 516) specify, among other things, the criteria and procedures for requesting eligibility for indexing and for requesting addition to the index, as well as the annual reporting requirements for index holders. The administrative procedures and criteria for indexing a new animal drug for use in a minor species are set forth in §§ 516.111 through 516.171. Section 516.165 sets forth the annual reporting requirements for index holders. FDA needs the information to determine: (1) The eligibility of a new animal drug for indexing; (2) that a qualified expert panel proposed to review certain information regarding the new animal drug meets the selection criteria listed in the regulations; (3) whether the Agency agrees with the recommendation of a qualified expert panel that a drug be added to the index; and (4) whether there may be grounds for removing a drug from the index.
FDA estimates the burden of this collection of information as follows:
We based our estimates in tables 1 and 2 on our experience with the MUMS indexing program and the requests for eligibility for indexing and for addition to the index, as well as the periodic drug experience reports submitted during the past 3 years.
Our estimated burden for the information collection reflects an overall increase of 351 reporting hours and a corresponding increase of 85 responses. We attribute this adjustment, generally, to an increase in the number of submissions we received over the last few years. We also reduced our burden hour estimate for drug experience reports and distributor statements under § 516.165 from 8 hours per submission to 5 hours per submission based on our experience with this type of reporting.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (the PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by March 9, 2020.
You may submit comments as follows. Please note that late untimely filed comments will not be considered. Electronic comments must be submitted on or before March 9, 2020. The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Domini Bean, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-5733,
Under the PRA (44 U.S.C. 3501-3521), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
Under § 630.3(h) (21 CFR 630.3(h)), a list is set forth of relevant transfusion-transmitted infections (RTTIs) (§ 630.3(h)(1)) and the conditions under which a transfusion-transmitted infection (TTI) would meet the definition of an RTTI (§ 630.3(h)(2)). The list of RTTIs under § 630.3(h)(1) includes, among other things, the following:
The Chagas, babesiosis, Zika virus and West Nile virus, and HTLV guidance documents provide recommendations for consignee and physician notification relating to donors that tested reactive for these infections.
In addition, a blood establishment may receive information from a donor following collection that reveals the donor had a risk factor for a RTTI or TTI at the time of collection and should have been deferred for the risk factor. FDA has recommended, in the following guidance documents, that such a blood collection establishment notify the consignee regarding the distributed blood components that are potentially at-risk for a RTTI or TTI. In some cases,
Although such notifications are rare, we believe that these notification practices would be part of the usual and customary business practice for blood establishments and consignees in addressing the RTTIs or TTIs under the regulations. In addition, we believe respondents would have already developed standard operating procedures for notifying consignees and the recipient's physician of record regarding distributed blood components potentially at risk for a TTI. Therefore, for the purpose of estimating burden under the PRA, we provide an estimate of one response and one burden hour annually.
As other relevant transfusion-transmitted infections are determined under § 630.3, we may continue to issue guidance accordingly, and, if approved, intend the information collections to be included under this OMB control number.
Based on a review of the information collection since our last request for OMB approval, we have made no adjustments to our burden estimates. These guidance documents, as applicable, also refer to previously approved collections of information found in FDA regulations. The collections of information in 21 CFR parts 601 and 640, and Form FDA 356h have been approved under OMB control number 0910-0338; the collections of information in 21 CFR parts 606 and 630 have been approved under OMB control number 0910-0116; the collections of information in 21 CFR 606.171 have been approved under OMB control number 0910-0458.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA, Agency, or we) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by March 9, 2020.
You may submit comments as follows. Please note that late, untimely filed comments will not be considered. Electronic comments must be submitted on or before March 9, 2020. The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Amber Sanford, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-8867,
Under the PRA (44 U.S.C. 3501-3521), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
FDA chooses to select advisory committee members through a nomination process. (Appendix A to Subpart C of 41 CFR 102-3, the Federal Advisory Committee Management Final Rule notes that the Federal Advisory Committee Act (FACA, 5 U.S.C. App. 2) does not specify the manner in which advisory committee members and staff must be appointed.) A person can self-nominate or be nominated by another individual. In order to identify and select qualified individuals to serve on its advisory committees, FDA has established an online portal, the FDA Advisory Committee Membership Application, to accept nominations of potential advisory committee members.
The FDA Advisory Committee Membership Application accepts nominations for Academician/Practitioner, Consumer Representative, and Industry Representative membership types. Nominees who are nominated as scientific members should be technically qualified experts in the field (
These documents are collected in order to determine if the nominee has the expertise in the subject matter with which the committee is concerned and has diverse professional education, training, and experience so that the committee will reflect a balanced composition of sufficient scientific expertise to handle the problems that come before it (21 CFR 14.80(b)(1)(i)). In the case of Industry and Consumer Representatives, information is collected to assess the candidate's ability to represent all interested persons within the class which the member is selected to represent (21 CFR 14.86).
Each nominee should be sure to review the Agency website for information on:
• Vacancies, qualifications, and experience for more details concerning vacancies on each committee and the qualifications and experience common for nominees. Vacancies are updated periodically; therefore, one or more vacancies listed may be in the nomination process or a final appointment may have been made.
• Potential conflicts of interest such as financial holdings, employment, and research grants and/or contracts in order to permit evaluation of possible sources of conflict of interest.
Also, FDA asks that prospective nominees inform us of how they heard about the FDA Advisory Committees (
To further the Agency's goals of promoting transparency regarding the advisory committee process, FDA will also require that nominees to serve on advisory committees submit a consent form authorizing FDA to post, without removing or redacting any information, to FDA's public website (
All nominations for new advisory committee members will be required to be submitted through FDA's website at
We therefore estimate the burden of the information collection as follows:
Based on a review of data, we received 354 nominations for membership to FDA advisory committees in Fiscal Year (FY) 2015; we received 510 nominations in FY 2016; we received 500 nominations in FY 2017; we received 258 nominations in FY 2018; and we received 333 nominations in FY 2019. By averaging the number of nominations received annually over the past 5 years, we estimate there are approximately 391 respondents to the information collection. We estimate it takes respondents 15 minutes to complete an initial nomination, where accompanying documentation is already available or has been prepared in advance by respondents. Multiplying 15 minutes (0.25) by the number of respondents to the information collection (391) equals 97.75 (98 rounded) annual burden hours.
We have also included a burden estimate for members who currently serve on FDA advisory committees who are not Special Government and Regular Government Employees and who must submit an updated CV and an executed/completed consent form annually. Currently there are 54 authorized positions for these Representative members, mostly Industry Representatives. While some positions are vacant, we anticipate the positions will be filled during the year. The request for the updated CV and consent form will be made through email communications by the Designated Federal Officer of the committee. We anticipate that the burden to the respondent will be the same as that for new nominations. We estimate each response will require 15 minutes (0.25) for a total of 13.5 (14 rounded) annual hours.
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA) is announcing the availability of a final guidance for industry entitled “Enforcement Priorities for Electronic Nicotine Delivery Systems (ENDS) and Other Deemed Products on the Market Without Premarket Authorization.” The guidance describes, among other things, how FDA intends to prioritize its enforcement resources with regard to the marketing of ENDS products that do not have premarket authorization.
The announcement of the guidance is published in the
You may submit either electronic or written comments on Agency guidances at any time as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including
You may submit comments on any guidance at any time (see 21 CFR 10.115(g)(5)).
Submit written requests for single copies of this guidance to the Center for Tobacco Products, Food and Drug Administration, Document Control Center, 10903 New Hampshire Ave., Bldg. 71, Rm. G335, Silver Spring, MD 20993-0002. Send one self-addressed adhesive label to assist that office in processing your request or include a fax number to which the guidance document may be sent. See the
Gerie Voss, Center for Tobacco Products, Food and Drug Administration, Document Control Center, 10903 New Hampshire Ave., Bldg. 71, Rm. G335, Silver Spring, MD 20993-0002, email:
FDA is announcing the availability of a guidance for industry entitled “Enforcement Priorities for Electronic Nicotine Delivery Systems (ENDS) and Other Deemed Products on the Market Without Premarket Authorization.”
The Family Smoking Prevention and Tobacco Control Act (Pub. L. 111-31) (Tobacco Control Act) granted FDA the authority to regulate the manufacture, marketing, and distribution of cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco products to protect public health generally and to reduce tobacco use by minors. The Tobacco Control Act also gave FDA the authority to issue regulations deeming other products that meet the statutory definition of a tobacco product to be subject to chapter IX of the Federal Food, Drug, and Cosmetic Act (FD&C Act).
In accordance with that authority, on May 10, 2016, FDA issued a final rule entitled “Deeming Tobacco Products to be Subject to the Federal Food, Drug, and Cosmetic Act, as Amended by the Family Smoking Prevention and Tobacco Control Act; Restrictions on the Sale and Distribution of Tobacco Products and Required Warning Statements for Tobacco Products” (the final deeming rule) deeming all products that meet the statutory definition of a tobacco product, except accessories of deemed tobacco products, to be subject to FDA's tobacco product authority. This included ENDS, cigars, waterpipe (hookah) tobacco, pipe tobacco, nicotine gels, and dissolvables that were not already subject to the FD&C Act (81 FR 28974 at 28976, May 10, 2016).
The requirements in chapter IX of the FD&C Act (21 U.S.C. 387 through 387u) now apply to deemed tobacco products. This includes section 910 (21 U.S.C. 387j), which imposes certain premarket review requirements for “new tobacco products”—
In May 2017, FDA published a guidance document entitled “Three-Month Extension of Certain Tobacco Product Compliance Deadlines Related to the Final Deeming Rule,” under which the Agency, as a matter of enforcement discretion, stated its intention to defer enforcement of any future compliance dates for requirements under the final deeming rule for an additional 3 months. In July 2017, FDA announced a new comprehensive plan for tobacco and nicotine regulation that would serve as a multiyear roadmap in an effort to significantly reduce tobacco-related disease and death. One aspect of the plan involved striking a balance between regulation and encouraging development of innovative tobacco products that may be potentially less harmful than cigarettes. The Agency announced that it planned to issue an updated compliance policy further deferring some enforcement timelines described in the final deeming rule. In accordance with this comprehensive plan, in August 2017, FDA stated its intention to further extend the period during which it did not intend to initiate enforcement action for the premarket review requirements under the final deeming rule (“August 2017 Compliance Policy”).
In March 2018, in
Since issuing the August 2017 Compliance Policy, FDA has received information underscoring the problem of youth use of ENDS products, as well as evidence of other new and continued public health concerns related to ENDS products. For example, data from the 2018 National Youth Tobacco Survey (NYTS), as described throughout the guidance, documented a significant increase in youth use of ENDS products and revealed the magnitude of the problem. These data prompted FDA to issue a draft guidance regarding the continued marketing of deemed tobacco products that had not obtained premarket authorization, and to call on industry to do more to keep their products out of the hands of minors. In March 2019, FDA published a draft guidance entitled “Modifications to Compliance Policy for Certain Deemed Tobacco Products” (“March 2019 Draft Guidance”), which discussed the Agency's plan to modify the August 2017 Compliance Policy and prioritize enforcement of the premarket authorization requirements for certain deemed tobacco products.
Recent data show a second consecutive year with an alarming increase in youth use of ENDS products. In 2019, two of the largest surveys of tobacco use among youth found that e-cigarette use has reached the highest levels ever recorded. The 2019 Monitoring the Future Study shows that e-cigarette use among 8th, 10th, and 12th graders who had used ENDS products during the previous 12 months and those who had ever used ENDS products significantly increased from 2018 to 2019. Data from the 2019 NYTS also show that 2019 was the second consecutive year in which current (past 30-day) e-cigarette use among youth reached unprecedented levels. Evidence from the 2016-2017 (Wave 4) Population Assessment of Tobacco and Health Study and other studies, as described in the guidance, further confirms these trends, including that youth are particularly attracted to flavored ENDS products.
Moreover, recent data indicate that youth overwhelmingly prefer cartridge-based ENDS products, which FDA has found are easy to conceal, can be used discreetly, may have a high nicotine content, and are manufactured on a large scale. The 2019 NYTS survey instrument included a measure for the “usual brand” of e-cigarette used in the past 30 days, and the majority of youth who were current e-cigarette users reported a cartridge-based e-cigarette as their usual brand.
Finally, FDA remains concerned about health and safety issues connected to ENDS products—
The Agency views the dramatic increase in youth use of these products as a problem that requires an urgent response. Accordingly, FDA is issuing this final guidance to communicate its enforcement priorities with respect to ENDS products. FDA would adopt these enforcement priorities for ENDS regardless of the decision of the U.S. District Court for the District of Maryland in
This guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the current thinking of the Agency's enforcement priorities for premarket review requirements for certain deemed tobacco products and describes how the Agency intends to prioritize its enforcement resources with regard to the marketing of certain deemed tobacco products that do not have premarket authorization. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
This final guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). The collections of information in 21 CFR 1107.1(b) and (c) have been approved under OMB control number 0910-0684; the collections of information under section 910 of the FD&C Act have been approved under OMB control number 0910-0768. The collections of information in section 905(j) of the FD&C Act (21 U.S.C. 387e(j)) have been approved under OMB control number 0910-0673.
Persons with access to the internet may obtain an electronic version of the guidance at either
Health Resources and Services Administration (HRSA), Department of Health and Human Services (HHS).
Notice.
On December 17, 2019, HRSA approved an update to the HRSA-supported Women's Preventive Services Guidelines (Guidelines) that addresses health needs specific to women. The Guidelines are based on clinical recommendations from the Women's Preventive Services Initiative. Preventive care and screenings for women provided for in comprehensive guidelines supported by HRSA are required to be covered without cost-sharing by non-grandfathered group health plans and health insurance
Ada Determan, Maternal and Child Health Bureau at email:
The updated 2019 HRSA-supported Women's Preventive Services Guidelines and information related to guideline development and implementation can be found on
The Women's Preventive Services Initiative recommends screening for anxiety in adolescent and adult women, including those who are pregnant or postpartum. Optimal screening intervals are unknown and clinical judgement should be used to determine screening frequency. Given the high prevalence of anxiety disorders, lack of recognition in clinical practice, and multiple problems associated with untreated anxiety, clinicians should consider screening women who have not been recently screened.
The HRSA-supported Women's Preventive Services Guidelines were originally established in 2011 based on recommendations from the Institute of Medicine, now known as the National Academy of Medicine (NAM), developed under a contract with HHS. Since then, there have been advancements in science and gaps identified in the existing guidelines, including a greater emphasis on practice-based clinical considerations. To address these, HRSA awarded a 5-year cooperative agreement in March 2016 to convene a coalition of clinician, academic, and consumer-focused health professional organizations and conduct a scientifically rigorous review to develop recommendations for updated Women's Preventive Services Guidelines in accordance with the model created by the NAM
Under section 2713 of the Public Health Service Act, 42 U.S.C. 300gg-13, non-grandfathered group health plans and issuers of non-grandfathered group and individual health insurance coverage are required to cover specified preventive services without a copayment, coinsurance, deductible, or other cost sharing, including preventive care and screenings for women as provided for in comprehensive guidelines supported by HRSA for this purpose. Non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual coverage (generally plans or policies created or sold after March 23, 2010, or older plans or policies that have been changed in certain ways since that date) are required to provide coverage without cost sharing for preventive services listed in the updated HRSA-supported guidelines (which include the 11 preventive services last updated in 2017 as well as the one new service added in this update) beginning with the first plan year (in the individual market, policy year) that begins on or after December 17, 2020.
Office of the Secretary, HHS.
Notice.
Findings of research misconduct have been made against Alexander Neumeister, M.D. (Respondent), who was a Professor of Psychiatry and Radiology, Department of Psychiatry, New York University School of Medicine, Langone Medical Center (NYUSOM). Dr. Neumeister engaged in research misconduct in psychiatric clinical research supported by National Institute of Mental Health (NIMH), National Institutes of Health (NIH), grants R01 MH096876, R01 MH102566, R21 MH094763, R21 MH096105, R21 MH102035, and R34 MH102871. The administrative actions, including debarment for a period of two (2) years, followed by supervision for a period of two (2) years, were implemented beginning on December 13, 2019, and are detailed below.
Elisabeth A. Handley, Interim Director, Office of Research Integrity, 1101 Wootton Parkway, Suite 240, Rockville, MD 20852, (240) 453-8200.
Notice is hereby given that the Office of Research Integrity (ORI) has taken final action in the following case:
Respondent neither admits nor denies ORI's findings of research misconduct. The settlement is not an admission of liability on the part of the Respondent. The parties entered into a Voluntary Exclusion Agreement (Agreement) to conclude this matter without further expenditure of time, finances, or other resources.
ORI found that Respondent engaged in research misconduct by intentionally, knowingly, and/or recklessly falsifying and/or fabricating data in the clinical records of research supported by six (6) NIMH grants, resulting in the inclusion of falsified and/or fabricated research methods and results in four (4) published papers:
• Association of in vivo k-opioid receptor availability and the transdiagnostic dimensional expression of trauma-related psychopathology.
• Cannabinoid type 1 receptor availability in the amygdala mediates threat processing in trauma survivors.
• Linking plasma cortisol levels to phenotypic heterogeneity of posttraumatic stress symptomatology.
• Association of posttraumatic stress disorder with reduced in vivo norepinephrine transporter availability in the locus coeruleus.
Specifically, the Respondent misrepresented the characteristics of the subjects entered in the research record by:
This resulted in the inclusion of subjects in experimental and control groups who did not meet the criteria for entry, as specified in the protocols of the Respondent's funded grants, rendering the data and/or published results invalid in the four (4) papers. The grants are:
Dr. Neumeister entered into an Agreement and agreed:
(1) To exclude himself voluntarily for a period of two (2) years, beginning on December 13, 2019, from any contracting or subcontracting with any agency of the United States Government and from eligibility for or involvement in nonprocurement programs of the United States Government referred to as “covered transactions” pursuant to HHS' Implementation (2 CFR part 376) of OMB Guidelines to Agencies on Governmentwide Debarment and Suspension, 2 CFR part 180 (collectively the “Debarment Regulations”); at the conclusion of the period of voluntary exclusion, Respondent agreed to have his research supervised for a period of two (2) years; Respondent agreed that prior to submission of an application for U.S. Public Health Service (PHS) support for a research project on which the Respondent's participation is proposed and prior to Respondent's participation in any capacity on PHS-supported research, Respondent shall ensure that a plan for supervision of Respondent's duties is submitted to ORI for approval; the supervision plan must be designed to ensure the scientific integrity of Respondent's research contribution; Respondent agreed that he shall not participate in any PHS-supported research until such a supervision plan is submitted to and approved by ORI; Respondent agrees to maintain responsibility for compliance with the agreed supervision plan;
(2) to exclude himself voluntarily from serving in any advisory capacity to PHS including, but not limited to, service on any PHS advisory committee, board, and/or peer review committee, or as a consultant for a period of four (4) years, beginning on December 13, 2019.
(3) as a condition of the Agreement, Respondent will utilize information provided by ORI to request that the following papers be corrected or retracted in accordance with 42 CFR 93.407(a)(1):
•
•
•
•
Respondent will copy ORI and the Research Integrity Officers at NYUSOM and Yale University on the correspondence.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of meetings of the National Advisory Mental Health Council.
The meetings will be open to the public as indicated below, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any member of the public interested in presenting oral comments to the committee may notify the Contact Person listed on this
Information is also available on the Institute's/Center's home page:
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Coast Guard, DHS.
Notice of intent; request for comments.
The Coast Guard announces its intent to enter into a cooperative research and development agreement (CRADA) with several companies to evaluate the suitability of implementing Wide Area Network (WAN) optimization technology in a shipboard environment. The CRADA will explore WAN optimization technologies and how they can be implemented for shipboard use under a variety of scenarios. While the Coast Guard is currently considering partnering with SWISH DATA CORPORATION (SWISH), we are soliciting public comment on the possible participation of other parties in the proposed CRADA. The Coast Guard also invites other potential non-Federal participants, who have the interest and capability to bring similar contributions to this type of research, to consider submitting proposals for consideration in similar CRADAs.
Comments must be submitted to the online docket via
Synopses of proposals regarding future CRADAs must reach the Coast Guard (see
Submit comments online at
If you have questions on this notice or wish to submit proposals for future CRADAs, contact LCDR Grant Wyman, Project Official, IT and Networks Branch, U.S. Coast Guard Research and Development Center, 1 Chelsea Street, New London, CT 06320, telephone 860-271-2727, email
We request public comments on this notice. Although we do not plan to respond to comments in the
Comments should be marked with docket number USCG-2019-0879 and should provide a reason for each suggestion or recommendation. You should provide personal contact information so that we can contact you if we have questions regarding your comments; but please note that all comments will be posted to the online docket without change and that any personal information you include can be searchable online (see the
We encourage you to submit comments through the Federal rulemaking Portal at
Do not submit detailed proposals for future CRADAs to the Docket Management Facility. Instead, submit them directly to the Coast Guard (see
CRADAs are authorized under 15 U.S.C. 3710(a).
CRADAs are not procurement contracts. Care is taken to ensure that CRADAs are not used to circumvent the contracting process. CRADAs have a specific purpose and should not be confused with procurement contracts, grants, and other type of agreements.
Under the proposed CRADA, the Coast Guard's Research and Development Center (RDC) will collaborate with one or more non-Federal participants. Together, the RDC and the non-Federal participants will evaluate the suitability of WAN optimization technologies in a shipboard environment.
We anticipate that the Coast Guard's contributions under the proposed CRADA will include the following:
(1) Develop a test plan for execution under the CRADA;
(2) Provide network access, data, facilities, and approvals required for work under the CRADA;
(3) Collect and analyze test plan data; and
(4) Develop a report documenting the methodologies, findings, conclusions, and recommendations related to this CRADA work.
We anticipate that the non-Federal participants' contributions under the proposed CRADA will include the following:
(1) Provide WAN optimization technologies to conduct work to be described in test plan;
(2) Provide required operators and technicians to perform work identified in the test plan;
(3) Provide technical data for the equipment and services to be utilized;
(4) Provide shipment and delivery of any equipment required;
(5) Provide travel and associated personnel and other expenses as required for subject work.
The Coast Guard reserves the right to select for CRADA participants all, some, or no proposals submitted for this CRADA. The Coast Guard will provide no funding for reimbursement of proposal development costs. Proposals and any other material submitted in response to this notice will not be returned. Proposals submitted are expected to be unclassified and have no more than five single-sided pages (excluding cover page, DD 1494, JF-12, etc.). The Coast Guard will select proposals at its sole discretion on the basis of:
(1) How well they communicate an understanding of, and ability to meet, the proposed CRADA's goal; and
(2) How well they address the following criteria:
(a) Technical capability to support the non-Federal party contributions described; and
(b) Resources available for supporting the non-Federal party contributions described.
Currently, the Coast Guard is considering SWISH, for participation in this CRADA. However, we do not wish to exclude other viable participants from this or future similar CRADAs.
This is a technology suitability effort. The goal of this CRADA is to evaluate the suitability of implementing WAN optimization technology in a shipboard environment. Special consideration will be given to small business firms/consortia, and preference will be given to business units located in the U.S.
This notice is issued under the authority of 5 U.S.C. 552(a).
United States International Trade Commission.
January 14, 2020 at 11:00 a.m.
Room 101, 500 E Street SW, Washington, DC 20436, Telephone: (202) 205-2000.
Open to the public.
1.
2. Minutes.
3. Ratification List.
4. Vote on Inv. Nos. 701-TA-622 and 731-TA-1448 (Final) (Dried Tart Cherries from Turkey). The Commission is currently scheduled to complete and file its determinations and views of the Commission by January 27, 2020.
5.
The Commission is holding the meeting under the Government in the Sunshine Act, 5 U.S.C. 552(b). In accordance with Commission policy, subject matter listed above, not disposed of at the scheduled meeting, may be carried over to the agenda of the following meeting.
By order of the Commission.
The National Science Board's Executive Committee (EC), pursuant to National Science Foundation regulations (45 CFR part 614), the National Science Foundation Act, as amended (42 U.S.C. 1862n-5), and the Government in the Sunshine Act (5 U.S.C. 552b), hereby gives notice of the scheduling of a teleconference for the transaction of National Science Board business, as follows:
Friday, January 10, 2020, from 3:30-4:30 p.m. EST.
This meeting will be held by teleconference at the National Science Foundation, 2415 Eisenhower Avenue, Alexandria, VA 22314. An audio link will be available for the public. Members of the public must contact the Board Office to request the public audio link by sending an email to
Open.
Committee Chair's opening remarks; approval of Executive Committee minutes of October 23, 2019; and discuss issues and topics for an agenda of the NSB meetings scheduled for February 4-5, 2020.
Point of contact for this meeting is: James Hamos, 2415 Eisenhower Avenue, Alexandria, VA 22314. Telephone: 703/292-8000. Meeting information and updates may be found at
The National Science Board, pursuant to NSF regulations (45 CFR part 614), the National Science Foundation Act, as amended (42 U.S.C. 1862n-5), and the Government in the Sunshine Act (5 U.S.C. 552b), hereby gives notice of the scheduling of a teleconference for the transaction of National Science Board business, as follows:
Closed teleconference of the Committee on Strategy of the National Science Board, to be held Monday, January 13, 2020 from 4:00-5:00 p.m. EST.
This meeting will be held by teleconference at the National Science Foundation, 2415 Eisenhower Avenue, Alexandria, VA 22314.
Closed.
Committee Chair's opening remarks; Approval of prior meeting minutes; Update on NSF's Fiscal Year 2021 budget passback and budget request to Congress.
Point of contact for this meeting is: Kathy Jacquart, 2415 Eisenhower Avenue, Alexandria, VA 22314. Telephone: (703) 292-7000.
Weeks of January 6, 13, 20, 27, February 3, 10, 2020.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public.
There are no meetings scheduled for the week of January 6, 2020.
There are no meetings scheduled for the week of January 13, 2020.
There are no meetings scheduled for the week of January 20, 2020.
This meeting will be webcast live at the Web address—
This meeting will be webcast live at the Web address—
There are no meetings scheduled for the week of February 10, 2020.
For more information or to verify the status of meetings, contact Denise McGovern at 301-415-0681 or via email at
The NRC Commission Meeting Schedule can be found on the internet at:
The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings or need this meeting notice or the transcript or other information from the public meetings in another format (
Members of the public may request to receive this information electronically. If you would like to be added to the distribution, please contact the Nuclear Regulatory Commission, Office of the Secretary, Washington, DC 20555 (301-415-1969), or by email at
The NRC is holding the meetings under the authority of the Government in the Sunshine Act, 5 U.S.C. 552b.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
License amendment request; notice of opportunity to comment, request a hearing, and petition for leave to intervene; order imposing procedures.
The U.S. Nuclear Regulatory Commission (NRC) received and is considering approval of five amendment requests. The amendment requests are for Fermi 2; Oconee Nuclear Station, Units 1, 2, and 3; Center for Neutron Research Test Reactors; Joseph M.
Comments must be filed by February 6, 2020. A request for a hearing must be filed by March 9, 2020. Any potential party as defined in § 2.4 of title 10 of the
You may submit comments by any of the following methods:
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•
For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Shirley Rohrer, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-5411, email:
Please refer to Docket ID NRC-2019-0241, facility name, unit number(s), plant docket number, application date, and subject when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
•
•
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Please include Docket ID NRC-2019-0241, facility name, unit number(s), plant docket number, application date, and subject in your comment submission.
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC will post all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.
Pursuant to Section 189a.(2) of the Atomic Energy Act of 1954, as amended (the Act), the NRC is publishing this notice. The Act requires the Commission to publish notice of any amendments issued, or proposed to be issued and grants the Commission the authority to issue and make immediately effective any amendment to an operating license or combined license, as applicable, upon a determination by the Commission that such amendment involves no significant hazards consideration, notwithstanding the pendency before the Commission of a request for a hearing from any person.
This notice includes notices of amendments containing SUNSI and/or SGI.
The Commission has made a proposed determination that the following amendment requests involve no significant hazards consideration. Under the Commission's regulations in 10 CFR 50.92, this means that operation of the facility in accordance with the proposed amendment would not (1) involve a significant increase in the probability or consequences of an accident previously evaluated, or (2) create the possibility of a new or different kind of accident from any accident previously evaluated, or (3) involve a significant reduction in a margin of safety. The basis for this proposed determination for each amendment request is shown below.
The Commission is seeking public comments on this proposed determination. Any comments received within 30 days after the date of publication of this notice will be considered in making any final determination.
Normally, the Commission will not issue the amendments until the expiration of 60 days after the date of publication of this notice. The Commission may issue the license amendments before expiration of the 60-day period provided that its final determination is that the amendments involve no significant hazards consideration. In addition, the Commission may issue the amendments prior to the expiration of the 30-day comment period if circumstances change during the 30-day comment period such that failure to act in a timely way would result, for example, in derating or shutdown of the facility. If the Commission takes action prior to the expiration of either the comment period or the notice period, it will publish a notice of issuance in the
Within 60 days after the date of publication of this notice, any persons (petitioner) whose interest may be affected by this action may file a request for a hearing and petition for leave to intervene (petition) with respect to the action. Petitions shall be filed in accordance with the Commission's “Agency Rules of Practice and Procedure” in 10 CFR part 2. Interested persons should consult a current copy of 10 CFR 2.309. The NRC's regulations are accessible electronically from the NRC Library on the NRC's website at
As required by 10 CFR 2.309(d) the petition should specifically explain the reasons why intervention should be permitted with particular reference to the following general requirements for standing: (1) The name, address, and telephone number of the petitioner; (2) the nature of the petitioner's right to be made a party to the proceeding; (3) the nature and extent of the petitioner's property, financial, or other interest in the proceeding; and (4) the possible effect of any decision or order which may be entered in the proceeding on the petitioner's interest.
In accordance with 10 CFR 2.309(f), the petition must also set forth the specific contentions which the petitioner seeks to have litigated in the proceeding. Each contention must consist of a specific statement of the issue of law or fact to be raised or controverted. In addition, the petitioner must provide a brief explanation of the bases for the contention and a concise statement of the alleged facts or expert opinion which support the contention and on which the petitioner intends to rely in proving the contention at the hearing. The petitioner must also provide references to the specific sources and documents on which the petitioner intends to rely to support its position on the issue. The petition must include sufficient information to show that a genuine dispute exists with the applicant or licensee on a material issue of law or fact. Contentions must be limited to matters within the scope of the proceeding. The contention must be one which, if proven, would entitle the petitioner to relief. A petitioner who fails to satisfy the requirements at 10 CFR 2.309(f) with respect to at least one contention will not be permitted to participate as a party.
Those permitted to intervene become parties to the proceeding, subject to any limitations in the order granting leave to intervene. Parties have the opportunity to participate fully in the conduct of the hearing with respect to resolution of that party's admitted contentions, including the opportunity to present evidence, consistent with the NRC's regulations, policies, and procedures.
Petitions must be filed no later than 60 days from the date of publication of this notice. Petitions and motions for leave to file new or amended contentions that are filed after the deadline will not be entertained absent a determination by the presiding officer that the filing demonstrates good cause by satisfying the three factors in 10 CFR 2.309(c)(1)(i) through (iii). The petition must be filed in accordance with the filing instructions in the “Electronic Submissions (E-Filing)” section of this document.
If a hearing is requested, and the Commission has not made a final determination on the issue of no significant hazards consideration, the Commission will make a final determination on the issue of no significant hazards consideration. The final determination will serve to establish when the hearing is held. If the final determination is that the amendment request involves no significant hazards consideration, the Commission may issue the amendment and make it immediately effective, notwithstanding the request for a hearing. Any hearing would take place after issuance of the amendment. If the final determination is that the amendment request involves a significant hazards consideration, then any hearing held would take place before the issuance of the amendment unless the Commission finds an imminent danger to the health or safety of the public, in which case it will issue an appropriate order or rule under 10 CFR part 2.
A State, local governmental body, Federally-recognized Indian Tribe, or agency thereof, may submit a petition to the Commission to participate as a party under 10 CFR 2.309(h)(1). The petition should state the nature and extent of the petitioner's interest in the proceeding. The petition should be submitted to the Commission no later than 60 days from the date of publication of this notice. The petition must be filed in accordance with the filing instructions in the “Electronic Submissions (E-Filing)” section of this document, and should meet the requirements for petitions set forth in this section, except that under 10 CFR 2.309(h)(2) a State, local governmental body, or Federally-recognized Indian Tribe, or agency thereof does not need to address the standing requirements in 10 CFR 2.309(d) if the facility is located within its boundaries. Alternatively, a State, local governmental body, Federally-recognized Indian Tribe, or agency thereof may participate as a non-party under 10 CFR 2.315(c).
If a hearing is granted, any person who is not a party to the proceeding and is not affiliated with or represented by a party may, at the discretion of the presiding officer, be permitted to make a limited appearance pursuant to the provisions of 10 CFR 2.315(a). A person making a limited appearance may make an oral or written statement of his or her position on the issues but may not otherwise participate in the proceeding. A limited appearance may be made at any session of the hearing or at any prehearing conference, subject to the limits and conditions as may be imposed by the presiding officer. Details regarding the opportunity to make a limited appearance will be provided by the presiding officer if such sessions are scheduled.
All documents filed in NRC adjudicatory proceedings, including a request for hearing and petition for leave to intervene (petition), any motion or other document filed in the proceeding prior to the submission of a request for hearing or petition to intervene, and documents filed by interested governmental entities that request to participate under 10 CFR 2.315(c), must be filed in accordance with the NRC's E-Filing rule (72 FR 49139; August 28, 2007, as amended at 77 FR 46562; August 3, 2012). The E-Filing process requires participants to submit and serve all adjudicatory documents over the internet, or in some cases to mail copies on electronic storage media. Detailed guidance on making electronic submissions may be found in the Guidance for Electronic Submissions to the NRC and on the NRC website at
To comply with the procedural requirements of E-Filing, at least 10 days prior to the filing deadline, the participant should contact the Office of the Secretary by email at
Information about applying for a digital ID certificate is available on the NRC's public website at
A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC's Electronic Filing Help Desk through the “Contact Us” link located on the NRC's public website at
Participants who believe that they have a good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing stating why there is good cause for not filing electronically and requesting authorization to continue to submit documents in paper format. Such filings must be submitted by: (1) First class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemaking and Adjudications Staff; or (2) courier, express mail, or expedited delivery service to the Office of the Secretary, 11555 Rockville Pike, Rockville, Maryland 20852, Attention: Rulemaking and Adjudications Staff. Participants filing adjudicatory documents in this manner are responsible for serving the document on all other participants. Filing is considered complete by first-class mail as of the time of deposit in the mail, or by courier, express mail, or expedited delivery service upon depositing the document with the provider of the service. A presiding officer, having granted an exemption request from using E-Filing, may require a participant or party to use E-Filing if the presiding officer subsequently determines that the reason for granting the exemption from use of E-Filing no longer exists.
Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket which is available to the public at
1. Does the proposed amendment involve a significant increase in the probability or consequences of an accident previously evaluated?
The proposed change revises the Renewed Facility Operating License and TSs to reflect installation of NETCO SNAP-IN® rack inserts in SFP storage rack cells. The changes are necessary to ensure that, without credit for Boraflex as a neutron absorbing material as required by the License Renewal License Condition, the effective neutron multiplication factor, k-effective, is less than or equal to 0.95, if the spent fuel pool (SFP) is fully flooded with unborated water. Since the proposed changes pertain only to the SFP, only those accidents that are related to movement and storage of fuel assemblies in the SFP could potentially be affected by the proposed changes.
The installation of NETCO SNAP-IN® rack inserts and their credit in the criticality safety analysis does not result in a significant increase in the probability of an accident previously analyzed because there are no changes in the manner in which spent fuel is handled, moved, or stored in the rack cells. The probability that a fuel assembly would be dropped is unchanged by the installation of the NETCO SNAP-IN® rack inserts and their credit in the criticality safety analysis. These events involve failures of administrative controls, human performance, and equipment failures that are unaffected by the type of neutron absorbing material utilized in the SFP racks.
The installation of NETCO SNAP-IN® rack inserts and their credit in the criticality
Therefore, the proposed change does not involve a significant increase in the probability or consequences of an accident previously evaluated.
2. Does the proposed amendment create the possibility of a new or different kind of accident from any accident previously evaluated?
Onsite storage of spent fuel assemblies in the Fermi 2 SFP is a normal activity for which Fermi 2 has been designed and licensed. As part of assuring that this normal activity can be performed without endangering the public health and safety, the ability to safely accommodate different possible accidents in the SFP have been previously analyzed. These analyses address accidents such as radiological releases due to dropping a fuel assembly; potential inadvertent criticality due to misloading a fuel assembly. The proposed SFP storage configuration utilizing the NETCO SNAP-IN® rack inserts does not change the method of fuel movement or spent fuel storage and does not create the potential for a new accident. The proposed changes also allow for the continued use of SFP storage rack cells with Boraflex within those SFP storage rack cells; however, no credit is taken for Boraflex as a neutron absorbing material.
The rack inserts are passive devices. These devices, when inside a SFP storage rack cell, perform the same function as the previously licensed Boraflex neutron absorber panels in that cell. The NETCO SNAP-IN® rack inserts do not add any limiting structural loads or adversely affect the removal of decay heat from the assemblies. No change in total heat load in the spent fuel pool is being made. The insert devices will be monitored to ensure they maintain their design function over the life of the spent fuel pool. The existing fuel handling accident, which assumes the drop of a fuel assembly and refueling mast, bounds the drop of a rack insert and associated tools. This proposed change does not create the possibility of misloading an assembly into a SFP storage rack cell. Inadvertent removal of an insert, although largely precluded by design and administrative controls, does not challenge subcriticality requirements as explicitly demonstrated by the criticality safety analysis.
Therefore, the proposed change does not create the possibility of a new or different kind of accident from any previously evaluated.
3. Does the proposed amendment involve a significant reduction in a margin of safety?
The NETCO SNAP-IN® rack inserts are being installed to maintain the margin of safety in the SFP criticality safety analysis. The NETCO SNAP-IN® rack inserts, once approved and installed, will replace the existing Boraflex as the credited neutron absorber for controlling spent fuel pool reactivity, even though the Boraflex material will remain in place.
Fermi 2 TS 4.3, “Fuel Storage,” Specification 4.3.1.b requires the SFP storage racks to maintain the effective neutron multiplication factor, k-effective, less than or equal to 0.95 when fully flooded with unborated water, which includes an allowance for uncertainties. Therefore, for SFP criticality safety considerations, the required safety margin is 5 percent.
The proposed changes ensure, as verified by the new criticality safety analysis, that k-effective continues to be less than or equal to 0.95, thus preserving the required safety margin of 5 percent.
In addition, the radiological consequences of a dropped fuel assembly, considering the installed NETCO SNAP-IN® rack inserts, remain unchanged as the anticipated fuel damage due to a fuel handling accident is unaffected by the addition of the inserts in the SFP storage cells. The proposed changes also do not increase the capacity of the SFP.
Therefore, the proposed change does not involve a significant reduction in a margin of safety.
