Table of Contents I. Background II. The Interim Final Rule III. Impact Assessment IV. Administrative Law Matters A. Effective Date/Request for Comment B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Riegle Community Development and Regulatory Improvement Act of 1994 E. Use of Plain Language F. Unfunded Mandates I. Background

Under the capital rule, a banking organization  1 must maintain a minimum amount of regulatory capital. 2 In addition, a banking organization must maintain a buffer of regulatory capital above its minimum capital requirements to avoid restrictions on capital distributions and discretionary bonus payments. 3 The agencies established the buffer requirements to encourage better capital conservation by banking organizations and to enhance the resilience of the banking system during stress periods. 4 In particular, the agencies intend for the buffer requirements to limit the ability of banking organizations to distribute capital in the form of dividends and discretionary bonus payments and therefore strengthen the ability of banking organizations to continue lending and conducting other financial intermediation activities during stress periods. The agencies are concerned, however, that the buffer requirements do not limit capital distributions in the gradual manner intended when the buffer requirements were developed. Rather, the limitations on capital distributions could be sudden and severe if such banking organizations were to experience even a modest reduction in their capital ratios, undermining the ability of banking organizations to use their capital buffers.

The agencies are adopting an interim final rule that revises the definition of eligible retained income. The interim final rule also addresses the impact of recent dislocations in the U.S. economy as a result of COVID-19. By modifying the definition of eligible retained income and thereby allowing banking organizations to more freely use their capital buffers, this interim final rule should help to promote lending activity and other financial intermediation activities by banking organizations and avoid compounding negative impacts on the financial markets. 5

During this stress period, the agencies encourage banking organizations to make prudent decisions regarding capital distributions. In addition, this interim final rule does not make changes to any other rule or regulation that may limit capital distributions or discretionary bonus payments. For instance, under the prompt corrective action framework, an insured depository institution that becomes less than adequately capitalized will be subject to dividend restrictions. 6

In addition, S-corporation banks do not pay Federal income taxes. Income and losses are attributed to shareholders, potentially increasing their personal tax liability when the S-corporation has income and potentially reducing their personal tax liability if the S-corporation has losses. In a situation where the S-corporation has income but does not pay dividends, its shareholders are responsible for meeting the increased tax liability from their own resources. A situation in which S-corporation shareholders' dividends would be insufficient to pay their share of taxes on the banks' income because of the capital conservation buffer is most likely to occur when the bank is adequately capitalized but one or more of its risk-based capital ratios breach the capital conservation buffer requirements. 7 The revised definition of eligible retained income would assist in the ability of S-corporation banks to provide dividends to shareholders in order to meet their pass-through tax liabilities.

The capital rule requires a banking organization to maintain minimum risk-based capital and leverage ratios. 8 The capital rule also requires a banking organization to maintain certain buffers above its risk-based capital and leverage ratios, as applicable, to avoid increasingly stringent restrictions on capital distributions and discretionary bonus payments. 9 All banking organizations are currently subject to a fixed capital conservation buffer equal to 2.5 percent of risk-weighted assets. Banking organizations subject to Category I, II, and III standards also are subject to a countercyclical capital buffer requirement, and the largest and most systemically important banking organizations—global systemically important bank holding companies, or U.S. GSIBs—are subject to an additional capital buffer based on a measure of their systemic risk, the GSIB surcharge. 10 In addition, a minimum supplementary leverage ratio of 3 percent applies to banking organizations subject to Category I, II, and III standards. U.S. GSIBs also are subject to enhanced supplementary leverage ratio standards. U.S. GSIB bank holding companies must hold a leverage buffer of tier 1 capital to avoid limitations on distributions and discretionary bonus payments. The depository institution subsidiaries of U.S. GSIB holding companies generally must maintain a similarly higher supplementary leverage ratio to be considered well capitalized under the agencies' respective prompt corrective action frameworks. On March 4, 2020, the Board adopted a final rule that simplified the Board's capital framework for large banking organizations with the introduction of a stress capital buffer requirement (SCB final rule). 11 Under the SCB final rule, a banking organization will receive a new stress capital buffer requirement on an annual basis, which replaces the static 2.5 percent capital conservation buffer requirement.

Under the capital rule, if a banking organization's capital ratios fall within its buffer requirements, the maximum amount of capital distributions and discretionary bonus payments it can make is a function of its eligible retained income. For example, a banking organization in the bottom quartile of its capital conservation buffer may not make any capital distributions without prior approval from the Board, OCC, or FDIC, as applicable. The countercyclical capital buffer, the GSIB surcharge, and enhanced supplementary leverage ratio standards use the same definition of eligible retained income. As adopted, eligible retained income was defined as four quarters of net income, net of distributions and associated tax effects not already reflected in net income.

Under a benign business environment when banking organizations have significant capital cushions above their capital requirements, some banking organizations decide to distribute all or nearly all of their net income. Because the measure of eligible retained income subtracts capital distributions made during the previous year, a period of sudden stress following a period of relatively benign conditions could result in very low or zero eligible retained income. Similarly, if a banking organization with eligible retained income that is very low or negative experiences an increase in its stress capital buffer requirement, because, for example, the banking organization's risk profile changed, then the banking organization's capital levels might not be sufficient to meet the stress capital buffer requirement. In either scenario, the banking organization could face sudden and severe distribution limitations even if its capital ratios only marginally fall below applicable buffer requirements.

To address this concern, the SCB final rule revised the definition of eligible retained income for the stress loss portion of a covered holding company's capital conservation buffer requirement. Under the SCB final rule, if a covered holding company's capital ratios are above minimum requirements plus the fixed 2.5 percent portion of the capital conservation buffer plus any applicable GSIB surcharge and countercyclical capital buffer, the covered holding company's eligible retained income is defined as the average of its previous four quarters of net income. Under the SCB final rule, if a covered holding company's capital ratios are below its minimum requirements plus the fixed 2.5 percent portion of the capital conservation buffer plus any applicable GSIB surcharge and countercyclical capital buffer, the covered holding company's eligible retained income is defined as net income for the four preceding calendar quarters, net of any distributions.

Recent events have suddenly and significantly impacted financial markets. The spread of the COVID-19 virus has disrupted economic activity in many countries. In addition, financial markets have experienced significant volatility. The magnitude and persistence of the overall effects on the economy remain highly uncertain. In light of these developments, banking organizations may realize a sudden, unanticipated drop in capital ratios. This could create a strong incentive for these banking organizations to limit their lending and other financial intermediation activities in order to avoid facing abrupt limitations on capital distributions. Thus, the current definition of eligible retained income, particularly in light of present market uncertainty, could serve as a deterrent for banking organizations to continue lending to creditworthy businesses and households.

To better allow a banking organization to continue lending during times of stress, the agencies are issuing the interim final rule to revise the definition of eligible retained income to the greater of (1) a banking organization's net income for the four preceding calendar quarters, net of any distributions and associated tax effects not already reflected in net income, and (2) the average of a banking organization's net income over the preceding four quarters. This definition will apply with respect to all of a banking organization's buffer requirements, including the fixed 2.5 percent capital conservation buffer, and, if applicable, the countercyclical capital buffer, the GSIB surcharge, and enhanced supplementary leverage ratio standards. Once the SCB final rule is effective, this definition will also apply to all parts of a covered holding company's buffer requirements, including the stress loss portion of a covered holding company's capital conservation requirement. The agencies believe that having one definition for all banking organizations as described in this interim final rule simplifies the regulatory capital framework and ensures fairness across banking organizations of all sizes.

This interim final rule is intended to strengthen the incentives for a banking organization to use its capital buffers as intended in adverse conditions and serve as a financial intermediary and source of credit to the economy. This revision would reduce the likelihood that a banking organization is suddenly subject to abrupt and restrictive distribution limitations in a scenario of lower than expected capital levels.

Question 1: What would be the advantages and disadvantages of defining eligible retained income as the average of a banking organization's net income over the preceding four quarters instead of the greater of (i) a banking organization's net income for the four preceding calendar quarters, net of any distributions and associated tax effects not already reflected in net income, and (ii) the average of a banking organization's net income over the preceding four quarters?

Question 2: What are the advantages and disadvantages of applying the revised definition of eligible retained income to depository institution subsidiaries? Would, and if so how would, applying the revised definition of eligible retained income to depository institutions be consistent with the purposes of the buffer requirements discussed above? How, if at all, do, the incentives for using a capital buffer differ for depository institutions compared to bank holding companies and savings and loan holding companies? Similarly, would, and if so how would, applying the revised definition of eligible retained income to U.S. intermediate holding companies be consistent with the purposes of the buffer requirements discussed above? How, if at all, do the incentives for using a capital buffer differ for U.S. intermediate holding companies?

Question 3: Under what circumstances, if any, should a banking organization be restricted from making any capital distributions?

In ordinary economic circumstances, many banking organizations will pay out a significant portion of their net income, and retain the rest to support growth. As banking organizations enter stress periods, the restrictions in the capital buffers limit distributions and help to preserve capital and support lending. However, if the limits to distributions are too restrictive, banking organizations can face a sharp increase in their distribution limitations when they enter the buffer due to stress. This may create an incentive for banking organizations to reduce lending or take other actions to avoid falling into the buffer. The revised definition of eligible net income in the interim final rule allows banking organizations to more gradually reduce distributions as they enter stress, and provides banking organizations with stronger incentives to continue to lend in such a scenario. On the other hand, by enabling banking organizations to gradually decrease capital distributions in stress (rather than mandating a sharp decrease), the rule could incrementally reduce the banking organization's loss-absorption capacity in stress.

The definition of eligible retained income affects the distributions of banking organizations within their capital conservation or stress capital buffers. It does not have an impact on minimum capital requirements, per se. As such, the revised definition of eligible retained income in the interim final rule is not likely to have any noticeable effect on the capital requirements of banking organizations. Furthermore, banking organizations currently maintain robust capital levels, with only a small number of banking organizations having capital levels within the capital conservation buffer.

The agencies are issuing the interim final rules without prior notice and the opportunity for public comment and the delayed effective date ordinarily prescribed by the Administrative Procedure Act (APA)). 12 Pursuant to section 553(b)(B) of the APA, general notice and the opportunity for public comment are not required with respect to a rulemaking when an “agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”  13

The agencies believe that the public interest is best served by implementing the interim final rule immediately upon publication in the Federal Register . As discussed above, the spread of COVID-19 has disrupted economic activity in the United States. In addition, U.S. financial markets have featured extreme levels of volatility. The magnitude and persistence of COVID-19 on the economy remain uncertain. In light of the current market uncertainty, banking organizations may have a strong incentive to limit their lending activity in order to avoid facing abrupt restrictions on distributions. By making the automatic limitations on a banking organization's distributions more gradual as the banking organization's capital ratios decline, the interim final rule would allow banking organizations to focus on continuing to lend to creditworthy households and businesses rather than on managing their capital buffers and reducing the potential of exacerbating negative impacts on the financial markets. For these reasons, the agencies find that there is good cause consistent with the public interest to issue the rule without advance notice and comment. 14

The APA also requires a 30-day delayed effective date, except for (1) substantive rules which grant or recognize an exemption or relieve a restriction; (2) interpretative rules and statements of policy; or (3) as otherwise provided by the agency for good cause. 15 Because the rules relieve a restriction, the interim final rule is exempt from the APA's delayed effective date requirement. 16

While the agencies believe that there is good cause to issue the rule without advance notice and comment and with an immediate effective date, the agencies are interested in the views of the public and requests comment on all aspects of the interim final rule.

For purposes of Congressional Review Act, the OMB makes a determination as to whether a final rule constitutes a “major” rule. 17 If a rule is deemed a “major rule” by the Office of Management and Budget (OMB), the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication. 18

The Congressional Review Act defines a “major rule” as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in (A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions, or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. 19

For the same reasons set forth above, the agencies are adopting the interim final rule without the delayed effective date generally prescribed under the Congressional Review Act. The delayed effective date required by the Congressional Review Act does not apply to any rule for which an agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rule issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. 20 In light of current market uncertainty, the agencies believe that delaying the effective date of the rule would be contrary to the public interest. In addition, as discussed above, the revised definition of eligible retained income in the interim final rule is not likely to have any significant effect on the capital requirements of banking organizations.

As required by the Congressional Review Act, the agencies will submit the final rule and other appropriate reports to Congress and the Government Accountability Office for review.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA) states that no agency may conduct or sponsor, nor is the respondent required to respond to, an information collection unless it displays a currently valid OMB control number. The interim final rule affects the agencies' current information collections for the Consolidated Reports of Condition and Income (Call Reports) (FFIEC 031, FFIEC 041, and FFIEC 051). The OMB control numbers for the agencies are: OCC OMB No. 1557-0081; Board OMB No. 7100-0036; and FDIC OMB No. 3064-0052. The Board has reviewed this interim final rule pursuant to authority delegated by the OMB.

Although there is a substantive change to the actual calculation of retained income for purposes of the Call Reports, the change should be minimal and result in a zero net change in hourly burden under the agencies' information collections. Submissions will, however, be made by the agencies to OMB. The changes to the Call Reports and their related instructions will be addressed in a separate Federal Register notice. Also, the Board has temporarily revised the Consolidated Financial Statements for Holding Companies (FR Y-9; OMB No. 7100-0128) to reflect the changes made in this interim final rule. On June 15, 1984, OMB delegated to the Board authority under the PRA to temporarily approve a revision to a collection of information without providing opportunity for public comment if the Board determines that a change in an existing collection must be instituted quickly and that public participation in the approval process would defeat the purpose of the collection or substantially interfere with the Board's ability to perform its statutory obligation.

The Board's delegated authority requires that the Board, after temporarily approving a collection, solicit public comment on a proposal to extend the temporary collection for a period not to exceed three years. Therefore, the Board is inviting comment on a proposal to extend the FR Y-9 reports for three years, with revision. The Board invites public comment on the FR Y-9 reports, which are being reviewed under authority delegated by the OMB under the PRA. Comments are invited on the following:

a. Whether the proposed collection of information is necessary for the proper performance of the Board's functions, including whether the information has practical utility;

b. The accuracy of the Board's estimate of the burden of the proposed information collection, including the validity of the methodology and assumptions used;

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

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

e. Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information.

Comments must be submitted on or before May 19, 2020. At the end of the comment period, the comments and recommendations received will be analyzed to determine the extent to which the Board should modify the proposal.

Adopted Revision, With Extension for Three Years, of the Following Information Collection:

Report title: Financial Statements for Holding Companies.

Agency form number: FR Y-9C; FR Y-9LP; FR Y-9SP; FR Y-9ES; FR Y-9CS.

OMB control number: 7100-0128.

Effective date: December 31, 2020.

Frequency: Quarterly, semiannually, and annually.

Affected public: Businesses or other for-profit.

Respondents: Bank holding companies (BHCs), savings and loan holding companies (SLHCs), 21 securities holding companies (SHCs), and U.S. intermediate holding companies (IHCs) (collectively, holding companies (HCs)).

Estimated number of respondents:

FR Y-9C (non AA HCs) with less than $5 billion in total assets—155,

FR Y-9C (non AA HCs) with $5 billion or more in total assets—189,

FR Y-9C (AA HCs)—19,

FR Y-9LP—434,

FR Y-9SP—3,960,

FR Y-9ES—83,

FR Y-9CS—236.

Estimated average hours per response:

FR Y-9C (non AA HCs) with less than $5 billion in total assets—40.48,

FR Y-9C (non AA HCs) with $5 billion or more in total assets—46.34,

FR Y-9C (AA HCs)—47.59,

FR Y-9LP—5.27,

FR Y-9SP—5.40,

FR Y-9ES—0.50,

FR Y-9CS—0.50.

Recordkeeping

FR Y-9C (non AA HCs) with less than $5 billion in total assets—1,

FR Y-9C (non AA HCs) with $5 billion or more in total assets—1,

FR Y-9C (AA HCs)—1,

FR Y-9LP—1,

FR Y-9SP—0.50,

FR Y-9ES—0.50,

FR Y-9CS—0.50.

Estimated annual burden hours:

FR Y-9C (non AA HCs) with less than $5 billion in total assets—25,098,

FR Y-9C (non AA HCs) with $5 billion or more in total assets—35,033,

FR Y-9C (AA HCs)—3,617,

FR Y-9LP—9,149,

FR Y-9SP—42,768,

FR Y-9ES—42,

FR Y-9CS—472.

FR Y-9C (non AA HCs) with less than $5 billion in total assets—620,

FR Y-9C (non AA HCs) with $5 billion or more in total assets—756,

FR Y-9C (AA HCs)—76,

FR Y-9LP—1,736,

FR Y-9SP—3,960,

FR Y-9ES—42,

FR Y-9CS—472.

General description of report: The FR Y-9 family of reporting forms continues to be the primary source of financial data on holding companies that examiners rely on in the intervals between on-site inspections. Financial data from these reporting forms are used to detect emerging financial problems, to review performance and conduct pre-inspection analysis, to monitor and evaluate capital adequacy, to evaluate holding company mergers and acquisitions, and to analyze a holding company's overall financial condition to ensure the safety and soundness of its operations. The FR Y-9C, FR Y-9LP, and FR Y-9SP serve as standardized financial statements for the consolidated holding company. The Board requires HCs to provide standardized financial statements to fulfill the Board's statutory obligation to supervise these organizations. The FR Y-9ES is a financial statement for HCs that are Employee Stock Ownership Plans. The Board uses the FR Y-9CS (a free-form supplement) to collect additional information deemed to be critical and needed in an expedited manner. HCs file the FR Y-9C on a quarterly basis, the FR Y-9LP quarterly, the FR Y-9SP semiannually, the FR Y-9ES annually, and the FR Y-9CS on a schedule that is determined when this supplement is used.