Based on the above evaluation, DTE Electric Company concludes that the proposed amendment does not involve a significant hazards consideration under the standards set forth in 10 CFR 50.92(c), and, accordingly, a finding of “no significant hazards consideration” is justified.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment request involves no significant hazards consideration.
1. Does the proposed amendment involve a significant increase in the probability or consequences of an accident previously evaluated?
A HELB does not constitute a previously-evaluated accident. HELB is a design criterion that is required to be considered in the design of structures, systems, or components and is not a design basis accident or design basis event. The possibility of HELBs is approximately considered in the UFSAR and Duke Energy has concluded that the proposed changes do not increase the possibility that a HELB will occur or increase the consequences from a HELB. This LAR provides an overview of the HELB reanalysis, description of station modifications that will be made because of the HELB reanalysis, and the proposed mitigation strategies which now includes normal plant equipment, the protected service water (PSW) system, and the standby shutdown facility (SSF). The PSW and SSF systems are designed as standby systems for use under emergency conditions. With the exception of testing, the systems are not normally pressurized. The duration of the test configuration is short as compared to the total plant (unit) operating time. Due to the combination of the infrequent testing and short duration of the test, pipe ruptures are not postulated or evaluated for these systems.
Other systems have also been excluded based on the infrequency of those systems operating at high energy conditions. Considerations of HELBs is excluded (both breaks and cracks) if a high energy system operates less than 1% of the total unit operating time such as emergency feedwater or reactor building spray or if the operating time of a system at high energy conditions is less than approximately 2% of total system operating time such as low-pressure injection. This is acceptable based on the very low probability of a HELB occurring during the limited operating time of these systems at high energy conditions. Gas and oil systems have been evaluated, since these systems also possess limited energy.
The modifications associated with the HELB licensing basis will be designed and installed in accordance with applicable quality standards to ensure that no new failure mechanisms, malfunctions, or accident initiators not already considered in the design and licensing basis are introduced.
As noted in Section 3.4 [of the LAR], Oconee Nuclear Station plans to adopt the provisions of Branch Technical Position (BTP) Mechanical Engineering Branch (MEB) 3-1, [“NRC Generic Letter 87-11, Relaxation in Arbitrary Intermediated Pipe Rupture Requirements,”] regarding the elimination of arbitrary intermediate breaks for analyzed lines that include seismic loading. Guidance in the BTP MEB 3-1 is used to define crack locations in analyzed lines that include seismic loading. Adoption of this provision allows Oconee Nuclear Station to focus attention to those high stress areas that have a higher potential for catastrophic pipe failure. In absence of additional guidance, Duke Energy uses NUREG/CR-2913 to define the zone of influence for breaks and critical cracks that meet the range of operating parameters listed in NUREG/CR-2913. NUREG/CR-2913 provides an analytical model for predicting two-phase, water jet loadings on axisymmetric targets that did not exist prior in the Giambusso/Schwencer requirements.
In conclusion, the changes proposed will increase assurance that safe shutdown can be achieved following a HELB. The changes will also collectively enhance the station's overall design, safety, and risk margin; therefore, the proposed change does not involve a significant increase in the probability or consequence of an accident previously evaluated.
2. Does the proposed amendment create the possibility of a new or different kind of accident from any accident previously evaluated?
A HELB does not constitute a previously-evaluated accident. HELB is a design criterion that is required to be considered in the design of structures, systems or components and is not a design basis accident or design basis event. The possibility of HELBs is approximately considered in the UFSAR and Duke Energy has concluded that the proposed changes do not increase the possibility that a HELB will create a new or different kind of accident. This LAR provides an overview of the HELB analysis, descriptions of station modifications that will be made because of the HELB reanalysis, and the proposed mitigation strategies which now include normal plant equipment, the PSW system, and the SSF.
In conclusion, the changes proposed will increase assurance that safe shutdown can be achieved following a HELB. The changes will also collectively enhance the station's overall design, safety, and risk margin; therefore, the proposed does create the possibility of a new or different kind of accident from any accident previously evaluated.
3. Does the proposed amendment involve a significant reduction in margin of safety?
A HELB does not constitute a previously-evaluated accident. HELB is a design criterion that is required to be considered in the design of structures, systems, or components and is not a design basis accident or design basis event. The possibility of HELBs is appropriately considered in the UFSAR and Duke Energy has concluded that the proposed changes do not involve a reduction in the margin of safety. This LAR provides an overview of the HELB analysis, descriptions of station modifications that will be made because of the HELB reanalysis, and the proposed mitigation strategies which now include normal plant equipment, the PSW system, and the SSF.
The changes described above provide a HELB licensing basis and have no effect on the plant safety margins that have been established through limiting conditions for operation, limiting safety system settings, and safety limits specified in the TSs. Therefore, the proposed change does not involve a reduction in the margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment request involves no significant hazards consideration.
1. Does the proposed amendment involve a significant increase in the probability or consequences of an accident previously evaluated?
The proposed amendment only proposes slight changes to security personnel and does not increase the probability or consequences of any accident.
2. Does the change create the possibility of a new or different kind of accident from any accident previously evaluated?
The possible changes to security personnel do not create a new type of accident.
3. Does the proposed change involve a significant reduction in a margin of safety?
No margin of safety is reduced by this proposed change in security personnel, as the number of security personnel either remains the same or increased.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment request involves no significant hazards consideration.
1. Does the proposed amendment involve a significant increase in the probability or consequences of an accident previously evaluated?
The proposed amendment was evaluated for impact on the following criticality events and accidents and no impacts were identified: (1) Loss of spent fuel pool cooling system, (2) dropping a fuel assembly into an already loaded storage cell, and (3) the misloading of a single fuel assembly or multiple fuel assemblies into a cell for which the restrictions on location, enrichment, or burnup are not satisfied.
Operation in accordance with the proposed amendment will not change the probability
Operation in accordance with the proposed amendment will not change the probability of a fuel assembly being dropped into an already loaded storage cell because fuel movement will continue to be controlled by approved fuel handling procedures. The consequences of a dropped fuel assembly are not changed; there will continue to be significant separation between the dropped fuel assembly and the active regions of the fuel assemblies. The effects of this accident are bounded by the multiple fuel assembly misload accident.
Operation in accordance with the proposed amendment will not change the probability of a fuel assembly misloading because fuel movement will continue to be controlled by approved fuel selection and fuel handling procedures. These procedures continue to require identification of the initial and target locations for each fuel assembly and fuel assembly insert that is moved. The consequences of a fuel misloading event are not changed because the reactivity analysis demonstrates that the same subcriticality criteria and requirements continue to be met for the multiple fuel assembly misload accident.
Therefore, the proposed changes do not involve a significant increase in the probability or consequences of a criticality accident previously evaluated.
2. Does the proposed amendment create the possibility of a new or different kind of accident from any accident previously evaluated?
The potential for criticality in the spent fuel pool is not a new or different type of accident. Storage configurations allowed by TSs 3.7.15 and 4.3 have been analyzed to demonstrate that the pool remains subcritical.
The new criticality safety analysis includes analysis of a multiple misload accident scenario; only single misload events were previously analyzed. The inclusion of this analysis does not imply the creation of the possibility of a new accident, but simply expands the boundaries of the analyzed accident conditions to ensure that all potential accidents are properly considered.
There is no significant change in plant configuration, equipment design or usage of plant equipment. The updated criticality safety analysis assures that the pool will continue to remain subcritical.
Therefore; the proposed changes do not create the possibility of a new or different kind of accident from any accident previously evaluated.
3. Does the proposed amendment involve a significant reduction in a margin of safety?
The proposed change was evaluated for its effect on current margins of safety as they relate to criticality. The margin of safety for subcriticality required by Amendment No. 133 to Facility Operating License No. NPF-2 and Amendment No. 125 to Facility Operating License, No. NPF-8 for Joseph M. Farley Nuclear Plant, Units 1 and 2 (Accession No. ML013130226) is unchanged. The updated criticality safety analysis confirms that operation in accordance with the proposed amendment continues to meet the required subcriticality margin.
Therefore, the proposed changes do not involve a significant reduction in a margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment request involves no significant hazards consideration.
1. Does the proposed amendment involve a significant increase in the probability or consequence of an accident previously evaluated?
The Westinghouse non-nickel banded Alloy 800 leak-limiting repair sleeves are designed using the applicable American Society of Mechanical Engineers (ASME) Boiler and Pressure Vessel Code; therefore, they meet the design objectives of the original SG tubing. The applied stresses and fatigue usage for the repair sleeves are bounded by the limits established in the ASME Code. Mechanical testing has shown that the structural strength of repair sleeves under normal, upset, emergency, and faulted conditions provides margin to the acceptance limits. The acceptance limits bound the most limiting (three times normal operating pressure differential) burst margin recommended by Regulatory Guide (RG) 1.121, “Bases for Plugging Degraded PWR Steam Generator Tubes.” Burst testing of sleeve/tube assemblies has demonstrated that no unacceptable levels of primary-to-secondary leakage are expected during any plant condition.
The Alloy 800 repair sleeve depth-based structural limit is determined using the RG 1.121 guidance and the pressure stress equation of ASME Code, Section III with additional margin added to account for configuration of long axial cracks. A bounding detection threshold value has been conservatively identified and statistically established to account for growth and determine the repair sleeve/tube assembly plugging limit. A sleeved tube is plugged on detection of degradation in the sleeve/tube assembly.
Evaluation of the repaired SG tube testing and analysis indicates no detrimental effects on the sleeve or sleeved tube assembly from reactor system flow, primary or secondary coolant chemistries, thermal conditions or transients, or pressure conditions as may be experienced at WBN Unit 2. Corrosion testing and historical performance of sleeve/tube assemblies indicates no evidence of sleeve or tube corrosion considered detrimental under anticipated service conditions.
The implementation of the proposed amendment has no significant effect on either the configuration of the plant or the manner in which it is operated. The consequences of a hypothetical failure of the sleeve/tube assembly is bounded by the current SG tube rupture (SGTR) analysis described in the WBN dual-unit UFSAR. Due to the slight reduction in diameter caused by the sleeve wall thickness, primary coolant release rates would be slightly less than assumed for the SGTR analysis and; therefore, would result in lower total primary fluid mass release to the secondary system. A main steam line break or feedwater line break will not cause a SGTR because the sleeves are analyzed for a maximum accident differential pressure greater that that predicted in the WBN Unit 2 safety analysis. The minimal leakage that could occur during repair of the sleeve/tube assembly during plant operation is well within the TS leakage limits when grouped with current alternate plugging criteria calculated leakage values.
Therefore, TVA has concluded that the proposed change does not involve a significant increase in the probability or consequences of an accident previously evaluated in the WBN dual-unit UFSAR.
2. Does the proposed amendment create the possibility of a new or different kind of accident from any accident previously evaluated?
The Alloy 800 leak-limiting repair sleeves are designed using the applicable ASME Code as guidance; therefore, it meets the objectives of the original steam generator
The implementation of the proposed amendment has no significant effect on either the configuration of the plant, or the manner in which it is operated. Therefore, TVA concludes that this proposed change does not create the possibility of a new or different kind of accident from any previously evaluated.
3. Does the proposed amendment involve a significant reduction in a margin of safety?
The repair of degraded SG tubes with Alloy 800 leak-limiting repair sleeves restores the structural integrity of the degraded tube under normal operating and postulated accident conditions and thereby maintains current core cooling margin as opposed to plugging the tube and taking it out of service. The design safety factors utilized for the repair sleeves are consistent with the safety factors in the ASME Code used in the original SG design. The portions of the installed sleeve/tube assembly that represent the reactor coolant pressure boundary can be monitored for the initiation of sleeve/tube wall degradation and affected tube plugged on detection. Use of the previously identified design criteria and design verification testing assures that the margin to safety is not different from the original SG tubes.
Therefore, TVA concludes that the proposed change does not involve a significant reduction in a margin of safety.
The NRC staff has reviewed the licensee's analysis and, based on this review, it appears that the three standards of 10 CFR 50.92(c) are satisfied. Therefore, the NRC staff proposes to determine that the amendment request involves no significant hazards consideration.
A. This Order contains instructions regarding how potential parties to this proceeding may request access to documents containing sensitive unclassified information (including Sensitive Unclassified Non-Safeguards Information (SUNSI) and Safeguards Information (SGI)). Requirements for access to SGI are primarily set forth in 10 CFR parts 2 and 73. Nothing in this Order is intended to conflict with the SGI regulations.
B. Within 10 days after publication of this notice of hearing and opportunity to petition for leave to intervene, any potential party who believes access to SUNSI or SGI is necessary to respond to this notice may request access to SUNSI or SGI. A “potential party” is any person who intends to participate as a party by demonstrating standing and filing an admissible contention under 10 CFR 2.309. Requests for access to SUNSI or SGI submitted later than 10 days after publication will not be considered absent a showing of good cause for the late filing, addressing why the request could not have been filed earlier.
C. The requestor shall submit a letter requesting permission to access SUNSI, SGI, or both to the Office of the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemakings and Adjudications Staff, and provide a copy to the Deputy General Counsel for Hearings and Administration, Office of the General Counsel, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001. The expedited delivery or courier mail address for both offices is: U.S. Nuclear Regulatory Commission, 11555 Rockville Pike, Rockville, Maryland 20852. The email address for the Office of the Secretary and the Office of the General Counsel are
(1) A description of the licensing action with a citation to this
(2) The name and address of the potential party and a description of the potential party's particularized interest that could be harmed by the action identified in C.(1);
(3) If the request is for SUNSI, the identity of the individual or entity requesting access to SUNSI and the requestor's basis for the need for the information in order to meaningfully participate in this adjudicatory proceeding. In particular, the request must explain why publicly available versions of the information requested would not be sufficient to provide the basis and specificity for a proffered contention; and
(4) If the request is for SGI, the identity of each individual who would have access to SGI if the request is granted, including the identity of any expert, consultant, or assistant who will aid the requestor in evaluating the SGI. In addition, the request must contain the following information:
(a) A statement that explains each individual's “need to know” the SGI, as required by 10 CFR 73.2 and 10 CFR 73.22(b)(1). Consistent with the definition of “need to know” as stated in 10 CFR 73.2, the statement must explain:
(i) Specifically why the requestor believes that the information is necessary to enable the requestor to proffer and/or adjudicate a specific contention in this proceeding;
(ii) The technical competence (demonstrable knowledge, skill, training or education) of the requestor to effectively utilize the requested SGI to provide the basis and specificity for a proffered contention. The technical competence of a potential party or its counsel may be shown by reliance on a qualified expert, consultant, or assistant who satisfies these criteria.
(b) A completed Form SF-85, “Questionnaire for Non-Sensitive Positions,” for each individual who would have access to SGI. The completed Form SF-85 will be used by the Office of Administration to conduct the background check required for access to SGI, as required by 10 CFR part 2, subpart C, and 10 CFR 73.22(b)(2), to determine the requestor's
(c) A completed Form FD-258 (fingerprint card), signed in original ink, and submitted in accordance with 10 CFR 73.57(d). Copies of Form FD-258 may be obtained by writing the Office of Administrative Services, Mail Services Center, Mail Stop P1-37, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, or by email to
(d) A check or money order payable in the amount of $357.00
(e) If the requestor or any individual(s) who will have access to SGI believes they belong to one or more of the categories of individuals that are exempt from the criminal history records check and background check requirements in 10 CFR 73.59, the requestor should also provide a statement identifying which exemption the requestor is invoking and explaining the requestor's basis for believing that the exemption applies. While processing the request, the Office of Administration, Personnel Security Branch, will make a final determination whether the claimed exemption applies. Alternatively, the requestor may contact the Office of Administration for an evaluation of their exemption status prior to submitting their request. Persons who are exempt from the background check are not required to complete the SF-85 or Form FD-258; however, all other requirements for access to SGI, including the need to know, are still applicable.
These documents and materials should
D. To avoid delays in processing requests for access to SGI, the requestor should review all submitted materials for completeness and accuracy (including legibility) before submitting them to the NRC. The NRC will return incomplete packages to the sender without processing.
E. Based on an evaluation of the information submitted under paragraphs C.(3) or C.(4) above, as applicable, the NRC staff will determine within 10 days of receipt of the request whether:
(1) There is a reasonable basis to believe the petitioner is likely to establish standing to participate in this NRC proceeding; and
(2) The requestor has established a legitimate need for access to SUNSI or need to know the SGI requested.
F. For requests for access to SUNSI, if the NRC staff determines that the requestor satisfies both E.(1) and E.(2) above, the NRC staff will notify the requestor in writing that access to SUNSI has been granted. The written notification will contain instructions on how the requestor may obtain copies of the requested documents, and any other conditions that may apply to access those documents. These conditions may include, but are not limited to, the signing of a Non-Disclosure Agreement or Affidavit, or Protective Order setting forth terms and conditions to prevent the unauthorized or inadvertent disclosure of SUNSI by each individual who will be granted access to SUNSI.
G. For requests for access to SGI, if the NRC staff determines that the requestor has satisfied both E.(1) and E.(2) above, the Office of Administration will then determine, based upon completion of the background check, whether the proposed recipient is trustworthy and reliable, as required for access to SGI by 10 CFR 73.22(b). If the Office of Administration determines that the individual or individuals are trustworthy and reliable, the NRC will promptly notify the requestor in writing. The notification will provide the names of approved individuals as well as the conditions under which the SGI will be provided. Those conditions may include, but are not limited to, the signing of a Non-Disclosure Agreement or Affidavit, or Protective Order
H. Release and Storage of SGI. Prior to providing SGI to the requestor, the NRC staff will conduct (as necessary) an inspection to confirm that the recipient's information protection system is sufficient to satisfy the requirements of 10 CFR 73.22. Alternatively, recipients may opt to view SGI at an approved SGI storage location rather than establish their own SGI protection program to meet SGI protection requirements.
I. Filing of Contentions. Any contentions in these proceedings that are based upon the information received as a result of the request made for SUNSI or SGI must be filed by the requestor no later than 25 days after receipt of (or access to) that information. However, if more than 25 days remain between the petitioner's receipt of (or access to) the information and the deadline for filing all other contentions (as established in the notice of hearing or opportunity for hearing), the petitioner may file its SUNSI or SGI contentions by that later deadline.
J. Review of Denials of Access.
(1) If the request for access to SUNSI or SGI is denied by the NRC staff either after a determination on standing and requisite need, or after a determination on trustworthiness and reliability, the NRC staff shall immediately notify the requestor in writing, briefly stating the reason or reasons for the denial.
(2) Before the Office of Administration makes a final adverse determination regarding the trustworthiness and reliability of the proposed recipient(s) for access to SGI, the Office of Administration, in accordance with 10 CFR 2.336(f)(1)(iii), must provide the proposed recipient(s) any records that were considered in the trustworthiness and reliability determination, including those required to be provided under 10 CFR 73.57(e)(1), so that the proposed recipient(s) have an opportunity to correct or explain the record.
(3) The requestor may challenge the NRC staff's adverse determination with respect to access to SUNSI or with respect to standing or need to know for SGI by filing a challenge within 5 days of receipt of that determination with: (a) The presiding officer designated in this proceeding; (b) if no presiding officer has been appointed, the Chief Administrative Judge, or if he or she is unavailable, another administrative judge, or an Administrative Law Judge with jurisdiction pursuant to 10 CFR 2.318(a); or (c) if another officer has been designated to rule on information access issues, with that officer.
(4) The requestor may challenge the Office of Administration's final adverse determination with respect to trustworthiness and reliability for access to SGI by filing a request for review in accordance with 10 CFR 2.336(f)(1)(iv).
(5) Further appeals of decisions under this paragraph must be made pursuant to 10 CFR 2.311.
K. Review of Grants of Access. A party other than the requestor may challenge an NRC staff determination granting access to SUNSI whose release would harm that party's interest independent of the proceeding. Such a challenge must be filed within 5 days of the notification by the NRC staff of its grant of access and must be filed with: (a) The presiding officer designated in this proceeding; (b) if no presiding officer has been appointed, the Chief Administrative Judge, or if he or she is unavailable, another administrative judge, or an Administrative Law Judge with jurisdiction pursuant to 10 CFR 2.318(a); or (c) if another officer has been designated to rule on information access issues, with that officer.
If challenges to the NRC staff determinations are filed, these procedures give way to the normal process for litigating disputes concerning access to information. The availability of interlocutory review by the Commission of orders ruling on such NRC staff determinations (whether granting or denying access) is governed by 10 CFR 2.311.
L. The Commission expects that the NRC staff and presiding officers (and any other reviewing officers) will consider and resolve requests for access to SUNSI or SGI, and motions for protective orders, in a timely fashion in order to minimize any unnecessary delays in identifying those petitioners who have standing and who have propounded contentions meeting the specificity and basis requirements in 10 CFR part 2. The attachment to this Order summarizes the general target schedule for processing and resolving requests under these procedures.
It is so ordered.
For the Nuclear Regulatory Commission.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange is filing a proposal to amend the MIAX Emerald Fee Schedule (the “Fee Schedule”) to adopt the Exchange's system connectivity fees.
The Exchange previously filed the proposal on October 22, 2019 (SR-EMERALD-2019-35). That filing has been withdrawn and replaced with the current filing (SR-EMERALD-2019-39).
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange is refiling its proposal to amend the Fee Schedule to increase the Exchange's network connectivity fees, in order to provide further clarification regarding the Exchange's cost allocation methodology—namely, information that explains the Exchange's rationale for determining that it was reasonable to allocate certain expenses described in this filing towards the total cost to the Exchange to provide network connectivity services. The Exchange is also bolstering its equitable allocation of fees discussion.
The Exchange had previously supplemented its connectivity fee filings in order to provide additional analysis of its baseline revenues, costs, and profitability (before the proposed fee change) and the Exchange's expected revenues, costs, and profitability (following the proposed fee change) for its network connectivity services. This additional analysis includes information regarding its methodology for determining the baseline costs and revenues, as well as expected costs and revenues, for its network connectivity services. The Exchange previously refiled its proposal in order to address certain points raised in the only comment letter received by the Commission on the Exchange's prior proposal to increase connectivity fees.
In order to determine the Exchange's baseline costs associated with providing network connectivity services, the Exchange conducted an extensive cost review in which the Exchange analyzed every expense item in the Exchange's general expense ledger to determine whether each such expense relates to the provision of network connectivity services, and, if such expense did so relate, what portion (or percentage) of such expense actually supports the provision of network connectivity services. The sum of all such portions of expenses represents the total actual baseline cost of the Exchange to provide network connectivity services. (For the avoidance of doubt, no expense amount was allocated twice.) The Exchange is presenting the results of its cost review in a way that corresponds directly with the Exchange's 2018 Audited Unconsolidated Financial Statement, the relevant section of which is attached hereto [sic] as Exhibit 3, which is publicly available as part of the Exchange's Form 1 Amendment.
Specifically, the Exchange proposes to amend Sections 5(a) and (b) of the Fee Schedule to adopt the network connectivity fees for the 1 Gigabit (“Gb”) fiber connection and the 10Gb ultra-low latency (“ULL”) fiber connection, which are charged to both Members
The Exchange initially filed the Proposed Fees on March 1, 2019, designating the Proposed Fees immediately effective.
On March 29, 2019, the Commission issued its Order Disapproving Proposed Rule Changes to Amend the Fee Schedule on the BOX Market LLC Options Facility to Establish BOX Connectivity Fees for Participants and Non-Participants Who Connect to the BOX Network (the “BOX Order”).
After the BOX Order was issued, the Commission received four comment letters on the First Proposed Rule Change.
The Second SIFMA Letter argued that the Exchange did not provide sufficient information in its First Proposed Rule Change to support a finding that the proposal should be approved by the Commission after further review of the Proposed Fees. Specifically, the Second SIFMA Letter argued that the Exchange's market data fees and connectivity fees were not constrained by competitive forces, the Exchange's filing lacked sufficient information regarding cost and competition, and that the Commission should establish a framework for determining whether fees for exchange products and services are reasonable when those products and services are not constrained by significant competitive forces.
The IEX Letter argued that the Exchange did not provide sufficient information in its First Proposed Rule Change to support a finding that the proposal should be approved by the Commission and that the Commission should extend the time for public comment on the First Proposed Rule Change. Despite the objection to the Proposed Fees, the IEX Letter did find that “MIAX has provided more transparency and analysis in these filings than other exchanges have sought to do for their own fee increases.”
The Second Healthy Markets Letter did not object to the First Proposed Rule Change and the information provided by the Exchange in support of the Proposed Fees. Specifically, the Second Healthy Markets Letter stated that the First Proposed Rule Change was “remarkably different,” and went on to further state as follows:
The instant MIAX filings—along with their April 5th supplement—provide much greater detail regarding users of connectivity, the market for connectivity, and costs than the Initial MIAX Filings. They also appear to address many of the issues raised by the Commission staff's BOX disapproval order. This third round of MIAX filings suggests that MIAX is operating in good faith to
On April 29, 2019, the Exchange withdrew the First Proposed Rule Change.
The Exchange refiled the Proposed Fees on April 30, 2019, designating the Proposed Fees immediately effective.
On May 21, 2019, the Commission issued the Staff Guidance on SRO Rule Filings Relating to Fees.
The Commission received two comment letters on the Second Proposed Rule Change, after the Guidance was released.
On June 26, 2019, the Exchange withdrew the Second Proposed Rule Change.
The Exchange refiled the Proposed Fees on June 26, 2019, designating the Proposed Fees immediately effective.
The Commission received three comment letters on the Third Proposed Rule Change.
Neither the Third Healthy Markets Letter nor the Fourth SIFMA Letter called for the Commission to suspend or disapprove the Proposed Fee Increases. In fact, the Third Healthy Markets Letter acknowledged that “it appears as though MIAX is operating in good faith to provide what the Commission, its staff, and market participants the information needed to appropriately assess the filings.” The Third IEX Letter only reiterated points from the Second IEX Letter and failed to address any of the new information in the Fifth Proposed Rule Change concerning the Exchange's revenue figures, cost allocation or that the Proposed Fee Increases did not result in excessive pricing or a supra-competitive profit for the Exchange.
On August 23, 2019, the Exchange withdrew the Third Proposed Rule Change.
The Exchange refiled the Proposed Fee Increases on August 23, 2019, designating the Proposed Fee Increases immediately effective.
The Commission received only one comment letter on the Fourth Proposed Rule Change, twelve days after the comment period deadline ended.
On October 22, 2019, the Exchange withdrew the Fourth Proposed Rule Change.
The Exchange refiled the Proposed Fees on October 22, 2019, designating the Proposed Fees immediately effective.
On December 20, 2019, the Exchange withdrew the Fifth Proposed Rule Change.
The Exchange offers to both Members and non-Members various bandwidth alternatives for connectivity to the Exchange, to its primary and secondary facilities, consisting of a 1Gb fiber connection and a 10Gb ULL fiber connection. The 10Gb ULL offering uses an ultra-low latency switch, which provides faster processing of messages sent to it in comparison to the switch used for the other types of connectivity. The Exchange also offers to both Members and non-Members various bandwidth alternatives for connectivity to the Exchange, to its disaster recovery facility, consisting of a 1Gb fiber connection and a 10Gb connection.
For the Shared Connections, the Exchange's MIAX Express Network Interconnect (“MENI”) can be configured to provide Members and non-Members of the Exchange network connectivity to the trading platforms, market data systems, test systems, and disaster recovery facilities of the Exchange and its affiliates, MIAX and MIAX PEARL, via a single, shared connection. Any Member or non-Member can purchase a Shared Connection.
For the Dedicated Connection, the Exchange's MENI is configured to provide Members and non-Members of the Exchange network connectivity to the trading platforms, market data systems, test systems, and disaster recovery facilities of the Exchange. Any Member or non-Member can purchase a Dedicated Connection. The Exchange determined to design its network architecture in a manner that offered 10Gb ULL connections as dedicated connections (as opposed to shared connections) in order to provide cost saving opportunities for itself and for its Members, by reducing the amount of equipment that the Exchange would have to purchase and to which the Members would have to connect. Accordingly, the Exchange is able to offer to its Members 10Gb ULL connectivity at a lower price point than is offered on MIAX and MIAX PEARL, the price difference being reflective of the lower cost to the Exchange.
For the Shared Connections, Members and non-Members utilizing the MENI to connect to the trading platforms, market data systems, test systems and disaster recovery facilities of the Exchange, MIAX, and MIAX PEARL via a single, shared connection are assessed only one monthly network connectivity fee per connection, regardless of the trading platforms, market data systems, test systems, and disaster recovery facilities accessed via such connection. Thus, since all of the Members of MIAX Emerald are also members of either MIAX and/or MIAX PEARL, and most of those Members already have connectivity to the Exchange via existing Shared Connections, most Members of MIAX Emerald have instant connectivity to the Exchange without paying any new incremental connectivity fees, as more fully-detailed below.
The Exchange proposes to establish the monthly network connectivity fees for such connections for both Members and non-Members. As discussed above, the amounts of the Proposed Fees for the Shared Connections are the same amounts that are currently in place at MIAX and MIAX PEARL. The amount of the Proposed Fee for the Dedicated Connection is offered at a substantial discount to the amount currently in place at MIAX and MIAX PEARL. The reasons for the substantial discount are that the Dedicated Connection offers access to only a single market (the Exchange), whereas the 10Gb ULL connection offered by MIAX and MIAX PEARL offers access to two markets (MIAX and MIAX PEARL), as well as cost savings the Exchange was able to achieve (and thus pass through to its Members) as a result of a dedicated architecture. The network connectivity fees for connectivity to the Exchange's primary/secondary facility will be as follows: (a) 1,400 for the 1Gb connection; and (b) $6,000 for the 10Gb ULL connection. The network connectivity fees for connectivity to the Exchange's disaster recovery facility will be as follows: (a) $550 for the 1Gb connection; and (b) $2,750 for the 10Gb connection.
The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act
The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In
The Exchange believes that its proposal is consistent with Section 6(b)(4) of the Act, in that the Proposed Fees are fair, equitable and not unreasonably discriminatory, because the fees for the connectivity alternatives available on the Exchange, as proposed, are constrained by significant competitive forces. The U.S. options markets are highly competitive (there are currently 16 options markets) and a reliance on competitive markets is an appropriate means to ensure equitable and reasonable prices.
The Exchange acknowledges that there is no regulatory requirement that any market participant connect to the Exchange, or that any participant connect at any specific connection speed. The rule structure for options exchanges are, in fact, fundamentally different from those of equities exchanges. In particular, options market participants are not forced to connect to (and purchase market data from) all options exchanges, as shown by the number of Members of MIAX Emerald as compared to the much greater number of members at other options exchanges (as further detailed below). MIAX Emerald is a brand new exchange, having only commenced operations in March 2019. Not only does MIAX Emerald have less than half the number of members as certain other options exchanges, but there are also a number of the Exchange's Members that do not connect directly to MIAX Emerald. Further, of the number of Members that connect directly to MIAX Emerald, many such Members do not purchase market data from MIAX Emerald. There are a number of large market makers and broker-dealers that are members of other options exchanges but not Members of MIAX Emerald. For example, the following are not Members of MIAX Emerald: The D. E. Shaw Group, CTC, XR Trading LLC, Hardcastle Trading AG, Ronin Capital LLC, Belvedere Trading, LLC, Bluefin Trading, and HAP Capital LLC. In addition, of the market makers that are connected to MIAX Emerald, it is the individual needs of the market maker that require whether they need one connection or multiple connections to the Exchange. The Exchange has market maker Members that only purchase one connection and the Exchange has market maker Members that purchase multiple connections. It is all driven by the business needs of the market maker. Market makers that are consolidators that target resting order flow tend to purchase more connectivity than market makers that simply quote all symbols on the Exchange. Even though non-Members purchase and resell 10Gb ULL connections to both Members and non-Members, no market makers currently connect to the Exchange indirectly through such resellers.
The argument that all broker-dealers are required to connect to all exchanges is not true in the options markets. The options markets have evolved differently than the equities markets both in terms of market structure and functionality. For example, there are many order types that are available in the equities markets that are not utilized in the options markets, which relate to mid-point pricing and pegged pricing which require connection to the SIPs and each of the equities exchanges in order to properly execute those orders in compliance with best execution obligations. In addition, in the options markets there is a single SIP (OPRA) versus two SIPs in the equities markets, resulting in fewer hops and thus alleviating the need to connect directly to all the options exchanges. Additionally, in the options markets, the linkage routing and trade through protection are handled by the exchanges, not by the individual members. Thus not connecting to an options exchange or disconnecting from an options exchange does not potentially subject a broker-dealer to violate order protection requirements. Gone are the days when the retail brokerage firms (the Fidelity's, the Schwab's, the eTrade's) were members of the options exchanges—they are not members of MIAX Emerald or its affiliates, MIAX and MIAX PEARL, they do not purchase connectivity to MIAX Emerald, and they do not purchase market data from MIAX Emerald. The Exchange further recognizes that the decision of whether to connect to the Exchange is separate and distinct from the decision of whether and how to trade on the Exchange. The Exchange acknowledges that many firms may choose to connect to the Exchange, but ultimately not trade on it, based on their particular business needs.
To assist prospective Members or firms considering connecting to MIAX Emerald, the Exchange provides information about the Exchange's available connectivity alternatives in a Connectivity Guide, which contains detailed specifications regarding, among other things, throughput and latency for each available connection.
There is competition for connectivity to MIAX Emerald and its affiliates. MIAX Emerald competes with eight (8) non-Members, who resell MIAX Emerald connectivity. These are resellers of MIAX Emerald connectivity—they are not arrangements between broker-dealers to share connectivity costs. Those non-Members resell that connectivity to multiple market participants over that same connection, including both Members and non-Members of MIAX Emerald (typically extranets and service bureaus). When connectivity is re-sold by a third-party, MIAX Emerald does not receive any connectivity revenue from that sale. It is entirely between the third-party and the purchaser, thus constraining the ability of MIAX Emerald to set its connectivity pricing as indirect connectivity is a substitute for direct connectivity. In fact, there are currently seven (7) non-Members that purchase 1Gb direct connectivity that are able to access MIAX Emerald, MIAX and MIAX PEARL. Those non-Members resell that connectivity to eight (8) customers, some of whom are agency broker-dealers that have tens of customers of their own. Some of those eight (8) customers also purchase connectivity directly from MIAX
The Exchange,
Further, of those 22 Members, 14 of such Members elected to purchase additional connectivity to the Exchange, including additional Shared Connections and additional Dedicated Connections. The Exchange made available in advance to all of its prospective Members its proposed connectivity pricing (subject to regulatory clearance), in order for those prospective Members to make an informed decision about whether to become a Member of the Exchange and whether to purchase connectivity to the Exchange. Accordingly, each such Member made the decision to become a Member of the Exchange and to purchase connectivity to the Exchange, knowing in advance the connectivity pricing. And the vast majority of the additional connectivity purchased by those Members were for Dedicated Connections, the most expensive connectivity option.
As a result, of those 22 Members, through existing Shared Connections, newly purchased Shared Connections, and newly purchased Dedicated Connections: 14 Members have 1Gb (primary/secondary) connections; 13 Members have 10Gb ULL (primary/secondary) connections; 3 Members have 10Gb (disaster recovery) connections; and 10 Members have 1Gb (disaster recovery) connections, or some combination of multiple various connections. All such Members with those Shared Connections and Dedicated Connections trade on MIAX Emerald.
The 6 Members who have not purchased any connectivity to the Exchange are still able to trade on the Exchange indirectly through other Members or non-Member service bureaus that are connected. These 6 Members who have not purchased connectivity are not forced or compelled to purchase connectivity, and they retain all of the other benefits of membership with the Exchange. Accordingly, Members have the choice to purchase connectivity and are not compelled to do so in any way.
In addition, there are 5 non-Member service bureaus that already have connectivity to the Exchange via existing Shared Connections, thus providing all 5 of those non-Member service bureaus with instant connectivity to the Exchange without paying any new incremental connectivity fees. These non-Members freely purchased their connectivity from one of the Exchange's affiliates, either MIAX or MIAX PEARL, in order to offer trading services to other firms and customers, as well as access to the market data services that their connections to the Exchange provide them, but they are not required or compelled to purchase any of the Exchange's connectivity options.
The Exchange believes that the Proposed Fees are reasonable, equitable and not unfairly discriminatory because the connectivity pricing is directly related to the relative costs to the Exchange to provide those respective services, and does not impose a barrier to entry to smaller participants. Accordingly, the Exchange offers two direct connectivity alternatives and various indirect connectivity (via third-party) alternatives, as described above. MIAX Emerald recognizes that there are various business models and varying sizes of market participants conducting business on the Exchange. The 1Gb direct connectivity alternative is 1/10th the size of the 10Gb ULL direct connectivity alternative. Because it is 1/10th of the size, it does not offer access to many of the products and services offered by the Exchange, such as the ability to quote or receive certain market data products. Approximately just less than half of MIAX Emerald, MIAX and MIAX PEARL Members that connect (15 out of 33) purchase 1Gb connections. The 1Gb direct connection can support the sending of orders and the consumption of all market data feed products, other than the top-of-market data feed product or depth data feed product (which require a 10Gb connection). The 1Gb direct connection is generally purchased by market participants that utilize less bandwidth and also generally do not require the high touch network support services provided by the Exchange. Accordingly, these connections consume the least resources of the Exchange and are the least costly to the Exchange to provide. The market participants that purchase 10Gb ULL direct connections utilize the most bandwidth and also generally do require the high touch network support services provided by the Exchange. Accordingly, these connections consume the most resources of the Exchange and are the most costly to the Exchange to provide. Accordingly, the Exchange believes the allocation of the Proposed Fees ($6,000 for a 10Gb ULL connection versus $1,400 for a 1Gb connection) are reasonable based on the resources consumed by the respective type of connection—lowest resource consuming members pay the least, and highest resource consuming members pay the most, particularly since higher resource consumption translates directly to higher costs to the Exchange. The 10Gb ULL connection offers optimized connectivity for latency sensitive participants. This lower latency is achieved through more advanced network equipment, such as advanced hardware and switching components, which translates to increased costs to the Exchange. The 10Gb ULL connection offers optimized connectivity for latency sensitive participants and is approximately single digit microseconds faster in round trip time for connection oriented traffic to the Exchange than the 1Gb connection. This lower latency is achieved through more advanced network equipment, such as advanced hardware and switching components, which translates
The Exchange launched trading on March 1, 2019. Thus, at the time that the 14 Members who elected to purchase connectivity to the Exchange, the Exchange was untested and unproven, and had 0% market share of the U.S. options industry. With respect to options trading, the Exchange had only a 0.92% market share of the U.S. options industry in November 2019 in Equity/Exchange Traded Fund (“ETF”) classes according to the OCC.
Separately, the Exchange is not aware of any reason why market participants could not simply drop their connections and cease being Members of the Exchange if the Exchange were to establish unreasonable and uncompetitive price increases for its connectivity alternatives. Market participants choose to connect to a particular exchange and because it is a choice, MIAX Emerald must set reasonable connectivity pricing, otherwise prospective members would not connect and existing members would disconnect or connect through a third-party reseller of connectivity. No options market participant is required by rule, regulation, or competitive forces to be a Member of the Exchange. As evidence of the fact that market participants can and do disconnect from exchanges based on connectivity pricing, R2G Services LLC (“R2G”) filed a comment letter after BOX's proposed rule changes to increase its connectivity fees (SR-BOX-2018-24, SR-BOX-2018-37, and SR-BOX-2019-04).