Legal authorization and confidentiality: The Board has the authority to impose the reporting and recordkeeping requirements associated with the FR Y-9 family of reports on BHCs pursuant to section 5 of the Bank Holding Company Act of 1956 (BHC Act) (12 U.S.C. 1844); on SLHCs pursuant to section 10(b)(2) and (3) of the Home Owners' Loan Act (12 U.S.C. 1467a(b)(2) and (3)), as amended by sections 369(8) and 604(h)(2) of the Dodd-Frank Wall Street and Consumer Protection Act (Dodd-Frank Act); on U.S. IHCs pursuant to section 5 of the BHC Act (12 U.S.C 1844), as well as pursuant to sections 102(a)(1) and 165 of the Dodd-Frank Act (12 U.S.C. 511(a)(1) and 5365); and on securities holding companies pursuant to section 618 of the Dodd-Frank Act (12 U.S.C. 1850a(c)(1)(A)). The obligation to submit the FR Y-9 series of reports, and the recordkeeping requirements set forth in the respective instructions to each report, are mandatory.

With respect to the FR Y-9C report, Schedule HI's memoranda data item 7(g) “FDIC deposit insurance assessments,” Schedule HC-P's data item 7(a) “Representation and warranty reserves for 1-4 family residential mortgage loans sold to U.S. government agencies and government sponsored agencies,” and Schedule HC-P's data item 7(b) “Representation and warranty reserves for 1-4 family residential mortgage loans sold to other parties” are considered confidential commercial and financial information. Such treatment is appropriate under exemption 4 of the Freedom of Information Act (FOIA) (5 U.S.C. 552(b)(4)) because these data items reflect commercial and financial information that is both customarily and actually treated as private by the submitter, and which the Board has previously assured submitters will be treated as confidential. It also appears that disclosing these data items may reveal confidential examination and supervisory information, and in such instances, this information would also be withheld pursuant to exemption 8 of the FOIA (5 U.S.C. 552(b)(8)), which protects information related to the supervision or examination of a regulated financial institution.

In addition, for both the FR Y-9C report and the FR Y-9SP report, Schedule HC's memorandum item 2.b., the name and email address of the external auditing firm's engagement partner, is considered confidential commercial information and protected by exemption 4 of the FOIA (5 U.S.C. 552(b)(4)) if the identity of the engagement partner is treated as private information by HCs. The Board has assured respondents that this information will be treated as confidential since the collection of this data item was proposed in 2004.

Aside from the data items described above, the remaining data items on the FR Y-9C report and the FR Y-9SP report are generally not accorded confidential treatment. The data items collected on FR Y-9LP, FR Y-9ES, and FR Y-9CS reports, are also generally not accorded confidential treatment. As provided in the Board's Rules Regarding Availability of Information (12 CFR part 261), however, a respondent may request confidential treatment for any data items the respondent believes should be withheld pursuant to a FOIA exemption. The Board will review any such request to determine if confidential treatment is appropriate, and will inform the respondent if the request for confidential treatment has been denied.

To the extent the instructions to the FR Y-9C, FR Y-9LP, FR Y-9SP, and FR Y-9ES reports each respectively direct the financial institution to retain the workpapers and related materials used in preparation of each report, such material would only be obtained by the Board as part of the examination or supervision of the financial institution. Accordingly, such information is considered confidential pursuant to exemption 8 of the FOIA (5 U.S.C. 552(b)(8)). In addition, the workpapers and related materials may also be protected by exemption 4 of the FOIA, to the extent such financial information is treated as confidential by the respondent (5 U.S.C. 552(b)(4)).

Current actions: The Board has temporarily revised the instructions for the FR Y-9C to reflect the modification to the definition of eligible retained income contained in this interim final rule. Specifically, the Board has temporarily revised the instructions for the item capturing eligible retained income for HCs not subject to the capital plan rule on FR Y-9C, Schedule HC-R. The Board has determined that the revisions to the FR Y-9C must be instituted quickly and that public participation in the approval process would defeat the purpose of the collection of information, as delaying the revisions would result in the collection of inaccurate information and would interfere with the Board's ability to perform its statutory duties. The Board also proposes to revise the instructions for a forthcoming item, which will be added to Schedule HC-R for the December 31, 2020 as-of date, that captures eligible retained income for HCs subject to the capital plan rule.

The Board also proposes to extend the FR Y-9 reports for three years, with the revisions discussed above.

The Regulatory Flexibility Act (RFA)  22 requires an agency to consider whether the rules it proposes will have a significant economic impact on a substantial number of small entities. 23 The RFA applies only to rules for which an agency publishes a general notice of proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed previously, consistent with section 553(b)(B) of the APA, the agencies have determined for good cause that general notice and opportunity for public comment is unnecessary, and therefore the agencies are not issuing a notice of proposed rulemaking. Accordingly, the agencies have concluded that the RFA's requirements relating to initial and final regulatory flexibility analysis do not apply.

Nevertheless, the agencies seek comment on whether, and the extent to which, the interim final rule would affect a significant number of small entities.

On November 13, 2019, the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), and the FDIC (collectively, the agencies) published a final rule “Regulatory Capital Rule: Capital Simplification for Qualifying Community Banking Organizations” (CBLR final rule). 1 The CBLR final rule provides for a simple measure of capital adequacy for certain community banking organizations, consistent with section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Under the CBLR final rule, depository institutions and depository institution holding companies that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio of greater than 9 percent, will be eligible to opt into the community bank leverage ratio framework (CBLR banks). In addition, under the CBLR final rule, the community bank leverage ratio framework incorporates tier I capital in the numerator of that leverage ratio. The CBLR final rule also amends standards referencing total capital so that an electing CBLR bank uses tier I capital in the numerator of that leverage ratio instead of total capital, which includes tier 2 capital. 2

This correcting amendment will conform appendix A to subpart A of part 365 of the FDIC's Real Estate Lending Standards regulation to that of the other Federal banking agencies.

For the reasons stated in the preamble, the FDIC corrects 12 CFR part 365 by making the following correcting amendment:

In executing its statutory responsibilities, the Bureau places primary emphasis on preventing harm to consumers. Preventing harm to consumers is among the most effective and efficient ways of ensuring consumer access to a fair, transparent, and competitive financial market. In 2013, the Bureau issued a Bulletin that identified several activities that individuals or businesses, collectively “entities,” could engage in that could prevent and minimize harm to consumers, referring to these activities as “responsible conduct.” The Bureau is issuing this updated Bulletin to clarify its approach to responsible conduct and to reiterate the importance of such conduct.

In the first instance, the Bureau's focus is on building a culture of compliance among entities, including covered persons and service providers, in order to minimize the likelihood of a violation of Federal consumer financial law, and thereby prevent harm to consumers. When a violation of law does occur, swift and effective actions taken by an entity to address the violation can minimize resulting harm to consumers. Specifically, an entity may self-assess its compliance with Federal consumer financial law, self-report to the Bureau when it identifies likely violations, remediate the harm resulting from these likely violations, and cooperate above and beyond what is required by law with any Bureau review or investigation.

Such activities are in the public interest. Depending on its form and substance, responsible conduct can improve the Bureau's ability to promptly detect violations of Federal consumer financial law, increase the effectiveness and efficiency of its supervisory and enforcement work, enable the Bureau to focus its finite resources on their best use for the mission, and help more consumers in more matters promptly receive financial redress and additional meaningful remedies for any harm they experienced.

Because responsible conduct is in the public interest, the Bureau seeks to encourage it. Accordingly, if an entity meaningfully engages in responsible conduct, the Bureau intends to favorably consider such conduct, along with other relevant factors, in addressing violations of Federal consumer financial law in supervisory and enforcement matters. 1 Depending on the nature and extent of an entity's actions, the Bureau has a wide range of options available to properly account for responsible conduct. For example, in light of an entity's responsible conduct, the Bureau could exercise its discretion to close an enforcement investigation with no action or decide not to include Matters Requiring Attention in an exam report or supervisory letter. Even if the Bureau does take action, those who engage in responsible conduct may receive other types of credit for engaging in such behavior. For entities within the Bureau's supervisory authority, the Bureau's Division of Supervision, Enforcement, and Fair Lending makes determinations of whether violations should be resolved through non-public supervisory action or a possible public enforcement action through its Action Review Committee (ARC) process. The ARC process includes factors that are closely aligned with the elements of responsible conduct. Thus, for entities under the Bureau's supervisory authority, responsible conduct could result in resolving violations non-publicly through the supervisory process. Responsible conduct also could result in the Bureau's reducing the number of violations pursued or reducing the sanctions or penalties sought by the Bureau in any public enforcement action. The Bureau intends to consider the extent and significance of an entity's responsible conduct, with more extensive and important responsible conduct leading to more substantial consideration.

This guidance, and its description of factors that may warrant favorable consideration, is not adopting any rule or formula to be applied in all matters. The importance of each factor in a given matter, and the way in which the Bureau evaluates each factor, will depend on the circumstances. The Bureau is not in any way limiting its discretion and responsibility to evaluate each matter individually on its own facts and circumstances. In short, the fact that an entity may argue it has satisfied some or even all of the factors set forth in this guidance will not necessarily foreclose the Bureau from bringing any enforcement action or seeking any remedy if it believes such a course is necessary and appropriate.

As noted previously, the Bureau principally considers four categories of conduct when evaluating whether some form of credit is warranted in an enforcement investigation or supervisory matter: Self-assessing, self-reporting, remediating, and cooperating. However, if an entity engages in another type of activity particular to its situation that is both substantial and meaningful, the Bureau may take that activity into consideration.

Listed below are some of the factors the Bureau intends to consider in determining whether and how much to take into account responsible conduct. This list is not exhaustive, and some of the factors identified may relate to more than one category of responsible conduct.

This factor, which can also be described as self-monitoring or self-auditing, reflects a proactive commitment by an entity to use resources for the prevention and early detection of violations of Federal consumer financial law. The Bureau recognizes that a robust compliance management system appropriate for the size and complexity of an entity's business will not prevent all violations, but it will reduce the risk of violations, and it will often facilitate early detection of likely violations, which can limit the size and scope of consumer harm. Questions the Bureau intends to consider in determining whether to provide favorable consideration for self-assessing activity include:

1. What resources does the entity devote to compliance? How robust and effective is its compliance management system? Is it appropriate for the size and complexity of the entity's business?

2. Has the entity taken steps to improve its compliance management system when deficiencies have been identified either by itself or external regulators? Did the entity ignore obvious deficiencies in compliance procedures? Does the entity have a culture of compliance?

3. Considering the nature of the violation, did the entity identify the issue? What is the nature of the violation or likely violation and how did it arise? Was the conduct pervasive or an isolated act? How long did it last? Did senior personnel participate in, or turn a blind eye toward, obvious indicia of misconduct?

4. How was the violation detected and who uncovered it? If identified by the entity, how did the entity identify the issue ( e.g., from customer complaints, audits or monitoring based on routine risk assessments, or whistleblower activity)? Was the identification the result of a robust and effective compliance management system including adequate internal audit, monitoring, and complaint review processes? Was identification prompted by an impending exam or an investigation by a regulator?

5. What self-assessment mechanisms were in place to effectively prevent, identify, or limit the conduct that occurred, elevate it appropriately, and preserve relevant information? In what ways, if any, were the entity's self-assessing mechanisms particularly noteworthy and effective?

This factor substantially advances the Bureau's protection of consumers and enhances its mission by reducing the resources it must expend to identify violations and making those resources available for other significant matters. Prompt self-reporting of likely violations also represents concrete evidence of an entity's commitment to responsibly address the conduct at issue. Conversely, efforts to conceal a likely violation from the Bureau represent concrete evidence of the entity's lack of commitment to responsibly address the conduct at issue. For these reasons, the Bureau considers this factor in its evaluation of an entity's overall conduct. Of note, however, an entity's self-reporting of a potential issue does not require it to concede that it has violated the law. Questions the Bureau intends to examine in determining whether to provide favorable consideration for self-reporting of likely violations of Federal consumer financial law include:

1. Did the entity completely and effectively disclose the existence of the conduct to the Bureau, to other regulators, and, if applicable, to self-regulatory organizations? Did the entity report any additional related misconduct likely to have occurred?

2. Did the entity report the conduct to the Bureau without unreasonable delay? If it delayed, what justification, if any, existed for the delay? How did the delay affect the preservation of relevant information, the ability of the Bureau to conduct its review or investigation, or the interests of affected consumers?

3. Did the entity proactively self-report, or wait until discovery or disclosure was likely to happen anyway, for example due to impending supervisory activity, public company reporting requirements, the emergence of a whistleblower, consumer complaints or actions, or the conduct of a Bureau investigation?

When violations of Federal consumer financial law have occurred, the Bureau's remedial priorities include obtaining full redress for those injured by the violations, ensuring that the entity who violated the law implements measures designed to prevent the violations from recurring, and, when appropriate, effectuating changes in the entity's future conduct for the protection and/or benefit of consumers. Questions the Bureau intends to examine in determining whether to provide favorable consideration for remediation activity regarding likely violations of Federal consumer financial law include:

1. What steps did the entity take upon learning of the violation? Did it immediately stop the violation? How long after the violation was uncovered did it take to implement an effective response?

2. What steps did the entity take to discipline the individuals responsible for the violation and to prevent the individuals from repeating the same or similar conduct?

3. Did the entity conduct an analysis to determine the number of affected consumers and the extent to which they were harmed? Were consumers made whole through compensation and other appropriate relief, as applicable? Did affected consumers receive appropriate information related to the violations within a reasonable period of time?

4. What assurances are there that the violation (or a similar violation) is unlikely to recur? Did the entity take measures, such as a root-cause analysis, to ensure that the issues were addressed and resolved in a manner likely to prevent and minimize future violations? Similarly, have the entity's business practices, policies, and procedures changed to remove harmful incentives and encourage proper compliance?

Unlike self-assessing and remediating, which may occur with or without Bureau involvement, cooperating relates to the quality of an entity's interactions with the Bureau after the Bureau becomes aware of a likely violation of Federal consumer financial law, either through an entity's self-reporting or the Bureau's own efforts. Credit for cooperating in this context depends on the extent to which an entity takes steps above and beyond what the law requires in its interactions with the Bureau. Simply meeting those legal obligations is not a factor that the Bureau intends to give any special consideration in a supervisory review or enforcement investigation. Of note, the Bureau does not consider an entity's good faith assertion of privilege in an enforcement investigation to be a lack of cooperation; an entity asserting privileges in good faith remains eligible for potential favorable consideration for cooperating. Questions the Bureau intends to examine in determining whether to provide favorable consideration for cooperating in a Bureau matter include:

1. Did the entity cooperate promptly and completely with the Bureau and other appropriate regulatory and law enforcement bodies? Was that cooperation present throughout the course of the review and/or investigation?

2. Did the entity take proper steps to develop the facts quickly and completely and to fully share its findings with the Bureau? Did it undertake a thorough review of the nature, extent, origins, and consequences of the violation and related behavior? Who conducted the review and did they have a vested interest or bias in the outcome? Were scope limitations placed on the review? If so, why and what were they?

3. Did the entity promptly make available to the Bureau the results of its review and provide sufficient documentation reflecting its response to the situation? Did it provide evidence with sufficient precision and completeness to facilitate, among other things, appropriate actions against others who violated the law? Did the entity produce a complete and thorough written report detailing the findings of its review? Did it voluntarily disclose material information not directly requested by the Bureau or that otherwise might not have been uncovered? Did the entity provide all relevant, non-privileged information and make assertions of privilege in good faith?

4. Did the entity direct its employees to cooperate with the Bureau and make reasonable efforts to secure such cooperation? Did it make the most appropriate person(s) available for interviews, consultation, and/or sworn statements?

The Bureau intends for this guidance to encourage entities subject to the Bureau's supervisory and enforcement authority to engage in more “responsible conduct,” as defined herein. Such an outcome, the Bureau believes, would benefit both consumers and providers of consumer financial products and services, is in the public interest, and supports the Bureau's efforts to prevent consumer harm.

This Bulletin is a non-binding general statement of policy articulating considerations relevant to the Bureau's exercise of its supervisory and enforcement authority. It is therefore exempt from notice and comment rulemaking requirements under the Administrative Procedure Act pursuant to 5 U.S.C. 553(b). Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a). The Bureau has determined that this Bulletin does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring OMB approval under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

Pursuant to the Congressional Review Act, 5 U.S.C. 801 et seq., the Bureau will submit a report containing this policy statement and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the United States prior to its applicability date. The Office of Information and Regulatory Affairs has designated this policy statement as not a “major rule” as defined by 5 U.S.C. 804(2).

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2019-0197, dated August 14, 2019 (“EASA AD 2019-0197”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus SAS Model A318-112, A319-111, A319-112, A319-113, A319-114, A319-115, A319-131, A319-132, A319-133, A320-211, A320-212, A320-214, A320-215, A320-216, A320-231, A320-232, A320-233, A320-251N, and A320-271N airplanes. Model A320-215 airplanes are not certified by the FAA and are not included on the U.S. type certificate data sheet; this AD therefore does not include those airplanes in the applicability.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Airbus SAS Model A318-112, A319-111, A319-112, A319-113, A319-114, A319-115, A319-131, A319-132, A319-133, A320-211, A320-212, A320-214, A320-215, A320-216, A320-231, A320-232, A320-233, A320-251N, and A320-271N airplanes. The NPRM published in the Federal Register on November 7, 2019 (84 FR 60001). The NPRM was prompted by a report of marginal clearance between certain fuel sensor covers on both LH and RH wings. The NPRM proposed to require the replacement of certain fuel level sensor brackets.

The FAA is issuing this AD to address marginal clearance between certain fuel sensor covers on rib 24 and the crown of stringer 15 on both LH and RH wings. A possible contact between the shield and the stringer, and/or possible motion between the stringer and the shield, can make the gap more susceptible to sparking in case of lightning strike. This condition could create a source of ignition in a fuel tank vapor space, possibly resulting in a fire or explosion and consequent loss of the airplane. See the MCAI for additional background information.

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

Air Line Pilots Association, International (ALPA) agreed with the intent of the NPRM.

American Airlines (AAL) requested that the NPRM be revised to clarify the affected airplanes. AAL stated that clarification is needed on which airplanes fall outside of Group 1, 2, or 3, but still have not embodied Airbus modification (mod) 158133 and are therefore affected by EASA AD 2019-0197. AAL requested instructions on how to comply with the actions specified in the proposed AD for those airplanes in “Group 4” (EASA AD 2019-0197 defines Group 1, 2, and 3 only). Alternatively, AAL recommended that the proposed AD applicability reflect Group 1, 2, and 3 airplanes only.

The FAA agrees to clarify. This AD applies to Airbus airplanes referenced in paragraph (c) of this AD as identified in EASA AD 2019-0197, i.e., those that have not embodied Airbus modification 158133. If modification 158133 is not installed on an airplane, and none of the criteria associated with the definitions of Group 1, 2, or 3 airplanes is met, then those airplanes (referred to as group 4 by the commenter) are subject only to paragraph (4) of EASA AD 2019-0197, which contains parts installation requirements. Paragraph (4) of EASA AD 2019-0197 also applies to Group 1, 2, and 3 airplanes. The FAA has not changed this AD in this regard.

United Airlines (UAL) stated its fleet will be identified as Group 3 as specified in EASA AD 2019-0197 because Airbus Service Bulletin A320-28-1216 is being implemented on its entire fleet. UAL noted that if it were to incorporate Airbus Service Bulletin A320-57-1193 on its fleet, Airbus would need to be contacted for instructions. The FAA infers UAL is requesting that the FAA clarify the actions for Group 2 and Group 3 airplanes.

The FAA agrees to clarify. Group 3 airplanes are those having embodied Airbus Service Bulletin A320-28-1216 but not Airbus Service Bulletin A320-57-1193. However, once operators incorporate Airbus Service Bulletin A320-28-1216 and Airbus Service Bulletin A320-57-1193 on an airplane, that airplane is a Group 2 airplane as defined in EASA AD 2019-0197; operators then must comply with the requirements of this AD that correspond to the actions specified in paragraph (2) of EASA AD 2019-0197. The FAA also acknowledges UAL's comment regarding operators needing to contact Airbus prior to incorporating Airbus Service Bulletin A320-57-1193, as specified in paragraph (3) of EASA AD 2019-0197. The FAA has not changed this AD in this regard.

Spirit Airlines requested that airplanes without factory modification 160001 be excluded from the requirements of the proposed AD. Spirit Airlines stated that if the proposed AD is applicable to aircraft without the production modification 160001, then EASA AD 2019-0197 gives no method of compliance. Spirit Airlines stated its airplanes do not fall within Group 1, Group 2, or Group 3, as specified in EASA AD 2019-0197. Spirit Airlines noted that the applicability section of EASA AD 2019-0197 excludes only aircraft with factory modification 158133.

The FAA disagrees with the commenter's request. If Airbus modification 158133 is not installed, and none of the criteria associated with the definitions for Group 1, 2, and 3 airplanes is met, then those airplanes are still subject to the parts installation requirements of this AD, as specified in paragraph (4) of EASA AD 2019-0197. Paragraph (4) of EASA AD 2019-0197 applies to all airplanes identified in paragraph (c), “Applicability,” of this AD, which includes all manufacturer serial numbers (MSN) of the referenced models, except those having Airbus modification 158133 embodied in production. The FAA has not changed this AD in this regard.

The FAA reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. The FAA has determined that these minor changes:

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

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

EASA AD 2019-0197 describes procedures for the replacement of certain fuel level sensor brackets. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 776 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

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

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

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

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

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

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

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

Discussion

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2019-0227, dated September 11, 2019 (“EASA AD 2019-0227”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus SAS Model A319-112, -115, and -132 airplanes; and Model A320-214, -216, -232 and -233 airplanes.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Airbus SAS Model A319-112, -115, and -132 airplanes; and Model A320-214, -216, -232, and -233 airplanes. The NPRM published in the Federal Register on November 22, 2019 (84 FR 64443). The NPRM was prompted by a report that a possible interference was identified between 1M and 2M wiring harnesses and the tapping units, and that the interference could adversely affect the lavatory smoke detection system and/or the passenger oxygen system. The NPRM proposed to require modifying the 1M and 2M harness routing, as specified in an EASA AD.

The FAA is issuing this AD to address possible loss of lavatory smoke detection and/or passenger oxygen system commands, which could prevent the delivery of passenger oxygen during an emergency and possibly result in injury to airplane occupants. See the MCAI for additional background information.

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

Two anonymous commenters stated their support for the NPRM.

Megan Meyet requested clarification on other Airbus airplanes that may be affected by the unsafe condition identified in the proposed AD. The commenter asked what will the FAA do if there are other Airbus airplanes that are found to have the same issue. The commenter stated that the proposed AD lists a specific batch of Airbus airplanes that have a defective part, but does not mention what would happen if other airplane models are found to have the same issue.

The FAA agrees to clarify. The unsafe condition in this AD is caused by interference due to installation of optional tapping units, which reduced the clearance between the wire harnesses and tapping units. EASA and Airbus know the population of airplanes affected by this unsafe condition. Therefore, the Airbus airplanes specified in EASA AD 2019-0227 are the affected population. If additional airplanes are found to be affected by this unsafe condition, the FAA will consider additional rulemaking. The FAA has not changed this AD in this regard.

An anonymous commenter requested clarification of the unsafe condition. The commenter stated that the proposed AD was prompted by a report that a possible interference was identified between the 1M and 2M wiring harnesses and tapping units, and that this interference could have negative effects on the lavatory smoke detection system and possibly the passenger oxygen system. The commenter asked if this interference actually caused an error in the smoke alarm or in the oxygen system, or is this a proposed consequence of the interference? The commenter suggested that if it is only a proposed consequence, it would be more cost effective to run more tests before incurring the costs of the 6 airplanes affected by the proposed AD. The commenter also stated that if this issue has been confirmed, then the proposed AD is extremely important to adopt, and could affect countless lives if the passenger oxygen system commands failed in an emergency.

The FAA agrees to clarify. EASA, as the State of Design Authority for Airbus SAS airplanes, issued AD 2019-0227 based on its risk assessment, which takes into account the effects of system level failures on the airplane's safety. This risk assessment showed that a change in the installation of the tapping units creates the potential for contact between wire harnesses and the tapping units, because the tapping units are installed higher than they previously were. If this potential interference between the wiring harnesses and tapping units is not addressed, an unsafe condition may occur, resulting in failure of audio and/or visual warnings to the flight crew related to smoke detection in the lavatory and the loss of delivery of passenger oxygen in the event of an emergency. The FAA has determined that further testing and analysis are not needed, and the agency is issuing this AD to prevent this unsafe condition from occurring. The FAA has not revised this AD in this regard.

The FAA reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. The FAA has determined that these minor changes:

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

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

EASA AD 2019-0227 describes procedures for modifying the 1M and 2M wiring harness routing. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 6 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

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

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

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

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

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

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

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

Discussion

On December 3, 2019, at 84 FR 66080, the Federal Register published the FAA's notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 by adding an AD that would apply to Airbus Helicopters Model AS332C, AS332C1, AS332L, AS332L1, and AS332L2 helicopters, except those with modification 0726383 installed. The NPRM proposed to require removing drain plugs from the fuel tank compartments. The proposed requirements were intended to prevent fuel accumulating in an area containing electrical equipment and ignition of fuel vapors, which could result in a fire and subsequent damage to the helicopter or injury to the occupants.

The NPRM was prompted by EASA AD No. 2018-0209, dated September 21, 2018 (EASA AD 2018-0209), issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for Airbus Helicopters (formerly Eurocopter, Eurocopter France, Aerospatiale) Model AS332C, AS332C1, AS332L, AS332L1, and AS332L2 helicopters, except those with modification 0726383. EASA advises that during production of AS332 helicopters, closure of the fuel tank drains with plugs was implemented. EASA states that this closure disregards compliance with an airworthiness certification requirement and in the event of fuel leakage in flight, a closed fuel drain creates the risk of fuel accumulation and/or migration to an adjacent area. EASA advises this area may contain electrical equipment that could be susceptible to creating a source of ignition. Accordingly, EASA AD 2018-0209 requires modification of the draining system of the fuel tank compartments by removing the drain plugs from the fuel tank compartments located under the bottom structure.

The FAA gave the public the opportunity to participate in developing this AD, but the FAA did not receive any comments on the NPRM.

These helicopters have been approved by EASA and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the European Union, EASA has notified the FAA of the unsafe condition described in its AD. The FAA is issuing this AD after evaluating all information provided by EASA and determining the unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed.

The FAA reviewed Airbus Helicopters Alert Service Bulletin (ASB) No. AS332-53.01.62, Revision 1, dated May 28, 2019 (ASB AS332-53.01.62, Revision 1), which specifies procedures for removing the drain plugs from the fuel tank compartments located under the bottom structure of the helicopter. This service information also specifies that the number of drain plugs varies depending on the version of the helicopter.

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

The FAA also reviewed Airbus Helicopters ASB No. AS332-53.01.62, Revision 0, dated June 7, 2018 (AS332-53.01.62, Revision 0). AS332-53.01.62, Revision 0, contains the same procedures as AS332-53.01.62, Revision 1. However, AS332-53.01.62, Revision 1, also addresses military versions.

The FAA estimates that this AD affects 11 helicopters of U.S. Registry. The FAA estimates that operators may incur the following costs in order to comply with this AD. Labor costs are estimated at $85 per work-hour.

Removing the 6 drain plugs installed on Model AS332C and AS332C1 helicopters takes about 2 work-hours for an estimated cost of $170 per helicopter and $170 for the U.S. fleet size of 1 helicopter.

Removing the 7 drain plugs installed on Model AS332L, AS332L1, and AS332L2 helicopters takes about 2 work-hours for an estimated cost of $170 per helicopter and $1,700 for the U.S. fleet size of 10 helicopters.

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

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

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

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

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

2. Will not affect intrastate aviation in Alaska, and

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

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

Discussion

The FAA received a report of a Honda Model HA-420 airplane losing normal braking during ground operations. Inspections revealed damage to a brake wiring harness for the WST, which was most likely caused by contact with the main landing gear tire. A review of manufacturer type design data and production line assembly instructions revealed that the wiring harness is installed with excessive slack that allows contact with the tire when pulled. Thus, the damage found may occur on all in service Honda Model HA-420 airplanes.

Further investigation revealed that damage to the wiring harness results in loss of the WST signal, which is interpreted by the digital antiskid control unit (DACU) as either a WST failure or locked wheel condition. The DACU provides locked wheel protection, which commands a full release of normal brakes at speeds greater than 25 knots until the right and left wheel speeds are within 70 percent of each other. Thus, when a WST signal is lost, the DACU commands a full normal brake release until the airplane speed falls below 25 knots. In this scenario, unavailability of the normal brakes is not annunciated to the pilot, because WST signal loss does not trigger the NORMAL BRAKE FAIL red crew alerting system (CAS) message. The pilot is notified via an ANTI-SKID FAIL amber CAS message. Existing AFM procedures for ANTI-SKID FAIL instruct the pilot to apply normal brakes gradually to stop the airplane when the anti-skid system has failed. The current AFM procedures are incorrect and do not caution the pilot that normal braking may be unavailable when the ANTI-SKID FAIL amber CAS message posts or instruct the pilot to use emergency braking.

This condition, if not addressed, could result in unannunciated loss of normal brakes, reduced directional control during landing deceleration and ground operations, and loss of control of the airplane when applying the brakes. The FAA is issuing this AD to address the unsafe condition on these products.

The FAA reviewed Pages 3A-178 through 3A-180 from Section 3A—Abnormal Procedures in Honda Aircraft Company Airplane Flight Manual, HondaJet, Effectivity: 42000012 through 42000125, Model HA-420, Part No.: HJ1-29000-003-001, Revision D, dated December 12, 2019; and Pages 3A-178 through 3A-180 from Section 3A—Abnormal Procedures in Honda Aircraft Company Airplane Flight Manual, HondaJet ELITE, Effectivity: 42000011, 42000126 and after, HondaJet APMG, Effectivity: 42000012 through 42000125 with SB-420-55-001, Model HA-420, Part No.: HJ1-29001-003-001, Revision B1, dated December 12, 2019. For the specific airplane serial numbers specified on each document, these pages are revised pages to the AFMs that provide procedures for the flight crew when the braking anti-skid system fails.

The FAA also reviewed Page A-126 and Page A-127 from HondaJet, Model HA-420, HJ1-29000-007-001, Volume 1 of 2, Effectivity 42000012 through 42000125, Quick Reference Handbook, Normal Procedures, Revision D, dated December 12, 2019; Page A-124 and Page A-125 from HondaJet, Model HA-420, HJ1-29001-007-001, HondaJet ELITE, Effectivity: 42000011, 42000126 and after, HondaJet APMG, Effectivity: 42000012 through 42000125 with SB-420-55-001, Quick Reference Handbook, Revision B, dated December 12, 2019. For the specific airplane serial numbers specified on each document, these pages are revised pages to the QRHs that provide procedures for the flight crew when the braking anti-skid system fails.

The FAA also reviewed Honda Aircraft Company Service Bulletin Alert SB-420-32-008, Revision B, dated November 16, 2019 (Honda SB-420-32-008, Revision B). This service document contains procedures for inspecting the condition of the WST wiring harness, replacing the wiring harness if necessary, installing wiring hardware, and rerouting the WST wiring harness on both the left and right brake assemblies.

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

The FAA is issuing this AD because the FAA evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This AD requires replacing the revised pages in the AFMs and QRHs applicable to your airplane. This AD also requires accomplishing the actions specified in Honda SB-420-32-008, Revision B described previously.

The FAA considers this AD, which addresses anti-skid braking system failures, an interim action. Honda is developing software changes to revise the WST logic from the ANTI-SKID FAIL CAS to the NORMAL BRAKES FAIL CAS. Once this action is developed, approved, and available, the FAA may consider additional rulemaking.

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because the damage to WST wiring harness is possible on all affected airplanes due to slack in the harness by type design and may worsen rapidly after each landing cycle and result in loss of normal braking if left uncorrected. Additionally, incorrect AFM and QRH procedures instruct the pilot to use normal braking when it is unavailable instead of using emergency braking. The FAA has determined that certain corrective action is necessary before further flight to address the wiring harness damage that results in loss of normal braking and to provide pilot notification and guidance on what to expect and how to react to the ANTI-SKID FAIL CAS message coupled with the loss of normal brakes. Therefore, the FAA finds good cause that notice and opportunity for prior public comment are impracticable. In addition, for the reasons stated above, the FAA finds that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety and was not preceded by notice and an opportunity for public comment. However, the FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under the ADDRESSES section. Include the Docket Number FAA-2020-0195 and Product Identifier 2019-CE-052-AD at the beginning of your comments. The FAA specifically invites comments on the overall regulatory, economic, environmental, and energy aspects of this final rule. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

The FAA will post all comments received, without change, to https://www.regulations.gov, including any personal information you provide. The FAA will also post a report summarizing each substantive verbal contact the FAA receives about this final rule.

The FAA estimates that this AD affects 116 airplanes of U.S. registry.

The FAA estimates the following costs to comply with this AD:

The FAA estimates the following costs to do any necessary replacements that would be required based on the results of the inspection. The FAA has no way of determining the number of aircraft that might need these replacements:

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

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

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

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

The requirements of the Regulatory Flexibility Act (RFA) do not apply when an agency finds good cause pursuant to 5 U.S.C. 553 to adopt a rule without prior notice and comment. Because FAA has determined that it has good cause to adopt this rule without notice and comment, RFA analysis is not required.

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

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

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

(2) Will not affect intrastate aviation in Alaska.

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

Discussion

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2010-26-01, Amendment 39-16540 (75 FR 78594, December 16, 2010) (“AD 2010-26-01”). AD 2010-26-01 applied to certain Model 777-200 series airplanes. The NPRM published in the Federal Register on August 9, 2019 (84 FR 39241). The NPRM was prompted by a report of an in-flight shutdown due to an engine fire indication; an under-cowl engine fire was extinguished after landing. The NPRM was also prompted by a determination that additional airplanes are affected. The NPRM proposed to continue to require installing a new insulation blanket on the latch beam firewall of each T/R half. The NPRM also proposed to add airplanes to the applicability. For those airplanes, the NPRM proposed to require an inspection to determine if the installed T/R has an affected part number and, if an affected part number is found, installation of a new insulation blanket. The FAA is issuing this AD to address the potential for a fire from entering the cowl or strut area, which could weaken T/R parts and result in reduced structural integrity of the T/R, possible separation of T/R parts during flight, and consequent damage to the airplane, injury to people, and damage to property on the ground.