Several market participants choose not to be Members of the Exchange and choose not to access the Exchange, and several market participants are proposing to access the Exchange indirectly through another market participant. To illustrate, the Exchange has only 34 total Members (including all such Members' affiliate Members). However, Cboe Exchange, Inc. (“Cboe”) has over 200 members,
Further, since there are 41 distinct members amongst all three exchanges, and only 28 of those distinct members decided to become Members of MIAX Emerald, there were 13 distinct members that decided
With respect to the now MIAX Emerald Members that had Shared Connections in place as of August 1, 2018 (via a previously purchased Shared Connection from MIAX or MIAX PEARL), the Exchange finds it compelling that all of those Members continued to purchase those Shared Connections after August 1, 2018, when MIAX and MIAX PEARL increased the connectivity fees for the Shared Connections to the current amounts proposed by the Exchange herein. In particular, the Exchange believes that the Proposed Fees for the Shared Connections are reasonable because MIAX and MIAX PEARL, which charge the same amount for the Shared Connections, did not lose any Members (or the number of Shared Connections each Member purchased) or non-Member Shared Connections when MIAX and MIAX PEARL proposed to increase the connectivity fees for the Shared Connections on August 1, 2018. For example, with respect to the Shared Connections maintained by now Members of MIAX Emerald who had Shared Connections in place as of July 2018, 12 Members purchased 1Gb connections. The vast majority of those Members purchased multiple such connections, the number of connections depending on their throughput requirements based on the volume of their quote/order traffic and market data needs associated with their business model. After the fee increase, beginning August 1, 2018, the same 12 Members purchased 1Gb connections. Furthermore, the total number of connections did not decrease from July to August.
Further, with respect to the Shared Connections maintained by now Members of MIAX Emerald who had Shared Connections in place as of July 2018, of those Members and non-Members that bought multiple connections, no firm dropped any
The Exchange believes that the Proposed Fees are equitably allocated among Members and non-Members, as evidenced by the fact that the fees are allocated across all connectivity alternatives according to the Exchange's costs to provide such alternatives, and there is not a disproportionate number of Members purchasing any alternative—14 Members have 1Gb (primary/secondary) connections; 14 Members have 10Gb ULL (primary/secondary) connections; 3 Members have 10Gb (disaster recovery) connections; and 11 Members have 1Gb (disaster recovery) connections, or some combination of multiple various connections.
The Exchange further believes that the Proposed Fees, as they pertain to purchasers of each type of connectivity alternative, constitute an equitable allocation of reasonable fees charged to the Exchange's Members and non-Members and are allocated fairly amongst the types of market participants using the facilities of the Exchange. For example, for November 2019, Exchange: (i) Members and non-Members that purchased 10Gb ULL connections accounted for approximately 95% of the total network connectivity revenue collected by the Exchange from all connectivity alternatives; and (ii) Members and non-Members that purchased 1Gb connections accounted for approximately 5% of the revenue collected by the Exchange from all connectivity alternatives. (The Exchange notes that it does not offer a 10Gb connectivity alternative.) As described above, the Exchange believes the Proposed Fees are equitably allocated because 10Gb ULL purchasers (while they account for the vast majority of the Exchange's total connectivity revenue—approximately 95%): (1) Consume the most bandwidth and resources of the network; (2) transact the vast majority of the volume on the Exchange; and (3) require the high touch network support services provided by the Exchange and its staff, including more costly network monitoring, reporting and support services, resulting in a much higher cost to the Exchange to provide such connectivity alternatives, compared to the cost to provide a 1Gb connectivity alternative (as further described in the Exchange's cost discussion, below).
The Exchange believes that the connectivity fees are equitably allocated among users of the network connectivity alternatives, as the users of the 10Gb ULL connections consume the most bandwidth and resources of the network. Specifically, the Exchange notes that these users account for approximately greater than 99% of message traffic over the network, while the users of the 1Gb connections account for approximately less than 1% of message traffic over the network. In the Exchange's experience, users of the 1Gb connections do not have a business need for the high performance network solutions required by 10Gb ULL users. The Exchange's high performance network solutions and supporting infrastructure (including employee support), provides unparalleled system throughput and the capacity to handle approximately 18 million quote messages per second. On an average day, the Exchange handles approximately 3,000,000,500,000 total messages. Of those, users of the 10Gb ULL connections generate approximately 3 billion messages, and users of the 1Gb connections generate 500,000 messages. However, in order to achieve a consistent, premium network performance, the Exchange must build out and maintain a network that has the capacity to handle the message rate requirements of its most heavy network consumers. These billions of messages per day consume the Exchange's resources and significantly contribute to the overall network connectivity expense for storage and network transport capabilities. Given this difference in network utilization rate, the Exchange believes that it is reasonable, equitable, and not unfairly discriminatory that the 10Gb ULL users pay for the vast majority of the shared network resources from which all Member and non-Member users benefit, but is designed and maintained from a capacity standpoint to specifically handle the message rate and performance requirements of 10Gb ULL users.
The Exchange also believes that the connectivity fees are equitably allocated amongst users of the network connectivity alternatives, when these fees are viewed in the context of the overall trading volume on the Exchange. To illustrate, the purchasers of the 10Gb ULL connectivity account for approximately 75% of the volume on the Exchange. For example, for all of November 2019, 2.5 million contracts of the 3.3 million contracts executed were done by the top market making firms on the Exchange in simple (non-complex) volume. This overall volume percentage (75% of total Exchange volume) is in line with the amount of network connectivity revenue collected from 10Gb ULL purchasers (95% of total Exchange connectivity revenue).
The Exchange further believes that the fees are equitably allocated, as the amount of the fees for the various connectivity alternatives are directly related to the actual costs associated with providing the respective connectivity alternatives. That is, the cost to the Exchange of providing a 1Gb network connection is significantly lower than the cost to the Exchange of providing a 10Gb ULL network connection. Pursuant to its extensive cost review described above, the Exchange believes that the average cost to provide a 10Gb ULL network connection is approximately 4 to 6 times more than the average cost to provide a 1Gb connection. The simple hardware and software component costs alone of a 10Gb ULL connection are not 4 to 6 times more than the 1Gb connection. Rather, it is the associated premium-product level network monitoring, reporting, and support services costs that accompany a 10Gb ULL connection which cause it to be 4 to 6 times more costly to provide than the 1Gb connection. Accordingly, the Exchange believes it is equitable to allocate those network infrastructure costs that accompany a 10Gb ULL connection to the purchasers of those connections, and not to purchasers of 1Gb connections.
As discussed above, the Exchange differentiates itself by offering a “premium-product” network experience, as an operator of a high performance, ultra-low latency network with unparalleled system throughput, which network can support access to three distinct options markets and multiple competing market-makers having affirmative obligations to
The Exchange believes that its proposal is consistent with Section 6(b)(4) of the Act because the Proposed Fees will permit recovery of the Exchange's costs and will not result in excessive or supra-competitive profit. The Proposed Fees will allow the Exchange to recover a portion (less than all) of the costs incurred by the Exchange associated with providing and maintaining the necessary hardware and other infrastructure as well as network monitoring and support services in order to provide the network connectivity services. The Exchange believes that it is reasonable and appropriate to establish its fees charged for use of its connectivity at a level that will partially offset the costs to the Exchange associated with maintaining and enhancing a state-of-the-art exchange network infrastructure in the U.S. options industry.
The costs associated with making the network accessible to Exchange Members and non-Members, through the expansion associated with new Shared Connections and Dedicated Connections, as well as the general expansion of a state-of-the-art infrastructure, are extensive, have increased year-over-year in the past two years, and are projected to increase year-over-year in the future. This is due to several factors, including costs associated with maintaining and expanding a team of highly-skilled network engineers, fees charged by the Exchange's third-party data center operator, and costs associated with projects and initiatives designed to improve overall network performance and stability, through the Exchange's R&D efforts.
In order to provide more detail and to quantify the Exchange's costs, the Exchange notes that costs are associated with the infrastructure and headcount to fully-support the advances in infrastructure and expansion of network level services, including customer monitoring, alerting and reporting. The Exchange incurs technology expenses related to establishing and maintaining Information Security services, enhanced network monitoring and customer reporting, as well as Regulation SCI mandated processes, associated with its network technology. Additionally, the Exchange incurred costs in the expansion/buildout of the network leading up to the launch of operations, and the network maintenance costs continue to increase year-over-year. While some of the expense is fixed, much of the expense is not fixed, and thus increases as the number of connections increase. For example, new 1Gb and 10Gb ULL connections require the purchase of additional hardware to support those connections as well as enhanced monitoring and reporting of customer performance that MIAX Emerald and its affiliates provide. And 10Gb ULL connections require the purchase of specialized, more costly hardware. Further, as the total number of all connections increase, MIAX Emerald and its affiliates need to increase their data center footprint and consume more power, resulting in increased costs charged by their third-party data center provider. Accordingly, the cost to MIAX Emerald and its affiliates is not entirely fixed. Just the initial fixed cost buildout of the network infrastructure of MIAX Emerald and its affiliates, including both primary/secondary sites and disaster recovery, was over $30 million.
A more detailed breakdown of the expense increases since the initial phases of the buildout of the Exchange over two years ago include the following: With respect to the network, there has been an approximate 70% increase in technology-related personnel costs in infrastructure, due to expansion of services/support (increase of approximately $800,000); an approximate 10% increase in datacenter costs due to price increases and footprint expansion (increase of approximately $500,000); an approximate 5% increase in vendor-supplied dark fiber due to price increases and expanded capabilities (increase of approximately $25,000); and a 30% increase in market data connectivity fees (increase of approximately $200,000). Of note, regarding market data connectivity fee cost, this is the cost associated with MIAX Emerald consuming connectivity/content from the equities markets in order to operate the Exchange, causing MIAX Emerald to effectively pay its competitors for this connectivity.
There was also significant capital expenditures over this same period to upgrade and enhance the underlying technology components. The Exchange believes that it is reasonable and appropriate to establish its fees charged for use of its connectivity at a level that will partially offset the costs to the Exchange associated with the buildout, maintenance, and enhancement of its network infrastructure.
Further, because the costs of operating a data center are significant and not economically feasible for the Exchange, the Exchange does not operate its own data centers, and instead contracts with a third-party data center provider. The Exchange notes that larger, dominant exchange operators own/operate their data centers, which offers them greater control over their data center costs. Because those exchanges own and operate their data centers as profit centers, the Exchange is subject to additional costs. Connectivity fees, which are charged for accessing the Exchange's data center network infrastructure, are directly related to the network and offset costs such costs.
Further, the Exchange invests significant resources in network R&D to improve the overall performance and stability of its network. For example, the Exchange has a number of network monitoring tools (some of which were developed in-house, and some of which are licensed from third-parties), that continually monitor, detect, and report network performance, many of which serve as significant value-adds to the Exchange's Members and enable the Exchange to provide a high level of customer service. These tools detect and report performance issues, and thus enable the Exchange to proactively notify a Member (and the SIPs) when the Exchange detects a problem with a Member's connectivity. In fact, the Exchange often receives inquiries from other industry participants regarding the status of networking issues outside of the Exchange's own network environment that are impacting the industry as a whole via the SIPs, including inquiries from regulators, because the Exchange has a superior, state-of the-art network that, through its enhanced monitoring and reporting solutions, often detects and identifies industry-wide networking issues ahead of the SIPs. The Exchange also incurs costs associated with the maintenance
Certain recently developed network aggregation and monitoring tools provide the Exchange with the ability to measure network traffic with a much more granular level of variability. This is important as Exchange Members demand a higher level of network determinism and the ability to measure variability in terms of single digit nanoseconds. Also, routine R&D projects to improve the performance of the network's hardware infrastructure result in additional cost. As an example, in the last year, R&D efforts resulted in a performance improvement, requiring the purchase of new equipment to support that improvement, and thus resulting in increased costs in the hundreds of thousands of dollars range. In sum, the costs associated with maintaining and enhancing a state-of-the-art exchange network in the U.S. options industry is a significant expense for the Exchange that also increases year-over-year, and thus the Exchange believes that it is reasonable to offset a portion of those costs through establishing network connectivity fees, which are designed to recover those costs, as proposed herein. Overall, the Proposed Fees are projected to offset only a portion of the Exchange's network connectivity costs. The Exchange invests in and offers a superior network infrastructure as part of its overall options exchange services offering, resulting in significant costs associated with maintaining this network infrastructure, which are directly tied to the amount of the connectivity fees that must be charged to access it, in order to recover those costs. In fact, the Exchange often receives inquiries from other industry participants regarding the status of networking issues outside of the Exchange's own network environment that are impacting the industry as a whole via the SIPs, including inquiries from regulators, because the Exchange has a superior, state-of the-art network that, through its enhanced monitoring and reporting solutions, often detects and identifies industry-wide networking issues ahead of the SIPs. As detailed in the Exchange's 2018 Audited Unconsolidated Financial Statements, the Exchange only has four primary sources of revenue: Transaction fees, access fees (of which network connectivity constitute the majority), regulatory fees, and market data fees. Accordingly, the Exchange must cover all of its expenses from these four primary sources of revenue.
The Proposed Fees are fair and reasonable because they will not result in excessive pricing or supra-competitive profit, when comparing the total annual expense of MIAX Emerald associated with providing network connectivity services versus the total projected annual revenue of the Exchange associated with providing network connectivity services. For 2018, the total annual expense associated with providing network connectivity services for MIAX Emerald was approximately $4.7 million. The $4.7 million in total annual expense is comprised of the following, all of which are directly related to the provision of network connectivity services by MIAX Emerald to its respective Members and non-Members: (1) Third-party expense, relating to fees paid by MIAX Emerald to third-parties for certain products and services; and (2) internal expense, relating to the internal costs of MIAX Emerald to provide the network connectivity services. All such expenses are more fully-described below, and are mapped to MIAX Emerald's 2018 Statements of Operations and Member's Deficit (the “2018 Financial Statements”). The $4.7 million in total annual expense is directly related to the provision of network connectivity services and not any other product or service offered by the Exchange. It does not, as the Third IEX Letter baselessly claims, include general costs of operating matching systems and other trading technology. (And as stated previously, no expense amount was allocated twice.) As discussed, the Exchange conducted an extensive cost review in which the Exchange analyzed every expense item in the Exchange's general expense ledger (this includes over 150 separate and distinct expense items) to determine whether each such expense relates to the provision of network connectivity services, and, if such expense did so relate, what portion (or percentage) of such expense actually supports the provision of network connectivity services, and thus bears a relationship that is, “in nature and closeness,” directly related to network connectivity services. The sum of all such portions of expenses represents the total actual baseline cost of the Exchange to provide network connectivity services.
As discussed above, the Exchange differentiates itself by offering a “premium-product” network experience, as an operator of a high performance, ultra-low latency network with unparalleled system throughput, which network can support access to three distinct options markets and multiple competing market-makers having affirmative obligations to continuously quote over 750,000 distinct trading products (per exchange), and the capacity to handle approximately 18 million quote messages per second. The “premium-product” network experience enables users of 10Gb ULL connections to receive the network monitoring and reporting services for those approximately 750,000 distinct trading products. Thus, the Exchange is acutely aware of and can isolate the actual costs associated with providing such a service to its customers, a significant portion of which relates to the premium, value-add customer network monitoring and support services that accompany the service, as fully-described above. IEX, on the other hand, does not offer such a network, and thus has no legal basis to offer a qualified opinion on the Exchange's costs associated with operating such a network. In fact, IEX differentiates itself as a provider of low cost connectivity solutions to an intentionally delayed trading platform—quite the opposite from the Exchange. Thus, there is no relevant comparison between IEX network connectivity costs and the Exchange's network connectivity costs, and IEX's attempt to do so in the Third IEX Letter is ill-informed and self-serving.
For 2018, total third-party expense, relating to fees paid by MIAX Emerald to third-parties for certain products and services for the Exchange to be able to provide network connectivity services, was $728,246. This includes, but is not limited to, a portion of the fees paid to: (1) Equinix, for data center services, for the primary, secondary, and disaster recovery locations of the MIAX Emerald trading system infrastructure; (2) Zayo Group Holdings, Inc. (“Zayo”) for connectivity services (fiber and bandwidth connectivity) linking MIAX Emerald's office locations in Princeton, NJ and Miami, FL to all data center locations; (3) Secure Financial Transaction Infrastructure (“SFTI”),
All of the third-party expense described above is contained in the information technology and communication costs line item under the section titled “Operating Expenses Incurred Directly or Allocated From Parent” of the 2018 Financial Statements. For clarity, only a portion of all fees paid to such third-parties is included in the third-party expense herein (only the portion that actually supports the provision of network connectivity services), and no expense amount is allocated twice. Accordingly, MIAX Emerald does not allocate its entire information technology and communication costs to the provision of network connectivity services.
The Exchange believes it is reasonable to allocate such third-party expense described above towards the total cost to the Exchange to operate and support the network, including providing network connectivity services. In particular, the Exchange believes it is reasonable to allocate the identified portion of the Equinix expense because Equinix operates the data centers (primary, secondary, and disaster recovery) that host the Exchange's network infrastructure, which enables the provision of network connectivity services. This includes, among other things, the necessary storage space, which continues to expand and increase in cost, power to operate the network infrastructure, and cooling apparatuses to ensure the Exchange's network infrastructure maintains stability. Without these services from Equinix, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the Equinix expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 68% of the total Equinix expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
The Exchange believes it is reasonable to allocate the identified portion of the Zayo expense because Zayo provides the internet, fiber and bandwidth connections with respect to the network, linking MIAX Emerald with its affiliates, MIAX PEARL and MIAX, as well as the data center and disaster recovery locations. As such, all of the trade data, including the billions of messages each day per exchange, flow through Zayo's infrastructure over the Exchange's network. Without these services from Zayo, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the Zayo expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 62% of the total Zayo expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
The Exchange believes it is reasonable to allocate the identified portion of the SFTI expense and various other service providers' (including Thompson Reuters, NYSE, Nasdaq, and Internap) expense because those entities provide connectivity and feeds for the entire U.S. options industry as well as the content, connectivity services, and infrastructure services for critical components of the network. Without these services from SFTI and various other service providers, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the SFTI and other service providers' expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 17% of the total SFTI and other service providers' expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
The Exchange believes it is reasonable to allocate the identified portion of the other hardware and software provider expense because this includes costs for dedicated hardware licenses for switches and servers, as well as dedicated software licenses for security monitoring and reporting across the network. Without this hardware and software, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the hardware and software provider expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 54% of the total hardware and software provider expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
For 2018, total internal expense, relating to the internal costs of MIAX Emerald to provide the network connectivity services, was $4,031,491. This includes, but is not limited to, costs associated with: (1) Employee compensation and benefits for full-time employees that support network connectivity services, including staff in network operations, trading operations, development, system operations, business, etc., as well as staff in general corporate departments (such as legal, regulatory, and finance) that support those employees and functions; (2) depreciation and amortization of hardware and software used to provide network connectivity services, including equipment, servers, cabling, purchased software and internally developed software used in the production environment to support connectivity for trading; and (3) occupancy costs for leased office space for staff that support network connectivity services. The breakdown of these costs is more fully-described below.
All of the internal expenses described above are contained in the following line items under the section titled “Operating Expenses Incurred Directly or Allocated From Parent” in the 2018 Financial Statements: (1) Employee compensation and benefits; (2) Depreciation and amortization; and (3) Occupancy costs. For clarity, only a portion of all such internal expenses are included in the internal expense herein (only the portion that supports the provision of network connectivity services), and no expense amount is allocated twice. Accordingly, MIAX Emerald does not allocate its entire costs contained in those line items to the provision of network connectivity services.
The Exchange believes it is reasonable to allocate such internal expense
MIAX Emerald's depreciation and amortization expense relating to providing network connectivity services was $416,807, which is only a portion of the $616,785 total expense for depreciation and amortization that is stated in the 2018 Financial Statements. The Exchange believes it is reasonable to allocate the identified portion of such expense because such expense includes the actual cost of the computer equipment, such as dedicated servers, computers, laptops, monitors, information security appliances and storage, and network switching infrastructure equipment, including switches and taps that were purchased to operate and support the network. Without this equipment, the Exchange would not be able to operate the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the depreciation and amortization expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 68% of the total depreciation and amortization expense, as connectivity services would not be possible without relying on such equipment. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
MIAX Emerald's occupancy expense relating to providing network connectivity services was $352,458, which is only a portion of the $732,720 total expense for occupancy that is stated in the 2018 Financial Statements. The Exchange believes it is reasonable to allocate the identified portion of such expense because such expense represents the portion of the Exchange's cost to rent and maintain a physical location for the Exchange's staff who operate and support the network, including providing network connectivity services. This amount consists primarily of rent for the Exchange's Princeton, NJ office, as well as various related costs, such as physical security, property management fees, property taxes, and utilities. The Exchange operates its Network Operations Center (NOC) and Security Operations Center (SOC) from its Princeton, New Jersey office location. A centralized office space is required to house the staff that operates and supports the network. The Exchange currently has 130 employees. Approximately two-thirds of the Exchange's staff are in the Technology department, and the majority of those staff have some role in the operation and performance of the network. Without this office space, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. Accordingly, the Exchange believes it is reasonable to allocate the identified portion of its occupancy expense because such amount represents the Exchange's actual cost to house the equipment and personnel who operate and support the Exchange's network infrastructure and connectivity services. The Exchange did not allocate all of the occupancy expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting network connectivity services, approximately 48% of the total occupancy expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
The total projected MIAX Emerald revenue for providing network connectivity services, on a full year run rate, is $3.0 million. However, since MIAX Emerald was launched on March 1, 2019, it did not start collecting revenue for network connectivity services until March 1, 2019. Thus, for 2018, MIAX Emerald's expense for providing network connectivity services was approximately $4.7 million, while its revenue for providing network connectivity services was $0. For 2019, MIAX Emerald projects 10 full months of revenue for network connectivity services (March 1-December 31), of $2.5 million, however it also projects increased expense for providing network connectivity services for 2019, as compared to 2018. Nevertheless, utilizing 2018 expense figures, for 2019, MIAX Emerald's expense for providing network connectivity services would be approximately $4.7 million, while its revenue for providing network connectivity services would be $2.5 million. On a fully annualized basis, utilizing 2018 expense figures and 2019 projected revenue extrapolated out to a full year run rate, MIAX Emerald's expense for providing network connectivity services would be approximately $4.7 million, while its revenue for providing network connectivity services would be $3 million. Accordingly, for both 2018 and 2019, the total MIAX Emerald projected revenue for providing network connectivity services during 2018 ($0) and during 2019 ($2.5 million) is less than total actual and projected MIAX Emerald expense for providing network connectivity services for 2018 ($4.7 million) and 2019 (greater than $4.7 million).
For the avoidance of doubt, none of the expenses included herein relating to the provision of network connectivity services relate to the provision of any other services offered by MIAX Emerald. Stated differently, no expense amount of the Exchange is allocated twice.
The Exchange believes it is reasonable, equitable and not unfairly discriminatory to allocate the respective percentages of each expense category described above towards the total cost to the Exchange of operating and supporting the network, including providing network connectivity services, because the Exchange performed a line-by-line item analysis of all the expenses of the Exchange, and has determined the expenses that directly relate to operation and support of the network, including providing network connectivity to the Exchange. Further, the Exchange notes that, without the specific third-party and internal items listed above, the Exchange would not be able to operate and support the network, including providing network connectivity services to its Members and non-Members and their customers. Each of these expense items, including physical hardware, software, employee compensation and benefits, occupancy costs, and the depreciation and amortization of equipment, have been identified through a line-by-line item analysis to be integral to the operation and support of the network. Network connectivity fees are intended to recover the Exchange's costs of operating and supporting the network.
Accordingly, the Proposed Fee Increases are fair and reasonable because they do not result in excessive pricing or supra-competitive profit, when comparing the actual network operation and support costs to the Exchange versus the projected network connectivity annual revenue, including the increased amount. Additional information on overall revenue and expense of the Exchange can be found in the Exchange's 2018 Financial Statements.
The Exchange also believes its proposal to offer 10Gb ULL connections as dedicated connections furthers the objectives of Section 6(b)(5) of the Act
The Exchange notes that other exchanges have similar connectivity alternatives for their participants, including similar low-latency connectivity. For example, Nasdaq PHLX LLC (“Phlx”), NYSE Arca, Inc. (“Arca”), NYSE American LLC (“NYSE American”) and Nasdaq ISE, LLC (“ISE”) all offer a 1Gb, 10Gb and 10Gb low latency ethernet connectivity alternatives to each of their participants.
The Exchange does not believe that the proposed rule change would place certain market participants at the Exchange at a relative disadvantage compared to other market participants or affect the ability of such market participants to compete. In particular, the Exchange has received no official complaints from Members, non-Members (extranets and service bureaus), third-parties that purchase the Exchange's connectivity and resell it, and customers of those resellers, that the Exchange's fees or the Proposed Fees are negatively impacting or would negatively impact their abilities to compete with other market participants or that they are placed at a disadvantage.
The Exchange believes that the Proposed Fees do not place certain market participants at a relative disadvantage to other market participants because the connectivity pricing is associated with relative usage of the various market participants and does not impose a barrier to entry to smaller participants. As described above, the less expensive 1Gb direct connection is generally purchased by market participants that utilize less bandwidth. The market participants that purchase 10Gb ULL direct connections utilize the most bandwidth, and those are the participants that consume the most resources from the network. Accordingly, the Proposed Fees do not favor certain categories of market participants in a manner that would impose a burden on competition; rather, the allocation of the Proposed Fees reflects the network resources consumed by the various size of market participants—lowest bandwidth consuming members pay the least, and highest bandwidth consuming members pays the most, particularly since higher bandwidth consumption translates to higher costs to the Exchange.
The Exchange believes the Proposed Fees do not place an undue burden on competition on other SROs that is not necessary or appropriate. In particular, options market participants are not
While the Exchange recognizes the distinction between connecting to an exchange and trading at the exchange, the Exchange notes that it operates in a highly competitive options market in which market participants can readily connect and trade with venues they desire. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges. The Exchange believes that the proposed changes reflect this competitive environment.
Written comments were neither solicited nor received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On October 31, 2019, The Depository Trust Company (“DTC”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
DTC proposes to modify its Procedures
An issuer of a Security may be allowed under the terms of the issue to call a portion of the par value of the issue outstanding for redemption at certain times during the life of the issue,
When an issuer initiates a Partial Call, DTC's Procedures require the trustee for the issue to publish notice of such event or mail notice of the event, including the specific amount to be redeemed, to the registered holders.
Under DTC's Procedures set forth in the Redemptions Guide relating to a Partial Call, DTC allocates the called Securities among Participants that hold the applicable Security by means of an impartial lottery, based upon Participants' net long positions as of the close of business on the day prior to the publication of the call notice.
An odd lot occurs when a Participant holds a position in a Security that is not within the stated increments of the Security,
DTC proposes to amend its Redemptions Guide to revise its call lottery process such that, for issues where the incremental value is $5,000 or less, Participants with odd lot positions would have their positions adjusted down to the nearest value that is divisible by the minimum incremental value for purposes of the lottery. However, the Participant would continue to hold the Securities reduced from its position for this purpose in its Account. Thus, the Participant with the initial odd lot for issues where the incremental value is $5,000 or less would continue to maintain an odd lot position after the lottery is run, and no new odd lot positions would be created.
In addition, a copyright date in the text of the Redemptions Guide is currently shown as 1999-2014. DTC proposes to revise the text of the Redemptions Guide to reflect a copyright date of 1999-2019.
Section 19(b)(2)(C) of the Act
Section 17A(b)(3)(F) of the Act requires that the rules of a clearing agency be designed to, among other things, promote the prompt and accurate clearance and settlement of securities transactions and assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible.
As described above, the proposal would prevent the creation of new odd lot positions during the lottery process for issues where the incremental value is $5,000 or less, which would facilitate the allocation of positions that are more amenable to trading for transactions that are processed and settled through DTC's system. Therefore, the proposal should promote the prompt and accurate clearance and settlement of securities transactions that are processed and settled through DTC's system.
On the basis of the foregoing, the Commission finds that the proposed rule change is consistent with the requirements of the Act and, in particular, with the requirements of Section 17A of the Act
For the
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The principal purpose of the proposed rule change is to revise Clearing Member Charges and Rates of Return on cash and collateral in relation to margin deposits and Guaranty Fund contributions for all Clearing Member House and Customer Accounts. The revisions do not involve any changes to the ICE Clear Europe Clearing Rules or Procedures.
In its filing with the Commission, ICE Clear Europe included statements concerning the purpose of and basis for the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. ICE Clear Europe has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements.
The purpose of the proposed rule changes are for ICE Clear Europe to: (i) Reduce the Rate of Return paid to Clearing Members on cash balances; and (ii) increase the charges levied on Clearing Members in relation to collateral in respect of margin deposits and Guaranty Fund contributions.
Attached [sic] as Exhibit 5 are the tables listing the new Clearing Member Charges and Rates of Return that will be included in a Circular in advance of the effective date. The new Clearing Member Charges and Rates of Return are expected to come into effect on January 1, 2020. The proposed revisions to the Clearing Member Charges and Rates of Return are set forth in Exhibit 5 hereto, and described in detail as follows.
Currently, ICEU pays a rate of return on cash deposited by Clearing Members in respect of margin deposits and Guaranty Fund contributions referred to as the ICE Deposit Rate (“IDR”). IDR is calculated daily and applied to cash balances held at the close of business on the previous business day in respect of three currencies, U.S. Dollar, Euro and Pound Sterling. It is calculated as follows: The net income earned on cash deposits (positive or negative) less a charge of 12.5 basis points (out of which the Clearing House shall cover external investment management expenses). ICEU proposes to increase this charge to 15 basis points.
ICEU also proposes to increase the Clearing House charges for Collateral and Triparty Collateral as per Exhibit 5.
ICE Clear Europe believes that the proposed rule changes are consistent with the requirements of the Act, including Section 17A of the Act
ICE Clear Europe does not believe the proposed rule changes would have any impact, or impose any burden, on competition not necessary or
Written comments relating to the proposed changes to the rules have not been solicited or received. ICE Clear Europe will notify the Commission of any written comments received by ICE Clear Europe.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, security-based swap submission or advance notice is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ICEEU-2019-029 and should be submitted on or before January 28, 2020.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
Cboe Exchange, Inc. (the “Exchange” or “Cboe Options”) proposes to adopt certain linkage fee codes. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange's Fees Schedule currently provides for fee codes for Routing Fees. In particular, the Fees Schedule currently lists fee codes and their corresponding transaction fee for routed Customer orders to other options exchanges specifically in Exchange Traded Funds (“ETF”) and equity options, and for non-Customer orders routed in Penny and Non-Penny options classes. The Exchange notes that in connection with a recent technology migration (including the migration of the Exchange's billing system to a new
In light of the migration, the Exchange amended, among other things, the general routing fee for Customer orders to instead provide for an exact charge for routing per specific types of transaction and a particular corresponding fee code, which currently exists in the Fees Schedule today. The Exchange, however, inadvertently did not adopt a fee code for Customer orders routed in index options, which the Exchange had intended to adopt in the migration-related Fee Schedule amendments along with the fee codes currently in place for Customer orders routed in ETF and equity options, as the general routing fee for Customer orders contained in the Fees Schedule prior to migration was assessed for orders in all option classes. As such, the Exchange now proposes to adopt fee codes and reinstate fees in connection with Customer orders routed in index options. Particularly, the Exchange proposes to adopt fee code “RX”, which would be appended to Customer orders routed in Mini-SPX Index (“XSP”) options
In addition, the Exchange also proposes to amend certain language in the Fees Schedule under the Frequent Trader Program table. Specifically, the Fees Schedule currently provides that the Exchange will disperse a customer's rebates pursuant to the customer's instructions, which may include receiving the rebates as a direct payment or via a distribution to one or more of its Clearing Trading Permit Holders. The Exchange notes that the integrated post-migration billing system does not currently offer distribution to Clearing Trading Permit Holder, therefore the Exchange proposed to remove this payment method in connection with the Frequent Trader Program. As such, the proposed change is designed to amend language in the Fees Schedule in order to accurately reflect the manner in which the billing system currently functions. Additionally, the Exchange notes that prior to the migration-related changes made to the billing system the Exchange generally dispersed all customers' rebates as direct payments.
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
The Exchange also believes the proposed fee codes for Customer orders routed in index options are reasonable and equitable because such fees would be reinstated for the same amount they were previously assessed in the Fees Schedule, as the Exchange inadvertently omitted such fees, which were prior in place, when it made migration-related amendments and updates to a majority of its Fees Schedule. As a result, the proposed fee codes would alleviate potential confusion and provide clarity for market participants by ensuring the continuation of fees that were not intended, nor announced, to be discontinued. As stated, the manner in which the proposed single fee rates for Customer orders routed in index options would be provided in the Fees Schedule is consistent with the manner in which the routed fee rates are currently provided for Customer orders routed in ETF and equity options. The Exchange also believes its proposed fees in connection with Customer orders routed in index options are reasonable as the
The Exchange believes the proposed routing fees are equitable and not unfairly discriminatory because the proposed fees apply equally to all Customers who choose to use the Exchange to route orders in index options (either in XSP or all other index options). The Exchange highlights that routing through the Exchange is voluntary and that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues or providers of routing services if they deem fee levels to be excessive.
Additionally, the Exchange believes that the proposed change to remove the Frequent Trader Program payment method in connection with distributions to Clearing Trading Permit Holders is reasonable because it is intended to accurately reflect the payment methods currently offered by the billing system post-migration, thereby providing for clarity in the Fees Schedule and mitigating any potential confusion surrounding the Frequent Trader Program payment options. The Exchange also notes that the proposed change would not significantly impact investors as prior to the migration the Exchange generally only dispersed customer's rebates as a direct payment. The proposed change would have no impact on the ability of customer's to receive their payments. The Exchange further believes that the proposed rule change is equitable and not unfairly discriminatory because, as proposed, the same payment method would apply equally to all Frequent Trader Program customer rebates.
The Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed change to the payment methods in connection with its Frequent Trader Program does not involve or impact trading on the Exchange, and is merely intended to clarify the manner in which the Exchange's billing system currently functions.
Further, the Exchange does not believe that the proposed fee codes would impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed changes would, again, be applied equally to all Customer orders routed in index options. As stated, the Exchange operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. The proposed rule change would merely reinstate an inadvertently omitted fee in order to continue to reflect a competitive pricing structure designed to incentivize market participants to direct their order flow to the Exchange, which the Exchange believes enhances market quality to the benefit of all TPHs. The Exchange does not believe that the proposed rule change would impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed fee codes are not intended as a competitive change, as these fees were prior in place in the Fees Schedule and recently removed inadvertently. As such, the proposed rule change is corrective and clarifying in nature.
The Exchange neither solicited nor received comments on the proposed rule change.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange is filing a proposal to amend the MIAX PEARL Fee Schedule (the “Fee Schedule”) to modify certain of the Exchange's system connectivity fees.
The Exchange previously filed the proposal on October 22, 2019 (SR-PEARL-2019-33). That filing has been withdrawn and replaced with the current filing (SR-PEARL-2019-36).
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange is refiling its proposal to amend the Fee Schedule to increase the Exchange's network connectivity fees, in order to provide further clarification regarding the Exchange's cost allocation methodology—namely, information that explains the Exchange's rationale for determining that it was reasonable to allocate certain expenses described in this filing towards the total cost to the Exchange to provide network connectivity services. The Exchange is also bolstering its equitable allocation of fees discussion.
The Exchange had previously supplemented its connectivity fee filings in order to provide additional analysis of its baseline revenues, costs, and profitability (before the proposed fee change) and the Exchange's expected revenues, costs, and profitability (following the proposed fee change) for its network connectivity services. This additional analysis includes information regarding its methodology for determining the baseline costs and revenues, as well as expected costs and revenues, for its network connectivity services. The Exchange previously refiled its proposal in order to address certain points raised in the only comment letter received by the Commission on the Exchange's prior proposal to increase connectivity fees.
In order to determine the Exchange's baseline costs associated with providing network connectivity services, the Exchange conducted an extensive cost review in which the Exchange analyzed every expense item in the Exchange's general expense ledger to determine whether each such expense relates to the provision of network connectivity services, and, if such expense did so relate, what portion (or percentage) of such expense actually supports the provision of network connectivity services. The sum of all such portions of expenses represents the total actual baseline cost of the Exchange to provide network connectivity services. (For the avoidance of doubt, no expense amount was allocated twice.) The Exchange is presenting the results of its cost review in a way that corresponds directly with the Exchange's 2018 Audited Unconsolidated Financial Statements, the relevant sections of which are attached hereto [sic] as Exhibit 3, which are publicly available as part of the Exchange's Form 1 Amendment.
Specifically, the Exchange proposes to amend Sections 5(a) and (b) of the Fee Schedule to increase the network connectivity fees for the 1 Gigabit (“Gb”) fiber connection, the 10Gb fiber connection, and the 10Gb ultra-low latency (“ULL”) fiber connection, which are charged to both Members
The Exchange initially filed the Proposed Fee Increases on July 31, 2018, designating the Proposed Fee Increases effective August 1, 2018.
The Healthy Markets Letter argued that the Exchange did not provide sufficient information in its filing to support a finding that the proposal is consistent with the Act. Specifically, the Healthy Markets Letter objected to the Exchange's reliance on the fees of other exchanges to demonstrate that its fee increases are consistent with the Act. In addition, the Healthy Markets Letter argued that the Exchange did not offer any details to support its basis for asserting that the Proposed Fee Increases are consistent with the Act.
The Exchange refiled the Proposed Fee Increases on September 18, 2018, designating the Proposed Fee Increases immediately effective.
The SIFMA Letter argued that the Exchange did not provide sufficient information in its filing to support a finding that the proposal should be approved by the Commission after further review of the proposed fee increases. Specifically, the SIFMA Letter objected to the Exchange's reliance on the fees of other exchanges to justify its own fee increases. In addition, the SIFMA Letter argued that the Exchange did not offer any details to support its basis for asserting that the Proposed Fee Increases are reasonable.
On November 23, 2018, the Exchange withdrew the Second Proposed Rule Change.
The Exchange refiled the Proposed Fee Increases on March 1, 2019, designating the Proposed Fee Increases immediately effective.
On March 29, 2019, the Commission issued its Order Disapproving Proposed Rule Changes to Amend the Fee Schedule on the BOX Market LLC Options Facility to Establish BOX Connectivity Fees for Participants and Non-Participants Who Connect to the BOX Network (the “BOX Order”).
After the BOX Order was issued, the Commission received four comment letters on the Third Proposed Rule Change.
The Second SIFMA Letter argued that the Exchange did not provide sufficient information in its Third Proposed Rule Change to support a finding that the proposal should be approved by the Commission after further review of the proposed fee increases. Specifically, the Second SIFMA Letter argued that the Exchange's market data fees and connectivity fees were not constrained by competitive forces, the Exchange's filing lacked sufficient information regarding cost and competition, and that the Commission should establish a framework for determining whether fees for exchange products and services are reasonable when those products and services are not constrained by significant competitive forces.