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

The Air Line Pilots Association, International (ALPA) and United Airlines stated their support for the NPRM.

Boeing requested that the FAA revise the Cost of Compliance paragraph in the NPRM. Boeing stated that the proposed AD would affect 4 additional airplanes for a total of 29 airplanes of U.S. registry. Boeing stated that the 4 additional airplanes are equipped with Model GE 90-90B engines with line numbers greater than 413 and are therefore not identified in Boeing Alert Service Bulletin 777-78A0066, Revision 2, dated April 8, 2010, and not affected by AD 2010-26-01.

The FAA concurs with the request and has revised the Cost of Compliance paragraph of this final rule to include 29 airplanes of U.S. registry. The four additional airplanes are Model 777-200 series with the specified engines already included in the applicability of the proposed AD. Although the effectivity of Boeing Alert Service Bulletin 777-78A0066, Revision 2, dated April 8, 2010, does not include those four additional airplanes, the FAA determined that the actions in that service information are applicable to the additional airplanes.

Boeing requested that the applicability paragraph in the proposed AD also include Model 777-200 series airplanes equipped with General Electric Company (GE) GE90-92B engines. Boeing stated that there are two airplanes equipped with GE90-92B engines that are affected by AD 2010-26-01 and are not included in the applicability of the proposed AD.

The FAA disagrees with the commenter's request. The FAA has investigated the circumstances surrounding the comment and determined that the Model GE90-92B engine is not identified on the existing U.S. type certificate data sheet (TCDS). At the engine manufacturer's request, the Model GE90-92B engine was removed from the Engine TCDS No. E00049EN at Revision 8, dated October 12, 2000. The FAA has also confirmed with the engine manufacturer that there are no Model GE90-92B engines in service or certified for installation on Boeing Model 777 airplanes, as specified in Airplane TCDS No. T00001SE, Revision 43, dated August 28, 2019. The FAA has not changed this AD in this regard.

Boeing requested that the FAA revise the section “Actions Since AD 2010-26-01 Was Issued” of the NPRM to state that the installation of a T/R specified in AD 2010-26-01 onto an airplane outside of the applicability of that AD is possible, but it is not allowed. Boeing commented that the interchangeability of the T/Rs delivered on Model 777-200 series airplanes equipped with GE90-76B, -85B, -90B, -92B, or -94B engines is controlled by the “released engineering” that defines the type design, which includes the 315W1295 Interchangeability Drawings (Sheets 1-9). Boeing also commented that there is a one-way interchangeability restriction that does not allow the earlier, affected T/Rs specified in AD 2010-26-01 to be installed on an airplane that is not subject to that AD.

The FAA partially agrees. The FAA agrees that the T/R configuration referenced in AD 2010-26-01 is not part of the manufacturer's type design, based on the drawings the manufacturer provided. However, the FAA disagrees with adding a clarification statement about the manufacturer's type design to this AD because it is not relevant to the purpose of this AD. The purpose of the AD is to address the safety concern in the design of those parts. The manufacturer's type design does not preclude an owner or operator from installing the affected parts. The FAA has not changed this AD in this regard.

Japan Airlines (JAL) requested clarification of the inspection in paragraph (h) of the proposed AD. JAL asked whether it is acceptable to determine the T/R part number with the airplane delivery document from Boeing if the following conditions are met: the T/R has never been replaced since the airplane delivery from Boeing; and no modification requiring change of the part number has been done on the T/R.

The FAA agrees to provide clarification. The FAA expects that the inspection will contain a thorough review of all relevant airplane configuration documentation and it is possible documentation alone may be used to show compliance with this requirement. The principal maintenance inspector responsible for accepting the documentation will determine the adequacy of the supplied documentation in showing if the affected parts are in service. The FAA has not revised this AD in this regard.

Boeing requested that the FAA and Boeing collaborate with its airline partners, other original equipment manufacturers, and the national Civil Aviation Authorities (CAA) to develop an action to implement safe, fair, and consistent policy to address concerns on rotable parts for the industry. Boeing stated that it acknowledges there is a difference between the Boeing service information and the FAA's rulemaking in capturing the airplane effectivity. Boeing commented that there may be some instances where operators are rotating parts outside of type design, beyond effectivity limits or having T/Rs installed onto airplane configurations in which service information and design changes have already been incorporated. Boeing stated it understands the FAA's concerns with the possibility of parts being rotated outside the effectivity contained in the Boeing service information and would like to seek an alternative solution to address these concerns.

The FAA supports the commenter's proposal to address rotable parts under the collaborative efforts of the FAA, other civil aviation authorities, airplane manufacturers, and airplane operators. Any future collaborative efforts to address rotable parts will be coordinated outside of this AD. The FAA has not changed this AD in this regard.

The FAA reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this AD as proposed, except for minor editorial changes. The FAA has determined that these minor changes:

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

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

The FAA reviewed Boeing Service Bulletin 777-78A0066, Revision 3, dated April 28, 2011. This service information describes procedures for installing a new insulation blanket on the latch beam firewall of each T/R half. The installation includes, for certain airplanes, inspecting to determine if fitting part number 315W1436-4 is installed on the aft latch beam of the right side T/R and, for affected fittings, cutting the clevis from the affected fitting.

This AD would also require Boeing Alert Service Bulletin 777-78A0066, Revision 2, dated April 8, 2010, which the Director of the Federal Register approved for incorporation by reference as of January 20, 2011 (75 FR 78594, December 16, 2010).

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

The FAA estimates that this AD affects 29 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

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

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

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

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

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

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

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

Discussion

On November 8, 2019, at 84 FR 60349, the Federal Register published the FAA's notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 by adding an AD that would apply to Airbus Helicopters Model AS332C, AS332C1, AS332L, and AS332L1 helicopters, delivered to the first owner or customer before September 1, 2018, and with attachment screws part number (P/N) 330A22013520 installed with MGB right hand (RH) side rear attachment fitting P/N 330A22270207 and left hand (LH) side rear attachment fitting P/N 330A22270206 of the MGB suspension bars. The NPRM proposed to require inspecting each screw on the RH and LH rear attachment by identifying the number of threads “F” that extend beyond the nut. If there are 2 or less threads on each affected part, or if there are 3 or more threads on any affected part with a thread height less than 5 mm (0.196 in), the NPRM proposed to require applying a sealing compound on the nuts, and convex and concave washers. If there are 3 or more threads on any affected part with a thread height of 5 mm (0.196 in) or more, the NPRM proposed to require removing the nut and inspecting the convex and concave washers for bent parts and corrosion. If any washers are bent or corroded, the NPRM proposed to require removing the washers from service. If the length “L” measurement of any attachment screw is greater than 59.3 mm (2.334 in), the NPRM proposed to require replacing the attachment fitting and the set of four screws. The proposed requirements were intended to prevent structural failure of an MGB attachment fitting, detachment of an MGB suspension bar, and subsequent loss of control of the helicopter.

The NPRM was prompted by EASA AD No. 2018-0282, dated December 19, 2018 (EASA AD 2018-0282), issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for Airbus Helicopters Model AS332C, AS332C1, AS332L, and AS332L1 helicopters. EASA advises that occurrences were reported of elongated attachment screws and loss of tightening torque of the nut installed on the affected part. EASA also advises that an investigation is ongoing to determine the root cause of this event. EASA states this condition could lead to structural failure of an MGB rear attachment fitting and possibly result in detachment of an MGB suspension bar. Accordingly, EASA AD 2018-0282 requires a one-time inspection of each attachment screw for the number of threads that protrude beyond its bolt and depending on the outcome, applying a sealing compound on the nuts, and convex and concave washers; measuring the height of the protruding threads; inspecting the tightening torque of the nuts; inspecting the upper and lower convex and concave washers; measuring and inspecting removed attachment screws; and replacing affected parts. EASA AD 2018-0282 also requires reporting information to Airbus Helicopters. EASA states EASA AD 2018-0282 is considered to be an interim action and further AD action may follow.

The FAA gave the public the opportunity to participate in developing this AD. Benjamin Pico and Patrick Imperatrice commented that they support the NPRM.

These helicopters have been approved by EASA and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the European Union, EASA has notified the FAA of the unsafe condition described in its AD. The FAA is issuing this AD after evaluating all information provided by EASA and determining the unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed.

The FAA considers this AD interim action. The design approval holder is currently developing a modification that will address the unsafe condition identified in this AD. Once this modification is developed, approved, and available, the FAA might consider additional rulemaking.

The EASA AD requires the operator to perform a torque check and report the value to Airbus, whereas this AD does not.

The FAA reviewed Airbus Helicopters Alert Service Bulletin No. AS332-53.02.04, Revision 0, dated November 21, 2018, which specifies checking the number of threads that protrude beyond the bolt of the attachment screws on the RH and LH rear attachment fittings of the MGB. This service information also specifies a one-time inspection of the affected parts and depending on findings, accomplishment of applicable corrective actions.

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

The FAA estimates that this AD affects14 helicopters of U.S. Registry. The FAA estimates that operators may incur the following costs in order to comply with this AD. Labor costs are estimated at $85 per work-hour.

Inspecting the number of threads and applying a sealing compound takes about 3 work-hours for an estimated cost of $255 per helicopter and $3,570 for the U.S. fleet.

Replacing an attachment fitting and the set of four screws takes about 16 work-hours and parts cost $6,330 for an estimated replacement cost of $7,690.

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

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

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

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

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

2. Will not affect intrastate aviation in Alaska, and

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

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

Discussion

The ANAC, which is the aviation authority for Brazil, has issued Brazilian AD 2019-10-02, effective October 21, 2019 (“Brazilian AD 2019-10-02”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Yaborã Indústria Aeronáutica S.A. (Type Certificate Previously Held by Embraer S.A.) Model ERJ 170-100 LR, -100 STD, -100 SE, and -100 SU airplanes; and Model ERJ 170-200 LR, -200 SU, -200 STD, and -200 LL airplanes.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Yaborã Indústria Aeronáutica S.A. (Type Certificate Previously Held by Embraer S.A.) Model ERJ 170 airplanes. The NPRM published in the Federal Register on December 17, 2019 (84 FR 68819). The NPRM was prompted by a report of erroneous indications of certain engine parameters and reports of “pitch up” and “pitch down” uncommanded attitudes with autopilot engaged in cruise flight. The NPRM proposed to require installing updated PRIMUS EPIC LOAD software.

The FAA is issuing this AD to address erroneous indications of certain engine parameters and reports of uncommanded attitudes with autopilot engaged in cruise flight, which could interfere with the decisions taken by the flight crew during takeoff and landing and possibly result in reduced controllability of the airplane. See the MCAI for additional background information.

This AD identifies the manufacturer's name as published in the most recent type certificate data sheet for the affected models.

The FAA gave the public the opportunity to participate in developing this final rule. The FAA has considered the comment received. The Air Line Pilots Association, International (ALPA) indicated its support for the NPRM.

The FAA reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting this final rule with the change described previously and minor editorial changes. The FAA has determined that these minor changes:

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

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

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

Brazilian AD 2019-10-02 describes procedures for installing updated PRIMUS EPIC LOAD software. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 540 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

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

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

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

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

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

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

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

Discussion

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2019-0233, dated September 18, 2019; corrected September 19, 2019 (“EASA AD 2019-0233”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus SAS Model A319-115 airplanes; Model A320-214, -216, -232, -251N, and -271N airplanes; and Model A321-211, -231, -251N, -251NX, -253N, -271N, -271NX, and -272N airplanes.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Airbus SAS Model A319-115 airplanes; Model A320-214, -216, -232, -251N, and -271N airplanes; and Model A321-211, -231, -251N, -251NX, -253N, -271N, -271NX, and -272N airplanes. The NPRM published in the Federal Register on December 16, 2019 (84 FR 68365). The NPRM was prompted by reports of incomplete installations of the over wing panel lug attachments in the production assembly line. The NPRM proposed to require a one-time detailed inspection of certain attaching points on the left-hand and right-hand wings for the correct installation of certain hardware, and, depending on findings, accomplishment of applicable corrective actions, as specified in an EASA AD.

The FAA is issuing this AD to address this condition, which, if not detected and corrected, could reduce the structural integrity of the wing. See the MCAI for additional background information.

The FAA gave the public the opportunity to participate in developing this final rule. The FAA has considered the comment received. The Air Line Pilots Association, International (ALPA) indicated its support for the NPRM.

The FAA reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. The FAA has determined that these minor changes:

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

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

EASA AD 2019-0233 describes procedures for a one-time detailed inspection of certain attaching points on the left-hand and right-hand wings for the correct installation of certain hardware (bolt, nut, washer, and cotter pin), and, depending on findings, accomplishment of applicable corrective actions. Corrective actions include installing missing hardware, doing a detailed inspection of the attaching point and attaching straps for distortion or missing parts, and repair. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 110 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA estimates that it would take about 1 work-hour per product to comply with the reporting requirement in this AD. The average labor rate is $85 per hour. Based on these figures, the FAA estimates the cost of reporting the inspection results on U.S. operators to be $9,350, or $85 per product.

The FAA estimates the following costs to do any necessary on-condition actions that would be required based on the results of any required actions. The FAA has no way of determining the number of aircraft that might need these on-condition actions:

A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB control number. The control number for the collection of information required by this AD is 2120-0056. The paperwork cost associated with this AD has been detailed in the Costs of Compliance section of this document and includes time for reviewing instructions, as well as completing and reviewing the collection of information. Therefore, all reporting associated with this AD is mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to Information Collection Clearance Officer, Federal Aviation Administration, 10101 Hillwood Parkway, Fort Worth, TX 76177-1524.

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

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

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

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

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

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

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

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

Discussion

The ANAC, which is the aviation authority for Brazil, has issued Brazilian AD 2019-10-01, effective October 21, 2019 (“Brazilian AD 2019-10-01”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Yaborã Indústria Aeronáutica S.A. (Type Certificate Previously Held by Embraer S.A.) Model ERJ 190-100 STD, -100 LR, -100 ECJ, -100 IGW, -100 SR, -200 STD, -200 LR, and -200 IGW airplanes. Model ERJ 190-100 SR airplanes are not certified by the FAA and are not included on the U.S. type certificate data sheet; this AD therefore does not include those airplanes in the applicability.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Yaborã Indústria Aeronáutica S.A. (Type Certificate Previously Held by Embraer S.A.) Model ERJ 190-100 STD, -100 LR, -100 ECJ, -100 IGW, -100 SR, -200 STD, -200 LR, and -200 IGW airplanes. The NPRM published in the Federal Register on December 17, 2019 (84 FR 68824). The NPRM was prompted by a report of erroneous indications of certain engine parameters and reports of “pitch up” and “pitch down” uncommanded attitudes with autopilot engaged in cruise flight. The NPRM proposed to require installing updated PRIMUS EPIC LOAD software, as specified in an ANAC Brazilian AD.

The FAA is issuing this AD to address erroneous indications of certain engine parameters and reports of uncommanded attitudes with autopilot engaged in cruise flight, which could interfere with the decisions taken by the flight crew during takeoff and landing and possibly result in reduced controllability of the airplane. See the MCAI for additional background information.

This AD identifies the manufacturer's name as published in the most recent type certificate data sheet for the affected models.

The FAA gave the public the opportunity to participate in developing this final rule. The FAA has considered the comment received. The Air Line Pilots Association, International (ALPA) indicated its support for the NPRM.

The FAA reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting this final rule with the change described previously and minor editorial changes. The FAA has determined that these minor changes:

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

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

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

Brazilian AD 2019-10-01 describes procedures for installing updated PRIMUS EPIC LOAD software. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 107 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

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

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

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

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

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

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

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

Discussion

The FAA has received reports of 57 instances of fractures occurring on LPT 3rd-stage blades during operation since 2017.

In response to the LPT 3rd-stage blade fractures that occurred from 2017 until November 2019, and in response to on-going investigations of these fractures, the FAA proposed an AD, Product Identifier 2019-NE-31-AD (84 FR 64441, November 22, 2019), to replace the LPT 3rd-stage blades with more impact-resistant LPT blades. The FAA also issued AD 2019-25-01 (84 FR 65666, November 29, 2019) to accelerate replacement of certain LPT 3rd-stage blades on the affected engines. Since November 2019, 12 additional LPT 3rd-stage blade fractures have occurred.

The FAA investigation determined that 28 of the 57 LPT 3rd-stage blade fractures resulted from wear and fracture of the turbine piston seal releasing debris that impacted the LPT 3rd-stage blades. The FAA is therefore issuing this AD to prevent failure of the turbine piston seals and fracture of the LPT 3rd-stage blades.

This condition, if not addressed, could result in failure of one or more engines, loss of thrust control, and loss of the airplane. The FAA is issuing this AD to address the unsafe condition on these products.

The FAA reviewed Pratt & Whitney (P&W) Service Bulletin (SB) PW1000G-C-72-00-0154-00A-930A-D, Issue No. 004, dated February 14, 2020. The service information describes procedures for performing initial and repetitive BSIs of the LPT 3rd-stage turbine pistol seal. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA reviewed Airbus Aircraft Maintenance Manual (AMM) TASK 72-53-00-200-801-A. The AMM describes procedures for BSI of the LPT assembly.

The FAA is issuing this AD because it evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This AD requires initial and repetitive BSI of the turbine piston seal and, depending on the results of the inspection, replacement with a part eligible for installation.

Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 U.S.C.) authorizes agencies to dispense with notice and comment procedures for rules when the agency, for “good cause,” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under this section, an agency, upon finding good cause, may issue a final rule without seeking comment prior to the rulemaking. Similarly, Section 553(d) of the APA authorizes agencies to make rules effective in less than 30 days, upon a finding of good cause.

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule. The affected IAE model turbofan engines, with a certain LPT 3rd-stage blade installed, have experienced 57 LPT 3rd-stage blade fractures during operation since 2017, with 12 LPT 3rd-stage blade fractures occurring between December 2019 and February 2020. Twenty-eight of the 57 LPT 3rd-stage blade fractures resulted from wear and fracture of the turbine piston seal releasing debris that impacted the LPT 3rd-stage blades. The turbine piston seal must be inspected within 15 days on engines operating on extended operations (ETOPS) flights and within 45 days on engines that do not operate on ETOPS flights. This unsafe condition may result in loss of the airplane.

The FAA considers the inspection of the turbine piston seals to be an urgent safety issue. Accordingly, notice and opportunity for prior public comment are impracticable and contrary to public interest pursuant to 5 U.S.C. 553(b)(3)(B). In addition, for the reasons stated above, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety and was not preceded by notice and an opportunity for public comment. However, the FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under the ADDRESSES section. Include the docket number FAA-2020-0184 and Project Identifier AD-2020-00187-E at the beginning of your comments. The FAA specifically invites comments on the overall regulatory, economic, environmental, and energy aspects of this final rule. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

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

Confidential Business Information (CBI) is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Kevin M. Clark, Aerospace Engineer, ECO Branch, FAA, 1200 District Avenue, Burlington, MA, 01803. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The requirements of the Regulatory Flexibility Act (RFA) do not apply when an agency finds good cause pursuant to 5 U.S.C. 553 to adopt a rule without prior notice and comment. Because FAA has determined that it has good cause to adopt this rule without notice and comment, RFA analysis is not required.

The FAA estimates that this AD affects 40 engines installed on airplanes of U.S. registry.

The FAA estimates the following costs to comply with this AD:

The FAA estimates the following costs to do any necessary replacements that would be required based on the results of the inspection. The FAA has no way of determining the number of engines that might need this replacement:

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

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

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

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

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

(2) Will not affect intrastate aviation in Alaska.

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

Discussion

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2019-0232, dated September 16, 2019 (“EASA AD 2019-0232”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus SAS Model A319-131, -132, and -133 airplanes, Model A320-231, -232, and -233 airplanes, and Model A321-131, -231, and -232 airplanes.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus SAS Model A319-131, -132, and -133 airplanes, Model A320-231, -232, and -233 airplanes, and Model A321-131, -231, and -232 airplanes. The NPRM published in the Federal Register on December 16, 2019 (84 FR 68368). The NPRM was prompted by a report of rupture of a hydraulic reservoir air pressurization hose on an in-service airplane, leading to air leakage that was undetectable during normal operation, and found during subsequent zonal inspection. The NPRM proposed to require modifying the airplane by replacing the affected bleed air hoses with a modification of hydraulic pressurization lines, as specified in an EASA AD.

The FAA is issuing this AD to address this condition, which, if not detected and corrected, could lead to exposure of the wing structure to high temperatures (possibly above 200 degrees Celsius (392 degrees Fahrenheit)), possibly resulting in reduced structural integrity of the airplane. See the MCAI for additional background information.

The FAA gave the public the opportunity to participate in developing this final rule. The FAA has considered the comments received. The Air Line Pilots Association, International (ALPA) and United Airlines indicated support for the NPRM.

The FAA reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. The FAA has determined that these minor changes:

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

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

EASA AD 2019-0232 describes procedures for modifying the airplane by replacing the affected bleed air hoses with a modification kit that includes improved bleed air hoses. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 802 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The taking of northern fur seals is prohibited by the Fur Seal Act (FSA, 16 U.S.C. 1151-1175), unless expressly authorized by the Secretary of Commerce through regulation. Section 105(a) of the FSA authorizes the promulgation of regulations with respect to the taking of fur seals on the Pribilof Islands as the Secretary of Commerce deems necessary and appropriate for the conservation, management, and protection of the fur seal population (16 U.S.C. 1155(a)). Regulations governing the subsistence use of northern fur seals are located at 50 CFR 216.71-216.74 and authorize Pribilovians to take fur seals on the Pribilof Islands if such taking is for subsistence uses and not accomplished in a wasteful manner (50 CFR 216.71).

NMFS published a proposed rule on August 14, 2018 (83 FR 40192), to revise the subsistence use regulations for northern fur seals on the Pribilof Islands based on the petition from the Aleut Community of St. Paul Island, Tribal Government (ACSPI) (77 FR 41168; July 12, 2012). The final rule revising the subsistence use regulations at 50 CFR 216.71-216.74 published in the Federal Register on October 2, 2019 (84 FR 52372). The requirements of the final rule (84 FR 52372), other than the collection-of-information requirements associated with the subsistence use regulations (hunt and harvest reporting for St. Paul and St. George Islands), were effective on September 27, 2019. The final rule incorrectly stated that the collection-of-information requirements subject to the PRA had been approved by the OMB under OMB Control Number 0648-0699 (Annual Northern Fur Seal Subsistence Harvest Reporting) at the time the final rule was published. On January 7, 2020, OMB approved these collection-of-information requirements under OMB Control Number 0648-0699 (Annual Northern Fur Seal Subsistence Harvest Reporting). Accordingly, this rule announces the approval and effective date of the collection-of-information requirements associated with the subsistence use regulations found at 50 CFR 216.72 and 50 CFR 216.74.

Section 3507(c)(B)(i) of the PRA requires that agencies inventory and display a current control number assigned by the Director of OMB, for each agency's information collection. Section 902.1(b) identifies the location of NOAA regulations for which OMB approval numbers have been issued. Because this final rule revises collection-of-information requirements, 15 CFR 902.1(b) is revised to reference correctly the sections resulting from this final rule.

The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is unnecessary and contrary to the public interest. This action simply provides notice of OMB's approval of the collection-of-information requirements at issue, which has already occurred, and renders those collection-of-information requirements effective. Thus this action does not involve any further exercise of agency discretion by NMFS or OMB. Moreover, the public was already provided with notice and opportunity to comment during the public comment period for the proposed rule, which began on August 14, 2018, and ended on September 13, 2018, and during the public comment period for the 2019 Final SEIS for Management of the Subsistence Harvest of Northern Fur Seals on St. Paul Island, Alaska. Additional opportunity for public comment at this point would not be meaningful and would be duplicative. Any further delay to allow for public comment is therefore unnecessary and would result in public confusion.

For the same reasons, the AA also finds good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in effective date and make this rule effective immediately upon publication.

This final rule has been determined to be not significant for purposes of Executive Order 12866.

This final rule contains collection-of-information requirements subject to the PRA, and which OMB approved on January 7, 2020, under OMB Control Number 0648-0699. NMFS obtained OMB Control Number 0648-0699 for hunt and harvest reports associated with the regulations at 50 CFR 216.72 and 50 CFR 216.74, which apply to both St. Paul and St. George Islands. For St. Paul Island, public reporting burden for hunt and harvest reporting is estimated to average 40 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. There are no significant changes to the collection-of-information requirements for St. Paul or St. George.

Send comments regarding these burden estimates or any other aspect of this data collection, including suggestions for reducing the burden, to NMFS Alaska Region (see ADDRESSES ) and by email to OIRA_Submission@omb.eop.gov, or fax to 202-395-5806.

Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number. All currently approved NOAA collections of information may be viewed at http://www.cio.noaa.gov/services_programs/prasubs.html.

For the reasons set out in the preamble, NMFS amends 15 CFR part 902 as follows:

The Saint Lawrence Seaway Development Corporation (SLSDC) and the St. Lawrence Seaway Management Corporation (SLSMC) of Canada, under international agreement, jointly publish and presently administer the St. Lawrence Seaway Regulations and Rules (Practices and Procedures in Canada) in their respective jurisdictions. Under agreement with the SLSMC, the SLSDC is amending the joint regulations by updating the Regulations and Rules in various categories. The changes update the following sections of the Regulations and Rules: Interpretations and Condition of Vessels. These changes are to clarify existing requirements in the regulations.

Regulatory Notices: Privacy Act: 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 association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit http://www.Regulations.gov.

The joint regulations will become effective in Canada on March 31, 2020. For consistency, because these are joint regulations under international agreement, and to avoid confusion among users of the Seaway, the SLSDC finds that there is good cause to make the U.S. version of the amendments effective on the same date.

This regulation involves a foreign affairs function of the United States and therefore, Executive Order 12866 does not apply and evaluation under the Department of Transportation's Regulatory Policies and Procedures is not required.

I certify that this regulation will not have a significant economic impact on a substantial number of small entities. The St. Lawrence Seaway Regulations and Rules primarily relate to commercial users of the Seaway, the vast majority of who are foreign vessel operators. Therefore, any resulting costs will be borne mostly by foreign vessels.

This regulation does not require an environmental impact statement under the National Environmental Policy Act (49 U.S.C. 4321, et seq. ) because it is not a major federal action significantly affecting the quality of the human environment.

The Corporation has analyzed this rule under the principles and criteria in Executive Order 13132, dated August 4, 1999, and have determined that this proposal does not have sufficient federalism implications to warrant a Federalism Assessment.

The Corporation has analyzed this rule under Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48) and determined that it does not impose unfunded mandates on State, local, and tribal governments and the private sector requiring a written statement of economic and regulatory alternatives.

This regulation has been analyzed under the Paperwork Reduction Act of 1995 and does not contain new or modified information collection requirements subject to the Office of Management and Budget review.

Accordingly, the Saint Lawrence Seaway Development Corporation is proposing to amend 33 CFR part 401, Regulations and Rules, as follows:

The Saint Lawrence Seaway Development Corporation (SLSDC) and the St. Lawrence Seaway Management Corporation (SLSMC) of Canada, under international agreement, jointly publish and presently administer the St. Lawrence Seaway Tariff of Tolls (Schedule of Fees and Charges in Canada) in their respective jurisdictions.

The Tariff sets forth the level of tolls assessed on all commodities and vessels transiting the facilities operated by the SLSDC and the SLSMC. The SLSDC is revising 33 CFR 402.12, “Schedule of tolls”, to reflect the fees and charges levied by the SLSMC in Canada beginning in the 2020 navigation season. With one exception, the changes affect the tolls for commercial vessels and are applicable only in Canada. The collection of tolls by the SLSDC on commercial vessels transiting the U.S. locks is waived by law (33 U.S.C. 988a(a)).

The SLSDC is amending 33 CFR 402.12, “Schedule of tolls”, to increase the minimum charge per vessel per lock for full or partial transit of the Seaway from $28.57 to $29.14. This charge is for vessels that are not pleasure craft or subject in Canada to the tolls under items 1 and 2 of the Tariff. This increase is due to higher operating costs at the locks.

Privacy Act: 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 association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit http://dms.dot.gov .

This regulation involves a foreign affairs function of the United States and therefore, Executive Order 12866 does not apply and evaluation under the Department of Transportation's Regulatory Policies and Procedures is not required.

I certify this regulation will not have a significant economic impact on a substantial number of small entities. The St. Lawrence Seaway Tariff of Tolls primarily relate to commercial users of the Seaway, the vast majority of whom are foreign vessel operators. Therefore, any resulting costs will be borne mostly by foreign vessels.

This regulation does not require an environmental impact statement under the National Environmental Policy Act (49 U.S.C. 4321, et reg.) because it is not a major federal action significantly affecting the quality of the human environment.

The Corporation has analyzed this rule under the principles and criteria in Executive Order 13132, dated August 4, 1999, and has determined that this rule does not have sufficient federalism implications to warrant a Federalism Assessment.

The Corporation has analyzed this rule under Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48) and determined that it does not impose unfunded mandates on State, local, and tribal governments and the private sector requiring a written statement of economic and regulatory alternatives.

This regulation has been analyzed under the Paperwork Reduction Act of 1995 and does not contain new or modified information collection requirements subject to the Office of Management and Budget review.

Accordingly, the Saint Lawrence Seaway Development Corporation amends 33 CFR part 402 as follows:

I. General Information A. Does this action apply to me?

You may be potentially affected by this action if you manufacture, process, or use the chemical substances contained in this rule. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

• Manufacturers or processors of one or more subject chemical substances (NAICS codes 325 and 324110), e.g., chemical manufacturing and petroleum refineries.

This action may also affect certain entities through pre-existing import certification and export notification rules under TSCA. Chemical importers are subject to the TSCA section 13 (15 U.S.C. 2612) import certification requirements promulgated at 19 CFR 12.118 through 12.127 and 19 CFR 127.28. Chemical importers must certify that the shipment of the chemical substance complies with all applicable rules and Orders under TSCA. Importers of chemicals subject to these SNURs must certify their compliance with the SNUR requirements. The EPA policy in support of import certification appears at 40 CFR part 707, subpart B. In addition, any persons who export or intend to export a chemical substance that is the subject of this rule on or after April 20, 2020 are subject to the export notification provisions of TSCA section 12(b) (15 U.S.C. 2611(b)) (see 40 CFR 721.20), and must comply with the export notification requirements in 40 CFR part 707, subpart D.

The docket includes information considered by the Agency in developing the proposed and final rules. The docket for this action, identified by docket identification (ID) number EPA-HQ-OPPT-2018-0772, is available at http://www.regulations.gov or at the Office of Pollution Prevention and Toxics Docket (OPPT Docket), Environmental Protection Agency Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334, 1301 Constitution Ave. NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OPPT Docket is (202) 566-0280. Please review the visitor instructions and additional information about the docket available at http://www.epa.gov/dockets.

EPA is finalizing a SNUR under TSCA section 5(a)(2) for chemical substances which were the subject of PMNs P-14-482, P-16-422, P-17-152, P-17-239, P-17-245, P-18-48, P-18-73, P-18-122, P-18-162, P-18-222, and P-19-10. These SNURs require persons who intend to manufacture or process any of these chemical substances for an activity that is designated as a significant new use to notify EPA at least 90 days before commencing that activity.

Previously, in the Federal Register of April 19, 2019 (84 FR 16432) (FRL-9992-42), EPA proposed a SNUR for these chemical substances in 40 CFR part 721, subpart E. More information on the specific chemical substances subject to this final rule can be found in the Federal Register documents proposing the SNUR. The record for the SNUR was established in the docket under docket ID number EPA-HQ-OPPT-2018-0772. That docket includes information considered by the Agency in developing the proposed and final rules, public comments submitted for the rule, and EPA's responses to public comments received on the proposed rule.

TSCA section 5(a)(2), 15 U.S.C. 2604(a)(2), authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by rule after considering all relevant factors, including the four bulleted TSCA section 5(a)(2) factors listed in Unit III. As described in Unit V., the general SNUR provisions are found at 40 CFR part 721, subpart A.

General provisions for SNURs appear in 40 CFR part 721, subpart A. These provisions describe persons subject to the rule, recordkeeping requirements, exemptions to reporting requirements, and applicability of the rule to uses occurring before the effective date of the rule. Provisions relating to user fees appear at 40 CFR part 700. Pursuant to 40 CFR 721.1(c), persons subject to these SNURs must comply with the same SNUN requirements and EPA regulatory procedures as submitters of PMNs under TSCA section 5(a)(1)(A). In particular, these requirements include the information submission requirements of TSCA sections 5(b) and 5(d)(1), the exemptions authorized by TSCA sections 5(h)(1), 5(h)(2), 5(h)(3), and 5(h)(5), and the regulations at 40 CFR part 720. Once EPA receives a SNUN, EPA must either determine that the significant new use is not likely to present an unreasonable risk of injury or take such regulatory action as is associated with an alternative determination before the manufacture or processing for the significant new use can commence. If EPA determines that the significant new use is not likely to present an unreasonable risk, EPA is required under TSCA section 5(g) to make public, and submit for publication in the Federal Register , a statement of EPA's findings.

Section 5(a)(2) of TSCA states that EPA's determination that a use of a chemical substance is a significant new use must be made after consideration of all relevant factors, including:

• The projected volume of manufacturing and processing of a chemical substance.

• The extent to which a use changes the type or form of exposure of human beings or the environment to a chemical substance.

• The extent to which a use increases the magnitude and duration of exposure of human beings or the environment to a chemical substance.

• The reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of a chemical substance.

In addition to these factors enumerated in TSCA section 5(a)(2), the statute authorizes EPA to consider any other relevant factors. In determining what would constitute a significant new use for the chemical substances that are the subject of these SNURs, EPA considered relevant information about the toxicity of the chemical substances, and potential human exposures and environmental releases that may be associated with the conditions of use of the substances, in the context of the four bulleted TSCA section 5(a)(2) factors listed in this unit.

EPA received public comments from two identifying entities on the proposed rule. The Agency's responses are described in a separate Response to Public Comments document contained in the public docket for this rule, EPA-HQ-OPPT-2018-0772.