The IEX Letter argued that the Exchange did not provide sufficient information in its Third Proposed Rule Change to support a finding that the proposal should be approved by the Commission and that the Commission should extend the time for public comment on the Third Proposed Rule Change. Despite the objection to the Proposed Fee Increases, the IEX Letter did find that “MIAX has provided more transparency and analysis in these filings than other exchanges have sought to do for their own fee increases.”
The Second Healthy Markets Letter did not object to the Third Proposed Rule Change and the information provided by the Exchange in support of the Proposed Fee Increases. Specifically, the Second Healthy Markets Letter stated that the Third Proposed Rule Change was “remarkably different,” and went on to further state as follows:
The instant MIAX filings—along with their April 5th supplement—provide much greater detail regarding users of connectivity, the market for connectivity, and costs than the Initial MIAX Filings. They also appear to address many of the issues raised by the Commission staff's BOX disapproval order. This third round of MIAX filings suggests that MIAX is operating in good faith to provide what the Commission and staff seek.
On April 29, 2019, the Exchange withdrew the Third Proposed Rule Change.
The Exchange refiled the Proposed Fee Increases on April 30, 2019, designating the Proposed Fee Increases immediately effective.
On May 21, 2019, the Commission issued the Staff Guidance on SRO Rule Filings Relating to Fees.
The Commission received two comment letters on the Fourth Proposed Rule Change, after the Guidance was released.
On June 26, 2019, the Exchange withdrew the Fourth Proposed Rule Change.
The Exchange refiled the Proposed Fee Increases on June 26, 2019, designating the Proposed Fee Increases immediately effective.
The Commission received three comment letters on the Fifth Proposed Rule Change.
Neither the Third Healthy Markets Letter nor the Fourth SIFMA Letter called for the Commission to suspend or disapprove the Proposed Fee Increases. In fact, the Third Healthy Markets Letter acknowledged that “it appears as though MIAX [PEARL] is operating in good faith to provide what the Commission, its staff, and market participants the information needed to appropriately assess the filings.” The Third IEX Letter only reiterated points from the Second IEX Letter and failed to address any of the new information in the Fifth Proposed Rule Change concerning the Exchange's revenue figures, cost allocation or that the Proposed Fee Increases did not result in excessive pricing or a supra-competitive profit for the Exchange.
On August 23, 2019, the Exchange withdrew the Fifth Proposed Rule Change.
The Exchange refiled the Proposed Fee Increases on August 23, 2019, designating the Proposed Fee Increases immediately effective.
The Commission received only one comment letter on the Sixth Proposed Rule Change, twelve days after the comment period deadline ended.
On October 22, 2019, the Exchange withdrew the Sixth Proposed Rule Change.
The Exchange refiled the Proposed Fee Increases on October 22, 2019, designating the Proposed Fee Increases immediately effective.
On December 20, 2019, the Exchange withdrew the Seventh Proposed Rule Change.
The Exchange currently offers various bandwidth alternatives for connectivity to the Exchange to its primary and secondary facilities, consisting of a 1Gb fiber connection, a 10Gb fiber connection, and a 10Gb ULL fiber connection. The 10Gb ULL offering uses an ultra-low latency switch, which provides faster processing of messages sent to it in comparison to the switch used for the other types of connectivity. The Exchange currently assesses the following monthly network connectivity fees to both Members and non-Members for connectivity to the Exchange's primary/secondary facility: (a) $1,100 for the 1Gb connection; (b) $5,500 for the 10Gb connection; and (c) $8,500 for the 10Gb ULL connection. The Exchange also assesses to both Members and non-Members a monthly per connection network connectivity fee of $500 for each 1Gb connection to the disaster recovery facility and a monthly per connection network connectivity fee of $2,500 for each 10Gb connection to the disaster recovery facility.
The Exchange's MIAX Express Network Interconnect (“MENI”) can be configured to provide Members and non-Members of the Exchange network connectivity to the trading platforms, market data systems, test systems, and disaster recovery facilities of both the Exchange and its affiliate, MIAX, via a single, shared connection. Members and non-Members utilizing the MENI to connect to the trading platforms, market data systems, test systems and disaster recovery facilities of the Exchange and MIAX via a single, shared connection are assessed only one monthly network connectivity fee per connection, regardless of the trading platforms, market data systems, test systems, and disaster recovery facilities accessed via such connection.
The Exchange proposes to increase the monthly network connectivity fees for such connections for both Members and non-Members. The network connectivity fees for connectivity to the Exchange's primary/secondary facility will be increased as follows: (a) From $1,100 to $1,400 for the 1Gb connection; (b) from $5,500 to $6,100 for the 10Gb connection; and (c) from $8,500 to $9,300 for the 10Gb ULL connection. The network connectivity fees for connectivity to the Exchange's disaster recovery facility will be increased as follows: (a) From $500 to $550 for the 1Gb connection; and (b) from $2,500 to $2,750 for the 10Gb connection.
The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act
The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
The Exchange believes that its proposal is consistent with Section 6(b)(4) of the Act, in that the Proposed Fee Increases are fair, equitable and not
The Exchange acknowledges that there is no regulatory requirement that any market participant connect to the Exchange, or that any participant connect at any specific connection speed. The rule structure for options exchanges are, in fact, fundamentally different from those of equities exchanges. In particular, options market participants are not forced to connect to (and purchase market data from) all options exchanges, as shown by the number of Members of MIAX PEARL as compared to the much greater number of members at other options exchanges (as further detailed below). Not only does MIAX PEARL have less than half the number of members as certain other options exchanges, but there are also a number of the Exchange's Members that do not connect directly to MIAX PEARL. Further, of the number of Members that connect directly to MIAX PEARL, many such Members do not purchase market data from MIAX PEARL. There are a number of large market makers and broker-dealers that are members of other options exchange but not Members of MIAX PEARL. For example, the following are not Members of MIAX PEARL: The D. E. Shaw Group, CTC, XR Trading LLC, Hardcastle Trading AG, Ronin Capital LLC, Belvedere Trading, LLC, Bluefin Trading, and HAP Capital LLC. In addition, of the market makers that are connected to MIAX PEARL, it is the individual needs of the market maker that require whether they need one connection or multiple connections to the Exchange. The Exchange has market maker Members that only purchase one connection (10Gb or 10Gb ULL) and the Exchange has market maker Members that purchase multiple connections. It is all driven by the business needs of the market maker. Market makers that are consolidators that target resting order flow tend to purchase more connectivity than Market Makers that simply quote all symbols on the Exchange. Even though non-Members purchase and resell 10Gb and 10Gb ULL connections to both Members and non-Members, no market makers currently connect to the Exchange indirectly through such resellers.
The argument that all broker-dealers are required to connect to all exchanges is not true in the options markets. The options markets have evolved differently than the equities markets both in terms of market structure and functionality. For example, there are many order types that are available in the equities markets that are not utilized in the options markets, which relate to mid-point pricing and pegged pricing which require connection to the SIPs and each of the equities exchanges in order to properly execute those orders in compliance with best execution obligations. In addition, in the options markets there is a single SIP (OPRA) versus two SIPs in the equities markets, resulting in fewer hops and thus alleviating the need to connect directly to all the options exchanges. Additionally, in the options markets, the linkage routing and trade through protection are handled by the exchanges, not by the individual members. Thus not connecting to an options exchange or disconnecting from an options exchange does not potentially subject a broker-dealer to violate order protection requirements. Gone are the days when the retail brokerage firms (the Fidelity's, the Schwab's, the eTrade's) were members of the options exchanges—they are not members of MIAX PEARL or its affiliates, MIAX and MIAX Emerald, they do not purchase connectivity to MIAX PEARL, and they do not purchase market data from MIAX PEARL. The Exchange further recognizes that the decision of whether to connect to the Exchange is separate and distinct from the decision of whether and how to trade on the Exchange. The Exchange acknowledges that many firms may choose to connect to the Exchange, but ultimately not trade on it, based on their particular business needs.
To assist prospective Members or firms considering connecting to MIAX PEARL, the Exchange provides information about the Exchange's available connectivity alternatives in a Connectivity Guide, which contains detailed specifications regarding, among other things, throughput and latency for each available connection.
There is competition for connectivity to MIAX PEARL and its affiliates. MIAX PEARL competes with nine (9) non-Members who resell MIAX PEARL connectivity. These are resellers of MIAX PEARL connectivity—they are not arrangements between broker-dealers to share connectivity costs. Those non-Members resell that connectivity to multiple market participants over that same connection, including both Members and non-Members of MIAX PEARL (typically extranets and service bureaus). When connectivity is re-sold by a third-party, MIAX PEARL does not receive any connectivity revenue from that sale. It is entirely between the third-party and the purchaser, thus constraining the ability of MIAX PEARL to set its connectivity pricing as indirect connectivity is a substitute for direct connectivity. There are currently nine (9) non-Members that purchase connectivity to MIAX PEARL and/or MIAX. Those non-Members resell that connectivity to eleven (11) customers, some of whom are agency broker-dealers that have tens of customers of their own. Some of those eleven (11) customers also purchase connectivity directly from MIAX PEARL and/or MIAX. Accordingly, indirect connectivity is a viable alternative that is already being used by non-Members of MIAX PEARL, constraining the price that MIAX PEARL is able to charge for connectivity to its Exchange.
The Exchange
The Exchange believes that the Proposed Fee Increases are reasonable, equitable and not unfairly discriminatory because the connectivity pricing is directly related to the relative costs to the Exchange to provide those respective services, and does not impose a barrier to entry to smaller participants. Accordingly, the Exchange offers three direct connectivity alternatives and various indirect connectivity (via third-party) alternatives, as described above. MIAX PEARL recognizes that there are various business models and varying sizes of market participants conducting business on the Exchange. The 1Gb direct connectivity alternative is 1/10th the size of the 10Gb direct connectivity alternative. Because it is 1/10th of the size, it does not offer access to many of the products and services offered by the Exchange, such as the ability to quote or receive certain market data products. Approximately just less than half of MIAX PEARL and MIAX Members that connect (14 out of 33) purchase 1Gb connections. The 1Gb direct connection can support the sending of orders and the consumption of all market data feed products, other than the top-of-market data feed product or depth data feed product (which require a 10Gb connection). The 1Gb direct connection is generally purchased by market participants that utilize less bandwidth and also generally do not require the high touch network support services provided by the Exchange. Accordingly, these connections consume the least resources of the Exchange and are the least costly to the Exchange to provide. The market participants that purchase 10Gb ULL direct connections utilize the most bandwidth and also generally do require the high touch network support services provided by the Exchange. Accordingly, these connections consume the most resources of the Exchange and are the most costly to the Exchange to provide. Accordingly, the Exchange believes the allocation of the Proposed Fee Increases ($9,300 for a 10Gb ULL connection versus $1,400 for a 1Gb connection) are reasonable based on the resources consumed by the respective type of connection—lowest resource consuming members pay the least, and highest resource consuming members pays the most, particularly since higher resource consumption translates directly to higher costs to the Exchange. The 10Gb ULL connection offers optimized connectivity for latency sensitive participants and is approximately single digit microseconds faster in round trip time for connection oriented traffic to the Exchange than the 10Gb connection. This lower latency is achieved through more advanced network equipment, such as advanced hardware and switching components, which translates to increased costs to the Exchange. Market participants that are less latency sensitive can purchase 10Gb direct connections and quote in all products on the Exchange and consume all market data feeds, and such 10Gb direct connections are priced lower than the 10Gb ULL direct connections, offering smaller sized market makers a lower cost alternative. 10Gb connections are less costly to provide than 10Gb ULL connections, which require greater network support services.
With respect to options trading, the Exchange had only a 4.78% market share of the U.S. options industry in November 2019 in Equity/Exchange Traded Fund (“ETF”) classes according to the OCC.
Separately, the Exchange is not aware of any reason why market participants could not simply drop their connections and cease being Members of the Exchange if the Exchange were to establish unreasonable and uncompetitive price increases for its connectivity alternatives. Market participants choose to connect to a particular exchange and because it is a choice, MIAX PEARL must set reasonable connectivity pricing, otherwise prospective members would not connect and existing members would disconnect or connect through a third-party reseller of connectivity. No options market participant is required by rule, regulation, or competitive forces to be a Member of the Exchange. As evidence of the fact that market participants can and do disconnect from exchanges based on connectivity pricing, R2G Services LLC (“R2G”) filed a comment letter after BOX's proposed rule changes to increase its connectivity fees (SR-BOX-2018-24, SR-BOX-2018-37, and SR-BOX-2019-04).
Several market participants choose not to be Members of the Exchange and choose not to access the Exchange, and several market participants also access the Exchange indirectly through another market participant. To illustrate, the Exchange has only 41 Members (including all such Members' affiliate Members). However, Cboe Exchange, Inc. (“Cboe”) has over 200 members,
The Exchange finds it compelling that all of the Exchange's existing Members continued to purchase the Exchange's connectivity services during the period for which the Proposed Fee Increases took effect in August 2018, particularly in light of the R2G disconnection example cited above.
Also, in July 2018, four (4) non-Members purchased 1Gb connections, two (2) non-Members purchased 10Gb connections, and one (1) non-Member purchased 10Gb ULL connections. After the fee increase, beginning August 1, 2018, the same non-Members purchased the same number of connections across all available alternatives and two (2) additional non-Members purchased three (3) more connections after the fee increase. These non-Members freely purchased their connectivity with the Exchange in order to offer trading services to other firms and customers, as well as access to the market data services that their connections to the Exchange provide them, but they are not required or compelled to purchase any of the Exchange's connectivity options. MIAX PEARL did not experience any noticeable change (increase or decrease) in order flow sent by its market participants as a result of the fee increase.
Of those Members and non-Members that bought multiple connections, no firm dropped any connections beginning August 1, 2018, when the Exchange increased its fees. Nor did the Exchange lose any Members. Furthermore, the Exchange did not receive any comment letters or official complaints from any Member or non-Member purchaser of connectivity regarding the increased fees regarding how the fee increase was unreasonable, unduly burdensome, or would negatively impact their competitiveness amongst other market participants. These facts, coupled with the discussion above, showing that it is not necessary to join and/or connect to all options exchanges and market participants can disconnect if pricing is set too high (the R2G example),
The Exchange believes that the Proposed Fee Increases are equitably allocated among Members and non-Members, as evidenced by the fact that the fee increases are allocated across all connectivity alternatives according to the Exchange's costs to provide such alternatives, and there is not a disproportionate number of Members purchasing any alternative—fourteen (14) Members purchased 1Gb connections, ten (10) Members purchased 10Gb connections, fifteen (15) Members purchased 10Gb ULL connections, four (4) non-Members purchased 1Gb connections, two (2) non-Members purchased 10Gb connections, and one (1) non-Member purchased 10Gb ULL connections. The Exchange recognizes that the relative fee increases are 27% for the 1Gb connection, 10.9% for the 10Gb connection, and 9.4% for the 10Gb ULL connection, but the Exchange believes that percentage increase differentiation is appropriate, given the actual costs to the Exchange to provide network connectivity and the respective connection options, including the costs associated with providing the different levels of service associated with the respective connections.
The Exchange further believes that the Proposed Fee Increases, as they pertain to purchasers of each type of connectivity alternative, constitute an equitable allocation of reasonable fees charged to the Exchange's Members and non-Members and are allocated fairly amongst the types of market participants using the facilities of the Exchange. For example, for November 2019, between the Exchange and MIAX: (i) Members and non-Members that purchased 10Gb ULL connections accounted for approximately 80% of the total network connectivity revenue collected by the Exchange and MIAX from all connectivity alternatives; (ii) Members and non-Members that purchased 10Gb connections accounted for approximately 15% of the total network connectivity revenue collected by the Exchange and MIAX from all connectivity alternatives; and (iii) Members and non-Members that purchased 1Gb connections accounted for approximately 5% of the revenue collected by the Exchange and MIAX from all connectivity alternatives. As described above, the Exchange believes the Proposed Fee Increases are equitably allocated because 10Gb and 10Gb ULL purchasers (while they account for the vast majority of the Exchange's total connectivity revenue—approximately 95%): (1) Consume the most bandwidth and resources of the network; (2) transact the vast majority of the volume on the Exchange; and (3) require the high touch network support services provided by the Exchange and its staff, including more costly network monitoring, reporting and support services, resulting in a much higher cost to the Exchange to provide such connectivity alternatives, compared to the cost to provide a 1Gb connectivity alternative (as further described in the Exchange's cost discussion, below).
The Exchange believes that the connectivity fees are equitably allocated among users of the three network connectivity alternatives, as the users of the 10Gb and 10Gb ULL connections consume the most bandwidth and resources of the network. Specifically, the Exchange notes that these users account for approximately greater than
The Exchange also believes that the connectivity fees are equitably allocated amongst users of the three network connectivity alternatives, when these fees are viewed in the context of the overall trading volume on the Exchange. To illustrate, the purchasers of 10Gb ULL connectivity account for approximately 78% of the volume on the Exchange. For example, for all of November 2019, approximately 13.4 million contracts of the 17.1 million contracts executed were done by the top market making firms on the Exchange in simple (non-complex) volume. This overall volume percentage (78% of total Exchange volume) is in line with the amount of network connectivity revenue collected from 10Gb ULL purchasers (80% of total Exchange connectivity revenue).
The Exchange further believes that the fees are equitably allocated, as the amount of the fees for the various connectivity alternatives are directly related to the actual costs associated with providing the respective connectivity alternatives. That is, the cost to the Exchange of providing a 1Gb network connection is significantly lower than the cost to the Exchange of providing a 10Gb or 10Gb ULL network connection. Pursuant to its extensive cost review described above, the Exchange believes that the average cost to provide a 10Gb/10Gb ULL network connection is approximately 4 to 6 times more than the average cost to provide a 1Gb connection. The simple hardware and software component costs alone of a 10Gb/10Gb ULL connection are not 4 to 6 times more than the 1Gb connection. Rather, it is the associated premium-product level network monitoring, reporting, and support services costs that accompany a 10Gb/10Gb ULL connection which cause it to be 4 to 6 times more costly to provide than the 1Gb connection. Accordingly, the Exchange believes it is equitable to allocate those network infrastructure costs that accompany a 10Gb/10Gb ULL connection to the purchasers of those connections, and not to purchasers of 1Gb connections.
As discussed above, the Exchange differentiates itself by offering a “premium-product” network experience, as an operator of a high performance, ultra-low latency network with unparalleled system throughput, which network can support access to three distinct options markets and multiple competing market-makers having affirmative obligations to continuously quote over 750,000 distinct trading products (per exchange), and the capacity to handle approximately 10.7 million quote messages per second. The “premium-product” network experience enables users of 10Gb and 10Gb ULL connections to receive the network monitoring and reporting services for those approximately 750,000 distinct trading products. There is a significant, quantifiable amount of research and development (“R&D”) effort, employee compensation and benefits expense, and other expense associated with providing the high touch network monitoring and reporting services that are utilized by the 10Gb and 10Gb ULL connections offered by the Exchange. These value add services are fully-discussed herein, and the actual costs associated with providing these services are the basis for the differentiated amount of the fees for the various connectivity alternatives.
The Exchange believes that its proposal is consistent with Section 6(b)(4) of the Act because the Proposed Fee Increases will permit recovery of the Exchange's costs and will not result in excessive pricing or supra-competitive profit. The Proposed Fee Increases will allow the Exchange to recover a portion (less than all) of the increased costs incurred by the Exchange associated with providing and maintaining the necessary hardware and other network infrastructure as well as network monitoring and support services in order to provide the network connectivity services, since the Exchange launched operations in February 2017. Put simply, the costs of the Exchange to provide these services have increased considerably over this time, as more fully-detailed and quantified below. The Exchange believes that it is reasonable and appropriate to increase its fees charged for use of its connectivity to partially offset the increased costs the Exchange incurred during this time associated with maintaining and enhancing a state-of-the-art exchange network infrastructure in the U.S. options industry.
In particular, the Exchange's increased costs associated with supporting its network are due to several factors, including increased costs associated with maintaining and expanding a team of highly-skilled network engineers (the Exchange also hired additional network engineering staff in 2017 and 2018), increasing fees charged by the Exchange's third-party data center operator, and costs associated with projects and initiatives designed to improve overall network performance and stability, through the Exchange's R&D efforts.
In order to provide more detail and to quantify the Exchange's increased costs, the Exchange notes that increased costs are associated with the infrastructure and increased headcount to fully-support the advances in infrastructure and expansion of network level services, including customer monitoring, alerting and reporting. Additional technology expenses were incurred related to expanding its Information Security services, enhanced network monitoring and customer reporting, as well as Regulation SCI mandated processes associated with network technology. All of these additional expenses have been incurred by the Exchange since it became operational in February 2017.
Additionally, while some of the expense is fixed, much of the expense is not fixed, and thus increases as the
A more detailed breakdown of the expense increases since February 2017 include an approximate 70% increase in technology-related personnel costs in infrastructure, due to expansion of services/support (increase of approximately $800,000); an approximate 10% increase in data center costs due to price increases and footprint expansion (increase of approximately $500,000); an approximate 5% increase in vendor-supplied dark fiber due to price increases and expanded capabilities (increase of approximately $25,000); and a 30% increase in market data connectivity fees (increase of approximately $200,000). Of note, regarding market data connectivity fee increased cost, this is the cost associated with MIAX PEARL consuming connectivity/content from the equities markets in order to operate the Exchange, causing MIAX PEARL to effectively pay its competitors for this connectivity. While the Exchange and MIAX have incurred a total increase in connectivity expenses since January 2017 (the last time connectivity fees were raised) of approximately $1.5 million per year (as described above), the total increase in connectivity revenue amount as a result of the Proposed Fee Increases is projected to be approximately $1.2 million per year for MIAX PEARL and MIAX. Accordingly, the total projected MIAX PEARL and MIAX connectivity revenue as a result of the proposed increase, on an annualized basis, is less than the total annual actual MIAX PEARL and MIAX connectivity expense. Accordingly, the Proposed Fee Increases are fair and reasonable because they will not result in excessive pricing or supra-competitive profit, when comparing the increase in actual costs to the Exchange (since February 2017) versus the projected increase in annual revenue. The Exchange also incurred additional significant capital expenditures over this same period to upgrade and enhance the underlying technology components, as more fully-detailed below.
Further, because the costs of operating a data center are significant and not economically feasible for the Exchange, the Exchange does not operate its own data centers, and instead contracts with a third-party data center provider. The Exchange notes that larger, dominant exchange operators own and operate their data centers, which offers them greater control over their data center costs. Because those exchanges own and operate their data centers as profit centers, the Exchange is subject to additional costs. As a result, the Exchange is subject to fee increases from its data center provider, which the Exchange experienced in 2017 and 2018 of approximately 10%, as cited above. Connectivity fees, which are charged for accessing the Exchange's data center network infrastructure, are directly related to the network and offset such costs.
Further, the Exchange invests significant resources in network R&D, which are not included in direct expenses to improve the overall performance and stability of its network. For example, the Exchange has a number of network monitoring tools (some of which were developed in-house, and some of which are licensed from third-parties), that continually monitor, detect, and report network performance, many of which serve as significant value-adds to the Exchange's Members and enable the Exchange to provide a high level of customer service. These tools detect and report performance issues, and thus enable the Exchange to proactively notify a Member (and the SIPs) when the Exchange detects a problem with a Member's connectivity. In fact, the Exchange often receives calls from other industry participants regarding the status of networking issues outside of the Exchange's own network environment that are impacting the industry as a whole via the SIPs, including calls from regulators, because the Exchange has a superior, state-of the-art network that, through its enhanced monitoring and reporting solutions, often detects and identifies industry-wide networking issues ahead of the SIPs. The costs associated with the maintenance and improvement of existing tools and the development of new tools resulted in significant increased cost to the Exchange since February 2017 and are loss leaders for the Exchange to provide these added benefits for Members and non-Members.
Certain recently developed network aggregation and monitoring tools provide the Exchange with the ability to measure network traffic with a much more granular level of variability. This is important as Exchange Members demand a higher level of network determinism and the ability to measure variability in terms of single digit nanoseconds. Also, the Exchange routinely conducts R&D projects to improve the performance of the network's hardware infrastructure. As an example, in the last year, the Exchange's R&D efforts resulted in a performance improvement, requiring the purchase of new equipment to support that improvement, and thus resulting in increased costs in the hundreds of thousands of dollars range. In sum, the costs associated with maintaining and enhancing a state-of-the-art exchange network in the U.S. options industry is a significant expense for the Exchange that continues to increase, and thus the Exchange believes that it is reasonable to offset a portion of those increased costs by increasing its network connectivity fees, which are designed to recover those costs, as proposed herein. The Exchange invests in and offers a superior network infrastructure as part of its overall options exchange services offering, resulting in significant costs associated with maintaining this network infrastructure, which are directly tied to the amount of the connectivity fees that must be charged to access it, in order to recover those costs. As detailed in the Exchange's 2018 Audited Unconsolidated Financial Statements, the Exchange only has four primary sources of revenue: Transaction fees, access fees (of which network connectivity constitutes the majority), regulatory fees, and market data fees. Accordingly, the Exchange must cover all of its expenses from these four primary sources of revenue.
The Proposed Fee Increases are fair and reasonable because they will not result in excessive pricing or supra-competitive profit, when comparing the total annual expense of MIAX PEARL and MIAX associated with providing network connectivity services versus the
As discussed above, the Exchange differentiates itself by offering a “premium-product” network experience, as an operator of a high performance, ultra-low latency network with unparalleled system throughput, which network can support access to three distinct options markets and multiple competing market-makers having affirmative obligations to continuously quote over 750,000 distinct trading products (per exchange), and the capacity to handle approximately 38 million quote messages per second. The “premium-product” network experience enables users of 10Gb and 10Gb ULL connections to receive the network monitoring and reporting services for those approximately 750,000 distinct trading products. Thus, the Exchange is acutely aware of and can isolate the actual costs associated with providing such a service to its customers, a significant portion of which relates to the premium, value-add customer network monitoring and support services that accompany the service, as fully-described above. IEX, on the other hand, does not offer such a network, and thus has no legal basis to offer a qualified opinion on the Exchange's costs associated with operating such a network. In fact, IEX differentiates itself as a provider of low cost connectivity solutions to an intentionally delayed trading platform—quite the opposite from the Exchange. Thus, there is no relevant comparison between IEX network connectivity costs and the Exchange's network connectivity costs, and IEX's attempt to do so in the Third IEX Letter is ill-informed and self-serving.
For 2018, total third-party expense, relating to fees paid by MIAX PEARL and MIAX to third-parties for certain products and services for the Exchange to be able to provide network connectivity services, was $5,052,346. This includes, but is not limited to, a portion of the fees paid to: (1) Equinix, for data center services, for the primary, secondary, and disaster recovery locations of the MIAX PEARL and MIAX trading system infrastructure; (2) Zayo Group Holdings, Inc. (“Zayo”) for connectivity services (fiber and bandwidth connectivity) linking MIAX PEARL and MIAX office locations in Princeton, NJ and Miami, FL to all data center locations; (3) Secure Financial Transaction Infrastructure (“SFTI”),
All of the third-party expense described above is contained in the information technology and communication costs line item under the section titled “Operating Expenses Incurred Directly or Allocated From Parent” of the 2018 Financial Statements. For clarity, only a portion of all fees paid to such third-parties is included in the third-party expense herein (only the portion that actually supports the provision of network connectivity services and no expense amount is allocated twice). Accordingly, MIAX PEARL and MIAX do not allocate their entire information technology and communication costs to the provision of network connectivity services.
The Exchange believes it is reasonable to allocate such third-party expense described above towards the total cost to the Exchange to operate and support the network, including providing network connectivity services. In particular, the Exchange believes it is reasonable to allocate the identified portion of the Equinix expense because Equinix operates the data centers (primary, secondary, and disaster recovery) that host the Exchange's network infrastructure, which enables the provision of network connectivity services. This includes, among other things, the necessary storage space, which continues to expand and increase in cost, power to operate the network infrastructure, and cooling apparatuses to ensure the Exchange's network infrastructure maintains stability. Without these services from Equinix, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the Equinix expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 68% of the total Equinix expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
The Exchange believes it is reasonable to allocate the identified portion of the Zayo expense because Zayo provides
The Exchange believes it is reasonable to allocate the identified portion of the SFTI expense and various other service providers' (including Thompson Reuters, NYSE, Nasdaq, and Internap) expense because those entities provide connectivity and feeds for the entire U.S. options industry as well as the content, connectivity services, and infrastructure services for critical components of the network. Without these services from SFTI and various other service providers, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the SFTI and other service providers' expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 89% of the total SFTI and other service providers' expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
The Exchange believes it is reasonable to allocate the identified portion of the other hardware and software provider expense because this includes costs for dedicated hardware licenses for switches and servers, as well as dedicated software licenses for security monitoring and reporting across the network. Without this hardware and software, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the hardware and software provider expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 54% of the total hardware and software provider expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review. For 2018, total internal expense, relating to the internal costs of MIAX PEARL and MIAX to provide the network connectivity services, was $14,271,870. This includes, but is not limited to, costs associated with: (1) Employee compensation and benefits for full-time employees that support network connectivity services, including staff in network operations, trading operations, development, system operations, business, etc., as well as staff in general corporate departments (such as legal, regulatory, and finance) that support those employees and functions; (2) depreciation and amortization of hardware and software used to provide network connectivity services, including equipment, servers, cabling, purchased software and internally developed software used in the production environment to support the provision of network connectivity for trading; and (3) occupancy costs for leased office space for staff that support the provision of network connectivity services. The breakdown of these costs is more fully-described below.
All of the internal expenses described above are contained in the following line items under the section titled “Operating Expenses Incurred Directly or Allocated From Parent” in the 2018 Financial Statements: (1) Employee compensation and benefits; (2) Depreciation and amortization; and (3) Occupancy costs. For clarity, only a portion of all such internal expenses are included in the internal expense herein (only the portion that supports the provision of network connectivity services), and no expense amount is allocated twice). Accordingly, MIAX PEARL and MIAX do not allocate their entire costs contained in those line items to the provision of network connectivity services.
The Exchange believes it is reasonable to allocate such internal expense described above towards the total cost to the Exchange to operate and support the network, including providing network connectivity services. In particular, MIAX PEARL's and MIAX's combined employee compensation and benefits expense relating to providing network connectivity services was $5,264,151, which is only a portion of the $11,997,098 (for MIAX) and $8,545,540 (for MIAX PEARL) total expense for employee compensation and benefits that is stated in the 2018 Financial Statements. The Exchange believes it is reasonable to allocate the identified portion of such expense because this includes the time spent by employees of several departments, including Technology, Back Office, Systems Operations, Networking, Business Strategy Development (who create the business requirement documents that the Technology staff use to develop network features and enhancements), Trade Operations, Finance (who provide billing and accounting services relating to the network), and Legal (who provide legal services relating to the network, such as rule filings and various license agreements and other contracts). As part of the extensive cost review conducted by the Exchange, the Exchange reviewed the amount of time spent by each employee on matters relating to the operation and support of the network. Without these employees, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the employee compensation and benefits expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 26% of the total employee compensation and benefits expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
MIAX's and MIAX PEARL's combined depreciation and amortization expense relating to providing network connectivity services was $8,269,048, which is only a portion of the $6,179,506 (for MIAX) and $4,783,245 (for MIAX PEARL) total expense for depreciation and amortization that is stated in the 2018 Financial Statements. The Exchange believes it is reasonable to allocate the identified portion of such expense because such expense includes the actual cost of the computer equipment, such as dedicated servers,
MIAX's and MIAX PEARL's combined occupancy expense relating to providing network connectivity services was $738,669, which is only a portion of the $945,431 (for MIAX) and $581,783 (for MIAX PEARL) total expense for occupancy that is stated in the 2018 Financial Statements. The Exchange believes it is reasonable to allocate the identified portion of such expense because such expense represents the portion of the Exchange's cost to rent and maintain a physical location for the Exchange's staff who operate and support the network, including providing network connectivity services. This amount consists primarily of rent for the Exchange's Princeton, NJ office, as well as various related costs, such as physical security, property management fees, property taxes, and utilities. The Exchange operates its Network Operations Center (NOC) and Security Operations Center (SOC) from its Princeton, New Jersey office location. A centralized office space is required to house the staff that operates and supports the network. The Exchange currently has 130 employees. Approximately two-thirds of the Exchange's staff are in the Technology department, and the majority of those staff have some role in the operation and performance of the network. Without this office space, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. Accordingly, the Exchange believes it is reasonable to allocate the identified portion of its occupancy expense because such amount represents the Exchange's actual cost to house the equipment and personnel who operate and support the Exchange's network infrastructure and connectivity services. The Exchange did not allocate all of the occupancy expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting network connectivity services, approximately 48% of the total occupancy expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review. Accordingly, the total projected MIAX and MIAX PEARL combined revenue for providing network connectivity services, reflective of the proposed increase, on an annualized basis, of $14.5 million, is less than total annual actual MIAX PEARL and MIAX combined expense for providing network connectivity services during 2018 of approximately $19.3 million. MIAX PEARL and MIAX project comparable combined expenses for providing network connectivity services for 2019, as compared to 2018.
For the avoidance of doubt, none of the expenses included herein relating to the provision of network connectivity services relate to the provision of any other services offered by MIAX PEARL and MIAX. Stated differently, no expense amount of the Exchange is allocated twice.
The Exchange believes it is reasonable, equitable and not unfairly discriminatory to allocate the respective percentages of each expense category described above towards the total cost to the Exchange of operating and supporting the network, including providing network connectivity services, because the Exchange performed a line-by-line item analysis of all the expenses of the Exchange, and has determined the expenses that directly relate to operation and support of the network, including providing network connectivity to the Exchange. Further, the Exchange notes that, without the specific third-party and internal items listed above, the Exchange would not be able to operate and support the network, including providing network connectivity services to its Members and non-Members and their customers. Each of these expense items, including physical hardware, software, employee compensation and benefits, occupancy costs, and the depreciation and amortization of equipment, have been identified through a line-by-line item analysis to be integral to the operation and support of the network. Network connectivity fees are intended to recover the Exchange's costs of operating and supporting the network.
Accordingly, the Proposed Fee Increases are fair and reasonable because they do not result in excessive pricing or supra-competitive profit, when comparing the actual network operation and support costs to the Exchange versus the projected network connectivity annual revenue, including the increased amount. Additional information on overall revenue and expense of the Exchange can be found in the Exchange's 2018 Financial Statements.
The Exchange notes that other exchanges have similar connectivity alternatives for their participants, including similar low-latency connectivity. For example, Nasdaq PHLX LLC (“Phlx”), NYSE Arca, Inc. (“Arca”), NYSE American LLC (“NYSE American”) and Nasdaq ISE, LLC (“ISE”) all offer a 1Gb, 10Gb and 10Gb low latency ethernet connectivity alternatives to each of their participants.
MIAX PEARL does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange does not believe that the proposed rule change would place certain market participants at the Exchange at a relative disadvantage compared to other market participants or affect the ability of such market participants to compete. In particular, the Exchange has received no official complaints from Members, non-Members (extranets and service bureaus), third-parties that purchase the Exchange's connectivity and resell it, and customers of those resellers, that the Exchange's fees or the Proposed Fee Increases are negatively impacting or would negatively impact their abilities to compete with other market participants or that they are placed at a disadvantage. The Exchange believes that the Proposed Fee Increases do not place certain market participants at a relative disadvantage to other market participants because the connectivity pricing is associated with relative usage of the various market participants and does not impose a barrier to entry to smaller participants. As described above, the less expensive 1Gb direct connection is generally purchased by market participants that utilize less bandwidth. The market participants that purchase 10Gb ULL direct connections utilize the most bandwidth, and those are the participants that consume the most resources from the network. Accordingly, the Proposed Fee Increases do not favor certain categories of market participants in a manner that would impose a burden on competition; rather, the allocation of the Proposed Fee Increases reflects the network resources consumed by the various size of market participants—lowest bandwidth consuming members pay the least, and highest bandwidth consuming members pays the most, particularly since higher bandwidth consumption translates to higher costs to the Exchange.
The Exchange believes the Proposed Fee Increases do not place an undue burden on competition on other SROs that is not necessary or appropriate. In particular, options market participants are not forced to connect to (and purchase market data from) all options exchanges, as shown by the number of Members of MIAX PEARL as compared to the much greater number of members at other options exchanges (as described above). Not only does MIAX PEARL have less than half the number of members as certain other options exchanges, but there are also a number of the Exchange's Members that do not connect directly to MIAX PEARL. There are a number of large market makers and broker-dealers that are members of other options exchange but not Members of MIAX PEARL. Additionally, other exchanges have similar connectivity alternatives for their participants, including similar low-latency connectivity, but with much higher rates to connect.
Written comments were neither solicited nor received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange is filing a proposal to amend the MIAX Options Fee Schedule (the “Fee Schedule”) to modify certain of the Exchange's system connectivity fees.
The Exchange previously filed the proposal on October 22, 2019 (SR-MIAX-2019-46). That filing has been withdrawn and replaced with the current filing (SR-MIAX-2019-51).
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange is refiling its proposal to amend the Fee Schedule to increase the Exchange's network connectivity fees, in order to provide further clarification regarding the Exchange's cost allocation methodology—namely, information that explains the Exchange's rationale for determining that it was reasonable to allocate certain expenses described in this filing towards the total cost to the Exchange to provide network connectivity services. The Exchange is also bolstering its equitable allocation of fees discussion.
The Exchange had previously supplemented its connectivity fee filings in order to provide additional analysis of its baseline revenues, costs, and profitability (before the proposed fee change) and the Exchange's expected revenues, costs, and profitability (following the proposed fee change) for its network connectivity services. This additional analysis includes information regarding its methodology for determining the baseline costs and revenues, as well as expected costs and revenues, for its network connectivity services. The Exchange previously refiled its proposal in order to address certain points raised in the only comment letter received by the Commission on the Exchange's prior proposal to increase connectivity fees.
In order to determine the Exchange's baseline costs associated with providing network connectivity services, the Exchange conducted an extensive cost review in which the Exchange analyzed every expense item in the Exchange's general expense ledger to determine whether each such expense relates to the provision of network connectivity services, and, if such expense did so relate, what portion (or percentage) of such expense actually supports the provision of network connectivity services. The sum of all such portions of expenses represents the total actual baseline cost of the Exchange to provide network connectivity services. (For the avoidance of doubt, no expense amount was allocated twice.) The Exchange is presenting the results of its cost review in a way that corresponds directly with the Exchange's 2018 Audited Unconsolidated Financial Statements, the relevant sections of which are attached hereto [sic] as Exhibit 3, which are publicly available as part of the Exchange's Form 1 Amendment.
Specifically, the Exchange proposes to amend Sections 5(a) and (b) of the Fee Schedule to increase the network connectivity fees for the 1 Gigabit (“Gb”) fiber connection, the 10Gb fiber connection, and the 10Gb ultra-low latency (“ULL”) fiber connection, which are charged to both Members
The Exchange initially filed the Proposed Fee Increases on July 31, 2018, designating the Proposed Fee Increases effective August 1, 2018.