In addition, the Agency is correcting the proposed regulatory text that appeared in the proposed SNUR at 40 CFR 721.11253. Paragraph (a)(1) of the proposed regulatory text erroneously describes the chemical substance as organic salt, rather than sulfuric acid, ammonium salt (1:?), which is listed correctly in both the title of the proposed SNUR and in Unit IV. of the proposed SNUR. This oversight has been corrected in the final regulatory text for the SNUR.

EPA is establishing significant new use and recordkeeping requirements for chemical substances in 40 CFR part 721, subpart E. In Unit IV of the April 19, 2019 proposed rule, EPA provided the following information for each chemical substance:

• PMN number.

• Chemical name (generic name, if the specific name is claimed as CBI).

• Chemical Abstracts Service (CAS) Registry number (if assigned for non-confidential chemical identities).

• Basis for the SNUR.

• Potentially Useful Information. Information identified by EPA that would help characterize the potential health and/or environmental effects of the chemical substances if a manufacturer or processor is considering submitting a SNUN for a significant new use designated by the SNUR.

• CFR citation assigned in the regulatory text section of these rules.

The regulatory text section of these rules specifies the activities designated as significant new uses. Certain new uses, including production volume limits and other uses designated in the rules, may be claimed as CBI.

The chemical substances that are the subject of these SNURs completed premanufacture review. In addition to those conditions of use intended by the submitter, EPA has identified certain other reasonably foreseen conditions of use. EPA has preliminarily determined that the chemicals under their intended conditions of use are not likely to present an unreasonable risk. However, EPA has not assessed risks associated with the reasonably foreseen conditions of use for these chemicals. EPA is designating these reasonably foreseen and other potential conditions of use as significant new uses. As a result, those conditions of use are no longer reasonably foreseen to occur without first going through a separate, subsequent EPA review and determination process associated with a SNUN.

During review of the PMNs submitted for the chemical substances that are the subject of these SNURs and as further discussed in Unit IV. of the April 19, 2019 proposed rule, EPA identified certain reasonably foreseen conditions of use and other circumstances different from the intended conditions of use identified in the PMNs and determined that those changes could result in changes in the type or form of exposure to the chemical substances and/or increased exposures to the chemical substances and/or changes in the reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of the chemical substances.

EPA is issuing these SNURs because the Agency wants:

• To receive notice of any person's intent to manufacture or process a listed chemical substance for the described significant new use before that activity begins.

• To have an opportunity to review and evaluate data submitted in a SNUN before the notice submitter begins manufacturing or processing a listed chemical substance for the described significant new use.

• To be obligated to make a determination under TSCA section 5(a)(3) regarding the use described in the SNUN, under the conditions of use. The Agency will either determine under section 5(a)(3)(C) that the significant new use is not likely to present an unreasonable risk, including an unreasonable risk to a potentially exposed or susceptible subpopulation identified as relevant by the Administrator under the conditions of use, or make a determination under section 5(a)(3) (A) or (B) and take the required regulatory action associated with the determination, before manufacture or processing for the significant new use of the chemical substance can occur.

• To be able to identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying Orders, consistent with TSCA section 5(f)(4).

Issuance of a SNUR for a chemical substance does not signify that the chemical substance is listed on the TSCA Chemical Substance Inventory (TSCA Inventory). Guidance on how to determine if a chemical substance is on the TSCA Inventory is available on the internet at http://www.epa.gov/opptintr/existingchemicals/pubs/tscainventory/index.html.

To establish a significant new use, EPA must determine that the use is not ongoing. The chemical substances subject to this rule have undergone premanufacture review. In cases where EPA has not received a notice of commencement (NOC) and the chemical substance has not been added to the TSCA Inventory, no person may commence such activities without first submitting a PMN. Therefore, for chemical substances for which an NOC has not been submitted EPA concludes that the designated significant new uses are not ongoing.

EPA designated April 15, 2019 (the date of web posting of the proposed rule) as the cutoff date for determining whether the new use is ongoing. The objective of EPA's approach has been to ensure that a person could not defeat a SNUR by initiating a significant new use before the effective date of the final rule.

In the unlikely event that a person began commercial manufacture or processing of the chemical substances for a significant new use identified as of April 15, 2019, that person will have to cease any such activity upon the effective date of the final rule. To resume their activities, that person would have to first comply with all applicable SNUR notification requirements and wait until EPA has conducted a review of the notice, made an appropriate determination on the notice, and has taken such actions as are required with that determination.

EPA recognizes that TSCA section 5 does not require development of any particular new information ( e.g., generating test data) before submission of a SNUN. There is an exception: If a person is required to submit information for a chemical substance pursuant to a rule, Order or consent agreement under TSCA section 4 (15 U.S.C. 2603), then TSCA section 5(b)(1)(A) (15 U.S.C. 2604(b)(1)(A)) requires such information to be submitted to EPA at the time of submission of the SNUN.

In the absence of a rule, Order, or consent agreement under TSCA section 4 covering the chemical substance, persons are required only to submit information in their possession or control and to describe any other information known to or reasonably ascertainable by them (see 40 CFR 720.50). However, upon review of PMNs and SNUNs, the Agency has the authority to require appropriate testing. Unit IV. of the April 19, 2019 proposed rule lists potentially useful information for all SNURs listed here. Descriptions are provided for informational purposes. The potentially useful information identified in Unit IV. of the proposed rule will be useful to EPA's evaluation in the event that someone submits a SNUN for the significant new use. Companies who are considering submitting a SNUN are encouraged, but not required, to develop the information on the substance. EPA strongly encourages persons, before performing any testing, to consult with the Agency. Furthermore, pursuant to TSCA section 4(h), which pertains to reduction of testing in vertebrate animals, EPA encourages consultation with the Agency on the use of alternative test methods and strategies (also called New Approach Methodologies, or NAMs), if available, to generate the recommended test data. EPA encourages dialog with Agency representatives to help determine how best the submitter can meet both the data needs and the objective of TSCA section 4(h).

The potentially useful information described in Unit IV. of the proposed rule may not be the only means of providing information to evaluate the chemical substance associated with the significant new uses. However, submitting a SNUN without any test data may increase the likelihood that EPA will take action under TSCA section 5(e) or 5(f). EPA recommends that potential SNUN submitters contact EPA early enough so that they will be able to conduct the appropriate tests.

SNUN submitters should provide detailed information on the following:

• Human exposure and environmental release that may result from the significant new use of the chemical substances.

• Information on risks posed by the chemical substances compared to risks posed by potential substitutes.

By this rule, EPA is establishing certain significant new uses which have been claimed as CBI subject to Agency confidentiality regulations at 40 CFR part 2 and 40 CFR part 720, subpart E. Absent a final determination or other disposition of the confidentiality claim under 40 CFR part 2 procedures, EPA is required to keep this information confidential. EPA promulgated a procedure to deal with the situation where a specific significant new use is CBI, at 40 CFR 721.1725(b)(1).

Under these procedures a manufacturer or processor may request EPA to determine whether a proposed use would be a significant new use under the rule. The manufacturer or processor must show that it has a bona fide intent to manufacture or process the chemical substance and must identify the specific use for which it intends to manufacture or process the chemical substance. If EPA concludes that the person has shown a bona fide intent to manufacture or process the chemical substance, EPA will tell the person whether the use identified in the bona fide submission would be a significant new use under the rule. Since most of the chemical identities of the chemical substances subject to these SNURs are also CBI, manufacturers and processors can combine the bona fide submission under the procedure in 40 CFR 721.1725(b)(1) with that under 40 CFR 721.11 into a single step.

If EPA determines that the use identified in the bona fide submission would not be a significant new use, i.e., the use does not meet the criteria specified in the rule for a significant new use, that person can manufacture or process the chemical substance so long as the significant new use trigger is not met. In the case of a production volume trigger, this means that the aggregate annual production volume does not exceed that identified in the bona fide submission to EPA. Because of confidentiality concerns, EPA does not typically disclose the actual production volume that constitutes the use trigger. Thus, if the person later intends to exceed that volume, a new bona fide submission would be necessary to determine whether that higher volume would be a significant new use.

According to 40 CFR 721.1(c), persons submitting a SNUN must comply with the same notification requirements and EPA regulatory procedures as persons submitting a PMN, including submission of test data on health and environmental effects as described in 40 CFR 720.50. SNUNs must be submitted on EPA Form No. 7710-25, generated using e-PMN software, and submitted to the Agency in accordance with the procedures set forth in 40 CFR 720.40. E-PMN software is available electronically at http://www.epa.gov/opptintr/newchems.

EPA has evaluated the potential costs of establishing SNUN requirements for potential manufacturers and processors of the chemical substances subject to this rule. EPA's complete economic analysis is available in the docket under docket ID number EPA-HQ-OPPT-2018-0772.

This action establishes SNURs for several new chemical substances that were the subject of PMNs and TSCA section 5(e) Orders. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866 (58 FR 51735, October 4, 1993).

According to PRA (44 U.S.C. 3501 et seq. ), an agency may not conduct or sponsor, and a person is not required to respond to a collection of information that requires OMB approval under PRA, unless it has been approved by OMB and displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in title 40 of the CFR, after appearing in the Federal Register , are listed in 40 CFR part 9, and included on the related collection instrument or form, if applicable. EPA is amending the table in 40 CFR part 9 to list the OMB approval number for the information collection requirements contained in this action. This listing of the OMB control numbers and their subsequent codification in the CFR satisfies the display requirements of PRA and OMB's implementing regulations at 5 CFR part 1320. This Information Collection Request (ICR) was previously subject to public notice and comment prior to OMB approval, and given the technical nature of the table, EPA finds that further notice and comment to amend it is unnecessary. As a result, EPA finds that there is “good cause” under section 553(b)(3)(B) of the Administrative Procedure Act (5 U.S.C. 553(b)(3)(B)) to amend this table without further notice and comment.

The information collection requirements related to this action have already been approved by OMB pursuant to PRA under OMB control number 2070-0012 (EPA ICR No. 574). This action does not impose any burden requiring additional OMB approval. If an entity were to submit a SNUN to the Agency, the annual burden is estimated to average between 30 and 170 hours per response. This burden estimate includes the time needed to review instructions, search existing data sources, gather and maintain the data needed, and complete, review, and submit the required SNUN.

Send any comments about the accuracy of the burden estimate, and any suggested methods for minimizing respondent burden, including using automated collection techniques, to the Director, Regulatory Support Division, Office of Mission Support (2822T), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001. Please remember to include the OMB control number in any correspondence, but do not submit any completed forms to this address.

Pursuant to section 605(b) of the RFA (5 U.S.C. 601 et seq. ), the Agency hereby certifies that promulgation of this SNUR would not have a significant adverse economic impact on a substantial number of small entities. The requirement to submit a SNUN applies to any person (including small or large entities) who intends to engage in any activity described in the final rule as a “significant new use.” Because these uses are “new,” based on all information currently available to EPA, it appears that no small or large entities presently engage in such activities. A SNUR requires that any person who intends to engage in such activity in the future must first notify EPA by submitting a SNUN. Although some small entities may decide to pursue a significant new use in the future, EPA cannot presently determine how many, if any, there may be. However, EPA's experience to date is that, in response to the promulgation of SNURs covering over 1,000 chemicals, the Agency receives only a small number of notices per year. For example, the number of SNUNs received was seven in Federal fiscal year (FY) 2013, 13 in FY2014, six in FY2015, 10 in FY2016, 14 in FY2017, and 11 in FY2018 and only a fraction of these were from small businesses. In addition, the Agency currently offers relief to qualifying small businesses by reducing the SNUN submission fee from $16,000 to $2,800. This lower fee reduces the total reporting and recordkeeping of cost of submitting a SNUN to about $10,116 for qualifying small firms. Therefore, the potential economic impacts of complying with this SNUR are not expected to be significant or adversely impact a substantial number of small entities. In a SNUR that published in the Federal Register of June 2, 1997 (62 FR 29684) (FRL-5597-1), the Agency presented its general determination that final SNURs are not expected to have a significant economic impact on a substantial number of small entities, which was provided to the Chief Counsel for Advocacy of the Small Business Administration.

Based on EPA's experience with proposing and finalizing SNURs, State, local, and Tribal governments have not been impacted by these rulemakings, and EPA does not have any reasons to believe that any State, local, or Tribal government will be impacted by this action. As such, EPA has determined that this action does not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments subject to the requirements of UMRA sections 202, 203, 204, or 205 (2 U.S.C. 1501 et seq. ).

This action will not have a substantial direct effect on 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, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999).

This action does not have Tribal implications because it is not expected to have substantial direct effects on Indian Tribes. This action does not significantly nor uniquely affect the communities of Indian Tribal governments, nor does it involve or impose any requirements that affect Indian Tribes. Accordingly, the requirements of Executive Order 13175 (65 FR 67249, November 9, 2000), do not apply to this action.

This action is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because this is not an economically significant regulatory action as defined by Executive Order 12866, and this action does not address environmental health or safety risks disproportionately affecting children.

This action is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001), because this action is not expected to affect energy supply, distribution, or use and because this action is not a significant regulatory action under Executive Order 12866.

In addition, since this action does not involve any technical standards, NTTAA section 12(d) (15 U.S.C. 272 note), does not apply to this action.

This action does not entail special considerations of environmental justice related issues as delineated by Executive Order 12898 (59 FR 7629, February 16, 1994).

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Therefore, 40 CFR parts 9 and 721 are amended as follows:

Preamble acronyms and abbreviations. We use multiple acronyms and terms in this preamble. While this list may not be exhaustive, to ease the reading of this preamble and for reference purposes, the EPA defines the following terms and acronyms here:

Background information. On May 17, 2019 (84 FR 22642), the EPA proposed revisions to the Boat Manufacturing NESHAP and the Reinforced Plastic Composites Production NESHAP based on our RTR. In this action, we are finalizing decisions and revisions for the rule. We summarize some of the more significant comments we timely received regarding the proposed rule and provide our responses in this preamble. A summary of all other public comments on the proposal and the EPA's responses to those comments is available in the Summary of Public Comments and Responses for the Risk and Technology Reviews for Boat Manufacturing NESHAP and Reinforced Plastic Composite NESHAP, Docket ID No. EPA-HQ-OAR-2016-0447 for Boat Manufacturing and EPA-HQ-OAR-2016-0449 for Reinforced Plastic Composites Production. A “track changes” version of the regulatory language that incorporates the changes in this action is available in the docket for each rule.

Organization of this document. The information in this preamble is organized as follows:

Regulated entities. Categories and entities potentially regulated by this action are shown in Table 1 of this preamble.

Table 1 of this preamble is not intended to be exhaustive, but rather to provide a guide for readers regarding entities likely to be affected by the final action for the source categories listed. To determine whether your facility is affected, you should examine the applicability criteria in the appropriate NESHAP. If you have any questions regarding the applicability of any aspect of this NESHAP, please contact the appropriate person listed in the preceding FOR FURTHER INFORMATION CONTACT section of this preamble.

In addition to being available in the docket, an electronic copy of this final action will also be available on the internet. Following signature by the EPA Administrator, the EPA will post a copy of this final action at: https://www.epa.gov/stationary-sources-air-pollution/boat-manufacturing-national-emission-standards-hazardous-air for the Boat Manufacturing NESHAP, and https://www.epa.gov/stationary-sources-air-pollution/reinforced-plastic-composites-production-national-emission for the Reinforced Plastic Composites Production NESHAP. Following publication in the Federal Register , the EPA will post the Federal Register version and key technical documents at this same website.

Additional information is available on the RTR website at https://www.epa.gov/stationary-sources-air-pollution/risk-and-technology-review-national-emissions-standards-hazardous. This information includes an overview of the RTR program and links to project websites for the RTR source categories.

Under Clean Air Act (CAA) section 307(b)(1), judicial review of this final action is available only by filing a petition for review in the United States Court of Appeals for the District of Columbia Circuit (the Court) by May 19, 2020. Under CAA section 307(b)(2), the requirements established by this final rule may not be challenged separately in any civil or criminal proceedings brought by the EPA to enforce the requirements.

Section 307(d)(7)(B) of the CAA further provides that only an objection to a rule or procedure which was raised with reasonable specificity during the period for public comment (including any public hearing) may be raised during judicial review. This section also provides a mechanism for the EPA to reconsider the rule if the person raising an objection can demonstrate to the Administrator that it was impracticable to raise such objection within the period for public comment or if the grounds for such objection arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of the rule. Any person seeking to make such a demonstration should submit a Petition for Reconsideration to the Office of the Administrator, U.S. EPA, Room 3000, WJC South Building, 1200 Pennsylvania Ave. NW, Washington, DC 20460, with a copy to both the person(s) listed in the preceding FOR FURTHER INFORMATION CONTACT section, and the Associate General Counsel for the Air and Radiation Law Office, Office of General Counsel (Mail Code 2344A), U.S. EPA, 1200 Pennsylvania Ave. NW, Washington, DC 20460.

Section 112 of the CAA establishes a two-stage regulatory process to address emissions of hazardous air pollutants (HAP) from stationary sources. In the first stage, we must identify categories of sources emitting one or more of the HAP listed in CAA section 112(b) and then promulgate technology-based NESHAP for those sources. “Major sources” are those that emit, or have the potential to emit, any single HAP at a rate of 10 tons per year (tpy) or more, or 25 tpy or more of any combination of HAP. For major sources, these standards are commonly referred to as maximum achievable control technology (MACT) standards and must reflect the maximum degree of emission reductions of HAP achievable (after considering cost, energy requirements, and non-air quality health and environmental impacts). In developing MACT standards, CAA section 112(d)(2) directs the EPA to consider the application of measures, processes, methods, systems, or techniques, including, but not limited to, those that reduce the volume of or eliminate HAP emissions through process changes, substitution of materials, or other modifications; enclose systems or processes to eliminate emissions; collect, capture, or treat HAP when released from a process, stack, storage, or fugitive emissions point; are design, equipment, work practice, or operational standards; or any combination of the above.

For these MACT standards, the statute specifies certain minimum stringency requirements, which are referred to as MACT floor requirements, and which may not be based on cost considerations. See CAA section 112(d)(3). For new sources, the MACT floor cannot be less stringent than the emission control achieved in practice by the best-controlled similar source. The MACT standards for existing sources can be less stringent than floors for new sources, but they cannot be less stringent than the average emission limitation achieved by the best-performing 12 percent of existing sources in the category or subcategory (or the best-performing five sources for categories or subcategories with fewer than 30 sources). In developing MACT standards, we must also consider control options that are more stringent than the floor under CAA section 112(d)(2). We may establish standards more stringent than the floor, based on the consideration of the cost of achieving the emissions reductions, any non-air quality health and environmental impacts, and energy requirements.

In the second stage of the regulatory process, the CAA requires the EPA to undertake two different analyses, which we refer to as the technology review and the residual risk review. Under the technology review, we must review the technology-based standards and revise them “as necessary (taking into account developments in practices, processes, and control technologies)” no less frequently than every 8 years, pursuant to CAA section 112(d)(6). Under the residual risk review, we must evaluate the risk to public health remaining after application of the technology-based standards and revise the standards, if necessary, to provide an ample margin of safety to protect public health or to prevent, taking into consideration costs, energy, safety, and other relevant factors, an adverse environmental effect. The residual risk review is required within 8 years after promulgation of the technology-based standards, pursuant to CAA section 112(f). In conducting the residual risk review, if the EPA determines that the current standards provide an ample margin of safety to protect public health, it is not necessary to revise the MACT standards pursuant to CAA section 112(f). 1 For more information on the statutory authority for this rule, see the CAA Section 112 Risk and Technology Reviews: Statutory Authority and Methodology memorandum (Docket ID Item No. EPA-HQ-OAR-2016-0447-0080).

The EPA promulgated the Boat Manufacturing NESHAP on August 22, 2001 (66 FR 44218). The standards are codified at 40 CFR part 63, subpart VVVV (40 CFR 63.5680). The boat manufacturing industry consists of facilities that manufacture fiberglass and aluminum boats. The source category covered by this MACT standard currently includes 93 facilities.

The following processes and operations are found at boat manufacturing facilities: Fiberglass boat manufacturing and assembly operations, fabric and carpet adhesive operations, and aluminum boat surface coating operations. See the proposal for this action for additional detail on the processes at boat manufacturing facilities (84 FR 22645, May 17, 2019). The Boat Manufacturing NESHAP regulates organic HAP from sources that manufacture aluminum recreational boats or any type of fiberglass boats. For the purposes of these standards, recreational boats are defined as a vessel which, by design and construction, is intended by the manufacturer to be operated primarily for pleasure, or to be leased, rented, or chartered to another for the latter's pleasure (rather than for commercial or military purposes). The Boat Manufacturing NESHAP applies to the following operations: All open molding operations including pigmented gel coat, clear gel coat, production resin, tooling resin, and tooling gel coat; all closed molding resin operations; resin and gel coat mixing and operations; resin and gel coat application equipment cleaning operations; carpet and fabric adhesive operations; aluminum hull and deck coating operations, including solvent wipe-down operations; and paint spray gun cleaning operations on aluminum recreational boats. The NESHAP regulates HAP emissions by setting HAP content limits for the resins and gel coats used at each regulated open molding resin and gel coat operation. Regulated entities can comply with the HAP limits by averaging emissions, using compliant materials, or using add-on controls.

The EPA promulgated the Reinforced Plastic Composites Production NESHAP on April 21, 2003 (68 FR 19375) and amended the standards on August 25, 2005 (70 FR 50118). The standards are codified at 40 CFR part 63, subpart WWWW (40 CFR 63.5780). The reinforced plastic composites production industry consists of facilities that manufacture reinforced and non-reinforced plastic composite products and the production of plastic molding compounds used in the production of plastic composites products. The source category covered by this MACT standard currently includes 448 facilities.

The Reinforced Plastic Composites Production NESHAP applies to the following operations: Open molding, closed molding, centrifugal casting, continuous lamination, continuous casting, polymer casting, pultrusion, sheet molding compound manufacturing, bulk molding compound (BMC) manufacturing, mixing, cleaning of equipment used in reinforced plastic composites manufacture, HAP-containing materials storage, and repair operations on manufactured parts (40 CFR 63.5790). Most existing major sources are required to incorporate pollution-prevention techniques in their production processes. These techniques include the following: Using raw materials containing low amounts of regulated HAP; non-atomized resin application; and covering open resin baths and tanks.

On May 17, 2019, the EPA published proposed rules in the Federal Register for the Boat Manufacturing NESHAP, 40 CFR part 63, subpart VVVV, and the Reinforced Plastic Composites Production NESHAP, 40 CFR part 63, subpart WWWW, that took into consideration the RTR analyses. In the proposed rule, we proposed that the risks due to emissions of air toxics from these source categories under the current standards are acceptable and that the standards provide an ample margin of safety to protect public health, and, therefore, no additional emission reductions are necessary. For the technology reviews, we did not identify any developments in practices, processes, or control technologies, and, therefore, we did not propose any changes to the standards under CAA section 112(d)(6). We did, however, solicit comments on the feasibility and associated cost of revising the NESHAP to include a work practice standard that would require controlled-spray operator training.

Additionally, the EPA proposed amendments to provisions addressing emissions during periods of SSM and to provisions regarding electronic reporting of performance test and performance evaluation results and semiannual reports, and proposed an amendment to the Reinforced Plastic Composites Production NESHAP to clarify that mixers that route to a capture and control device system with at least 95-percent efficiency overall are not required to have covers.

This action finalizes the EPA's determinations pursuant to the RTR provisions of CAA section 112 for the Boat Manufacturing and Reinforced Plastic Composites Production source categories. This actions also finalizes other changes to the NESHAP, including:

• Amending provisions addressing emissions during periods of SSM;

• Amending provisions regarding electronic reporting of performance test and performance evaluation results and semiannual reports; and

• An amendment to the Reinforced Plastic Composites Production NESHAP to clarify that mixers that route to a capture and control device system with at least 95-percent efficiency overall are not required to have covers.

This section introduces the final amendments to the Boat Manufacturing and Reinforced Plastic Composites Production NESHAP being promulgated pursuant to CAA section 112(f). Consistent with the proposed findings for these NESHAP, the EPA is finalizing our determination that the risks due to emissions of air toxics from these source categories under the current standards are acceptable and that the standards provide an ample margin of safety to protect public health. The EPA proposed no changes to these two subparts based on the risk reviews conducted pursuant to CAA section 112(f). The EPA received no new data or other information during the public comment period that causes us to change that proposed determination. Therefore, we are not requiring additional controls under CAA section 112(f)(2) for either of the two subparts in this action, and we are not making any changes to the existing standards under CAA section 112(f)(2). In other words, we are readopting the standards for both subparts.

Consistent with the proposed findings for these NESHAP, we determined that there are no developments in practices, processes, and control technologies that warrant revisions to the MACT standards for either of these source categories. Therefore, we are not finalizing any revisions to the MACT standards under CAA section 112(d)(6).

We are finalizing the proposed amendments to the Boat Manufacturing NESHAP (40 CFR part 63, subpart VVVV) and the Plastic Composites Production NESHAP (40 CFR part 63, subpart WWWW) to remove and revise the provisions related to SSM. In its 2008 decision in Sierra Club v. EPA, 551 F.3d 1019 (D.C. Cir. 2008), the Court vacated portions of two provisions in the EPA's CAA section 112 regulations governing the emissions of HAP during periods of SSM. Specifically, the Court vacated the SSM exemption contained in 40 CFR 63.6(f)(1) and (h)(1), holding that under section 302(k) of the CAA, emissions standards or limitations must be continuous in nature and that the SSM exemption violates the CAA's requirement that some CAA section 112 standards apply continuously. As detailed in section IV.D and IV.I of the proposal preamble for these NESHAP (84 FR 22660 and 22668, May 17, 2019), Table 8 to subpart VVVV of part 63 and Table 15 to subpart WWWW of part 63 (General Provisions applicability tables) are being revised to require that the standards apply at all times. We also eliminated or revised certain recordkeeping and reporting requirements related to the eliminated SSM exemption. The EPA also made other harmonizing changes to remove or modify inappropriate, unnecessary, or redundant language in the absence of the SSM exemption. We determined that facilities in both of these source categories can meet the applicable emission standards in the Boat Manufacturing NESHAP and the Plastic Composites Production NESHAP at all times, including periods of startup and shutdown. Therefore, the EPA determined that no additional standards are needed to address emissions during these periods. The legal rationale and explanation of the changes to the SSM requirements are set forth in the proposed rules. See 84 FR 22660 through 22662 and 22668 through 222669, May 17, 2019.

Further, the EPA is not implementing standards for malfunctions. As discussed in sections IV.D and IV.I of the May 17, 2019, proposal preamble, the EPA interprets CAA section 112 as not requiring emissions that occur during periods of malfunction to be factored into development of CAA section 112 standards, although the EPA has the discretion to set standards for malfunctions where feasible. For these source categories, it is unlikely that a malfunction would result in a violation of the standards, and no comments were submitted that would suggest otherwise. Refer to section IV.D and IV.I of the May 17, 2019, proposal preamble for further discussion of the EPA's rationale for the decision not to set standards for malfunctions, as well as a discussion of the actions a source could take in the unlikely event that a source fails to comply with the applicable CAA section 112(d) standards as a result of a malfunction event, given that administrative and judicial procedures for addressing exceedances of the standards fully recognize that violations may occur despite good faith efforts to comply and can accommodate those situations.

The EPA is finalizing a revision to the performance testing requirements at 40 CFR 63.5765 and 63.5912. The final performance testing provisions prohibit performance testing during SSM for demonstrating compliance as these conditions are not representative of normal operating conditions. The final rules also require that operators maintain records to document that operating conditions during performance tests represent normal conditions.

The EPA is finalizing electronic reporting requirements that apply to owners and operators of facilities subject to the Boat Manufacturing NESHAP and the Plastic Composites Production NESHAP. Owners and operations are required to submit electronic copies of performance test reports and performance evaluation reports and semiannual reports through the EPA's Central Data Exchange (CDX), using the Compliance and Emissions Data Reporting Interface (CEDRI). A description of the electronic data submission process is provided in the memorandum, Electronic Reporting Requirements for New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants (NESHAP) Rules, available in the dockets for both rules at Docket ID Item Nos. EPA-HQ-OAR-2016-0447-0082 and EPA-HQ-2016-0449-0047. The final rule requires that performance test and performance evaluation report results collected using test methods that are supported by the EPA's Electronic Reporting Tool (ERT) as listed on the ERT website  2 at the time of the test be submitted in the format generated through the use of the ERT and that other performance test results be submitted in portable document format using the attachment module of the ERT. For semiannual reports, the final rule requires that owners and operators use the appropriate spreadsheet template to submit information to CEDRI. A draft version of the proposed template for these reports is included in the dockets for this rulemaking (Docket ID Item Nos. EPA-HQ-OAR-2016-0447-0082 and EPA-HQ-OAR-2016-0449-0047). Electronic reporting requirements are discussed further in section IV.D and V.D of this preamble.

The revisions to the MACT standards being promulgated in this action are effective on March 20, 2020.

The EPA is finalizing rule revisions that require affected sources in the Boat Manufacturing and Reinforced Plastic Composites Production source categories that commenced construction or reconstruction on or before May 17, 2019, to comply with all the amendments, including the electronic format for submitting performance test and performance evaluation results and compliance reports, no later than 180 days after the effective date of the final rule. Affected sources that commence construction or reconstruction after May 17, 2019, must comply with all requirements of the subpart, including the amendments being finalized, no later than the effective date of the final rule or upon startup, whichever is later, with the exception of the electronic format for submitting compliance reports. Affected sources that commence construction or reconstruction after May 17, 2019, must comply with all requirements for the electronic format for submitting compliance reports no later than 180 days after the effective date of the final rule or upon startup, whichever is later. The EPA's rationale for these compliance deadlines appears in the proposal preamble (84 FR 22664 and 22670, May 17, 2019). All affected facilities for the Boat Manufacturing source category must continue to meet the current requirements of 40 CFR part 63, subpart VVVV, and for the Plastic Composites Production source category must continue to meet the current requirements of 40 CFR part 63, subpart WWWW, until the applicable compliance date of the amended rule.

The EPA is requiring owners and operators of boat manufacturing and reinforced plastic composites production facilities to submit electronic copies of certain required performance test reports, performance evaluation reports, and periodic reports through the EPA's CDX using the CEDRI. The final rule requires that performance test and performance evaluation test results be submitted using the ERT. For the periodic compliance reports, the final rule requires that owners and operators use the appropriate spreadsheet template to submit information to CEDRI. The final version of the templates for these reports will be located on the CEDRI website ( https://www.epa.gov/electronic-reporting-air-emissions/cedri ).

The electronic submittal of the reports addressed in this rulemaking will increase the usefulness of the data contained in those reports, is in keeping with current trends in data availability and transparency, will further assist in the protection of public health and the environment, will improve compliance by facilitating the ability of regulated facilities to demonstrate compliance with requirements and by facilitating the ability of delegated state, local, tribal, and territorial air agencies and the EPA to assess and determine compliance, and will ultimately reduce burden on regulated facilities, delegated air agencies, and the EPA. Electronic reporting also eliminates paper-based manual processes, thereby saving time and resources, simplifying data entry, eliminating redundancies, minimizing data reporting errors, and providing data quickly and accurately to the affected facilities, air agencies, the EPA and the public. For a more thorough discussion of electronic reporting, see the memorandum on e-reporting, available in Docket ID Item No. EPA-HQ-OAR-2016-0447 and EPA-HQ-OAR-2016-0449.

In this action, we are finalizing an amendment to Table 4 to 40 CFR part 63, subpart WWWW, to clarify that mixers that route emissions to a capture and control device system that is at least 95-percent efficient overall are not required to have covers. In the 2003 NESHAP rulemaking, we determined that MACT for existing sources was pollution prevention measures (for mixing and BMC manufacturing operations) and that MACT for new sources was 95-percent control. We also considered whether the new source MACT floor for mixing operations should be incorporation of the pollution prevention measures (in this case covering the mixers) combined with 95-percent control. We determined that the best controlled facilities which route emissions to a 95-percent efficient control device do not also incorporate the best pollution prevention techniques. Therefore, we concluded that combining the pollution prevention requirements with the 95-percent control requirements would result in an overall control level that exceeds the levels at the best controlled facilities (66 FR 40332, August 2, 2001). However, the text in table 4 of the regulation did not directly address whether mixers that capture and control emissions by 95 percent overall need to have covers. We have added text in line 6 of table 4 to clarify that covers are not required for mixers that fully capture and route emissions to a control device with at least 95-percent efficiency.

For each issue, this section provides a description of what we proposed and what we are finalizing for the issue, the EPA's rationale for the final decisions and amendments, and a summary of key comments and responses. For all comments not discussed in this preamble, comment summaries and the EPA's responses can be found in the comment summary and response document available in the docket.

Pursuant to CAA section 112(f), the EPA conducted a residual risk review and presented the results of this review, along with our proposed decisions regarding risk acceptability and ample margin of safety, in section IV.A of the proposed rule preamble (84 FR 22658, May 17, 2019). The results of this review are presented briefly below in Table 2 of this preamble. Additional detail is provided in the residual risk technical support document titled Residual Risk Assessment for the Boat Manufacturing Source Category in Support of the 2018 Risk and Technology Review Proposed Rule, which is available in the Boat Manufacturing Docket (Docket ID No. EPA-HQ-OAR-2016-0447).

The EPA proposed that the risks from the Boat Manufacturing source category were acceptable based on the health risk information and factors discussed in section IV.C of the proposal for this rulemaking (84 FR 22658, May 17, 2019). As explained in section II.A of the proposal preamble, the EPA sets standards under CAA section 112(f)(2) using “a two-step standard-setting approach, with an analytical first step to determine an 'acceptable risk' that considers all health information, including risk estimation uncertainty, and includes a presumptive limit on maximum individual risk (MIR) of approximately 1-in-10 thousand (84 FR 22644, May 17, 2019).”

For the Boat Manufacturing source category, the risk analysis indicates that the cancer risks to the individual most exposed is 0.2-in-1 million based on actual emissions and is 0.3-in-1 million based on allowable emissions. These risks are considerably less than 100-in-1 million (or 1-in-10 thousand), which is the presumptive upper limit of acceptable risk. The Benzene NESHAP explained that “a MIR of approximately one in 10 thousand should ordinarily be the upper end of the range of acceptability. As risks increase above this benchmark, they become presumptively less acceptable under CAA section 112, and would be weighed with the other health risk measures and information in making an overall judgment on acceptability (54 FR 38057, September 14, 1989). The risk analysis also shows very low cancer incidence (0.00001 cases per year for actual emissions and 0.00002 cases per year for allowable emissions). Based on our analysis, we did not identify potential for adverse chronic noncancer health effects; all target organ specific health indexes (TOSHIs) were less than 1. The acute noncancer risks based on actual emissions are not greater than a hazard quotient (HQ) of 1 for styrene. Therefore, we find there is little potential concern of acute noncancer health impacts from actual emissions. In addition, the risk assessment indicates no significant potential for multipathway health effects or ecological effects. For all the reasons stated, the risk from the Boat Manufacturing source category were found to be acceptable.