The Healthy Markets Letter argued that the Exchange did not provide sufficient information in its filing to support a finding that the proposal is consistent with the Act. Specifically, the Healthy Markets Letter objected to the Exchange's reliance on the fees of other exchanges to demonstrate that its fee increases are consistent with the Act. In addition, the Healthy Markets Letter argued that the Exchange did not offer any details to support its basis for asserting that the proposed fee increases are consistent with the Act.
The Exchange refiled the Proposed Fee Increases on September 18, 2018, designating the Proposed Fee Increases immediately effective.
The SIFMA Letter argued that the Exchange did not provide sufficient information in its filing to support a finding that the proposal should be approved by the Commission after further review of the proposed fee increases. Specifically, the SIFMA Letter objected to the Exchange's reliance on the fees of other exchanges to justify its own fee increases. In addition, the SIFMA Letter argued that the Exchange did not offer any details to support its basis for asserting that the proposed fee increases are reasonable.
On November 23, 2018, the Exchange withdrew the Second Proposed Rule Change.
The Exchange refiled the Proposed Fee Increases on March 1, 2019, designating the Proposed Fee Increases immediately effective.
On March 29, 2019, the Commission issued its Order Disapproving Proposed Rule Changes to Amend the Fee Schedule on the BOX Market LLC Options Facility to Establish BOX Connectivity Fees for Participants and Non-Participants Who Connect to the BOX Network (the “BOX Order”).
After the BOX Order was issued, the Commission received four comment letters on the Third Proposed Rule Change.
The Second SIFMA Letter argued that the Exchange did not provide sufficient information in its Third Proposed Rule Change to support a finding that the proposal should be approved by the Commission after further review of the proposed fee increases. Specifically, the Second SIFMA Letter argued that the Exchange's market data fees and connectivity fees were not constrained by competitive forces, the Exchange's filing lacked sufficient information regarding cost and competition, and that the Commission should establish a framework for determining whether fees for exchange products and services are reasonable when those products and services are not constrained by significant competitive forces.
The IEX Letter argued that the Exchange did not provide sufficient information in its Third Proposed Rule Change to support a finding that the proposal should be approved by the Commission and that the Commission should extend the time for public
The Second Healthy Markets Letter did not object to the Third Proposed Rule Change and the information provided by the Exchange in support of the Proposed Fee Increases. Specifically, the Second Healthy Markets Letter stated that the Third Proposed Rule Change was “remarkably different,” and went on to further state as follows:
The instant MIAX filings—along with their April 5th supplement—provide much greater detail regarding users of connectivity, the market for connectivity, and costs than the Initial MIAX Filings. They also appear to address many of the issues raised by the Commission staff's BOX disapproval order. This third round of MIAX filings suggests that MIAX is operating in good faith to provide what the Commission and staff seek.
On April 29, 2019, the Exchange withdrew the Third Proposed Rule Change.
The Exchange refiled the Proposed Fee Increases on April 30, 2019, designating the Proposed Fee Increases immediately effective.
On May 21, 2019, the Commission issued the Staff Guidance on SRO Rule Filings Relating to Fees.
The Commission received two comment letters on the Fourth Proposed Rule Change, after the Guidance was released.
On June 26, 2019, the Exchange withdrew the Fourth Proposed Rule Change.
The Exchange refiled the Proposed Fee Increases on June 26, 2019, designating the Proposed Fee Increases immediately effective.
The Commission received three comment letters on the Fifth Proposed Rule Change.
Neither the Third Healthy Markets Letter nor the Fourth SIFMA Letter called for the Commission to suspend or disapprove the Proposed Fee Increases. In fact, the Third Healthy Markets Letter acknowledged that “it appears as though MIAX is operating in good faith to provide what the Commission, its staff, and market participants the information needed to appropriately assess the filings.” The Third IEX Letter only reiterated points from the Second IEX Letter and failed to address any of the new information in the Fifth Proposed Rule Change concerning the Exchange's revenue figures, cost allocation or that the Proposed Fee Increases did not result in excessive pricing or a supra-competitive profit for the Exchange.
On August 23, 2019, the Exchange withdrew the Fifth Proposed Rule Change.
The Exchange refiled the Proposed Fee Increases on August 23, 2019, designating the Proposed Fee Increases immediately effective.
The Commission received only one comment letter on the Sixth Proposed Rule Change, twelve days after the comment period deadline ended.
On October 22, 2019, the Exchange withdrew the Sixth Proposed Rule Change.
The Exchange refiled the Proposed Fee Increases on October 22, 2019, designating the Proposed Fee Increases immediately effective.
On December 20, 2019, the Exchange withdrew the Seventh Proposed Rule Change.
The Exchange currently offers various bandwidth alternatives for connectivity to the Exchange, to its primary and secondary facilities, consisting of a 1Gb fiber connection, a 10Gb fiber connection, and a 10Gb ULL fiber connection. The 10Gb ULL offering uses an ultra-low latency switch, which provides faster processing of messages sent to it in comparison to the switch used for the other types of connectivity. The Exchange currently assesses the following monthly network connectivity fees to both Members and non-Members for connectivity to the Exchange's primary/secondary facility: (a) $1,100 for the 1Gb connection; (b) $5,500 for the 10Gb connection; and (c) $8,500 for the 10Gb ULL connection. The Exchange also assesses to both Members and non-Members a monthly per connection network connectivity fee of $500 for each 1Gb connection to the disaster recovery facility and a monthly per connection network connectivity fee of $2,500 for each 10Gb connection to the disaster recovery facility.
The Exchange's MIAX Express Network Interconnect (“MENI”) can be configured to provide Members and non-Members of the Exchange network connectivity to the trading platforms, market data systems, test systems, and disaster recovery facilities of both the Exchange and its affiliate, MIAX PEARL, via a single, shared connection. Members and non-Members utilizing the MENI to connect to the trading platforms, market data systems, test systems and disaster recovery facilities of the Exchange and MIAX PEARL via a single, shared connection are assessed only one monthly network connectivity fee per connection, regardless of the trading platforms, market data systems, test systems, and disaster recovery facilities accessed via such connection.
The Exchange proposes to increase the monthly network connectivity fees for such connections for both Members and non-Members. The network connectivity fees for connectivity to the Exchange's primary/secondary facility will be increased as follows: (a) From $1,100 to $1,400 for the 1Gb connection; (b) from $5,500 to $6,100 for the 10Gb connection; and (c) from $8,500 to $9,300 for the 10Gb ULL connection. The network connectivity fees for connectivity to the Exchange's disaster recovery facility will be increased as follows: (a) From $500 to $550 for the 1Gb connection; and (b) from $2,500 to $2,750 for the 10Gb connection.
The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act
The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and also recognized that
The Exchange believes that its proposal is consistent with Section 6(b)(4) of the Act, in that the Proposed Fee Increases are fair, equitable and not unreasonably discriminatory, because the fees for the connectivity alternatives available on the Exchange, as proposed to be increased, are constrained by significant competitive forces. The U.S. options markets are highly competitive (there are currently 16 options markets) and a reliance on competitive markets is an appropriate means to ensure equitable and reasonable prices.
The Exchange acknowledges that there is no regulatory requirement that any market participant connect to the Exchange, or that any participant connect at any specific connection speed. The rule structure for options exchanges are, in fact, fundamentally different from those of equities exchanges. In particular, options market participants are not forced to connect to (and purchase market data from) all options exchanges, as shown by the number of Members of MIAX as compared to the much greater number of members at other options exchanges (as further detailed below). Not only does MIAX have less than half the number of members as certain other options exchanges, but there are also a number of the Exchange's Members that do not connect directly to MIAX. Further, of the number of Members that connect directly to MIAX, many such Members do not purchase market data from MIAX. There are a number of large market makers and broker-dealers that are members of other options exchange but not Members of MIAX. For example, the following are not Members of MIAX: The D. E. Shaw Group, CTC, XR Trading LLC, Hardcastle Trading AG, Ronin Capital LLC, Belvedere Trading, LLC, Bluefin Trading, and HAP Capital LLC. In addition, of the market makers that are connected to MIAX, it is the individual needs of the market maker that require whether they need one connection or multiple connections to the Exchange. The Exchange has market maker Members that only purchase one connection (10Gb or 10Gb ULL) and the Exchange has market maker Members that purchase multiple connections. It is all driven by the business needs of the market maker. Market makers that are consolidators that target resting order flow tend to purchase more connectivity than Market Makers that simply quote all symbols on the Exchange. Even though non-Members purchase and resell 10Gb and 10Gb ULL connections to both Members and non-Members, no market makers currently connect to the Exchange indirectly through such resellers.
The argument that all broker-dealers are required to connect to all exchanges is not true in the options markets. The options markets have evolved differently than the equities markets both in terms of market structure and functionality. For example, there are many order types that are available in the equities markets that are not utilized in the options markets, which relate to mid-point pricing and pegged pricing which require connection to the SIPs and each of the equities exchanges in order to properly execute those orders in compliance with best execution obligations. In addition, in the options markets there is a single SIP (OPRA) versus two SIPs in the equities markets, resulting in fewer hops and thus alleviating the need to connect directly to all the options exchanges. Additionally, in the options markets, the linkage routing and trade through protection are handled by the exchanges, not by the individual members. Thus not connecting to an options exchange or disconnecting from an options exchange does not potentially subject a broker-dealer to violate order protection requirements. Gone are the days when the retail brokerage firms (the Fidelity's, the Schwab's, the eTrade's) were members of the options exchanges—they are not members of MIAX or its affiliates, MIAX PEARL and MIAX Emerald, they do not purchase connectivity to MIAX, and they do not purchase market data from MIAX. The Exchange further recognizes that the decision of whether to connect to the Exchange is separate and distinct from the decision of whether and how to trade on the Exchange. The Exchange acknowledges that many firms may choose to connect to the Exchange, but ultimately not trade on it, based on their particular business needs.
To assist prospective Members or firms considering connecting to MIAX, the Exchange provides information about the Exchange's available connectivity alternatives in a Connectivity Guide, which contains detailed specifications regarding, among other things, throughput and latency for each available connection.
There is competition for connectivity to MIAX and its affiliates. MIAX competes with nine (9) non-Members who resell MIAX connectivity. These are resellers of MIAX connectivity—they are not arrangements between broker-dealers to share connectivity costs. Those non-Members resell that connectivity to multiple market participants over that same connection, including both Members and non-Members of MIAX (typically extranets and service bureaus). When connectivity is re-sold by a third-party, MIAX does not receive any connectivity revenue from that sale. It is entirely between the third-party and the purchaser, thus constraining the ability of MIAX to set its connectivity pricing as indirect connectivity is a substitute for direct connectivity. There are currently nine (9) non-Members that purchase connectivity to MIAX and/or MIAX PEARL. Those non-Members resell that connectivity to eleven (11) customers, some of whom are agency broker-dealers that have tens of customers of their own. Some of those eleven (11) customers also purchase connectivity directly from MIAX and/or MIAX PEARL. Accordingly, indirect connectivity is a viable alternative that is already being used by non-Members of MIAX, constraining the price that MIAX is able to charge for connectivity to its Exchange.
The Exchange
The Exchange believes that the Proposed Fee Increases are reasonable, equitable and not unfairly discriminatory because the connectivity pricing is directly related to the relative costs to the Exchange to provide those respective services, and does not impose a barrier to entry to smaller participants. Accordingly, the Exchange offers three direct connectivity alternatives and various indirect connectivity (via third-party) alternatives, as described above. MIAX recognizes that there are various business models and varying sizes of market participants conducting business on the Exchange. The 1Gb direct connectivity alternative is 1/10th the size of the 10Gb direct connectivity alternative. Because it is 1/10th of the size, it does not offer access to many of the products and services offered by the Exchange, such as the ability to quote or receive certain market data products. Approximately just less than half of MIAX and MIAX PEARL Members that connect (14 out of 33) purchase 1Gb connections. The 1Gb direct connection can support the sending of orders and the consumption of all market data feed products, other than the top-of-market data feed product or depth data feed product (which require a 10Gb connection). The 1Gb direct connection is generally purchased by market participants that utilize less bandwidth and also generally do not require the high touch network support services provided by the Exchange. Accordingly, these connections consume the least resources of the Exchange and are the least costly to the Exchange to provide. The market participants that purchase 10Gb ULL direct connections utilize the most bandwidth and also generally do require the high touch network support services provided by the Exchange. Accordingly, these connections consume the most resources of the Exchange and are the most costly to the Exchange to provide. Accordingly, the Exchange believes the allocation of the Proposed Fee Increases ($9,300 for a 10Gb ULL connection versus $1,400 for a 1Gb connection) are reasonable based on the resources consumed by the respective type of connection—lowest resource consuming members pay the least, and highest resource consuming members pays the most, particularly since higher resource consumption translates directly to higher costs to the Exchange. The 10Gb ULL connection offers optimized connectivity for latency sensitive participants and is approximately single digit microseconds faster in round trip time for connection oriented traffic to the Exchange than the 10Gb connection. This lower latency is achieved through more advanced network equipment, such as advanced hardware and switching components, which translates to increased costs to the Exchange. Market participants that are less latency sensitive can purchase 10Gb direct connections and quote in all products on the Exchange and consume all market data feeds, and such 10Gb direct connections are priced lower than the 10Gb ULL direct connections, offering smaller sized market makers a lower cost alternative. 10Gb connections are less costly to provide than 10Gb ULL connections, which require greater network support services.
With respect to options trading, the Exchange had only a 4.32% market share of the U.S. options industry in November 2019 in Equity/Exchange Traded Fund (“ETF”) classes according to the OCC.
Separately, the Exchange is not aware of any reason why market participants could not simply drop their connections and cease being Members of the Exchange if the Exchange were to establish unreasonable and uncompetitive price increases for its connectivity alternatives. Market participants choose to connect to a particular exchange and because it is a choice, MIAX must set reasonable connectivity pricing, otherwise prospective members would not connect and existing members would disconnect or connect through a third-party reseller of connectivity. No options market participant is required by rule, regulation, or competitive forces to be a Member of the Exchange. As evidence of the fact that market participants can and do disconnect from exchanges based on connectivity pricing, R2G Services LLC (“R2G”) filed a comment letter after BOX's proposed rule changes to increase its connectivity fees (SR-BOX-2018-24, SR-BOX-2018-37, and SR-BOX-2019-04).
Several market participants choose not to be Members of the Exchange and choose not to access the Exchange, and several market participants also access the Exchange indirectly through another market participant. To illustrate, the Exchange has only 45 Members (including all such Members' affiliate Members). However, Cboe Exchange, Inc. (“Cboe”) has over 200 members,
The Exchange finds it compelling that all of the Exchange's existing Members continued to purchase the Exchange's connectivity services during the period for which the Proposed Fee Increases took effect in August 2018, particularly in light of the R2G disconnection example cited above.
Also, in July 2018, four (4) non-Members purchased 1Gb connections, two (2) non-Members purchased 10Gb connections, and one (1) non-Member purchased 10Gb ULL connections. After the fee increase, beginning August 1, 2018, the same non-Members purchased the same number of connections across all available alternatives and two (2) additional non-Members purchased three (3) more connections after the fee increase. These non-Members freely purchased their connectivity with the Exchange in order to offer trading services to other firms and customers, as well as access to the market data services that their connections to the Exchange provide them, but they are not required or compelled to purchase any of the Exchange's connectivity options. MIAX did not experience any noticeable change (increase or decrease) in order flow sent by its market participants as a result of the fee increase.
Of those Members and non-Members that bought multiple connections, no firm dropped any connections beginning August 1, 2018, when the Exchange increased its fees. Nor did the Exchange lose any Members. Furthermore, the Exchange did not receive any comment letters or official complaints from any Member or non-Member purchaser of connectivity regarding the increased fees regarding how the fee increase was unreasonable, unduly burdensome, or would negatively impact their competitiveness amongst other market participants. These facts, coupled with the discussion above, showing that it is not necessary to join and/or connect to all options exchanges and market participants can disconnect if pricing is set too high (the R2G example),
The Exchange believes that the Proposed Fee Increases are equitably allocated among Members and non-Members, as evidenced by the fact that the fee increases are allocated across all connectivity alternatives according to the Exchange's costs to provide such alternatives, and there is not a disproportionate number of Members purchasing any alternative—fourteen (14) Members purchased 1Gb connections, ten (10) Members purchased 10Gb connections, fifteen (15) Members purchased 10Gb ULL connections, four (4) non-Members purchased 1Gb connections, two (2) non-Members purchased 10Gb connections, and one (1) non-Member purchased 10Gb ULL connections. The Exchange recognizes that the relative fee increases are 27% for the 1Gb connection, 10.9% for the 10Gb connection, and 9.4% for the 10Gb ULL connection, but the Exchange believes that percentage increase differentiation is appropriate, given the actual costs to the Exchange to provide network connectivity and the respective connection options, including the costs associated with providing the different levels of service associated with the respective connections.
The Exchange further believes that the Proposed Fee Increases, as they pertain to purchasers of each type of connectivity alternative, constitute an equitable allocation of reasonable fees charged to the Exchange's Members and non-Members and are allocated fairly amongst the types of market participants using the facilities of the Exchange. For example, for November 2019, between the Exchange and MIAX PEARL: (i) Members and non-Members that purchased 10Gb ULL connections accounted for approximately 80% of the total network connectivity revenue collected by the Exchange and MIAX PEARL from all connectivity alternatives; (ii) Members and non-Members that purchased 10Gb connections accounted for approximately 15% of the total network connectivity revenue collected by the Exchange and MIAX PEARL from all connectivity alternatives; and (iii) Members and non-Members that purchased 1Gb connections accounted for approximately 5% of the revenue collected by the Exchange and MIAX PEARL from all connectivity alternatives. As described above, the Exchange believes the Proposed Fee Increases are equitably allocated because 10Gb and 10Gb ULL purchasers (while they account for the vast majority of the Exchange's total connectivity revenue—approximately 95%): (1) Consume the most bandwidth and resources of the network; (2) transact the vast majority of the volume on the Exchange; and (3) require the high touch network support services provided by the Exchange and its staff, including more costly network monitoring,
The Exchange believes that the connectivity fees are equitably allocated among users of the three network connectivity alternatives, as the users of the 10Gb and 10Gb ULL connections consume the most bandwidth and resources of the network. Specifically, the Exchange notes that these users account for approximately greater than 99% of message traffic over the network, while the users of the 1Gb connections account for approximately less than 1% of message traffic over the network. In the Exchange's experience, users of the 1Gb connections do not have a business need for the high performance network solutions required by 10Gb and 10Gb ULL users. The Exchange's high performance network solutions and supporting infrastructure (including employee support), provides unparalleled system throughput with the network ability to support access to three distinct options markets and the capacity to handle approximately 38 million quote messages per second. On an average day, the Exchange and MIAX PEARL handle approximately 8,304,500,000 total messages. Of those, users of the 10Gb and 10Gb ULL connections generate 8,300,000,000 messages, and users of the 1Gb connections generate 4,500,000 messages. However, in order to achieve a consistent, premium network performance, the Exchange must build out and maintain a network that has the capacity to handle the message rate requirements of its most heavy network consumers. These billions of messages per day consume the Exchange's resources and significantly contribute to the overall network connectivity expense for storage and network transport capabilities. Given this difference in network utilization rate, the Exchange believes that it is reasonable, equitable, and not unfairly discriminatory that the 10Gb and 10Gb ULL users pay for the vast majority of the shared network resources from which all Member and non-Member users benefit, but is designed and maintained from a capacity standpoint to specifically handle the message rate and performance requirements of 10Gb and 10Gb ULL users.
The Exchange also believes that the connectivity fees are equitably allocated amongst users of the three network connectivity alternatives, when these fees are viewed in the context of the overall trading volume on the Exchange. To illustrate, the purchasers of 10Gb ULL connectivity account for approximately 75% of the volume on the Exchange. For example, for all of November 2019, approximately 4.4 million contracts of the 5.8 million contracts executed were done by the top market making firms on the Exchange in simple (non-complex) volume. This overall volume percentage (75% of total Exchange volume) is in line with the amount of network connectivity revenue collected from 10Gb ULL purchasers (80% of total Exchange connectivity revenue).
The Exchange further believes that the fees are equitably allocated, as the amount of the fees for the various connectivity alternatives are directly related to the actual costs associated with providing the respective connectivity alternatives. That is, the cost to the Exchange of providing a 1Gb network connection is significantly lower than the cost to the Exchange of providing a 10Gb or 10Gb ULL network connection. Pursuant to its extensive cost review described above, the Exchange believes that the average cost to provide a 10Gb/10Gb ULL network connection is approximately 4 to 6 times more than the average cost to provide a 1Gb connection. The simple hardware and software component costs alone of a 10Gb/10Gb ULL connection are not 4 to 6 times more than the 1Gb connection. Rather, it is the associated premium-product level network monitoring, reporting, and support services costs that accompany a 10Gb/10Gb ULL connection which cause it to be 4 to 6 times more costly to provide than the 1Gb connection. Accordingly, the Exchange believes it is equitable to allocate those network infrastructure costs that accompany a 10Gb/10Gb ULL connection to the purchasers of those connections, and not to purchasers of 1Gb connections.
As discussed above, the Exchange differentiates itself by offering a “premium-product” network experience, as an operator of a high performance, ultra-low latency network with unparalleled system throughput, which network can support access to three distinct options markets and multiple competing market-makers having affirmative obligations to continuously quote over 750,000 distinct trading products (per exchange), and the capacity to handle approximately 38 million quote messages per second. The “premium-product” network experience enables users of 10Gb and 10Gb ULL connections to receive the network monitoring and reporting services for those approximately 750,000 distinct trading products. There is a significant, quantifiable amount of research and development (“R&D”) effort, employee compensation and benefits expense, and other expense associated with providing the high touch network monitoring and reporting services that are utilized by the 10Gb and 10Gb ULL connections offered by the Exchange. These value add services are fully-discussed herein, and the actual costs associated with providing these services are the basis for the differentiated amount of the fees for the various connectivity alternatives.
The Exchange believes that its proposal is consistent with Section 6(b)(4) of the Act because the Proposed Fee Increases will permit recovery of the Exchange's costs and will not result in excessive pricing or supra-competitive profit. The Proposed Fee Increases will allow the Exchange to recover a portion (less than all) of the increased costs incurred by the Exchange associated with providing and maintaining the necessary hardware and other network infrastructure as well as network monitoring and support services in order to provide the network connectivity services, since it last filed to increase its connectivity fees in December 2016, which became effective on January 1, 2017.
In particular, the Exchange's increased costs associated with supporting its network are due to several factors, including increased costs associated with maintaining and expanding a team of highly-skilled network engineers (the Exchange also hired additional network engineering staff in 2017 and 2018), increasing fees charged by the Exchange's third-party data center operator, and costs associated with projects and initiatives designed to improve overall network performance and stability, through the Exchange's R&D efforts.
In order to provide more detail and to quantify the Exchange's increased costs, the Exchange notes that increased costs are associated with the infrastructure and increased headcount to fully-support the advances in infrastructure and expansion of network level services, including customer monitoring, alerting and reporting. Additional technology expenses were incurred related to expanding its Information Security services, enhanced network monitoring and customer reporting, as well as Regulation SCI mandated processes associated with network technology. All of these additional expenses have been incurred by the Exchange since it last increased its connectivity fees on January 1, 2017.
Additionally, while some of the expense is fixed, much of the expense is not fixed, and thus increases as the number of connections increase. For example, new 1Gb, 10Gb, and 10Gb ULL connections require the purchase of additional hardware to support those connections as well as enhanced monitoring and reporting of customer performance that MIAX and its affiliates provide. And 10Gb ULL connections require the purchase of specialized, more costly hardware. Further, as the total number of all connections increase, MIAX and its affiliates need to increase their data center footprint and consume more power, resulting in increased costs charged by their third-party data center provider. Accordingly, the cost to MIAX and its affiliates is not entirely fixed. Just the initial fixed cost buildout of the network infrastructure of MIAX and its affiliates, including both primary/secondary sites and disaster recovery, was over $30 million. These costs have increased over 10% since the last time the Exchange increased its connectivity fees on January 1, 2017. As these network connectivity-related expenses increase, MIAX and its affiliates look to offset those costs through increased connectivity fees.
A more detailed breakdown of the expense increases since January 1, 2017 include an approximate 70% increase in technology-related personnel costs in infrastructure, due to expansion of services/support (increase of approximately $800,000); an approximate 10% increase in data center costs due to price increases and footprint expansion (increase of approximately $500,000); an approximate 5% increase in vendor-supplied dark fiber due to price increases and expanded capabilities (increase of approximately $25,000); and a 30% increase in market data connectivity fees (increase of approximately $200,000). Of note, regarding market data connectivity fee increased cost, this is the cost associated with the Exchange consuming connectivity/content from the equities markets in order to operate the Exchange, causing the Exchange to effectively pay its competitors for this connectivity. While the Exchange and MIAX PEARL have incurred a total increase in connectivity expenses since January 2017 (the last time connectivity fees were raised) of approximately $1.5 million per year (as described above), the total increase in connectivity revenue amount as a result of the Proposed Fee Increases is projected to be approximately $1.2 million per year for MIAX and MIAX PEARL. Accordingly, the total projected MIAX and MIAX PEARL connectivity revenue as a result of the proposed increase, on an annualized basis, is less than the total annual actual MIAX and MIAX PEARL connectivity expense. Accordingly, the Proposed Fee Increases are fair and reasonable because they will not result in excessive pricing or supra-competitive profit, when comparing the increase in actual costs to the Exchange (since January 2017) versus the projected increase in annual revenue.
The Exchange also incurred additional significant capital expenditures over this same period to upgrade and enhance the underlying technology components, as more fully-detailed below.
Further, because the costs of operating a data center are significant and not economically feasible for the Exchange, the Exchange does not operate its own data centers, and instead contracts with a third-party data center provider. The Exchange notes that larger, dominant exchange operators own and operate their data centers, which offers them greater control over their data center costs. Because those exchanges own and operate their data centers as profit centers, the Exchange is subject to additional costs. As a result, the Exchange is subject to fee increases from its data center provider, which the Exchange experienced in 2017 and 2018 of approximately 10%, as cited above. Connectivity fees, which are charged for accessing the Exchange's data center network infrastructure, are directly related to the network and offset such costs.
Further, the Exchange invests significant resources in network R&D, which are not included in direct expenses to improve the overall performance and stability of its network. For example, the Exchange has a number of network monitoring tools (some of which were developed in-house, and some of which are licensed from third-parties), that continually monitor, detect, and report network performance, many of which serve as significant value-adds to the Exchange's Members and enable the Exchange to provide a high level of customer service. These tools detect and report performance issues, and thus enable the Exchange to proactively notify a Member (and the SIPs) when the Exchange detects a problem with a Member's connectivity. In fact, the Exchange often receives calls from other industry participants regarding the status of networking issues outside of the Exchange's own network environment that are impacting the industry as a whole via the SIPs, including calls from regulators, because the Exchange has a superior, state-of the-art network that, through its enhanced monitoring and reporting solutions, often detects and identifies industry-wide networking issues ahead of the SIPs. The costs associated with the maintenance and improvement of existing tools and the development of new tools resulted in significant increased cost to the Exchange since January 1, 2017 and are loss leaders for the Exchange to provide these added benefits for Members and non-Members.
Certain recently developed network aggregation and monitoring tools provide the Exchange with the ability to measure network traffic with a much more granular level of variability. This is important as Exchange Members demand a higher level of network determinism and the ability to measure variability in terms of single digit nanoseconds. Also, the Exchange routinely conducts R&D projects to improve the performance of the network's hardware infrastructure. As an example, in the last year, the Exchange's R&D efforts resulted in a performance improvement, requiring the purchase of new equipment to support that improvement, and thus resulting in increased costs in the hundreds of thousands of dollars range. In sum, the costs associated with maintaining and enhancing a state-of-the-art exchange network in the U.S. options industry is a significant expense for the Exchange that continues to increase, and thus the Exchange believes that it is reasonable to offset a portion of those increased costs by increasing its network connectivity fees, which are designed to recover those costs, as proposed herein. The Exchange invests in and offers a superior network infrastructure as part of its overall options exchange services offering, resulting in significant costs associated with maintaining this network
The Proposed Fee Increases are fair and reasonable because they will not result in excessive pricing or supra-competitive profit, when comparing the total annual expense of MIAX and MIAX PEARL associated with providing network connectivity services versus the total projected annual revenue of both exchanges associated with providing network connectivity services. For 2018, the total annual expense associated with providing network connectivity services (that is, the shared network connectivity of MIAX and MIAX PEARL, but excluding MIAX Emerald) was approximately $19.3 million. The $19.3 million in total annual expense is comprised of the following, all of which is directly related to the provision of network connectivity services by MIAX and MIAX PEARL to their respective Members and non-Members: (1) Third-party expense, relating to fees paid by MIAX and MIAX PEARL to third-parties for certain products and services; and (2) internal expense, relating to the internal costs of MIAX and MIAX PEARL to provide the network connectivity services. All such expenses are more fully-described below, and are mapped to the MIAX and MIAX PEARL 2018 Statements of Operations and Member's Deficit (the “2018 Financial Statements”). The $19.3 million in total annual expense is directly related to the provision of network connectivity services and not any other product or service offered by the Exchange. It does not, as the Third IEX Letter baselessly claims, include general costs of operating matching systems and other trading technology. (And as stated previously, no expense amount was allocated twice.) As discussed, the Exchange conducted an extensive cost review in which the Exchange analyzed every expense item in the Exchange's general expense ledger (this includes over 150 separate and distinct expense items) to determine whether each such expense relates to the provision of network connectivity services, and, if such expense did so relate, what portion (or percentage) of such expense actually supports the provision of network connectivity services, and thus bears a relationship that is, “in nature and closeness,” directly related to network connectivity services. The sum of all such portions of expenses represents the total actual baseline cost of the Exchange to provide network connectivity services.
As discussed above, the Exchange differentiates itself by offering a “premium-product” network experience, as an operator of a high performance, ultra-low latency network with unparalleled system throughput, which network can support access to three distinct options markets and multiple competing market-makers having affirmative obligations to continuously quote over 750,000 distinct trading products (per exchange), and the capacity to handle approximately 38 million quote messages per second. The “premium-product” network experience enables users of 10Gb and 10Gb ULL connections to receive the network monitoring and reporting services for those approximately 750,000 distinct trading products. Thus, the Exchange is acutely aware of and can isolate the actual costs associated with providing such a service to its customers, a significant portion of which relates to the premium, value-add customer network monitoring and support services that accompany the service, as fully-described above. IEX, on the other hand, does not offer such a network, and thus has no legal basis to offer a qualified opinion on the Exchange's costs associated with operating such a network. In fact, IEX differentiates itself as a provider of low cost connectivity solutions to an intentionally delayed trading platform—quite the opposite from the Exchange. Thus, there is no relevant comparison between IEX network connectivity costs and the Exchange's network connectivity costs, and IEX's attempt to do so in the Third IEX Letter is ill-informed and self-serving.
For 2018, total third-party expense, relating to fees paid by MIAX and MIAX PEARL to third-parties for certain products and services for the Exchange to be able to provide network connectivity services, was $5,052,346. This includes, but is not limited to, a portion of the fees paid to: (1) Equinix, for data center services, for the primary, secondary, and disaster recovery locations of the MIAX and MIAX PEARL trading system infrastructure; (2) Zayo Group Holdings, Inc. (“Zayo”) for connectivity services (fiber and bandwidth connectivity) linking MIAX and MIAX PEARL office locations in Princeton, NJ and Miami, FL to all data center locations; (3) Secure Financial Transaction Infrastructure (“SFTI”),
All of the third-party expense described above is contained in the information technology and communication costs line item under the section titled “Operating Expenses Incurred Directly or Allocated From Parent” of the 2018 Financial Statements. For clarity, only a portion of all fees paid to such third-parties is included in the third-party expense herein (only the portion that actually supports the provision of network connectivity services and no expense amount is allocated twice). Accordingly, MIAX and MIAX PEARL do not allocate their entire information technology and communication costs to the provision of network connectivity services.
The Exchange believes it is reasonable to allocate such third-party expense described above towards the total cost to the Exchange to operate and support the network, including providing network connectivity services. In particular, the Exchange believes it is reasonable to allocate the identified portion of the Equinix expense because Equinix operates the data centers (primary, secondary, and disaster recovery) that host the Exchange's network infrastructure, which enables the provision of network connectivity services. This includes, among other things, the necessary storage space, which continues to expand and increase in cost, power to operate the network infrastructure, and cooling apparatuses to ensure the Exchange's network
The Exchange believes it is reasonable to allocate the identified portion of the Zayo expense because Zayo provides the internet, fiber and bandwidth connections with respect to the network, linking MIAX with its affiliates, MIAX PEARL and MIAX Emerald, as well as the data center and disaster recovery locations. As such, all of the trade data, including the billions of messages each day per exchange, flow through Zayo's infrastructure over the Exchange's network. Without these services from Zayo, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the Zayo expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 62% of the total Zayo expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
The Exchange believes it is reasonable to allocate the identified portion of the SFTI expense and various other service providers' (including Thompson Reuters, NYSE, Nasdaq, and Internap) expense because those entities provide connectivity and feeds for the entire U.S. options industry as well as the content, connectivity services, and infrastructure services for critical components of the network. Without these services from SFTI and various other service providers, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the SFTI and other service providers' expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 89% of the total SFTI and other service providers' expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
The Exchange believes it is reasonable to allocate the identified portion of the other hardware and software provider expense because this includes costs for dedicated hardware licenses for switches and servers, as well as dedicated software licenses for security monitoring and reporting across the network. Without this hardware and software, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the hardware and software provider expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 54% of the total hardware and software provider expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
For 2018, total internal expense, relating to the internal costs of MIAX and MIAX PEARL to provide the network connectivity services, was $14,271,870. This includes, but is not limited to, costs associated with: (1) Employee compensation and benefits for full-time employees that support network connectivity services, including staff in network operations, trading operations, development, system operations, business, etc., as well as staff in general corporate departments (such as legal, regulatory, and finance) that support those employees and functions; (2) depreciation and amortization of hardware and software used to provide network connectivity services, including equipment, servers, cabling, purchased software and internally developed software used in the production environment to support the provision of network connectivity for trading; and (3) occupancy costs for leased office space for staff that support the provision of network connectivity services. The breakdown of these costs is more fully-described below.
All of the internal expenses described above are contained in the following line items under the section titled “Operating Expenses Incurred Directly or Allocated From Parent” in the 2018 Financial Statements: (1) Employee compensation and benefits; (2) Depreciation and amortization; and (3) Occupancy costs. For clarity, only a portion of all such internal expenses are included in the internal expense herein (only the portion that supports the provision of network connectivity services), and no expense amount is allocated twice. Accordingly, MIAX and MIAX PEARL do not allocate their entire costs contained in those line items to the provision of network connectivity services.
The Exchange believes it is reasonable to allocate such internal expense described above towards the total cost to the Exchange to operate and support the network, including providing network connectivity services. In particular, MIAX's and MIAX PEARL's combined employee compensation and benefits expense relating to providing network connectivity services was $5,264,151, which is only a portion of the $11,997,098 (for MIAX) and $8,545,540 (for MIAX PEARL) total expense for employee compensation and benefits that is stated in the 2018 Financial Statements. The Exchange believes it is reasonable to allocate the identified portion of such expense because this includes the time spent by employees of several departments, including Technology, Back Office, Systems Operations, Networking, Business Strategy Development (who create the business requirement documents that the Technology staff use to develop network features and enhancements), Trade Operations, Finance (who provide billing and accounting services relating to the network), and Legal (who provide legal services relating to the network, such as rule filings and various license agreements and other contracts). As part of the extensive cost review conducted by the Exchange, the Exchange reviewed the amount of time spent by each employee on matters relating to the operation and support of the network. Without these employees, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the employee compensation and benefits expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being
MIAX's and MIAX PEARL's combined depreciation and amortization expense relating to providing network connectivity services was $8,269,048, which is only a portion of the $6,179,506 (for MIAX) and $4,783,245 (for MIAX PEARL) total expense for depreciation and amortization that is stated in the 2018 Financial Statements. The Exchange believes it is reasonable to allocate the identified portion of such expense because such expense includes the actual cost of the computer equipment, such as dedicated servers, computers, laptops, monitors, information security appliances and storage, and network switching infrastructure equipment, including switches and taps that were purchased to operate and support the network. Without this equipment, the Exchange would not be able to operate the network and provide network connectivity services to its Members and non-Members and their customers. The Exchange did not allocate all of the depreciation and amortization expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting the network, approximately 75% of the total depreciation and amortization expense, as connectivity services would not be possible without relying on such equipment. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
MIAX's and MIAX PEARL's combined occupancy expense relating to providing network connectivity services was $738,669, which is only a portion of the $945,431 (for MIAX) and $581,783 (for MIAX PEARL) total expense for occupancy that is stated in the 2018 Financial Statements. The Exchange believes it is reasonable to allocate the identified portion of such expense because such expense represents the portion of the Exchange's cost to rent and maintain a physical location for the Exchange's staff who operate and support the network, including providing network connectivity services. This amount consists primarily of rent for the Exchange's Princeton, NJ office, as well as various related costs, such as physical security, property management fees, property taxes, and utilities. The Exchange operates its Network Operations Center (NOC) and Security Operations Center (SOC) from its Princeton, New Jersey office location. A centralized office space is required to house the staff that operates and supports the network. The Exchange currently has 130 employees. Approximately two-thirds of the Exchange's staff are in the Technology department, and the majority of those staff have some role in the operation and performance of the network. Without this office space, the Exchange would not be able to operate and support the network and provide network connectivity services to its Members and non-Members and their customers. Accordingly, the Exchange believes it is reasonable to allocate the identified portion of its occupancy expense because such amount represents the Exchange's actual cost to house the equipment and personnel who operate and support the Exchange's network infrastructure and connectivity services. The Exchange did not allocate all of the occupancy expense toward the cost of providing network connectivity services, only that portion which the Exchange identified as being specifically mapped to operating and supporting network connectivity services, approximately 48% of the total occupancy expense. The Exchange believes this allocation is reasonable because it represents the Exchange's actual cost to operate and support the network, and not any other service, as supported by its cost review.
Accordingly, the total projected MIAX and MIAX PEARL combined revenue for providing network connectivity services, reflective of the proposed increase, on an annualized basis, of $14.5 million, is less than total annual actual MIAX and MIAX PEARL combined expense for providing network connectivity services during 2018 of approximately $19.3 million. MIAX and MIAX PEARL project comparable combined expenses for providing network connectivity services for 2019, as compared to 2018.
For the avoidance of doubt, none of the expenses included herein relating to the provision of network connectivity services relate to the provision of any other services offered by MIAX and MIAX PEARL. Stated differently, no expense amount of the Exchange is allocated twice.
The Exchange believes it is reasonable, equitable and not unfairly discriminatory to allocate the respective percentages of each expense category described above towards the total cost to the Exchange of operating and supporting the network, including providing network connectivity services, because the Exchange performed a line-by-line item analysis of all the expenses of the Exchange, and has determined the expenses that directly relate to operation and support of the network, including providing network connectivity to the Exchange. Further, the Exchange notes that, without the specific third-party and internal items listed above, the Exchange would not be able to operate and support the network, including providing network connectivity services to its Members and non-Members and their customers. Each of these expense items, including physical hardware, software, employee compensation and benefits, occupancy costs, and the depreciation and amortization of equipment, have been identified through a line-by-line item analysis to be integral to the operation and support of the network. Network connectivity fees are intended to recover the Exchange's costs of operating and supporting the network.
Accordingly, the Proposed Fee Increases are fair and reasonable because they do not result in excessive pricing or supra-competitive profit, when comparing the actual network operation and support costs to the Exchange versus the projected network connectivity annual revenue, including the increased amount. Additional information on overall revenue and expense of the Exchange can be found in the Exchange's 2018 Financial Statements.
The Exchange notes that other exchanges have similar connectivity alternatives for their participants, including similar low-latency connectivity. For example, Nasdaq PHLX LLC (“Phlx”), NYSE Arca, Inc. (“Arca”), NYSE American LLC (“NYSE American”) and Nasdaq ISE, LLC (“ISE”) all offer a 1Gb, 10Gb and 10Gb low latency ethernet connectivity alternatives to each of their participants.
MIAX does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange does not believe that the proposed rule change would place certain market participants at the Exchange at a relative disadvantage compared to other market participants or affect the ability of such market participants to compete. In particular, the Exchange has received no official complaints from Members, non-Members (extranets and service bureaus), third-parties that purchase the Exchange's connectivity and resell it, and customers of those resellers, that the Exchange's fees or the Proposed Fee Increases are negatively impacting or would negatively impact their abilities to compete with other market participants or that they are placed at a disadvantage.
The Exchange believes that the Proposed Fee Increases do not place certain market participants at a relative disadvantage to other market participants because the connectivity pricing is associated with relative usage of the various market participants and does not impose a barrier to entry to smaller participants. As described above, the less expensive 1Gb direct connection is generally purchased by market participants that utilize less bandwidth. The market participants that purchase 10Gb ULL direct connections utilize the most bandwidth, and those are the participants that consume the most resources from the network. Accordingly, the Proposed Fee Increases do not favor certain categories of market participants in a manner that would impose a burden on competition; rather, the allocation of the Proposed Fee Increases reflects the network resources consumed by the various size of market participants—lowest bandwidth consuming members pay the least, and highest bandwidth consuming members pays the most, particularly since higher bandwidth consumption translates to higher costs to the Exchange.
The Exchange believes the Proposed Fee Increases do not place an undue burden on competition on other SROs that is not necessary or appropriate. In particular, options market participants are not forced to connect to (and purchase market data from) all options exchanges, as shown by the number of Members of MIAX as compared to the much greater number of members at other options exchanges (as described above). Not only does MIAX have less than half the number of members as certain other options exchanges, but there are also a number of the Exchange's Members that do not connect directly to MIAX. There are a number of large market makers and broker-dealers that are members of other options exchange but not Members of MIAX. Additionally, other exchanges have similar connectivity alternatives for their participants, including similar low-latency connectivity, but with much higher rates to connect.
While the Exchange recognizes the distinction between connecting to an exchange and trading at the exchange, the Exchange notes that it operates in a highly competitive options market in which market participants can readily connect and trade with venues they desire. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges. The Exchange believes that the proposed changes reflect this competitive environment.
Written comments were neither solicited nor received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Office of the Secretary of Transportation (OST), Department of Transportation.
Request for information (RFI).
The U.S. Department of Transportation (DOT) Office of the Secretary of Transportation (OST) is seeking feedback on a proposed inclusive design challenge (Challenge) via this Request for Information (RFI). The Challenge is intended to incentivize creation of innovative, inclusive design solutions to enable access to automated vehicles (AV), also known as Highly automated Vehicles (HAV), for persons with disabilities. The Challenge seeks to emphasize the opportunities and challenges introduced by AVs which human occupants are not expected to drive, nor supervise the driving functions of the automated system, or perform any other element of the dynamic driving task as long as the vehicle remains within its operational design domain.
The Challenge will solicit solutions addressing obstacles faced by persons with physical, sensory, and/or cognitive disabilities. The goal of the Challenge is to inspire inclusive designs as AVs are developed, which may also increase access to conventional vehicles today. Solutions proposed should aim to decrease the need to modify Level 4 and 5 AVs post-production, or to reduce the cost of retrofitting AVs for use by persons with disabilities, including wheelchair users.
Responses to the RFI must be received by January 31, 2020, no later than 5:00 p.m. (ET).
Written comments may be submitted using any one of the following methods:
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Respondents may answer as many or as few questions as they wish.
DOT will not respond to individual submissions or publish publicly a compendium of responses. A response to this RFI will not be viewed as a binding commitment to develop or pursue the project or ideas discussed.
Respondents are requested to provide the following information at the beginning of their response to this RFI:
The monitored inbox at
The purpose of this RFI is to solicit feedback from academia, research laboratories, industry, government agencies, and other stakeholders on the scope and ideal outcomes of the Challenge. DOT is interested specifically in information on how best to structure a multi‐phase prize competition to attract novel systems that use design solutions to enhance accessibility in AVs.
DOT is eager to realize the potential mobility benefits that AVs could bring to persons with disabilities. However, DOT also recognizes that this is not an easy problem to solve and there is no single solution. The wide diversity of disabilities and resulting needs for inclusive vehicle designs increase the complexity of the engineering challenge. While some mobility services (
Automated vehicles introduce new design opportunities, particularly to enable independent use by persons with physical, sensory, and/or cognitive disabilities. By using the challenge format, DOT seeks to draw attention to the topic of passenger vehicle accessibility; encourage new cross-disciplinary collaborations; incentivize the development of new approaches and technologies to help people move independently; and tap into the creativity and knowledge of the disability community, researchers, advocates, manufacturers, and entrepreneurs.
DOT aims to attract ideas from around the nation to identify new solutions for common access issues. The Challenge is expected to be open to individuals and teams (Designers) from the academic, research, and business communities, including but not limited to universities, research institutions, technology companies, and entrepreneurs. As with other government competitions, the Challenge aims to create a vibrant community of thinkers and doers who drive revolutionary innovation. As such, DOT encourages teams to organize themselves in a manner that best allows them to meet the Challenge. DOT expects teams to describe how they have engaged with stakeholders to understand the needs and constraints of both industry and travelers with disabilities when explaining the feasibility and impact of their design. DOT also encourages teams to identify representatives from both industry and the disability advocacy community to serve as advisors and to help inform the
Through the Challenge, DOT seeks innovative ideas and design solutions to enable persons with disabilities to use AVs independently and ultimately to create a more accessible transportation future for all. Designers will compete for cash prizes by developing innovative design solutions to increase access to, and reduce the cost of building and/or modifying AVs for use by, persons with physical, sensory, and/or cognitive disabilities. Successful solutions will demonstrate consideration of production feasibility.
DOT expects to consider the following factors in the Challenge in evaluating design solutions that aim to both propose future vehicle designs and create components in support of inclusive design features.
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○ Locating an AV—Including, but not limited to, being notified that a vehicle has arrived; identifying the correct vehicle and locating and navigating to the correct vehicle.
○ Entering an AV—Including, but not limited to, unlocking and opening vehicle door(s); deploying and stowing ramps or other equipment enabling access for wheelchair users or persons with other physical disabilities or mobility equipment; and closing vehicle door(s).
○ Securing Passengers and Mobility Equipment—Including, but not limited to, securing seatbelts and other passenger restraints; securing wheelchairs or other mobility equipment to the vehicle; and securing service animals.
○ Inputting Information—Including, but not limited to, confirming passenger identity; searching for, entering, and changing a desired destination; confirming the vehicle's destination; selecting a specific drop-off point (
○ Interacting with the vehicle in routine and emergency situations—Including, but not limited to, operating passenger convenience and safety features (
○ Exiting an AV—Including, but not limited to, being notified and confirming that a vehicle has reached its intended destination; releasing passenger and/or mobility equipment restraints; identifying and locating the safe and appropriate door(s) from which to exit the vehicle; recognizing when it is safe to exit a vehicle; opening door(s) and deploying and stowing ramps or other equipment enabling access for wheelchair users or persons with other physical disabilities or mobility equipment.
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The Challenge is expected to consist of two stages. Individuals/teams will compete for an overall prize purse of up to $5,000,000. The prize purse is part of the $100 million provided in FY 2018 to the Federal Motor Carrier Safety Administration for a HAV research and development program. In Stage I, up to 15 semi-finalists will receive $100,000 each for developing promising concepts. In Stage II up to four Stage I Designers will move on to be named finalists and receive a portion of the remaining prize purse, including a potential grand prize of $2,000,000.
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This is solely an RFI and not a Notice of Funding Opportunity or the opening of a challenge competition. Therefore, DOT is not accepting applications at this time. DOT may issue a prize in the future based on or related to the content and responses to this RFI; however, DOT may also elect not to issue a prize. There is no guarantee that a prize will be issued as a result of this RFI. Responding to this RFI does not provide any advantage or disadvantage to potential applicants if DOT chooses to issue a prize regarding the subject matter. Final details, including the anticipated award size, quantity, and timing of DOT funded awards, will be at the discretion of the Secretary of Transportation.
Any information obtained as a result of this RFI is intended to be used by the government on a non-attribution basis for planning and strategy development; this RFI does not constitute a formal solicitation for proposals or abstracts. Responses to this notice will be treated as information only. DOT will review and consider all responses in its formulation of program strategies for the identified materials of interest that are the subject of this request. DOT will not provide reimbursement for costs incurred in responding to this RFI. Respondents are advised that DOT is under no obligation to acknowledge receipt of the information received or provide feedback to respondents with respect to any information submitted under this RFI. Responses to this RFI do not bind DOT to any further actions related to this topic. DOT may use or disclose responses for any lawful purpose.
Because information received in response to this RFI may be used to structure future programs and/or otherwise be made available to the public, respondents are strongly advised to NOT include any information in their responses that might be considered business sensitive, proprietary, or otherwise confidential. However, respondents may choose to include such information in their submissions if they believe it will significantly assist DOT in the design of the Challenge.
Responses containing confidential, proprietary, or privileged information must be conspicuously marked as described below. Failure to comply with these marking requirements may result in the disclosure of the unmarked information under the Freedom of Information Act, 5 U.S.C. 552.
If a response contains trade secrets or confidential commercial or financial information, the respondent must include a cover sheet identifying the specific pages containing that information. The cover sheet must also provide evidence that the respondent actually or customarily treats the information as private.
In addition, the respondent must (1) mark the header and footer of every page that contains trade secrets or confidential commercial or financial information with “Contains Confidential Information Exempt from Public Disclosure” and (2) identify every line and paragraph containing such information with double brackets or highlighting.
Federal employees are subject to criminal prosecution for the unauthorized disclosure of appropriately and properly marked confidential information under 18 U.S.C. 1905. The government may seek the advice of qualified non-federal personnel and use non-federal personnel to conduct routine, nondiscretionary administrative activities. Submissions may be reviewed by support contractors and private consultants. By submitting your response, the respondent consent to DOT providing it to non-federal parties. Non-federal parties will be obliged to maintain the confidentiality of any submissions prior to being given access to those submissions.
1. The Challenge could address elements of independently using a passenger vehicle, as described above. Are crucial elements missing? If so, please describe the missing element(s) and discuss how they create challenges for independent travel.
2. Is there benefit to including an option for the development of a full concept design for inclusive vehicles (
3. How can proposals account for uncertainty in the development path of automated vehicles while still demonstrating novel and realistic concepts for inclusive design?
4. Stakeholder engagement is an important aspect of the Inclusive Design Challenge. In what ways should DOT continue stakeholder engagement throughout the project to support teams in receiving valuable feedback on their designs (
5. Are Stage I awards sufficient for enabling the development of a prototype for Stage II?
6. Do the proposed Challenge background, purpose, and challenge features sections above provide sufficient information to inform proposals? If not, what additional information would be helpful?
1. How can DOT evaluate proposals on the basis of:
a. Inclusiveness?
b. Production feasibility?
c. Expected user experience?
2. What evaluation criteria are most important when considering how proposals can best enable access to AVs for persons with disabilities:
3. How would evaluation criteria be different if there were two types of proposals being considered (such as components and full design)?
Alcohol and Tobacco Tax and Trade Bureau (TTB); Treasury.
Notice and request for comments.
As part of our continuing effort to reduce paperwork and respondent burden, and as required by the Paperwork Reduction Act of 1995, we invite comments on the proposed or continuing information collections listed below in this notice.
We must receive your written comments on or before March 9, 2020.
As described below, you may send comments on the information collections described in this document using the “Regulations.gov” online comment form for this document, or you may send written comments via U.S. mail or hand delivery. We no longer accept public comments via email or fax.
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Please submit separate comments for each specific information collection described in this document. You must reference the information collection's title, form or recordkeeping requirement number, and OMB control number (if any) in your comment.
You may view copies of this document, the information collections described in it and any associated instructions, and all comments received in response to this document within Docket No. TTB-2019-0001 at
Michael Hoover, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW, Box 12, Washington, DC 20005; 202-453-1039, ext. 135; or
The Department of the Treasury and its Alcohol and Tobacco Tax and Trade Bureau (TTB), as part of their continuing effort to reduce paperwork and respondent burden, invite the general public and other Federal agencies to comment on the proposed or continuing information collections described below in this notice, as required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Comments submitted in response to this notice will be included or summarized in our request for Office of Management and Budget (OMB) approval of the relevant information collection. All comments are part of the public record and subject to disclosure. Please do not include any confidential or inappropriate material in your comments.
We invite comments on: (a) Whether an information collection is necessary for the proper performance of the agency's functions, including whether the information has practical utility; (b) the accuracy of the agency's estimate of the information collection's burden; (c) ways to enhance the quality, utility, and clarity of the information collected; (d) ways to minimize the information collection's burden on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide the requested information.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information has a valid OMB control number.
Currently, we are seeking comments on the following forms, letterhead applications or notices, recordkeeping requirements, questionnaires, or surveys:
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Department of Veterans Affairs.
Notice.
The Department of Veterans Affairs (VA) is publishing a summary of a legal interpretation issued by the Office of the General Counsel (OGC) involving Veterans' benefits under laws administered by VA. This interpretation is considered precedential by VA and will be followed by VA officials and employees in claim matters involving the same legal issue. This summary is published to provide the public and, in particular, Veterans' benefits claimants and their representatives, with notice of VA's interpretation regarding the legal matter at issue.
Suzanne Hill, Law Librarian, Office of General Counsel, 810 Vermont Avenue NW, Washington, DC 20420, (202) 461-7624.
A VA regulation at 38 CFR 2.6(e)(8) delegates to the General Counsel the power to designate an opinion as precedential, and 38 CFR 14.507(b) specifies that precedent opinions involving Veterans' benefits are binding on VA officials and employees in subsequent matters involving the legal issue decided in the precedent opinion. The interpretation of the General Counsel on legal matters, contained in such opinions, is conclusive as to all VA officials and employees in all adjudications and appeals involving the same legal issues in the absence of a change in controlling statute or regulation or a superseding written legal opinion of the General Counsel or a judicial decision.
VA publishes summaries of such opinions in order to provide the public with notice of those interpretations of the General Counsel that must be followed in future benefit matters and to assist Veterans' benefits claimants and their representatives in the prosecution of benefit claims. The full text of such opinions, with personal identifiers deleted, may be obtained by contacting the VA official named above or by accessing the opinions on the internet at
1. Who is eligible to file a claim as a “survivor” under the effective date provision of the Blue Water Navy Vietnam Veterans Act of 2019 (“the BWN Act”), Public Law 116-23, to be codified at 38 U.S.C. 1116A(c)?
2. Does the BWN Act authorize the Department of Veterans Affairs (VA) to pay estates, as if they were eligible payees under the Final Stipulation and Order in
3. Are veterans or their survivors who were granted disability compensation or survivor benefits under
1. As used in 38 U.S.C. 1116A(c), the term “survivors” refers to those relatives of veterans who are eligible for dependency and indemnity compensation (DIC) and/or accrued benefits under title 38, United States Code.
2. The BWN Act does not authorize VA to pay benefits to estates of claimants. The BWN Act did not adopt or extend the
3. The
The Secretary of Veterans Affairs approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Robert L. Wilkie, Secretary, Department of Veterans Affairs, approved this document on December 23, 2019, for publication.
Department of Veterans Affairs.
Notice.
As required by the Veterans' Compensation Cost-of-Living Adjustment Act of 2019, Public Law (Pub. L.) 116-58, the Department of Veterans Affairs (VA) is hereby giving notice of adjustments in certain benefit rates. These adjustments affect the compensation program.
These adjustments became effective on December 1, 2019, the date provided by Public Law 116-58.
Keith Hancock, Policy Staff (211A), Compensation Service, Department of Veterans Affairs, 810 Vermont Avenue NW, Washington, DC 20420, (202) 461-9700. (This is not a toll-free telephone number.)
Section 2 of Public Law 116-58 provides for an increase in each of the rates in sections 1114, 1115(1), and 1162 of title 38, United States Code (U.S.C.). VA is required to increase these benefit rates by the same percentage as increases in the benefit amounts payable under title II of the Social Security Act. The increased rates are required to be published in the
The Social Security Administration has announced that there will be a 1.6 percent cost-of-living increase in Social Security benefits for 2020. Therefore, applying the same percentage, the following rates (beginning on page 3) for VA's compensation program became effective on December 1, 2019:
The Secretary of Veterans Affairs approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Pamela Powers, Chief of Staff, Department of Veterans Affairs, approved this document on December 30, 2019, for publication.
National Highway Traffic Safety Administration (NHTSA); Department of Transportation (DOT).
Notice of proposed rulemaking.
Section 24405 of the Fixing America's Surface Transportation Act (FAST Act) amended the National Traffic and Motor Vehicle Safety Act (Safety Act) to direct the Secretary of Transportation (NHTSA by delegation) to exempt annually a limited number of replica motor vehicles manufactured or imported by low-volume manufacturers from Federal motor vehicle safety standards (FMVSS) that apply to motor vehicles, but not standards that apply to motor vehicle equipment. To implement the exemption program and the procedural mandates of the FAST Act, NHTSA is proposing, in a new Part 586, requirements for registering as a replica manufacturer, submitting annual reports, providing consumer disclosures, and labeling. NHTSA is proposing procedures to exempt replica vehicles produced by registrants from all the FMVSS that apply to new motor vehicles. This Notice of Proposed Rulemaking (NPRM) also proposes changes to Part 565, to require manufacturers to encode specific information into each replica vehicle's VIN, and to Parts 566 and 567 for manufacturer identification and vehicle certification, respectively.
You should submit your comments early enough to ensure that the docket receives them not later than February 6, 2020. In compliance with the Paperwork Reduction Act, NHTSA is also seeking comment on a new information collection and revisions to existing information collections. For additional information, see the Paperwork Reduction Act section under the Regulatory Notices and Analyses section below. All comments relating to the information collection requirements should be submitted to NHTSA and to the Office of Management and Budget (OMB) at the address listed in the
You may submit comments to the docket number identified in the heading of this document by any of the following methods:
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Comments on the proposed information collection requirements should be submitted to: Office of Management and Budget, Office of Information and Regulatory Affairs, Washington, DC 20503, Attn: Desk Officer for NHTSA. It is requested that comments sent to the OMB also be sent to the NHTSA rulemaking docket identified in the heading of this document.
For technical issues and information concerning the information collections, you may contact Ms. Mary Versailles, Office of Rulemaking, by telephone at 202-366-2057. For legal issues, you may contact Ms. Callie Roach, Office of the Chief Counsel, by telephone at 202-366-2992. The mailing address of both officials is: National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE, West Building, Washington, DC 20590.
The National Traffic and Motor Vehicle Safety Act (“Safety Act”) (49 U.S.C. Chapter 301, Motor Vehicle Safety (49 U.S.C. 30101
Pursuant to the Safety Act, NHTSA has issued FMVSS to protect the public against unreasonable risk of crashes occurring because of the design, construction, or performance of a vehicle and against unreasonable risk of death or injury in a crash. Some of the
The Safety Act provides limited authority to NHTSA to exempt motor vehicles from section 30112(a). Section 30113 authorizes NHTSA to exempt motor vehicles from a motor vehicle safety standard on a temporary basis and under tightly defined circumstances. Section 30114 sets forth “special exemptions” for motor vehicles and motor vehicle equipment from section 30112(a). Until the Fixing America's Surface Transportation Act (FAST Act), exemptions under section 30114 were limited to those necessary for research, investigations, demonstrations, training, competitive racing events, show, or display.
On December 4, 2015, Congress enacted the FAST Act (Pub. L. 114-94). Section 24405 of the FAST Act amended section 30114 of the Safety Act by, among other things, adding a subsection (b)(1)(A) that directs NHTSA by delegation to “exempt from section 30112(a) of this title not more than 325 replica motor vehicles per year that are manufactured or imported by a low-volume manufacturer.” Section 30114(b)(1)(B) states that exemptions are available from FMVSS for motor vehicles (
Under the delegation in 49 CFR 1.95 and pursuant to section 24405 of the FAST Act, NHTSA is proposing to adopt a regulation, 49 CFR part 586, and amend others to implement the low-volume manufacturer replica vehicle program. The FAST Act contains specific procedural requirements for the registration of low-volume manufacturers, labeling of replica vehicles, reporting, and other matters related to the exemption program. To implement the program and the procedural mandates of the FAST Act, NHTSA is proposing a new Part 586 to set forth requirements for registration, labeling, providing consumer disclosures, submitting annual reports, and other requirements needed for the administration of the program. This NPRM also proposes changes to Part 565 to require manufacturers to encode specific information into each replica vehicle's VIN, and to Parts 566 and 567 for manufacturer identification and vehicle certification, respectively.
NHTSA highlights the following aspects of the replica vehicle exemption program.
1. Low-volume manufacturers registering for this program would be conditionally exempt from section 30112(a)'s prohibitions on manufacturing, selling, and importing noncomplying motor vehicles for 325 replica motor vehicles per year (“covered replica vehicles”) per manufacturer. The exemption for replica vehicles would be conditioned on the manufacturer complying with all requirements of the program.
2. NHTSA emphasizes that a replica vehicle manufacturer's obtaining of an exemption from the FMVSS applicable to vehicles would have no effect on the manufacturer's obligation under the Safety Act to recall and remedy its vehicles if they are found by the manufacturer or NHTSA to contain a defect that creates an unreasonable risk to safety. Further, in such instance, manufacturers of covered replica vehicles must comply with the requirements of 49 U.S.C. 30116 through 30120A relating to defect reporting and notification.
On December 4, 2015, Congress enacted the FAST Act. Section 24405, “Treatment of Low-Volume Manufacturers,” provides a framework to exempt replica vehicles manufactured by low-volume manufacturers from certain vehicle safety standards. Section 24405 amends 49 U.S.C. 30114 by adding a new subsection.
Section 30114(b)(1)(A) directs NHTSA to exempt “325 replica motor vehicles per year that are manufactured or imported by a low-volume manufacturer” from 49 U.S.C. 30112(a). Under 49 U.S.C. 30112(a), a person may not manufacture for sale, sell, offer for sale, introduce or deliver for introduction in interstate commerce, or import into the United States, any motor vehicle or motor vehicle equipment manufactured on or after the date an applicable motor vehicle safety standard prescribed under this chapter takes effect unless the vehicle or equipment complies with the standard and is covered by a certification issued under section 30115 of this title. The exemption, as provided in section 30114(b)(1)(B), is limited to the “Federal Motor Vehicle Safety Standards applicable to motor vehicles and not motor vehicle equipment.”
The FAST Act defines “low-volume manufacturer” at 49 U.S.C. 30114(b)(7)(A) as a manufacturer “whose annual worldwide production, including by a parent or subsidiary of the manufacturer, if applicable, is not more than 5,000 motor vehicles.” The definition also specifically excludes persons who are registered as importers under 49 U.S.C. 30141.
The Act defines “replica motor vehicle” at section 30114(b)(7)(B) as a motor vehicle produced by a low-volume manufacturer that “is intended to resemble the body of another motor vehicle that was manufactured not less than 25 years before the manufacture of the replica motor vehicle” and further specifies that the replica motor vehicle must be “manufactured under a license for the product configuration, trade dress, trademark, or patent, for the motor vehicle that is intended to be replicated from the original manufacturer, its successors or assignees, or current owner of such product configuration, trade dress, trademark, or patent rights.”
To obtain an exemption, the FAST Act requires that a low-volume manufacturer, pursuant to section 30114(b)(2), “register with [NHTSA] at such time, in such manner, and under such terms that [NHTSA] determines appropriate” and requires that NHTSA establish terms to “ensure that no person may register as a low-volume manufacturer if the person is registered as an importer under 49 U.S.C. 30141.”
Under section 30114(b)(5), NHTSA has 90 days to review and approve or deny a low-volume manufacturer's registration. If the agency determines that any such registration is incomplete, the agency has an additional 30 days for review. Any registration not approved or denied within 90 days after initial submission, or 120 days if the registration submission is incomplete, is deemed approved. Under section 30114(b)(5), NHTSA is authorized to revoke an existing registration based on a failure to comply with the requirements or a finding by the agency of a safety-related defect or unlawful conduct under this chapter that poses a significant safety risk. NHTSA must provide the registrant a reasonable opportunity to correct all deficiencies, if deemed correctable, at the sole discretion of NHTSA. An exemption granted by NHTSA may not be transferred to any other person, and expires at the end of the calendar year in which it was granted with respect to any volume authorized by the exemption that was not produced by the low-volume manufacturer. The Act directs NHTSA to maintain an up-to-date list of registrants and a list of the make and model of motor vehicles exempted on at least an annual basis and publish such list in the
The FAST Act requires, at section 30114(b)(3), that NHTSA require low-volume manufacturers to affix permanent labels to the exempted motor vehicles that identify the specified standards and regulations for which such vehicle is exempt from section 30112(a), state that the vehicle is a replica, and designate the model year such vehicle replicates. The provision also provides an option, under section 30114(b)(3)(B), for the agency to require low-volume manufacturers to deliver written notice of the exemption to the dealer and the first purchaser of the motor vehicle if the first purchaser is not an individual that purchases the motor vehicle for resale.
Further, under section 30114(b)(3)(C), low-volume manufacturers “shall annually submit a report to [NHTSA] including the number and description of the motor vehicles exempted” under the exemption for replica vehicles and the list of exemptions described on the required label.
Section 24405 of the FAST Act also exempts replica motor vehicles from 49 U.S.C. 32304, 32502, and 32902 and from section 3 of the Automobile Information Disclosure Act (15 U.S.C. 1232). That is, replica motor vehicles will be exempt from passenger motor vehicle country of origin labeling requirements, bumper standards, average fuel economy standards, and vehicle labeling and safety rating disclosure requirements.
Section 30114(b)(8) provides that aside from the express exemptions provided, manufacturers of replica motor vehicles “shall be considered a motor vehicle manufacturer for purposes of parts A and C of subtitle VI” of title 49. The FAST Act also expressly states that “[n]othing shall be construed to exempt a registrant from complying with the requirements under sections 30116 through 30120A.” Sections 30116 through 30120A provide the requirements for defects and noncompliance reporting, notification and remedies.
Section 30114(b)(9) states that nothing in section 30114(b) “shall be construed to preempt, affect, or supersede any State titling or registration law or regulation for a replica motor vehicle, or exempt a person from complying with such law or regulation.”
Further, section 24405(b) of the FAST Act amends the Clean Air Act to provide a framework for replica motor vehicles (referred to as exempted specially produced motor vehicles) to be exempt from vehicle certification testing and vehicle emission control inspection and maintenance requirement.
NHTSA proposes the following provisions to implement the low-volume manufacturer replica vehicle program. Comments are requested on all aspects of the proposal.
The FAST Act contains specific definitions pertinent to the program and has numerous substantive and procedural requirements related to the exemption program. To implement the program and the procedural mandates of the FAST Act, we propose to establish Part 586 to specify definitions, procedural requirements for registration, labeling, consumer disclosures, submitting annual reports, and other matters needed for the administration of the program. This NPRM also proposes changes to Part 565 to require manufacturers to encode specific information into each replica vehicle's VIN, and to Parts 566 and 567 for manufacturer identification and vehicle certification, respectively.
Under the FAST Act, the exemption program is limited to “not more than 325 replica motor vehicles per year that are manufactured or imported by a low-volume manufacturer” that registers with NHTSA.
NHTSA has interpreted the FAST Act to allow NHTSA to grant each registered low-volume manufacturer exemptions to produce up to 325 replica vehicles per calendar year.
Congress specified that replica vehicles must be “manufactured or imported by a low-volume manufacturer.” NHTSA interprets this to mean that the vehicles must be produced by a “low-volume manufacturer,” and that replica vehicles may only be imported by their fabricating low-volume manufacturer.
NHTSA interprets the FAST Act provision in the same way NHTSA has interpreted the hardship exemption provision in 49 U.S.C. 30113,
Although the Safety Act includes importers in the definition of manufacturer,
This proposed requirement would mean that an entity seeking to import replica motor vehicles could not register as a low-volume manufacturer of replica vehicles unless it is also the entity fabricating the replica vehicles. NHTSA's interpretation ensures that small importers are not permitted to import replica vehicles that are manufactured by large foreign manufacturers.
NHTSA requests comment on NHTSA's interpretation.
NHTSA requests comment on whether the replica vehicle program should exclude vehicles manufactured in two or more stages. As discussed below, some of the requirements that NHTSA is proposing may be impossible to meet unless the replica vehicle is manufactured in a single stage. This exclusion would provide clarity to manufacturers and ensure that incomplete, intermediate, and final-stage manufacturers do not attempt to become low-volume manufacturers of replica vehicles and later, after expending resources, realize they cannot comply with all the procedural requirements.
NHTSA seeks comment on excluding vehicles manufactured in two or more stages from the exemption program for the following reasons.
First, NHTSA wishes to ensure replica vehicles are properly identified as replicas in their VINs, which could be a problem with replica vehicles manufactured in two or more stages. NHTSA's proposed VIN requirements would stipulate that each replica vehicle must have the identification of its low-volume manufacturer and a designation that the vehicle is a replica encoded in its VIN. The VIN would also be required to indicate the make, model, and model year of the replicated vehicle. Those requirements could not be met by vehicles produced in two or more stages because under NHTSA's VIN regulation, each vehicle manufactured in two or more stages has a VIN assigned by the incomplete vehicle manufacturer.
NHTSA is proposing a requirement that replica vehicle VINs designate the vehicle as a replica, what year it was manufactured, what vehicle it intends to replicate, the year of the original vehicle, and the identification of the manufacturer responsible for certifying the vehicle's compliance. Although that information may be provided on the certification label, including the information within the VIN provides an easier and more reliable way of verifying the characteristics of the vehicle. Including this information in the VIN and would also allow NHTSA to search its databases for crashes involving replica vehicles and better evaluate the safety of replica vehicles.
Second, NHTSA does not believe that the replica program is conducive to the multi-stage manufacture of replica vehicles as a practical matter. The FAST Act emphasizes that the replica vehicle exemption program is designed for “low-volume manufacturers.” The program is set forth in section 24405 of the FAST Act, which is entitled, “Treatment of Low-Volume Manufacturers.” The statute repeatedly describes the “exemption” as one for “low-volume manufacturers” and specifically exempts replica motor vehicles “that are manufactured or imported by a low-volume manufacturer.” NHTSA interprets this language to mean that if we were to permit the manufacture of replica vehicles produced in two or stages, each of the manufacturers, at all stages, would need to be a low-volume manufacturer. To our knowledge, incomplete vehicle manufacturers are typically not low-volume manufacturers. As a practical matter, therefore, it is likely that vehicles made in two or more stages would not qualify for the program because of the size of their manufacturer(s).
As an alternative to excluding multi-stage manufacturing from the exemption program, NHTSA is considering allowing joint registration submissions from two or more manufacturers wishing to manufacture replica vehicles. This would allow an incomplete vehicle manufacturer, a final-stage manufacturer, and any intermediate-stage manufacturers to jointly manufacture up to 325 replica vehicles annually. As a condition, however, any manufacturer with a joint registration would not be permitted to participate in the manufacture of any replica vehicles not covered by that registration. Under a joint registration program, the incomplete vehicle manufacturers would be required to code the information about the finished replica vehicle into its VIN. At the onset of manufacturing, the incomplete vehicle would know, as specified in the registration submission, the make, model, and model year of the vehicle the replica resembles.
NHTSA requests comment on whether the replica vehicle exemption program should exclude vehicles made in two or more stages or allow those vehicles to be manufactured under joint registrations from the incomplete
Section 30114(b)(7)(A) defines “low-volume manufacturer” as: “a motor vehicle manufacturer, other than a person who is registered as an importer under section 30141 of this title, whose annual worldwide production, including by a parent or subsidiary of the manufacturer, if applicable, is not more than 5,000 motor vehicles.” NHTSA is proposing to use the term “replica motor vehicle manufacturer” in the proposed Part 586 rather than “low-volume manufacturer” to identify the manufacturers exempted by Part 586 because the latter term is used and defined differently in several other NHTSA regulations. For example, “low-volume manufacturer” is defined in the VIN regulation (Part 565) as a manufacturer of fewer than 1,000 vehicles of a given type.
For proposed Part 586, the term “replica motor vehicle manufacturer” would be defined as a low-volume manufacturer that is registered as a replica motor vehicle manufacturer pursuant to the requirements in Part 586. The regulation would specify that “low-volume manufacturer” is defined in 49 U.S.C. 30114(b)(7). (Hereinafter in this NPRM, NHTSA will use the terms “replica motor vehicle manufacturer,” “replica manufacturer,” and “registrant” to mean a low-volume manufacturer that is registered under Part 586.)
Section 30114(b)(7)(B) defines “replica motor vehicle” as follows: A motor vehicle produced by a low-volume manufacturer that (i) is intended to resemble the body of another motor vehicle that was manufactured not less than 25 years before the manufacture of the replica motor vehicle; and (ii) is manufactured under a license for the product configuration, trade dress, trademark, or patent, for the motor vehicle that is intended to be replicated from the original manufacturer, its successors or assignees, or current owner of such product configuration, trade dress, trademark, or patent rights.
NHTSA is proposing requirements that would provide clarifications to the definition. First, “replica motor vehicle” would be defined, in part, as a motor vehicle that is produced by a manufacturer meeting the definition of replica motor vehicle manufacturer under Part 586 that has not yet manufactured 325 replica motor vehicles in that calendar year. This emphasizes the limit of 325 vehicles. Second, we propose requirements that will ensure that a replica vehicle meets the requirement that it be intended to resemble the original vehicle. Third, we address the provision about the manufacture of the vehicle pursuant to certain agreements for the intellectual property rights associated with the original vehicle that is being replicated. The second and third aspects are discussed below.
The FAST Act states that a replica vehicle is a vehicle that is “intended to resemble the body” of another motor vehicle that was manufactured at least 25 years before the replica. NHTSA is proposing requirements that replica manufacturers demonstrate objective manifestations of intent.
To balance objectivity, feasibility, and enforceability, NHTSA is proposing a requirement that manufacturers submit documentation to support the assertion that the replica vehicle is intended to resemble the original. The documentation must demonstrate that the replica vehicle has the same length, width, and height as the original and must include images of the original vehicle and design plans for the replica vehicle.
One way to ensure that a vehicle is intended to resemble another vehicle would be to require the measurements and shape of the replica motor vehicle body to be identical to those of the replicated vehicle. NHTSA has tentatively decided not to propose requiring replica vehicles to have the exact same specifications as the original vehicles. All of the specifications for the original may not be available and some adjustments may be necessary (
In addition to the dimension and shape requirement, NHTSA is proposing a requirement that each replica vehicle have the same outward appearance or exterior as the original vehicle. This would mean that each replica must have the same body styling, shape, and exterior features as the original. Compliance with this requirement would be determined based primarily on the location, size, and shape of exterior features and the overall shape of the body of the vehicle.
We interpret the Act's reference to “body” to mean any part of the vehicle that is not part of the chassis or frame. Therefore, NHTSA interprets “body” to include, but not be limited to: The exterior sheet metal and trim, the passenger compartment, trunk, bumpers, fenders, grill, hood, interior trim, lights and glazing. In making this interpretation, NHTSA looked at, among other things, its concept of “body type” as defined at 49 CFR 565.12. “Body type” is defined as the general configuration or shape of a vehicle distinguished by such characteristics as the number of doors or windows, cargo-carrying features and the roofline (
In each manufacturer's annual report, the manufacturer would submit: Images of the original vehicle, images of the replica produced, and full and complete descriptive information, views, and arguments sufficient to establish that the replica motor vehicles, as manufactured, resemble the body of the original vehicle.
Deviations in the appearance of the exterior would be considered carefully. While reasonable allowances would be made to accommodate safety equipment, NHTSA would consider any unjustified exterior changes (
To be clear, the statute provides for the creation of an exemption program
As the statutory definition refers specifically to the “body” of the original vehicle, we propose that the interior of the replica vehicle does not need to “resemble” that of the original vehicle. NHTSA believes this approach would allow low-volume manufacturers to update the interiors to provide modern amenities and safety improvements.
NHTSA does not interpret the resemblance or licensing provisions in the FAST Act as requiring replica vehicle manufacturers to obtain rights to put all logos and emblems that were on the original vehicle on the replica vehicle. Although separate from body styling, the logos and emblems are part of the distinctive external appearance of a vehicle. Whether vehicle logos and emblems are required to appear as part of the requirements to produce a vehicle that resembles an original vehicle is a separate concern from whether replica manufacturers are required to obtain licenses from rights holders to use the logos and emblems. NHTSA addresses intellectual property rights requirements in the next section. In this section, NHTSA requests comment on whether replica production under these requirements should mandate the use of the actual logos, emblems and vehicle model names that appear originally or if something less or different in this area should apply. To be clear, NHTSA is not proposing to require the use of vehicle logos and emblems as a requirement of resemblance under the statute at this time.
NHTSA considered a provision requiring replica vehicles to resemble the body of the original vehicle not only cosmetically, but also with respect to the vehicle's conformance with the “vehicle” FMVSS that applied to the original vehicle. This provision would require at a minimum, the replica vehicle's body to include the safety features incorporated in the original vehicle to meet the vehicle FMVSS. The section titled “Considered Requirements” below discusses this further and the reasons NHTSA decided not to take this approach.
Because we interpret “body” not to include chassis or frame components, the replica would not need to have the same engine, transmission or drive axles, or drive train as the original vehicle. For example, a replica vehicle could be a battery electric vehicle, while the original vehicle was powered by an internal combustion engine.
Further, we propose that the replica vehicle must resemble the body of another motor vehicle that was manufactured “for consumer sale” not less than 25 years before the manufacture of the replica motor vehicle. The provision “for consumer sale” is intended to make clear that the proposed replica vehicle exemption program does not apply to prototype or concept vehicles that were never sold to consumers. NHTSA intends to prevent the replication of prototypes because the vehicles were never intended for sale to the public. Further, a prototype would not be eligible for replication under this provision because the Safety Act defines motor vehicle as a vehicle driven or drawn by mechanical power and manufactured primarily for use on public streets, roads, and highways, but does not include a vehicle operated only on a rail line.
NHTSA requests comment on the requirement for replica vehicles to have the same dimensions and outward appearance as the original vehicle and whether the logos and emblems from the original vehicle should be reproduced on each replica vehicle. We also seek comment on the requirement that manufacturers submit images of the both the original vehicle and design plans or images of a representative replica vehicle in the registration submission and requirement to submit images of the replica vehicle(s) in the annual report.
The FAST Act states that a replica motor vehicle “is manufactured under a license for the product configuration, trade dress, trademark, or patent, for the motor vehicle that is intended to be replicated from the original manufacturer, its successors or assignees, or current owner of such product configuration, trade dress, trademark, or patent rights.” NHTSA views this provision as requiring replica vehicles manufactured under this program to be licensed products. This means that the manufacturer must obtain all legal rights necessary to produce the replica vehicle from the original manufacturer, its successes or assignees, or current owner of such intellectual property rights. As is clear from the comprehensive listing of the type of rights that might apply in such an effort, while creating an exemption for replica manufacturers, Congress also sought to protect the rights of the original manufacturers and their successors.
NHTSA is defining legal rights to be primarily based on the external appearance of the vehicle. Under the statute, replica manufacturers are defined as producing vehicles that are intended to resemble the body of another motor vehicle. NHTSA is not applying the definition to require that manufacturers also obtain rights associated with vehicle mechanics, electronic components or other interior aspects of a vehicle, unless implicated by the reproduction or otherwise necessary to ensure that the outward facing appearance of the replica vehicle resembles the original vehicle. While it is clear that such rights might exist, in our view, it is not necessary in most situations to obtain those rights for the purpose of producing a replica. However, we accept that some types of replica production may require intellectual property rights to components or other parts that are separate from the outward facing appearance of a vehicle.
In this document, NHTSA is not identifying any specific intellectual property rights that must be obtained by a replica manufacturer. However, as noted above, the FAST Act includes a definition of replica vehicle that identifies specifically “product configuration, trade dress, trademark, or patent” as intellectual property rights that might be licensed from a current rights holder prior to production. Based on this, replica manufacturers should consider what intellectual property rights are needed for production and obtain such rights prior to seeking registration with NHTSA.
For example, the FAST Act expressly includes trademarks as part of the rights that a manufacturer would obtain from an original manufacturer to produce a replica. Trademarks may cover vehicle make and model names or logos. Since NHTSA is requiring that replica manufacturers identify the original vehicle(s) it intends to replicate by make and model name and certify that the replica is intended to resemble and replicate the original, the manufacturer should consider whether it is necessary to obtain these rights. Certifying that a
NHTSA's role is to ensure that the manufacturers who register under this program meet the statutory requirements set forth in the FAST Act. Although NHTSA will review registration applications, NHTSA will not determine what intellectual property is required to produce a replica vehicle. Manufacturers remain responsible for performing the due diligence necessary to determine what rights are needed, and to obtain relevant rights. In areas of dispute, where the rights of a replica manufacturer are questioned, NHTSA plans to allow general legal procedures to take place without involvement.
That being said, NHTSA wants to ensure that manufacturers seeking registration under the statute have the legal basis to produce the replica vehicle. In order to protect rights holders and to mitigate the chance that lawsuits will emerge from this process, NHTSA is proposing that, when submitting its registration, manufacturers must provide a binding certification that attests that they can legally produce each replica vehicle model they propose to make. This requirement means that manufacturers must certify that they have determined the legal rights required and that they have obtained all licenses or permissions necessary to produce the replica vehicle. Applications that contain a missing or incomplete certification would be disapproved.
In addition to the required certification, the manufacturer also must provide supporting documentation that sets forth a description of the types of intellectual property that are necessary to produce the replica vehicle, addressing the status of each of those rights. If the manufacturer has a license for particular rights, it should provide documentation to that effect. If intellectual property rights for the original vehicle are no longer protected, the manufacturer should include a statement briefly stating the basis for concluding that no license is required. As an example,
NHTSA is also proposing clarifying an aspect of the requirement that replica motor vehicles be manufactured under licensing agreements for the intellectual property rights of the original vehicles. The statute is ambiguous concerning the treatment of current owners of intellectual property rights that wish to manufacture replica vehicles. That is, the statute could arguably be read to require license agreements even when the current owner of the intellectual property also intends to manufacture the replica vehicles. NHTSA believes this creates an unnecessary step for current rights holders and does not meet Congress' intent with these requirements. Accordingly, NHTSA interprets the licensing requirement to apply only when a manufacturer intending to produce replica vehicles does not own the intellectual property rights to the original vehicle (which is being replicated).
The FMVSS apply to motor vehicles and/or motor vehicle equipment that are manufactured on or after the effective date of the standard.
Whether an FMVSS is a “vehicle” standard or an “equipment” standard is determined by the “Application” section of the standard. If vehicle types are listed in the section, such as “passenger cars, multipurpose passenger vehicle, trucks, and buses,”
If an FMVSS that is both a vehicle and an equipment standard has requirements that apply to vehicles that are vehicle-specific, separate from requirements that apply to the equipment items, in NHTSA's view the replica motor vehicles are exempt from the vehicle-specific requirements but the requirements applying to the motor vehicle equipment would continue to apply. For example, for FMVSS No. 108, “Lamps, reflective devices, and associated equipment,” while the replica vehicle would not need to comply with vehicle-specific requirements specifying where lamps must be placed on the vehicle, the replica vehicle's lamps must meet the applicable portions of the standard that apply to lamps as equipment items on the date that the lamps were manufactured. Compliance with the vehicle portion of FMVSS No. 108 may be difficult or impossible when trying to produce a vehicle that resembles the appearance of an older vehicle,
Another notable standard that is both a vehicle and an equipment standard is FMVSS No. 208, “Occupant crash protection.” FMVSS No. 208 is mainly thought of as a vehicle standard requiring the installation of air bags and seat belts and specifying vehicle crash tests to evaluate the protective capabilities of those devices. However, section S9, “Pressure vessels and explosive devices,” applies to vessels designed to contain a pressurized fluid or gas, and to explosive devices, for use in covered motor vehicles as part of a system designed to provide protection to occupants in the event of a crash.
To assist the reader, the following is a list of current equipment FMVSS that would apply to motor vehicle equipment manufactured on today's date for installation in replica motor vehicles
FMVSS No. 106,
FMVSS No. 108,
FMVSS No. 109,
FMVSS No. 110,
FMVSS No. 116,
FMVSS No. 117,
FMVSS No. 119,
FMVSS No. 120,
FMVSS No. 125,
FMVSS No. 129,
FMVSS No. 139,
FMVSS No. 205,
FMVSS No. 208,
FMVSS No. 209,
FMVSS No. 213,
FMVSS No. 218,
FMVSS No. 223,
FMVSS No. 304,
FMVSS No. 403
In drafting this proposed rulemaking, NHTSA considered adding requirements to ensure that replicas provide a minimum level of vehicle safety beyond the performance of discrete equipment items. At this time, NHTSA is not proposing any additional safety requirements, but comments are requested to inform future agency action.
One considered approach would require replica vehicles to resemble the body of the original vehicle not only cosmetically, but also with respect to the safety designs and components incorporated into the body of the original vehicle to meet the vehicle FMVSS applying to that original vehicle. Features that meet a more current version of a standard would also be permitted under this approach.
The language of the FAST Act directs NHTSA to exempt covered replica vehicles but to limit that exemption only to the current “vehicle” FMVSS that apply today to contemporary, newly completed vehicles. The Act defines “replica motor vehicle” in relevant part,
NHTSA emphasizes that a replica vehicle manufacturer's obtaining of an exemption from the FMVSS applicable to vehicles would have no effect on the manufacturer's obligation under the Safety Act to recall and remedy its vehicles if they are found by the manufacturer or NHTSA to contain a defect that creates an unreasonable risk to safety. Further, in such instance, manufacturers of covered replica vehicles must comply with the requirements of 49 U.S.C. 30116 through 30120A relating to defect reporting and notification. In addition, the FAST Act specifies that a low-volume manufacturer's registration in the program may be revoked if the manufacturer fails to comply with requirements or if its vehicles are found to contain a safety-related defect or if the manufacturer engages in unlawful conduct that poses a significant safety risk.
This NPRM proposes requirements to implement the amendments made by section 24405 of the FAST Act to 49 U.S.C. 30114. Each manufacturer wishing to manufacture replica motor vehicles under this program must register, according the requirements in Part 586, as a replica motor vehicle manufacturer for the calendar year in which the replica motor vehicle is manufactured. Under 49 U.S.C. 30114(b)(2), low-volume manufacturers must be registered “[t]o qualify for an exemption.”
NHTSA would determine whether a manufacturer is eligible and permitted to manufacture replica motor vehicles based on the information the manufacturer provides in its registration documents. We propose that manufacturers would register using the NHTSA Product Information Catalog and Vehicle Listing (vPIC) platform (
We propose that manufacturers must submit information sufficient to establish that their annual world-wide production, including by a parent or subsidiary of the manufacturer, if applicable, is not more than 5,000 motor vehicles, and a statement certifying to that effect, including the total number of motor vehicles produced by or on behalf of the registrant in the 12-month prior to filing the registration.
NHTSA proposes requiring that each manufacturer provide information, in its registration submission, about the replica vehicle it intends to manufacture, including a statement identifying the original vehicle(s) the manufacturer intends to replicate by make, model, and model year. The manufacturer must submit images of the
The manufacturer would also need to provide documents showing that it has obtained the intellectual property rights to produce the replica vehicle, documents to support that it has done so, and a statement certifying to that effect. Proof of such rights could be shown by furnishing a license for the product configuration, trade dress, trademark, or patent, for the motor vehicle that is intended to be replicated from the original manufacturer, its successors or assignees, or the current owner of such product configuration, trade dress, trademark, or patent. As discussed above this documentation could also include a statement as to why obtaining licenses for certain intellectual property is not required.
The manufacturer would also need to certify that it will not manufacture more than the number of replica motor vehicles covered by the requested exemption, a number not more than 325 replica motor vehicles in a calendar year. NHTSA interprets this limitation to mean that a manufacturer is limited to 325 replica vehicles, regardless of whether it is manufacturing replicas of different makes and models of vehicles. NHTSA also interprets this limitation to apply to manufacturers under common ownership. For example, if a parent company or individual owns two low-volume manufacturers, the 325-limit would apply to all manufacturers under common ownership. Each low-volume manufacturer would not be permitted to manufacture 325 replicas. Instead, the two manufacturers under common ownership would need to submit one registration submission and collectively cannot manufacture more than 325 replica vehicles in any given calendar year. NHTSA interprets the statute this way to ensure that the 325-replica limit set by Congress is not circumvented.
Further, the manufacturer would need to submit information required by other administrative regulations, including all information required by 49 CFR part 566 to identify itself to NHTSA as a replica motor vehicle manufacturer (see below for proposed amendments to Part 566), VIN-deciphering information required by 49 CFR part 565, and a designation of a permanent resident of the United States as its agent for service of process if the manufacturer is not located in the United States (49 CFR part 551, subpart D). (NHTSA does not believe that any changes to the regulation at 49 CFR part 551, subpart D for manufacturers of replica motor vehicles are needed.)
49 U.S.C. 30114(b)(5) specifies that NHTSA has 90 days to review and approve or deny a registration. This new subsection also provides an additional 30 days if the registration is determined to be incomplete. We anticipate setting up the program so that registration under Part 586 on the vPIC portal provides an acknowledgment of receipt of the registration to the manufacturer when the registration is submitted. As some of the information will be provided by the manufacturer in attachments, NHTSA will review the submission, including attachments, within 90 days of acknowledging receipt to ensure that the registration is complete. If the registration is incomplete, NHTSA will inform the manufacturer that the registration is incomplete via email. NHTSA is proposing to give manufacturer 60 days from the date of NHTSA's email to submit the necessary information to complete the registration. If the necessary information is not submitted within 60 days, the registration will be denied. NHTSA requests comment on whether this 60-day period to respond is appropriate. The manufacturer may resubmit the denied registration (presumably, the resubmitted registration will include the information NHTSA identified as missing from the prior application) but the 90-day clock will reset.
A manufacturer may submit additional information to supplement its registration per NHTSA's notification of an incomplete registration (within 60 days of receipt of such notice), or may submit additional information on its own initiative. In these instances, NHTSA will have 30 additional days to review the amended registration. That is, these 30 days will be added to any remaining days from the initial 90-day review period. If the submission is still incomplete, NHTSA will deny the registration.
On receipt of a complete registration, NHTSA will review and approve or deny the registration. 49 U.S.C. 30114(b)(5) states that any registration not approved or denied within 90 days after initial submission, or 120 days if the registration submitted is incomplete, shall be deemed approved.
We propose that a low-volume manufacturer is not considered registered with NHTSA unless the manufacturer receives confirmation from NHTSA that its registration is approved. A manufacturer whose registration is not approved or denied within the allotted time, who believes its registration is thus deemed approved, must obtain confirmation of the approval from NHTSA. When NHTSA confirms the approval, NHTSA would add the manufacturer to the up-to-date list of registrants.
The reason for requiring that manufacturers obtain confirmation of approvals in the circumstances describe above is to better safeguard the integrity of the exemption program against confusion and fraud. This approach would avoid situations in which a manufacturer might assume its registration was deemed to be approved when in fact it was never received by NHTSA. An up-to-date list of registrants will show the “deemed to be approved” registrants, and the confirmation process better establishes a means of communication between NHTSA and the manufacturer to achieve this end. The list will be important to enable members of the public to check whether the low-volume manufacturer they are dealing with in fact qualifies for an exemption under this replica vehicle program and which vehicles are covered by the exemption. The list will also provide NHTSA with a strong enforcement mechanism to monitor if manufacturers are lawfully presenting themselves as registrants and to check which vehicles they are offering for sale, a mechanism that would better ensure that only vehicles covered by approved and deemed to be approved registrations are being manufactured and sold.
NHTSA is proposing that, in the case that a registration is deemed approved, NHTSA may request additional information from a “deemed approved” replica manufacturer when the registration submission is incomplete or does not meet the requirements in the new Part 586. NHTSA is proposing that, when notified of the submission's shortcomings, the manufacturer would have 60 days to submit information to correct and/or complete the registration. If the manufacturer fails to submit the requisite information, NHTSA may revoke the registration.
NHTSA requests comment on requirement for “deemed approved” replica manufacturers to respond within 60 days. NHTSA also requests comment on what actions NHTSA should take in regards to revoking a “deemed approved” replica manufacturer. For purposes of this NPRM, NHTSA is proposing to revoke a registration if the manufacturer fails to respond within the allotted time. At NHTSA's discretion, additional time may be provided if the deficiencies of the registration are deemed correctable. And, consideration would be provided for the length of time that NHTSA took to identify the
49 U.S.C. 30114(b)(5) specifies that NHTSA has the authority to revoke a registration based on a failure to comply with requirements or a finding of a safety-related defect or unlawful conduct.
Section 30114(b)(5) also states that an exemption granted to a low-volume manufacturer may not be transferred to any other person, and expires at the end of the calendar year for which it was granted with respect to any volume authorized by the exemption that was not applied by the manufacturer to vehicles built during that calendar year. NHTSA understands 49 U.S.C. 30114(b)(5) to address the vehicles that could have been made under an exemption in a calendar year but which were not, and not as requiring that manufacturers must re-register (renew their registrations) annually. NHTSA has tentatively decided that registrants may carry forward their registration by informing NHTSA in an annual report (discussed below) of their intent to continue manufacturing the vehicles covered by the approved registration, and need not formally re-register annually at the end of the calendar year concerning those covered vehicles. If an approved replica manufacturer wishes to manufacture a different replica vehicle or make modifications to a replica covered by an existing registration, the registrant must submit an update to their existing registration with all necessary supporting documentation. 49 U.S.C. 30114(b)(5) specifies that NHTSA must maintain an up-to-date list of registrants and a list of the make and model of exempted motor vehicles on at least an annual basis and publish such list in the
NHTSA is proposing an amendment to Part 566 to list replica motor vehicles among the types of vehicles manufactured. Manufacturers who have already submitted information under Part 566 would be required to update their information as required by § 566.6 before manufacturing replica vehicles.
The addition of replica motor vehicles to the types of vehicles is merely for identifying the vehicle as a replica and does not supplant the vehicle's type for application of FMVSS. The manufacturer of a replica vehicle would determine which standards the replica vehicle is exempt from by looking at the standards for a vehicle of that body type and the VIN and certification labels would reflect that the vehicle is a replica of a specific body type (
In addition, NHTSA is proposing to update
Replica motor vehicle manufacturers would need to obtain a manufacturer identifier in this program, like other manufacturers are currently required to do. Currently, a manufacturer that intends to manufacture motor vehicles for sale or introduction into interstate commerce in the United States must obtain a manufacturer identifier from SAE International. The manufacturer identifier is incorporated into the vehicle's VIN (see section below). NHTSA has a contract with SAE International to assign manufacturer identifiers to manufacturers in the United States. Manufacturers would contact SAE International directly (and not NHTSA) to request the assignment of a manufacturer identifier. They would do so by telephoning 724-772-8511 or by writing to: SAE International, 400 Commonwealth Avenue, Warrendale, PA 15096, Attention: WMI Coordinator.
NHTSA's regulations at 49 CFR part 565 require, among other things, a motor vehicle manufacturer to assign each motor vehicle manufactured for sale in the United States a 17-character VIN that uniquely identifies the vehicle. Under regulations administered by NHTSA, a vehicle identification number is “a series of Arabic numbers and Roman letters that is assigned to a motor vehicle for identification purposes.” (49 CFR 565.12(r)).
VINs serve a variety of public safety purposes. One of the original purposes of the VIN requirements was to enhance public safety by deterring vehicle theft based on the assumption that drivers of stolen vehicles are more likely to operate those vehicles unsafety and thus be involved in vehicle crashes.
NHTSA has considered whether changes are required to the regulations at 49 CFR part 565 for replica motor vehicles. The first section of the VIN (positions 1-3) uniquely identifies the manufacturer and type of the motor vehicle if the manufacturer is a high-volume manufacturer. If the manufacturer is a low-volume manufacturer, positions one through three along with positions twelve through fourteen in the VIN must uniquely identify the manufacturer and the type of the motor vehicle. The manufacturer identifier occupies the first three characters of the VIN for manufacturers that produce 1,000 or more vehicles of a specified type within a model year, and positions 1, 2, 3, 12, 13, and 14 of VINs assigned by manufacturers that produce less than 1,000 vehicles of a specified type of motor vehicle per model year. Because this proposal would create a new vehicle type for replica motor vehicles in Part 565 and each manufacturer is limited to manufacturing 325 replica vehicles per year, all manufacturers of replica vehicles would need to obtain new manufacturer identifiers that contain six characters. Therefore, even existing manufacturers who are manufacturing passenger cars would need to obtain new manufacturer identifier to manufacture replica passenger cars. However, the same identifier could be used for manufacturing different vehicle types. The vehicle type of the replica vehicles (
The second section of the VIN (positions 4-8) is known as the “Vehicle Descriptor Section.” This section contains information on vehicle attributes, which vary based on the vehicle's type classification (
The third section (position 9) is a check digit, used to determine whether the remainder of the VIN is properly configured.
The fourth section (positions 10-17) contains a variety of information. Position 10 represents the vehicle's model year. NHTSA interprets model year for the purposes of this replica vehicle program as the calendar year in which the vehicle was manufactured, and not, in the case of replica motor vehicles, the year the vehicle being replicated was originally manufactured. While these vehicles will be exempt from vehicle FMVSS, this information will be important for enforcement purposes. As discussed below, NHTSA is also required to include reporting requirements in this regulation, and NHTSA has proposed requirements that distinguish the year of manufacture from the year the replicated vehicle was manufactured.
Position 11 is the plant code, assigned by the manufacturer and reported to NHTSA.
For manufacturers of replica motor vehicles, positions 12-14 will be the remainder of the manufacturer identifier, which, with the characters in positions 1-3 of the VIN, uniquely identify the manufacturer and vehicle type for manufacturers that produce less than 1,000 vehicles of that type per model year. Positions 15-17 are the numbers sequentially assigned by the manufacturer during the production process.
NHTSA is proposing to amend the second section (Vehicle Descriptor Section), positions 4-8, of the VIN to include specific vehicle attributes for replica vehicles. Within positions 4-8, the manufacturer must identify, in addition to the attributes specified in table I of Part 565 for the vehicle's type classification (
This information would be important to NHTSA for tracking the safety of the replica motor vehicles and for other purposes. It also may be desirable to the States, which are permitted to regulate these vehicles under the provisions of the FAST Act.
NHTSA is also proposing amendments to Table I of § 565.15 which would require replica manufacturers to encode the make, model, and model year of the original replicated vehicle into the replica vehicle's VIN.
NHTSA is requesting comment on the proposed VIN requirements for replica motor vehicles.
Section 30114(b)(3)(a) directs NHTSA to require low-volume manufacturers to affix permanent labels to the exempted vehicles that identify the specified standards and regulations for which the vehicle is exempt, states that the vehicle is a replica, and designates the model year such vehicle replicates. NHTSA considered whether the label should be conspicuous or whether it should be in the same location as the certification labels required under 49 CFR part 567. While NHTSA believes that consumers should be provided a conspicuous warning label, NHTSA believes that aim is better accomplished by a requirement that manufacturers affix a temporary label, as discussed below.
To satisfy the requirement to have a permanent label, NHTSA is proposing requirements similar to those for certification labels that are required under 49 CFR part 567. NHTSA believes these labels will provide necessary information about the safety of the replica vehicle without detracting from the customer experience. NHTSA requests comments regarding the permanent label's placement and content requirements.
49 CFR part 567 includes permanent labeling requirements for motor vehicles to implement the certification requirements of 49 U.S.C. 30115. This NPRM proposes amendments to Part 567 to include a specific provision for certifying replica vehicles. Most of the requirements would be the same as those for non-replica vehicles.
For example, NHTSA is first proposing that § 567.4(a) be amended to include “replica motor vehicles” in the list of vehicles that are exempt from those requirements. Section 567.3 would be amended to include a definition of “replica motor vehicles” as discussed above. Next, new requirements for replica motor vehicles would be added in a similar format to the existing requirements. NHTSA is proposing to include the requirements in a new § 567.8. Many of the requirements would be the same or similar to those for other vehicles, such as the location on the vehicle where the label is to be affixed, as well as the contents of the label, including manufacturer name, month and year of manufacture, VIN, GVWR, vehicle type classification, and gross vehicle and gross axle weight ratings.
However, as amended by the FAST Act, 49 U.S.C. 30114(b)(3)(A) specifies that NHTSA shall require low-volume manufacturers to affix a permanent label to motor vehicles produced pursuant to a replica vehicle exemption. The label must identify the specified standards and regulations from which the replica vehicle is exempt under 49 U.S.C. 30112(a), state that the vehicle is a replica, and designate the model year such vehicle replicates. NHTSA is proposing that the requirements for permanent labeling be incorporated into the requirements for certification labels under 49 CFR part 567. NHTSA is proposing to incorporate the permanent label requirements for replica motor vehicles in the certification section to avoid duplicative requirements.
Details of the proposed permanent label requirements are discussed in a section below.
Imported replica vehicles will be subject to requirements in Part 591,
As amended by the FAST Act, 49 U.S.C. 30114(b)(3)(A) specifies that NHTSA shall require low-volume manufacturers to affix a permanent label to motor vehicles produced pursuant to
Part 567 currently requires manufacturers to certify that the vehicle conforms to all applicable FMVSS. This NPRM proposes a different statement for replica vehicles. For replicas, the label would state that the vehicle is a replica, and designate the model year such vehicle replicates. The label would state that the vehicle is exempt from FMVSS that apply to a vehicle of its type and include a list of all vehicle FMVSS and regulations the vehicle does not meet.
The FAST Act permits NHTSA to require registrants to provide “written notice of the exemption” to dealers and first purchasers of replica vehicles.
NHTSA has proposed purpose statements for each of the standards and regulations covered by the replica vehicle exemptions for inclusion in a table to Part 586. NHTSA is proposing using slight revisions of the existing “purpose” statements set forth at the beginning of each NHTSA regulation and standard in the CFR. NHTSA is asking for comments about whether the statements are easy to understand. The agency also requests comment on whether the table is needed or desirable. Registrants could research the CFR and provide the purpose statements on their own without NHTSA's intervention and without the need for NHTSA to conduct rulemaking to amend the table as necessary.
To draw the potential purchaser's attention to the written disclosure and to better inform consumers about the safety implications of their purchasing decisions, NHTSA is proposing a requirement that each replica vehicle have a temporary label on the dashboard or steering wheel hub, similar to the temporary air bag warning required by 49 CFR 571.208 S4.5.1(e) when the vehicle is offered for sale. NHTSA is proposing that the label conform to the color and size requirements of 49 CFR 571.208 S4.5.1(e)(1)(i) and (ii), and include the following statement in at least 20-point font: “This motor vehicle does not conform to all applicable Federal motor vehicle safety standards. Refer to the written disclosures provided for further information.” Comments are requested on whether there are more effective means of warning consumers about the replica vehicles' nonconformance with the applicable FMVSS, such as whether the warning should also be provided on advertisements and other marketing materials for the vehicles. NHTSA also requests comment on the appropriate minimum lettering size for the temporary warning label. Specifically, NHTSA requests comment on whether the requirement that the warning statement be in 20-point font or larger is appropriate to ensure legibility and conspicuity.
Under 49 U.S.C. 30114(b)(3)(C), NHTSA must require replica manufacturers to submit an annual report providing the number and description of motor vehicles exempted as replica motor vehicles, including a list of the exemptions included on the mandatory label described above. Because of this requirement, NHTSA is proposing to specify that “replica model year” for replica motor vehicles must correspond to the calendar year in which the replica was manufactured. This would differ from “Original model year of a replicated vehicle,” which would be the year in which the vehicle being replicated was originally manufactured.
NHTSA is also proposing that annual reports must be submitted within 60 days of the end of the calendar year. Because these vehicles would be produced in limited quantities, NHTSA believes that the information for the report could be entered after each vehicle is manufactured and that meeting a 60-day deadline for submitting the report at the end of the calendar year is therefore reasonable.
NHTSA is proposing to require that annual reports include:
Statement of whether to the registrant will be manufacturing the same replica motor vehicle(s) in the next calendar year and if so, how many vehicles it will be manufacturing.
NHTSA is proposing that the annual report must be submitted using the NHTSA Product Information Catalog and Vehicle Listing (vPIC). The website
NHTSA is proposing requiring a list of the complete VINs of all replica vehicles to be included in the annual report. This requirement will assist NHTSA in enforcing the annual limit of 325 replica vehicles per manufacturer. And, as manufacturers already maintain lists of all VINs manufactured in a given year, the burden should be very minimal.
New subsection (b)(5) added to 49 U.S.C. 30114 by Sec. 24405 of the FAST Act specifies that NHTSA has the authority to revoke a registration “based on a failure to comply with requirements set forth in this subsection [of the FAST Act] or a finding by the Secretary of a safety-related defect or unlawful conduct under this chapter that poses a significant safety risk.” NHTSA is including this provision in the proposed Part 586 regulation.
NHTSA would like to emphasize that revocation of registrations is not NHTSA's only means of enforcement. NHTSA's defect and recall authority under 49 U.S.C. 30116 through 30120A continues to apply.
NHTSA has developed a Preliminary Regulatory Evaluation (PRE) that discusses the potential costs, benefits and other impacts of this regulatory action. The PRE is available in the docket for this NPRM and may be obtained by downloading it or by contacting Docket Management at the address or telephone number provided at the beginning of this document.
The table below provides a summary of the various benefits and costs that may accrue from this rule, as well as the various factors that define the range of possible outcomes.
NHTSA requests comment on the framework for the benefit cost analysis and preliminary estimates included in the analysis.
NHTSA proposes to make the changes discussed in this NPRM effective immediately upon publication of the final rule in the
OMB has determined that this rule is nonsignificant. The amendments proposed by this NPRM implement an exemption program mandated by section 24405 of the FAST Act for low-volume manufacturers involving a relatively small number of motor vehicles. Potential benefits include costs avoided by low-volume manufacturers when producing replica vehicles that would not be required to meet all the Federal regulations and FMVSS applicable to new motor vehicles. Potential benefits could also include increased consumer surplus, reduced barriers to innovation, and increased incremental employment impacts among small manufacturers. Safety impacts could result from crashes if replica vehicles do not meet certain safety standards. However, we expect the program to have no significant effect on the national economy, due to the small number of vehicles affected by this program.
NHTSA has reviewed this proposed rule for compliance with E.O. 13771 (“Reducing Regulation and Controlling Regulatory Costs”), which requires Federal agencies to offset the number and costs of new regulations through the repeal, revocation, and revision of existing regulations. As provided in OMB Memorandum M-17-21 (“Implementing E.O. 13771”), a “regulatory action” subject to E.O. is a significant regulatory action as defined in section 3(f) of E.O. 12866 that has been finalized and that imposes total costs greater than zero.
For the reasons identified in the previous sections, this proposed rule is not a significant regulatory action under E.O. 12866 and is a “deregulatory action” under E.O. 13771 because its total costs to manufacturers will be less than zero.
Details on the estimated cost savings of this proposed rule are presented in the Preliminary Regulatory Evaluation. The document evaluates the economic impact, in terms of benefits and costs, on Federal, State, and local governments, as well as private entities regulated under this action and the public, as required by E.O. 12866 and E.O. 13563.
The National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4347) requires Federal agencies to consider the environmental impacts of proposed major Federal actions significantly affecting the quality of the human environment, as well as the impacts of alternatives to the proposed action.
When a Federal agency prepares an environmental assessment, the Council on Environmental Quality (CEQ) NEPA implementing regulations (40 CFR parts 1500 through 1508) require it to “include brief discussions of the need for the proposal, of alternatives [. . .], of the environmental impacts of the proposed action and alternatives, and a listing of agencies and persons consulted.”
This document sets forth the purpose of and need for this action. The purpose of this rulemaking is to implement the exemption program and the procedural mandates described in Section 24405 of the FAST Act, which directs NHTSA to exempt annually a limited number of replica motor vehicles manufactured or imported by low-volume manufacturers from the FMVSS that apply to motor vehicles, but not standards that apply to motor vehicle equipment. In addition, replica vehicles will be exempt from the requirements of 49 U.S.C. 32304, 32502, and 32902, as well as from section 3 of the Automobile Information Disclosure Act (15 U.S.C. 1232). This action is needed to implement a program to grant exemptions, as directed by Congress, for the manufacture of replica vehicles. NHTSA is also proposing labeling, consumer disclosure, and registration requirements to ensure adequate public awareness and agency oversight over these vehicles.
NHTSA seeks comment on all aspects of its proposal, including limitations on importers, application to vehicles manufactured in two or more stages, the use of vehicle logos and emblems as a requirement of resemblance, the requirement to have the same dimensions and outward appearance as the original vehicle, labeling requirements, and more. The above requests for public comment specifically describe alternative approaches to regulation that are being considered by the agency. NHTSA will consider all substantive public comments received and recommendations on alternatives in its final rule.
The aspects of the program over which NHTSA has the most discretion, including labeling requirements and registration, are not anticipated to have anything other than
NHTSA and DOT have consulted with EPA in developing this proposal.
NHTSA has reviewed the information presented in this Draft EA and concludes that the proposed action and alternatives it may consider would have nothing more than
Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601
In compliance with the Regulatory Flexibility Act, NHTSA has evaluated the effects of this proposed rule on small entities and has prepared an Initial Regulatory Flexibility Analysis (IRFA).
This proposed rule would directly impact low-volume manufacturers that choose to produce replica vehicles and that would fall under North American Industry Classification System (NAICS) Nos. 336111, 336112, and 336120 for Automobile Manufacturing, Light Truck and Utility Vehicle Manufacturing, and Heavy Duty Truck Manufacturing. According to 13 CFR 121.201, the Small Business Administration's size standards regulations used to define small business concerns, entities in these industries are small business concerns if they have 1,500 or fewer employees. NHTSA expects that most, if not all, replica manufacturers will have 1,500 employees or fewer. NHTSA estimates that up to 40 manufacturers will register as low-volume manufacturers of replica vehicles. However, as the Small Business Administration's regulations define a small business, in part, as a business entity “which operates primarily within the United States,” foreign manufacturers that participate in the replica vehicle program are not considered small businesses for the purposes of the Regulatory Flexibility Act.
Until the FAST Act was enacted, all low-volume manufacturers of replica vehicles were subject to virtually the same Vehicle Safety Act requirements as the largest manufacturers when producing new motor vehicles. Occasionally, small manufacturers are given more time to comply with new FMVSS requirements, such as by having longer phase-in timelines to comply with new requirements, and can also petition for exemptions from certain FMVSS for limited periods of time on certain specific grounds.
The FAST Act allows low-volume manufacturers of replica vehicles registered in the proposed exemption program to manufacture vehicles that are exempt from meeting the “vehicle” FMVSS. NHTSA estimates that involvement in the proposed Part 586 exemption program would save low-volume manufacturers of replica passenger cars and light trucks, MPVs, and buses (LTVs) between $3.4 million and $17.2 million at a three-percent discount rate (between $3.3 million and $16.8 million at a seven-percent discount rate) annually resulting from the elimination of the requirement to comply with the vehicle FMVSS, fuel economy standards, bumper standards, and labeling requirements.
According to guidance provided by the SBA's Office of Advocacy, to determine whether the number of small entities significantly impacted is substantial, an agency may need to look not only at the number of significantly impacted entities, but also at the percentage of affected small entities so impacted.
NHTSA is proposing requirements in this NPRM to implement a program mandated under the National Traffic and Motor Vehicle Safety Act (Vehicle Safety Act), as amended by the Fixing America's Surface Transportation Act (the FAST Act). The FAST Act directs the NHTSA by delegation to exempt not more than 325 replica motor vehicles per year that are manufactured or imported by a low-volume manufacturer. The exemption must be limited to the FMVSS applicable to motor vehicles, not motor vehicle equipment.
NHTSA is issuing this NPRM proposing to establish 49 CFR part 586 to implement the replica motor vehicle exemption program.
This proposed rule would affect manufacturers who have a total annual worldwide production of 5,000 vehicles or less. According to 13 CFR 121.201, the Small Business Administration's size standards regulations used to define small business concerns, vehicle manufacturers would fall under North American Industry Classification (NAICS) No. 336111, Automobile Manufacturing, which has a size standard of 1,000 employees. Using the size of 1,000 employees or fewer, NHTSA estimates that most, if not all, of the manufacturers that would produce replica vehicles would be small businesses. NHTSA estimates that there will be approximately 40 manufacturers that will take advantage of this program and manufacture replica vehicles under the replica vehicle exemption program.
Although this proposed rule would affect small manufacturers, we do not anticipate that the proposed rule would have a significant negative economic impact. Instead, this proposed rule should reduce compliance costs for the small businesses that produce replica vehicles under the exemption program. NHTSA estimates that manufacturers will save between $3.4 million and $17.2 million at a three-percent discount rate (between $3.3 million and $16.8 million at a seven-percent discount rate) annually. The cost savings result from low-volume manufacturers no longer having to conform their vehicles to the “vehicle” FMVSS.
The proposed rule contains reporting, record keeping and other compliance requirements to implement the replica vehicle program. All the proposed reporting and record keeping requirements discussed below are mandated or contemplated by the FAST Act or are essential to carrying out the statute.
First, in accordance with the FAST Act, low-volume manufacturers wishing to qualify for an exemption must register with NHTSA in accordance with this proposed regulation. The FAST Act mandates this registration requirement in section 30114(b)(1)(B)(2), specifying that “a low-volume manufacturer shall register with [NHTSA] at such time, in such manner, and under such terms that [NHTSA] determines appropriate.” NHTSA estimates that it would take each manufacturer 10 hours to draft and compile the submission. At an estimated cost of $48.47 per hour,
Second, in accordance with the FAST Act, manufacturers of replica vehicles would be required to submit annual reports. The annual reports are required by section 30114(b)(1)(C), which specifies that the annual report include the number and description of the motor vehicles exempted and a list of the exemptions described on a permanent label required by section 30114(b)(3)(A) (described below). The agency proposes that the annual report would be submitted online. In lieu of a requirement that registrants renew their registrations, the NPRM proposes only to require registrants to report to NHTSA if they will be producing the same replica motor vehicles the following calendar year. NHTSA estimates that compiling and submitting the annual report would take two hours and would involve primarily administrative skills. NHTSA estimates that labor to compile the report would cost $48.47 per hour, for a total cost to compile the report of $96.94.
Third, in accordance with the FAST Act, the proposed rule would also require the registrants to disclose information to consumers. Because the replica vehicles would be exempt from complying with current FMVSS, it is important that the consumer understand the reduced level of safety provided by the vehicle. In accordance with a mandate in section 30114(b)(3)(A), the NPRM would require registrants to affix a permanent label to the vehicle identifying the specified standards and regulations from which the vehicle is exempt, stating that the vehicle is a replica, and designating the model year such vehicle replicates. In accordance with discretion provided to NHTSA in section 30114(b)(3)(B), the proposed rule would require registrants to provide written notice of the exemption to the dealer and the first purchaser of the vehicle for purposes other than resale. NHTSA estimates that the consumer disclosures would cost $1 per vehicle and the temporary labels would cost $1 per vehicle. If each manufacturer manufacturers 200 vehicles, the total cost per manufacturer would be $400 for both the consumer disclosures and the temporary labels.
NHTSA does not know of any Federal rules which duplicate, overlap, or conflict with this proposal.
The FAST Act provision directing the establishment of the replica exemption program prescribes specific requirements that limit NHTSA's discretion to adopt different regulatory approaches. For the purpose of evaluating regulatory alternatives under the requirements of the Regulatory Flexibility Act, NHTSA considers here not only alternatives that are within NHTSA's discretion, but also alternatives that are not permitted by statute. The alternative approaches impact: Which entities may participate in the replica vehicle program; the safety performance of replica motor vehicles; requirements for replica vehicles to resemble the original vehicle; and reporting and informational requirements.
First, NHTSA is considering limiting the exemption program to replica vehicles that are built in one stage or, alternatively, allowing replica vehicles to be manufactured in two or more stages, if they are produced under a registration that was jointly submitted to NHTSA by all of the low-volume manufacturers involved with the production of the vehicle. These two alternative approaches would impact which entities would qualify for the replica vehicle exemption program. NHTSA is requesting comment on these approaches out of concern about administering the program and the belief that some of the requirements for the program could not be met if the vehicle is built in more than one stage. NHTSA does not have sufficient data to quantify the impact of this alternative approach and requests comment.
Second, there are alternatives that would impact the safety performance of replica vehicles. Although not permitted by statute, one alternative would be to take no action. This alternative, to maintain the status quo, is demonstrably more burdensome to manufacturers. NHTSA estimates that each replica manufacturer that participates in the exemption program would, on average, realize cost savings of between $85,000 and $430,000 annually (at a three-percent discount rate) and between $82,000 and $420,000 annually at a seven-percent discount rate; maintaining the status quo would forego these cost savings. Another alternative would be to require that replica motor vehicles resemble not only the original vehicle's exterior, but also its interior and its conformance with FMVSS in effect when the original vehicle was manufactured. NHTSA has not quantified the impact of this approach, but NHTSA has concluded that it would significantly increase the burden on small entities compared to the current proposal. This conclusion is based on data from NHTSA's Preliminary Regulatory Evaluation that estimates the savings that manufacturers may realize in manufacturing vehicles that are exempt from the FMVSS applicable to vehicles. Although NHTSA is not proposing the requirement to replicate the safety performance of the original vehicle, NHTSA is requesting comment to inform future decision-making.
Third, NHTSA considered some alternative approaches to ensuring that vehicles exempted under Part 586 meet the definition for “replica motor vehicle” in the FAST Act. The definition states that a replica motor vehicle “is intended to resemble the body of another motor vehicle.” To balance objectivity, feasibility, and enforceability, NHTSA is proposing to require manufacturers to submit images with each registration and documentation confirming that the replica vehicle will have the same dimensions (height, width, and length) as the original vehicle. Alternatively, NHTSA could have proposed either (1) no requirements for resemblance; or (2) requirements that replica vehicles have the exact specifications of the original vehicle and fully replicate not only the exterior of the original, but also its interior. NHTSA believes the proposal strikes the right balance between ensuring that the program is limited, as Congress intended, to vehicles that resemble previously-made vehicles while not unduly burdening low-volume manufacturers. NHTSA decided not to propose requiring the more stringent requirements because NHTSA recognizes that obtaining exact specifications for original vehicles may be difficult and allowing manufacturers to incorporate modern amenities and safety features in the interior would enable a greater range of alternatives to customers in terms of (improved) vehicle attributes and safety. NHTSA, however, thought some minimum requirements would help bring some objectivity to NHTSA's evaluation of whether a vehicle met the statutory definition of “replica motor vehicle.” NHTSA also believes that most replica manufacturers will act in good faith to ensure resemblance with the original and, even in the absence of requirements, will be motivated to closely replicate the original vehicle in appearance for marketing purposes. Therefore, although NHTSA does not have data to quantify the impact of the proposed approach, NHTSA does not expect the proposed requirements related to resemblance to generate any significant incremental burden for replica vehicle manufacturers.
Fourth, there are some alternatives that would impact the amount of information replica manufacturers would be required to submit to NHTSA or disclose to members of the public. The new requirements that are specific to replica vehicles include: Registration requirements, annual reporting, temporary labels, and consumer disclosures. Some alternatives are within NHTSA discretion, such as not requiring the submission of images with registration and annual reports. Others, like requiring less frequent reporting are not. Because the FAST Act provision requires annual reporting, NHTSA does not have discretion to require reporting only ever two or five years. NHTSA also does not have the discretion to collect less information in the annual report than is required by the FAST Act. In proposing these requirements, NHTSA considered that most, if not all, of replica vehicle manufacturers would be small entities; NHTSA estimated the costs associated with these requirements with this in mind, as well. NHTSA estimates the total cost associated with these requirements to be less than $1,500 for each replica manufacturer annually (approximately $4-$5 per vehicle if producing the maximum number of replica vehicles allowed per year). Thus, NHTSA does not believe these requirements will be burdensome to manufacturers, and does not believe less stringent requirements would constitute significant alternatives because the cost savings per vehicle would be minimal.
Accordingly, NHTSA does not believe there are any significant alternative approaches which would not only accomplish all the objectives of the rulemaking and NHTSA's statutory mandate under the FAST Act, but also minimize burden on small entities. NHTSA invites public comment on this tentative conclusion and whether there are workable significant alternative approaches for small entities that the agency should consider.
NHTSA has examined this proposed rule pursuant to E.O. 13132 (64 FR 43255, August 10, 1999) and concluded that no additional consultation with States, local governments or their representatives is mandated beyond the rulemaking process. The agency has
The FAST Act provision directing NHTSA to allow low-volume manufacturers registering with NHTSA to produce replica vehicles contains two unique provisions that have preemption implications.
The second provision, section 30114(b)(9), states that nothing in the “exemption for low-volume manufacturers” subsection of the Act shall be construed to preempt, affect, or supersede any State titling or registration law or regulation for a replica motor vehicle, or exempt a person from complying with such law or regulation. NHTSA interprets this section to mean that States may have their own replica motor vehicle standards for the vehicles to be titled or registered in that State. NHTSA also interprets this provision to mean that NHTSA's requirements for replica motor vehicles are intended to be minimum requirements only. Therefore, States may have higher safety requirements for replica vehicles than prescribed by NHTSA to be titled or registered in that State.
In terms of preemption generally and the FMVSS, NHTSA rules can preempt in two ways. First, the National Traffic and Motor Vehicle Safety Act contains an express preemption provision under 49 U.S.C. 30103(b)(1): When a motor vehicle safety standard is in effect, a State or political subdivision of State may prescribe or continue in effect a standard applicable to the same aspect of performance of a motor vehicle or motor vehicle only if the standard is identical to the standard prescribed under 49 U.S.C. 30103(b)(1). It is this statutory command by Congress that preempts any non-identical State legislative and administrative law addressing the same aspect of performance.
The express preemption provision described above is subject to a savings clause under 49 U.S.C. 30103(e), which states that compliance with a motor vehicle safety standard prescribed under this chapter does not exempt a person from liability at common law. Pursuant to this provision, State common law tort causes of action against motor vehicle manufacturers that might otherwise be preempted by the express preemption provision are generally preserved. However, the Supreme Court has recognized the possibility, in some instances, of implied preemption of such State common law tort causes of action by virtue of NHTSA's rules, even if not expressly preempted. This second way that NHTSA rules can preempt is dependent upon there being an actual conflict between an FMVSS and the higher standard that would effectively be imposed on motor vehicle manufacturers if someone obtained a State common law tort judgment against the manufacturer, notwithstanding the manufacturer's compliance with the NHTSA standard. Because most NHTSA standards established by an FMVSS are minimum standards, a State common law tort cause of action that seeks to impose a higher standard on motor vehicle manufacturers will generally not be preempted. However, when such a conflict does exist—for example, when the standard at issue is both a minimum and a maximum standard—the State common law tort cause of action is impliedly preempted. See
Pursuant to Executive Order 13132 and 12988, NHTSA has considered whether this proposed rule could or should preempt State common law causes of action. The agency's ability to announce its conclusion regarding the preemptive effect of one of its rules reduces the likelihood that preemption will be an issue in any subsequent tort litigation.
To this end, the agency has examined the nature (
Proposed 49 CFR part 586 would be issued as a regulation, not as an FMVSS, so the express preemption provision under 49 U.S.C. 30103(b)(1) does not apply to matters relating to Part 586. Therefore, NHTSA has concluded that this rulemaking will not preempt State law and does not require additional consultation with States and local governments.
When promulgating a regulation, E.O. 12988, “Civil Justice Reform” (61 FR 4729; February 7, 1996), specifically requires that the agency must make every reasonable effort to ensure that the regulation, as appropriate: (1) Specifies in clear language the preemptive effect; (2) specifies in clear language the effect on existing Federal law or regulation, including all provisions repealed, circumscribed, displaced, impaired, or modified; (3) provides a clear legal standard for affected conduct rather than a general standard, while promoting simplification and burden reduction; (4) specifies in clear language the retroactive effect; (5) specifies whether administrative proceedings are to be required before parties may file suit in court; (6) explicitly or implicitly defines key terms; and (7) addresses other important issues affecting clarity and general draftsmanship of regulations.
Pursuant to this Order, NHTSA notes as follows. The preemptive effect of this proposal is discussed above in connection with E.O. 13132. NHTSA has also considered whether this rulemaking would have any retroactive effect. This proposed rule does not have any retroactive effect. NHTSA notes further that there is no requirement that individuals submit a petition for reconsideration or pursue other administrative proceeding before they may file suit in court.
Under E.O. 13609 (77 FR 26413, May 4, 2012), agencies must consider whether the impacts associated with significant variations between domestic and regulatory approaches are unnecessary or may impair the ability of American business to export and
NHTSA has analyzed this action under the policies and agency responsibilities of E.O. 13609, and has determined that this action would have no effect on international regulatory cooperation. NHTSA requests public comment on whether regulatory approaches taken by foreign governments concerning the subject matter of this rulemaking and the above policy statement have any implications for this rulemaking.
Under the National Technology Transfer and Advancement Act of 1995 (NTTAA) (Pub. L. 104-113), all Federal agencies and departments shall use technical standards that are developed or adopted by voluntary consensus standards bodies, using such technical standards to carry out policy objectives or activities determined by the agencies and departments, except when use of such a voluntary consensus standard would be inconsistent with the law or otherwise impractical. Voluntary consensus standards are technical standards (
The Unfunded Mandates Reform Act of 1995 (UMRA) requires Federal agencies to prepare a written assessment of the costs, benefits and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually (adjusted for inflation with base year of 1995).
Before promulgating a rule for which a written statement is needed, section 205 of the UMRA generally requires NHTSA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with the applicable law. Moreover, section 205 allows NHTSA to adopt an alternative other than the least costly, most cost-effective, or least burdensome alternative if the agency publishes with the final rule an explanation why the agency did not adopt the alternative.
This proposed rule is not anticipated to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector in excess of 100 million, $154 million when adjusted for inflation, annually.
Under the procedures established by the Paperwork Reduction Act of 1995 (PRA), a person is not required to respond to a collection of information by a Federal agency unless the collection displays a valid Office of Management and Budget (OMB) control number. The Information Collection Requests (ICR) for a proposed new information collection and proposed revisions to the existing information collections described below have been forwarded to the Office of Management and Budget (OMB) for review and comment. The ICR describes the nature of the information collections and their expected burden.
This proposed rule would have new collection of information requirements that would require registrants to provide information to NHTSA and to dealers and consumers pertaining to registration, annual reporting, labeling, and written notification to dealers and owners. This proposed rule would also make changes to existing information collections for manufacturer identification, Vehicle Identification Number (VIN) requirements, and certification labeling. Accordingly, NHTSA is submitting requests to OMB for approval of a new collection of information for Replica Motor Vehicles and revisions to existing collections of information.
In compliance with these requirements, NHTSA asks for public comments on the following proposed collection of information:
Manufacturers of replica vehicles would also be required to affix temporary labels on the dashboard or steering wheel hub of each exempted vehicle alerting passengers that the vehicle does not comply with all FMVSS and directing them to consult their customer disclosure for more information on the standards from which the vehicle is exempt. However, this requirement is not subject to the Paperwork Reduction Act because NHTSA provides the exact language to provide on the temporary labels.
First, in accordance with the FAST Act, low-volume manufacturers wishing to qualify for an exemption must register with NHTSA in accordance with this proposed regulation. The FAST Act mandates this registration requirement in 49 U.S.C. 30114(b)(2), specifying that “a low-volume manufacturer shall register with [NHTSA] at such time, in such manner, and under such terms that [NHTSA] determines appropriate.” NHTSA needs this information to keep track of the exempted vehicles, ensure that the vehicles qualify as replica vehicles, and for enforcement purposes.
Second, in accordance with the FAST Act, manufacturers of replica vehicles would be required to submit annual reports. The annual reports are required by 49 U.S.C. 30114(b)(3)(C). The Act specifies that the annual report include the number and description of the motor vehicles exempted and a list of the exemptions described on a permanent label required by 49 U.S.C. 30114(b)(3)(A) (described below). In the annual report, manufacturers that are registered in the program (registrants) would be required to show NHTSA images of the vehicles they produced so that NHTSA can assess if the vehicles resemble the original vehicle. The registrants must also notify NHTSA if they will be manufacturing the same replica motor vehicles in the next calendar year and if so, how many vehicles they will be manufacturing. 49 U.S.C. 30114(b)(5) states that an exemption “shall expire at the end of the calendar year for which it was granted with respect to any volume authorized by the exemption that was not applied by the low-volume manufacturer to vehicles built during that calendar year.” The annual reporting requirement would be essential to NHTSA's enforcement of the program, enabling the agency to better assess whether registrants are complying with the 325-vehicle limit and manufacturing vehicles qualifying as “replica motor vehicles.” The reporting requirements would also enable NHTSA to keep track of registrants and the vehicles they produce, which would help the agency meet a FAST Act requirement to keep an up-to-date list of registrants and publish such list on an annual basis (section 30114(b)(5)). NHTSA considered requiring all registrants to formally renew their registration annually but believes that this reporting process would simplify and reduce paperwork by eliminating the need to re-register with NHTSA if the same replica vehicles would be produced in the next calendar year.
Third, in accordance with the FAST Act, the proposed rule would require the registrants to disclose information to consumers. Because the replica vehicles will be exempt from current FMVSS, it is important that the consumer understand the reduced level of safety provided by the vehicle. In accordance with a mandate in 49 U.S.C. 30114(b)(3)(A), the NPRM, if adopted, would require registrants to affix a permanent label to the vehicle identifying the specified standards and regulations from which the vehicle is exempt, stating that the vehicle is a replica, and designating the model year such vehicle replicates. In accordance with discretion provided to NHTSA in section 30114 (b)(3)(B), the proposed rule would require registrants to provide written notice of the exemption to the dealer and the first purchaser of the vehicle for purposes other than resale.
NHTSA estimates that it will take 10 hours to complete an initial registration submission. NHTSA estimates the labor cost for compiling and submitting the required information to be $48.47
For the annual reporting requirement, NHTSA estimates it would take a maximum of two hours to collect the necessary information and submit it on the vPIC portal. NHTSA estimates that, on average, 20 manufacturers will submit annual reports each year. Therefore, the burden hours associated with this information collection would, on average, be 40 hours per year (20 manufacturers × 2 hours). NHTSA estimates the hourly cost associated
To estimate the burden to produce consumer disclosures, NHTSA looked at estimates for owner's manuals which provide required disclosures to consumers. Owner's manuals are much longer and contain far more information than the replica vehicle consumer disclosures. However, because owner's manuals are produced in higher quantities, NHTSA estimates that it only costs manufacturers, on average, about $.50 for each Owner's Manual.
NHTSA estimates that it will take no more than 1 hour per manufacturer to compile and format the consumer disclosures. Therefore, the total burden hours for twenty manufacturers would be 20 hours (20 manufactures × 1 hour). NHTSA estimates the hourly cost associated with compiling consumer disclosures to be $48.47
Replica manufacturers will also be required to affix temporary labels. NHTSA estimates that it will take each manufacturer 2 hours to design and format the temporary labels for a total of 40 hours for all replica vehicle manufacturers. NHTSA estimates the hourly cost associated with designing and formatting temporary labels to be $48.47
The total burden associated with this information collection request is estimated to be 400 hours. The cost associated with the burden hours is estimated to be $16,239 and the cost associated with printing consumer disclosures and temporary labels is estimated to be $8,000. The total cost associated with this information collection is estimated to be $24,239.
i. Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
ii. The accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
iii. How to enhance the quality, utility, and clarity of the information to be collected;
iv. How to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Please submit any comments, identified by the docket number in the heading of this document, by the methods described in the
In compliance with these requirements, NHTSA asks for public comments on the following proposed collection of information:
The information that must be submitted includes: (a) The full individual, partnership, or corporate name of the manufacturer; (b) the business name of the manufacturer commonly known to the public; (c) the residence address of the manufacturer and State of incorporation if applicable; (d) full contact information for the manufacturer and the submitting official; and (e) a description of each type of motor vehicle or of covered equipment manufactured by the manufacturer, including, for motor vehicles, the approximate ranges of gross vehicle weight ratings (GVWR) for each vehicle type. The regulations specify that the description may be of a general type, such as “passenger cars” or “brake fluid,” but that in the case of multipurpose passenger vehicles, trucks, and trailers, the description shall be specific enough to indicate the types of use for which the vehicles are intended, such as “tank trailer,” “motor home,” or “cargo van.”
The regulations further specify that in the case of motor vehicles produced in two or more stages, if the manufacturer is an incomplete vehicle manufacturer, the description shall so state and include a description indicating the stage of completion of the vehicle and, where known, the types of use for which the vehicles are intended, such as “Incomplete vehicle manufacturer—Chassis-cab intended for completion as a van-type truck.”
The information must be submitted no later than 30 days after the manufacturer begins to manufacture motor vehicles or motor vehicle equipment subject to the FMVSS. No
Manufacturers who have previously submitted identifying information must ensure that the information on file is accurate and complete by submitting revised information no later than 30 days after a change in the business that affects the validity of that information has occurred.
In 2016, NHTSA received submissions of manufacturer identifying information under 49 CFR part 566 from 821 manufacturers. In 2016, the agency received 882 such submissions. Based on this volume and the estimating that the agency will receive 10 replica motor vehicle manufacturer submissions in each of the next three years, the agency projects that it will receive approximately 892 Part 566 submissions from manufacturers in each of the next three years. Assuming that it will take a manufacturer on average 15 minutes to prepare an online submittal, the agency estimates that 223 hours will be expended on an annual basis by all manufacturers required to submit Part 566 identifying information.
i. Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
ii. The accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
iii. How to enhance the quality, utility, and clarity of the information to be collected;
iv. How to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Please submit any comments, identified by the docket number in the heading of this document, by the methods described in the
In compliance with these requirements, NHTSA asks for public comments on the following proposed collection of information:
The regulations in Part 565 specify the format, contents, and physical requirements for a vehicle identification number (VIN) system and its installation to simplify vehicle identification information retrieval and to increase the accuracy and efficiency of vehicle recall campaigns. The regulations require each vehicle manufactured in one stage to have a VIN that is assigned by the vehicle's manufacturer. Each vehicle manufactured in more than one stage is to have a VIN assigned by the incomplete vehicle manufacturer. Each VIN must consist of 17 characters, including a check digit, in the ninth position, whose purpose is to verify the accuracy of any VIN transcription. The first section of the VIN consists of three characters that occupy positions one through three in the VIN. This section shall uniquely identify the manufacturer and type of the motor vehicle if the manufacturer is a high-volume manufacturer. If the manufacturer is a low-volume manufacturer, positions one through three along with positions twelve through fourteen in the VIN shall uniquely identify the manufacturer and the type of the motor vehicle. The manufacturer identifier occupies the first three characters of the VIN for manufacturers that produce 1,000 or more vehicles of a specified type within a model year, and positions 1, 2, 3, 12, 13, and 14 of VINs assigned by manufacturers that produce less than 1,000 vehicles of a specified type of motor vehicle per model year. The remaining characters of the VIN describe various vehicle attributes, such as make, model, and type, which vary depending on the vehicle's type classification (
The regulations in Part 567 specify the content and location of, and other requirements for, the certification label to be affixed to a motor vehicle, as required by the National Traffic and Motor Vehicle Safety Act,
As NHTSA estimates that fewer than 8,00 replica vehicles will be manufactured in each year, the implementation of the replica provision is not expected to change the estimate that 17,600,000 vehicles will be labeled according to Part 567 in each of the next three years.
The total hourly wage cost associated with this information collection is $2,061,330.92. The Bureau of Labor Statistics estimates that for private industry workers, wages represent 70.1% of total compensation.
i. Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
ii. The accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
iii. How to enhance the quality, utility, and clarity of the information to be collected;
iv. How to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
E.O. 12866 requires each agency to write all rules in plain language. Application of the principles of plain language includes consideration of the following questions:
• Have we organized the material to suit the public's needs?
• Are the requirements in the rule clearly stated?
• Does the rule contain technical language or jargon that isn't clear?
• Would a different format (grouping and order of sections, use of headings, paragraphing) make the rule easier to understand?
• Would more (but shorter) sections be better?
• Could we improve clarity by adding tables, lists, or diagrams?
• What else could we do to make the rule easier to understand?
If you have any responses to these questions, please include them in your comments on this proposal.
The Department of Transportation assigns a regulation identifier number (RIN) to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. You may use the RIN contained in the heading at the beginning of this document to find this action in the Unified Agenda.
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an organization, business, labor union, etc.). You may review DOT's complete Privacy Act statement in the
We are providing a 30-day comment period. The comment period is shorter than the customary 45-day comment period used by the agency for nonsignificant rulemakings. A shorter comment period is in the public interest because it will allow us to issue a final rule more quickly and allow qualifying low-volume manufacturers to begin manufacturing replica motor vehicles sooner. We do not believe a longer comment period is necessary for the public to consider this proposal because most of the proposed requirements are mandated or contemplated by the FAST Act.
• Your comments must be written in English.
• To ensure that your comments are correctly filed in the Docket, please include the Docket Number shown at the beginning of this document in your comments.
• Your comments must not be more than 15 pages long. (49 CFR 553.21). We established this limit to encourage you to write your primary comments in a concise fashion. However, you may attach necessary additional documents to your comments. There is no limit on the length of the attachments.
• If you are submitting comments electronically as a PDF (Adobe) File, NHTSA asks that the documents be submitted using the Optical Character Recognition (OCR) process, thus allowing NHTSA to search and copy certain portions of your submissions. Comments may be submitted to the docket electronically by logging onto the Docket Management System website at
• You may also submit two copies of your comments, including the attachments, to Docket Management at the address given above under
Please note that pursuant to the Data Quality Act, in order for substantive data to be relied upon and used by the agency, it must meet the information quality standards set forth in the OMB and DOT Data Quality Act guidelines. Accordingly, we encourage you to consult the guidelines in preparing your comments. OMB's guidelines may be accessed at
If you wish Docket Management to notify you upon its receipt of your comments, enclose a self-addressed, stamped postcard in the envelope containing your comments. Upon receiving your comments, Docket Management will return the postcard by mail.
If you wish to submit any information under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Chief Counsel, NHTSA, at the address given above under
We will consider all comments that Docket Management receives before the close of business on the comment closing date indicated above under
You may read the comments received by Docket Management at the address given above under
Please note that, even after the comment closing date, we will continue to file relevant information in the Docket as it becomes available. Further, some people may submit late comments. Accordingly, we recommend that you periodically check the Docket for new material.
Incorporation by reference, Motor vehicle safety, Reporting and recordkeeping requirements.
Motor vehicle safety, Reporting and recordkeeping requirements.
Labeling, Motor vehicle safety, Reporting and recordkeeping requirements.
Labeling, Motor vehicle safety, Replica motor vehicles, Reporting and recordkeeping requirements.
In consideration of the foregoing, NHTSA proposes to amend 49 CFR chapter V as follows:
49 U.S.C. 322, 30111, 30114, 30115, 30117, 30141, 30146, 30166, and 30168; delegation of authority at 49 CFR 1.95.
(a)
(b)
(1) Manufacturing or assembling motor vehicles or motor vehicle equipment; or
(2) Importing motor vehicles or motor vehicle equipment for resale.
(b) * * *
National Traffic and Motor Vehicle Safety Act (49 U.S.C. 30166) and Sec. 24405(a) of the Fixing America's Surface Transportation Act (49 U.S.C. 30114(b)); delegation of authority at 49 CFR 1.95.
Each manufacturer of motor vehicles, and each manufacturer of covered equipment, shall furnish the information specified in paragraphs (a) through (c) of this section to: Administrator, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE, West Building, Washington, DC 20590 or at
(c) * * *
(4) In the case of replica motor vehicles, the manufacturer shall include, in the description of each type of motor vehicle it manufactures, a designation that the vehicle is a replica motor vehicle.
49 U.S.C. 322, 30111, 30114, 30115, 30117, 30166, 32504, 33101-33104, 33108 and 33109; delegation of authority at 49 CFR 1.95.
The purpose of this part is to specify the content and location of, and other requirements for, the certification label to be affixed to motor vehicles as required by the National Traffic and Motor Vehicle Safety Act, as amended (the Vehicle Safety Act) (49 U.S.C. 30114 and 30115) and the Motor Vehicle Information and Cost Savings Act, as amended (the Cost Savings Act), (49 U.S.C. 30254 and 33109), to address certification-related duties and liabilities, and to provide the consumer with information to assist him or her in determining which of the Federal Motor Vehicle Safety Standards (part 571 of this chapter), Bumper Standards (part 581 of this chapter), and Federal Theft Prevention Standards (part 541 of this chapter), are applicable to the vehicle.
(a) Each manufacturer of motor vehicles (except replica motor vehicles or vehicles manufactured in two or more stages) shall affix to each vehicle a label, of the type and in the manner described in this section, containing the statements specified in paragraph (g) of this section.
(a) Each manufacturer of replica motor vehicles shall affix to each vehicle a label, of the type and in the manner described in this section, containing the statements specified in paragraph (e) of this section.
(b) The label shall be riveted or permanently affixed in such a manner that it cannot be removed without destroying or defacing it.
(c) The label shall be affixed to either the hinge pillar, door-latch post, or the door edge that meets the door-latch post, next to the driver's seating position, or if none of these locations is practicable, to the left side of the instrument panel. If that location is also not practicable, the label shall be affixed to the inward-facing surface of the door next to the driver's seating position. If none of the preceding locations is practicable, notification of that fact, together with drawings or photographs showing a suggested alternate location in the same general area, shall be submitted for approval to the Administrator, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE, West Building, Washington, DC 20590. The location of the label shall be such that it is easily readable without moving any part of the vehicle except an outer door.
(d) The lettering on the label shall be of a color that contrasts with the background of the label.
(e) The label shall contain the following information and statements, in the English language, lettered in block capitals and numerals not less than three thirty-seconds of an inch high, in the order shown:
(1)
(2)
(3) “Gross Vehicle Weight Rating” or “GVWR” followed by the appropriate value in pounds, which shall not be less than the sum of the unloaded vehicle weight, rated cargo load, and 150 pounds times the number of the vehicle's designated seating positions.
(4) “Gross Axle Weight Rating” or “GAWR,” followed by the appropriate value in pounds, for each axle, identified in order from front to rear (
(a) All axles—2,400 kg (5,290 lb.) with LT245/75R16(E) tires.
(b) Front—5,215 kg (11,500 lb.) with 295/75R22.5(G) tires.
First intermediate to rear—9,070 kg (20,000 lb.) with 295/75R22.5(G) tires.
(5)
(6)
(7) Vehicle identification number.
49 U.S.C. 30112 and 30114; delegation of authority at 49 CFR 1.95.
This part specifies requirements and procedures under 49 U.S.C. 30114(b) for the registration of low-volume manufacturers as replica motor vehicle manufacturers and establishes the duties of the manufacturers. Once approved, replica motor vehicle manufacturers are granted a conditional exemption from 49 U.S.C. 30112(a), 32304, 32502, and 32902 and from section 3 of the Automobile Information Disclosure Act (15 U.S.C. 1232) to produce up to 325 replica motor vehicles. That is replica motor vehicles granted an exemption under this part are exempt from all applicable Federal motor vehicle safety standards in part 571 of this chapter (except for standards applicable to motor vehicle equipment), passenger motor vehicle country of origin labeling requirements, bumper standards, average fuel economy standards, and vehicle labeling and safety rating disclosure requirements.
The purpose of this part is to implement a program under 49 U.S.C. 30114(b) to annually exempt not more than 325 replica motor vehicles per year that are manufactured or imported by low-volume manufacturers from existing requirements for motor vehicles. This part specifies eligibility requirements for low-volume manufacturers that wish to register with NHTSA as a replica motor vehicle manufacturer, procedures for the registration of such manufacturers, content and format requirements for registration submissions, and requirements for updating registrations. This part also provides for the revocation of registrations and sets forth the duties required of replica vehicle manufacturers. Manufacturers are not exempted under 49 U.S.C. 30114(b) unless they register with NHTSA pursuant to this part 586.
This part applies to low-volume manufacturers that wish to register with NHTSA as a replica motor vehicle manufacturer, and to manufacturers registered as replica motor vehicle manufacturers.
All terms in this part that are defined in 49 U.S.C. 30102 and in 49 CFR 571.3 are used as defined therein.
(1) Is produced by a manufacturer meeting the definition of replica motor vehicle manufacturer under 49 CFR part 586 that has not manufactured 325 replica motor vehicles in the current calendar year; and
(2) Is intended to resemble the body of another motor vehicle that was manufactured for consumer sale not less than 25 years before the manufacture of the replica motor vehicle; and
(3) Is either:
(i) Manufactured under a license for all of the intellectual property rights of the motor vehicle that is intended to be replicated, including, but not limited to, product configuration, trade dress, trademark, and patent, from the original manufacturer, or its successors or assignees; or,
(ii) Manufactured by a current owner of such intellectual property, including, but not limited to, product configuration trade dress, trademark, and patent rights.
(a) Each manufacturer wishing to register as a replica motor vehicle manufacturer must have a calendar year, worldwide production, including by a parent or subsidiary of the manufacturer, if applicable, of not more than 5,000 motor vehicles, and must not be a registered importer under 49 CFR part 592. Only one registration is permitted for manufacturers sharing common ownership. If a manufacturer wishes to manufacture replica vehicles and it shares common ownership with a registered replica motor vehicle, it may only do so after the registered replica manufacturer submits a revised registration submission indicating that the exemption for 325 replica vehicles will be divided between the manufacturers. Replica manufacturers sharing common ownership will be limited to a total of 325 replica vehicles. An update to a registration to add a manufacturer under common ownership shall allocate the exemption for 325 replica vehicles between the manufacturers. An update to the registration to adjust the allocation must be made pursuant to § 586.9.
(b) Each manufacturer wishing to manufacture replica motor vehicles under this program must be registered, according to the requirements in 49 CFR 586.6, as a replica motor vehicle manufacturer for the calendar year in which the replica motor vehicle is manufactured.
(c) Each replica motor vehicle manufacturer shall meet all statutory and regulatory requirements applicable to motor vehicle manufacturers, except:
(1) 49 U.S.C. 30112(a) regarding the Federal motor vehicle safety standards applicable to vehicles in effect on the date of manufacture of the replica motor vehicle; and
(2) 49 U.S.C. 32304, 32502, 32902 and 15 U.S.C. 1232.
(d) Each replica motor vehicle manufacturer shall:
(1) Meet all the requirements set forth in this part; and,
(2) Not manufacture more than 325 replica motor vehicles in a calendar year.
(e) Each replica motor vehicle, as manufactured, shall closely resemble the original replicated vehicle.
(f) An exemption granted by NHTSA may not be transferred to any other person, and shall expire at the end of the calendar year for which it was granted with respect to any volume authorized by the exemption that was not applied by the replica motor vehicle manufacturer to vehicles built during that calendar year.
(a) A manufacturer may register under this part as a manufacturer of replica motor vehicles if:
(1) The manufacturer is not registered as an importer under 49 CFR part 592;
(2) The manufacturer's annual worldwide production, including by a parent or subsidiary of the manufacturer, if applicable, is not more than 5,000 motor vehicles;
(3) The manufacturer has submitted manufacturer identification information pursuant to part 566 of this chapter.
(b) To register as a replica motor vehicle manufacturer, a manufacturer
(1) Information sufficient to establish:
(i) That the manufacturer's annual world-wide production, including by a parent or subsidiary of the manufacturer, if applicable, is not more than 5,000 motor vehicles, and a statement certifying to that effect, including the total number of motor vehicles produced by or on behalf of the registrant in the 12-month prior to filing the registration; and,
(ii) That the manufacturer is not registered as an importer under 49 CFR part 592;
(2) A statement identifying the original vehicle(s) the manufacturer intends to replicate by make, model, and model year;
(3) Information sufficient to establish that the replica vehicle(s) the manufacturer intends to replicate is intended to resemble the body of the original vehicle, including:
(i) The images of the front, rear, and side views of the exterior of the original vehicle;
(ii) If the manufacturer has previously replicated the original vehicle(s), images of the front, rear, and side views of the exterior of a representative replica motor vehicle;
(iii) If the manufacturer has not previously replicated the original vehicle(s), design plans for the replica vehicles;
(iv) Information to show that the replica vehicle will be the same height, width, and length as the original vehicle; and
(v) If any deviations were made to accommodate safety features, highlight those deviations for NHTSA's consideration.
(4) A certification that the manufacturer has determined the intellectual property rights required and obtained all licenses and permissions necessary to legally produce the replica and documentation to support that it has obtained the required licenses from the original manufacturer, its successors or assignees, or the current owner of any product configuration, trade dress, trademark, or patent necessary to produce the replicated vehicle. The intellectual property rights for the original vehicle may include, but are not limited to, the following:
(i) Trade dress of the vehicle;
(ii) Trademarks for the body style of the vehicle;
(iii) Patents for the vehicle's exterior shape or features; and/or
(iv) Trademarks for make and/or model names used in connection with the manufacturer and sale of the original vehicle.
(5) A statement certifying that the manufacturer will not manufacture more than the number of replica motor vehicles covered by the requested exemption, a number not more than 325 replica motor vehicles in a calendar year; and,
(6) All information required by part 566 of this chapter to identify itself to NHTSA as a motor vehicle manufacturer.
(7) A statement certifying that the manufacturer understands that information provided under this part is information upon which the Federal Government will rely, and that submission of false, fictitious or fraudulent information may result in civil or criminal penalties under 18 U.S.C. 1001.
(c) A manufacturer is not considered registered under this part 586 until it receives written confirmation from NHTSA that:
(1) The registration is approved; or,
(2) The registration is deemed approved by NHTSA's failure to approve or deny the registration pursuant to § 586.7.
(d) A replica manufacture shall submit an updated registration submission prior to beginning manufacture of any replica vehicle model(s) not covered by their existing registration and will not begin manufacturing those additional replica vehicle model(s) until the registration is either approved or deemed approved as specified under § 586.9.
(e) A registrant need not reapply annually if the registrant seeks to manufacture the same replica vehicles (make, model and model year) for which it received approval. The registrant must provide notification, by way of its annual report pursuant to § 586.12, of its intent to continue manufacturing covered replica vehicles.
Upon receipt of a registration submitted on vPIC, NHTSA will notify the registrant within 90 days, in writing which includes by email, whether the registration is approved or denied. If notification is not sent to the registrant within 90 days from NHTSA's receipt of the submission, the registration will be deemed approved pursuant to § 586.6(c) unless:
(a) NHTSA determines that the submission is incomplete. If NHTSA notifies the registrant, in writing which includes by email, within 90 days that the submission is incomplete, the manufacturer shall have 60 days to submit the missing information. If the manufacturer fails to submit additional information, the registration will be denied.
(1) Upon receipt of additional information, NHTSA shall have 30 days plus the remaining time of the initial 90 days to review and grant or deny the registration. For example, if NHTSA notifies the manufacturer that registration is incomplete on the 30th day, NHTSA shall have the remaining 60 days plus 30 days to review the registration upon receipt of additional information.
(2) A registration shall be denied if NHTSA requests additional information from the registrant necessary to complete the registration and the manufacturer does not submit information sufficient to complete the registration within 60 days.
(b) The submission is repetitious. A repetitious registration submission is one that relies on the same facts and circumstances as a previously denied registration.
(a) If a manufacturer believes that its registration is deemed approved by NHTSA's failure to approve or deny the registration pursuant to § 586.7, the manufacturer must obtain written confirmation from NHTSA that its registration is deemed approved. If NHTSA confirms that the registration is deemed approved, NHTSA shall include each deemed approved registrant's name on NHTSA's published list of registrants. If NHTSA cannot find any record of the registration submitted on vPIC, NHTSA will inform the manufacturer in writing that the registration has not been deemed approved.
(b) If NHTSA determines that a registration, deemed approved by a failure to approve or deny the registration within the allotted time, is incomplete or does not provide a basis for qualifying as a registrant, NHTSA may request additional information from the registrant, in writing which includes by email. A manufacturer shall have 60 days to respond to a request for additional information. If the manufacturer fails to respond within the 60 days or submits information that does not support qualification as a low-volume manufacturer of replica vehicles, NHTSA may revoke the registration.
A registered replica manufacturer shall submit updated registration
Each replica motor vehicle manufacturer must provide the dealer and first retail purchaser the following information, either in the owner's manual or a separate document:
(a) A list of all current standards and regulations the vehicle would be required to comply with but with which it does not comply due to this exemption;
(b) The purpose statements of each such standard or regulation, as provided in Table 1 of this part.
The vehicle shall have a label attached to a location on the dashboard or the steering wheel hub that is clearly visible from all front seating positions. The label need not be permanently affixed to the vehicle. The label shall meet the following requirements:
(a) The label shall include a heading area in yellow with an alert symbol consisting of a solid black equilateral triangle with a yellow exclamation point and the word “WARNING” in black block capitals in a type size that is larger than that used in the remainder of the label and the alert symbol in black.
(b) The label shall include a message area in white with black text in at least 20-point font stating: “This vehicle is a replica motor vehicle and is exempt from complying with all current Federal motor vehicle safety standards that apply to motor vehicles, and with theft prevention and bumper standards in effect on the date of manufacture. [The expression “U.S.” or “U.S.A.” may be inserted before the word “Federal”.] See the certification label or consumer disclosure for more specific information.”
(c) The message area shall be no less than 30 cm
Each manufacturer of a replica motor vehicle shall furnish the following information to
(a) Full individual, partnership or corporate name of the manufacturer.
(b) Residence address of the manufacturer, phone number and email address.
(c) The calendar year for which the annual report is submitted (replica model year) and the total number of replica vehicles manufactured during that year.
(d) The complete Vehicle Identification Number (VIN) of each replica vehicle manufactured.
(e) List of the different versions of replica motor vehicles produced by make, model, and original model year of replicated vehicle.
(f) List of the FMVSS and regulations from which each version of replica vehicle (by make, model, and original model year of replicated vehicle) is exempt.
(g) Images of the front, rear, and side views of the original vehicle(s) replicated, of both the vehicle's exterior, and images of the same views of a representative replica manufactured to resemble each original vehicle.
(h) Information sufficient to establish that the replica motor vehicles, as manufactured, resemble the body of the original vehicle.
(i) State whether the replica vehicles contain any of the following vehicle safety features: (1) Front or side air bags;
(2) Lap or lap and shoulder belts;
(3) Advanced safety systems/passive safety systems (listed with locations);
(4) Electronic stability control;
(5) Rear visibility camera system; or
(6) Ejection mitigation.
(j) Notification to NHTSA if the registrant will be manufacturing the same replica motor vehicle(s) in the next calendar year and if so, how many vehicles it will be manufacturing. If the manufacturer intends to continue manufacturing replica motor vehicle(s), the manufacturer must also submit information sufficient to establish that their annual world-wide production, including by a parent or subsidiary of the manufacturer, if applicable, is not more than 5,000 motor vehicles, and a statement certifying to that effect, including the total number of motor vehicles produced by or on behalf of the registrant in the 12-month prior to filing the registration.
NHTSA may require registrants to provide information at any time demonstrating compliance with the requirements of this part. NHTSA may revoke an existing registration or deny a registration based on a failure to comply with requirements of this part or a finding of a safety-related defect or unlawful conduct under 49 U.S.C. Chapter 301
Under authority delegated in 49 CFR part 1.95 and 49 CFR 501.4.