Under the ample margin of safety analysis, we evaluated the cost and feasibility of available control technologies and other measures (including the controls, measures, and costs reviewed under the technology review) that could be applied in this source category to further reduce the risks (or potential risks) due to emissions of HAP, considering all of the health risks and other health information considered in the risk acceptability determination described above. In this analysis, we considered the results of the technology review, risk assessment, and other aspects of our MACT rule review to determine whether there are any cost-effective controls or other measures that would reduce emissions further and would be necessary to provide an ample margin of safety to protect public health.

Our risk analysis indicated the risks from the Boat Manufacturing source category are low for both cancer and noncancer health effects, and, therefore, any risk reductions from further available control options would result in minimal health benefits. As noted in section IV.C of the proposal preamble, no additional control measures were identified for reducing HAP emissions from the Boat Manufacturing source category (84 FR 22660, May 17, 2019). Thus, we proposed that the Boat Manufacturing NESHAP provides an ample margin of safety to protect health and we are not making any changes to the existing standards under CAA section 112(f)(2).

Pursuant to CAA section 112(f), the EPA conducted a residual risk review and presented the results of this review, along with our proposed decisions regarding risk acceptability and ample margin of safety, in section IV.F of the proposed rule preamble (84 FR 22664, May 17, 2019). The results of this review are presented briefly below in Table 3 of this preamble. Additional detail is provided in the residual risk technical support document titled Residual Risk Assessment for the Reinforced Plastic Composites Production Source Category in Support of the 2018 Risk and Technology Review Proposed Rule, which is available in the Boat Manufacturing Docket (Docket ID No. EPA-HQ-OAR-2016-0449).

The EPA proposed that the risks from the Reinforced Plastic Composites Production source category were acceptable based on the health risk information and factors discussed in section IV.G of the proposal for this rulemaking (84 FR 22666, May 17, 2019). As explained in section II.A of the proposal preamble, the EPA sets standards under CAA section 112(f)(2) using “a two-step standard-setting approach, with an analytical first step to determine an ‘acceptable risk' that considers all health information, including risk estimation uncertainty, and includes a presumptive limit on MIR of approximately 1-in-10 thousand (84 FR 22644, May 17, 2019).”

For the Reinforced Plastic Composites Production source category, the risk analysis indicates that the cancer risks to the individual most exposed is 4-in-1 million based on actual emissions and is 4-in-1 million based on allowable emissions. These risks are considerably less than 100-in-1 million (or 1-in-10 thousand), which is the presumptive upper limit of acceptable risk. The risk analysis also shows very low cancer incidence (0.001 cases per year for actual emissions and 0.001 cases per year for allowable emissions). We did not identify potential for adverse chronic noncancer health effects; the TOSHIs were equal to 1. The results of the acute screening analysis estimate a maximum acute noncancer HQ of 3 based on the acute recommended exposure limit for styrene. The maximum off-site concentration for this HAP was also compared to EPA's Acute Exposure Guideline Levels (AEGL-1) and Emergency Response Planning Guideline (ERPG-1) levels and, in all cases, the HQ was less than 1, below the level at which mild, reversible effects would be anticipated. This information, in addition to the conservative (health protective) assumptions built into the screening assessment, leads us to conclude that adverse effects from acute exposure to emissions of this HAP from this category are not anticipated. In addition, the risk assessment indicates no significant potential for multipathway health effects or ecological effects. Considering all the health risk information and factors discussed above, we proposed that the risks from the Reinforced Plastic Composites Production source category are acceptable.

Under the ample margin of safety analysis, we evaluated the cost and feasibility of available control technologies and other measures (including the controls, measures, and costs reviewed under the technology review) that could be applied in this source category to further reduce the risks (or potential risks) due to emissions of HAP, considering all of the health risks and other health information considered in the risk acceptability determination described above. In this analysis, we considered the results of the technology review, risk assessment, and other aspects of our MACT rule review to determine whether there are any cost-effective controls or other measures that would reduce emissions further and would be necessary to provide an ample margin of safety to protect public health.

Our risk analysis indicated the risks from the Reinforced Plastic Composites Production source category are low for both cancer and noncancer health effects, and, therefore, any risk reductions from further available control options would result in minimal health benefits. As noted in section IV.H of the proposal preamble, no additional control measures were identified for reducing HAP emissions from sources in the Reinforced Plastic Composites Production source category (84 FR 22667, May 17, 2019). Thus, we proposed that the Reinforced Plastic Composites Production NESHAP provides an ample margin of safety to protect health and we are not making any changes to the existing standards under CAA section 112(f)(2).

The EPA has not changed any aspect of the risk assessment for either of these two source categories as a result of public comments received on the May 2019 proposal.

The EPA received comments in support of and against the proposed residual risk review and our determination that no revisions were warranted under CAA section 112(f)(2) for either source category. Generally, the comments that did not support the proposed determinations that the risks are acceptable and that the existing standards provide an ample margin of safety also asserted that changes to the underlying risk assessment methodology were needed. For example, one commenter stated that the EPA should lower the acceptability benchmark and not assume that risks below 100-in-1 million are inherently acceptable, include emissions from outside of the source categories in question in the risk assessment, and assume that pollutants with noncancer health risks have no safe level of exposure. Generally, the comments that were supportive of the proposed determinations of the residual risk review agreed with our underlying risk assessment methodology and data inputs and asked for the rule to be finalized as soon as possible to provide regulatory certainty. After review of all the comments received, we decided not to make any changes to the residual risk review. The comments and our specific responses can be found in the document, Summary of Public Comments and Responses on Proposed Rule (84 FR 22642, May 17, 2019), available in the dockets for these actions (Docket ID Nos. EPA-HQ-OAR-2016-0447 and EPA-HQ-OAR-2016-0449).

As noted in our proposal, the EPA sets standards under CAA section 112(f)(2) using “a two-step standard-setting approach, with an analytical first step to determine an `acceptable risk' that considers all health information, including risk estimation uncertainty, and includes a presumptive limit on the MIR of approximately 1-in-10 thousand (see 54 FR 38045, September 14, 1989).” We weigh all health risk factors in our risk acceptability determination, including the cancer MIR, cancer incidence, the maximum chronic noncancer TOSHI, the maximum acute noncancer HQ, the extent of noncancer risks, the distribution of cancer and noncancer risks in the exposed population, and the risk estimation uncertainties.

Since proposal, neither the risk assessment nor our determinations regarding risk acceptability, ample margin of safety, or adverse environmental effects have changed. For the reasons explained in the proposed rule, we determine that the risks from the Boat Manufacturing and Reinforced Plastic Composites Production source categories are acceptable, and that the current standards provide an ample margin of safety to protect public health and prevent an adverse environmental effect. Therefore, we are not revising either subpart to require additional controls pursuant to CAA section 112(f)(2) based on the residual risk review, and we are readopting the existing standards under CAA section 112(f)(2).

Based on our review, the EPA did not identify any developments in practices, processes, or control technologies for the Boat Manufacturing and Reinforced Plastic Composites Production source categories, and, therefore, we did not propose any changes to the standards under CAA section 112(d)(6). Brief summaries of the EPA's findings in conducting the technology review of Boat Manufacturing and Reinforced Plastic Composites Production source categories were included in the preamble to the proposed rule (84 FR 22642, 22660, 22667, May 17, 2019), and detailed discussions of the EPA's technology review and findings were included in the memorandum, Technology Review for Boat Manufacturing and Reinforced Plastic Composites Production Source Category, June 1, 2018, which can be found in the dockets for both source categories (Docket ID Nos. EPA-OAR-HQ-2016-0447 and EPA-HQ-OAR-2016-0449).

The EPA is making no changes to the conclusions of the technology review and is finalizing the results of the technology reviews for the Boat Manufacturing and Reinforced Plastic Composites Production source categories as proposed.

The EPA received one comment on the proposed technology review for the Boat Manufacturing source category. This commenter supported our proposed determination that no revisions were warranted under CAA section 112(d)(6) for the Boat Manufacturing source category. No comments were received on the technology review for the Reinforced Plastic Composites source category.

As we received no adverse comments on our proposed technology reviews or the proposed determinations based on those reviews, we are finalizing the reviews as proposed and making no changes to the standards pursuant to CAA section 112(d)(6). The rationale for and results of our technology reviews are explained in the preamble to the proposed rules (84 FR 22660 and 22667, May 17, 2019).

In the May 17, 2019, action, the EPA proposed amendments to the Boat Manufacturing NESHAP and the Reinforced Plastic Composites Production NESHAP to remove and revise provisions related to SSM that are not consistent with the requirement that the standards apply at all times. More information concerning the proposed amendments for the elimination of SSM exemption provisions is in the preamble to the proposed rules (84 FR 22660 and 22668, May 17, 2019).

The EPA is finalizing the SSM provisions as proposed with no changes (84 FR 22660 and 22668, May 17, 2019).

We received several comments in support of the proposed SSM amendments for the Boat Manufacturing and Reinforced Plastic Composites source categories. One commenter also stated that the proposed amendments will have no impact on the Boat Manufacturing industry.

For the reasons explained in the proposed rule and after evaluation of the comments on the proposed amendments to the SSM provisions for the Boat Manufacturing NESHAP and the Reinforced Plastic Composites Production NESHAP, we are finalizing the proposed revisions related to SSM that are inconsistent with the requirement that the standards apply at all times. More information concerning the proposed amendments to the SSM provisions is in the preamble for each of the proposed rules (84 FR 22660 and 22668, May 17, 2019).

In the May 17, 2019, action, we proposed that owners and operators of facilities subject to the Boat Manufacturing NESHAP and the Reinforced Plastic Composites NESHAP submit electronic copies of performance test and performance evaluation results and semiannual reports through the EPA's CDX, using the CEDRI Interface. A description of the electronic submission process is provided in the memorandum, Electronic Reporting Requirements for New Source Performance Standards (NSPS) and National Emission Standards for Hazardous Air Pollutants (NESHAP), August 8, 2018, in the dockets for Boat Manufacturing (Docket ID No. EPA-OAR-HQ-2016-0447) and Reinforced Plastic Composites (Docket ID No. EPA-HQ-OAR-2016-0449). The proposed rule requirement would replace the current rule requirement to submit these notifications and reports to the Administrator at the appropriate address listed in 40 CFR 63.13. The proposed rule requirement would not affect submittals required by state air agencies. The proposed compliance schedule language in 40 CFR 63.5765(c) and 63.5912(c) for submission of semiannual compliance reports gives facilities 181 days after the final rule is published to begin electronic reporting or 1 year after the 40 CFR part 63, subparts VVVV and WWWW, semiannual compliance report template for both source categories is available in CEDRI, whichever is later.

The EPA is finalizing the electronic reporting provisions as proposed with no changes (84 FR 22662 and 22669, May 17, 2019).

The EPA received several comments that were generally supportive of the proposed electronic reporting requirements. One commenter stated that the proposed electronic reporting requirements will reduce “regulatory burden imposed on this sector by helping to minimize waste of resources and streamline operations.”

4. What is the rationale for our final approach for the electronic reporting provisions?

For the reasons explained in the proposed rule and after evaluation of the comments on the proposed amendments, the EPA is requiring owners and operators of facilities subject to the Boat Manufacturing NESHAP and the Reinforced Plastic Composites Production NESHAP to submit electronic copies of performance test and performance evaluation results and semiannual reports through the EPA's CDX, using CEDRI. The rationale for the proposed amendments to the electronic reporting provisions is in the preamble to the proposed rule (84 FR 22662 and 22669, May 17, 2019). This rationale also supports our determination to finalize these requirements as proposed.

The EPA requested comment on the potential costs and benefits of revising the Boat Manufacturing NESHAP and/or the Reinforced Plastic Composites Production NESHAP to include a controlled-spray training program for operations where styrene-containing resins and gel coats are sprayed onto an open mold. We specifically asked for feedback on whether this practice is widely used in industry, whether significant HAP reductions can be achieved industry-wide and whether HAP reductions could be applicable to all open mold production operations. A more detailed description of the potential revisions and amendatory rule text were provided in the dockets for both rulemakings (Docket ID Item Nos. EPA-OAR-HQ-2016-0447-0079 and EPA-OAR-HQ-2016-0049-0044).

For reasons described below, the EPA has decided not to add provisions requiring a controlled-spray operator training program for styrene-containing resins and gel coats sprayed onto an open mold.

Comment: The EPA received mixed comments on the inclusion of a work practice standard for controlled-spray operator training. Some commenters argued that EPA was obligated to include a training program, while other commenters objected to the inclusion of such a program. One commenter argued that EPA must adopt controlled spray training as a technological development based on the statutory requirements of CAA section 112(d)(6). A commenter also argued that the program must be included in the final rule as a measure for reducing emissions and therefore reducing health risk to satisfy the `ample margin of safety' requirements under CAA section 112(f)(2). Other commenters objected to the inclusion of the controlled spray-training program, arguing that it would achieve no additional environmental benefit and would impose unwarranted regulatory burden. Some commenters also asserted that requirements to weigh overspray of resins and gel coats does not provide any additional environmental benefit and is overly burdensome.

Response: The EPA has decided not to add a work practice for controlled spray operator training to either the Boat Manufacturing NESHAP and/or the Reinforced Plastic Composites Production NESHAP. The EPA acknowledges that a controlled-spray training could be considered a potential development in practices. Even if the agency were to conclude it is a development, however, no changes to these NESHAP would be warranted. We do not have enough information at this time to conclude that a controlled-spray program implemented for boat manufacturing and reinforced plastic composites production facilities would result in environmental benefits and we cannot quantify the burden on affected facilities. The EPA did not receive any additional information regarding potential environmental benefits or costs associated with such a program for these source categories during the comment period. For these reasons, the EPA has concluded, based on the available information, that even if the spray operator training program were found to be a development, changes to the standards would not be required under CAA section 112(d)(6).

Under the ample margin of safety analysis, the EPA analyzes whether there are any cost-effective controls or other measures that would reduce emissions further and would be necessary to provide an ample margin of safety to protect public health. The EPA is not able, based on the information currently available to it, to conclude that the controlled-spray operator training program would be cost effective for either source category or that it would have any environmental benefit. As such, the EPA has concluded, based on the available information on the cost and feasibility of the program and considering all of the health risks and other health information considered in the risk acceptability determination, that the program is not needed to provide an ample margin of safety.

The EPA could not determine that requiring a work practice standard for controlled-spray operator training in the NESHAP for the Boat Manufacturing and Reinforced Plastic Composites Production source categories would provide an environmental benefit, and, therefore, could not determine if such programs would be cost effective. The EPA did not receive any information regarding the potential costs of revising the Boat Manufacturing NESHAP and/or the Reinforced Plastic Composites Production NESHAP to include controlled-spray training as a work practice standard during the comment period for both regulatory actions. Given this uncertainty for program costs and benefits, we have also determined that the controlled-spray operator training program is not needed to provide an ample margin of safety.

For these reasons, the EPA has decided not to add work practice standards for controlled-spray operator training to either the Boat Manufacturing NESHAP and/or the Reinforced Plastic Composites Production NESHAP.

The EPA estimates that there are 93 boat manufacturing facilities that are subject to the Boat Manufacturing NESHAP affected by the proposed amendments to 40 CFR part 63, subpart VVVV, and 448 reinforced plastic composites production facilities subject to the Reinforced Plastic Composites Production NESHAP, affected by the proposed amendments to 40 CFR part 63, subpart WWWW. The basis of our estimates of affected facilities are provided in the memorandum, Emissions Data for the National Emission Standards for Hazardous Air Pollutants for Boat Manufacturing and the National Emission Standards for Hazardous Air Pollutants for Reinforced Plastic Composites Production, which is available in the respective dockets for this action. We are not currently aware of any planned or potential new or reconstructed manufacturing facilities in either of the source categories.

All major sources in the two source categories would be required to comply with the relevant emission standards at all times without the SSM exemption. We were unable to quantify the specific emissions reductions associated with eliminating the SSM exemption. However, eliminating the SSM exemption has the potential to reduce emissions by requiring facilities to meet the applicable standard during SSM periods.

The one-time cost associated with reviewing the revised rules and becoming familiar with the electronic reporting requirements is estimated to be $446,448 (2016$); the one-time cost is composed of $75,629 for the Boat Manufacturing source category (93 facilities), and $370,819 for the Reinforced Plastic Composites Production source category (448 facilities). The total cost per facility in the Boat Manufacturing source category is estimated to be $399 per facility to review the final rule requirements and $414 per facility to become familiar with the electronic reporting requirements. The total cost per facility in the Reinforced Plastic Composites Production source category is estimated to be $414 per facility to review the final rule requirements and $414 per facility to become familiar with the electronic reporting requirements. All other costs associated with notifications, reporting, and recordkeeping are assumed to be unchanged because the facilities in each source category are currently required to comply with notification, reporting, and recordkeeping requirements, and will continue to be required to comply with those requirements. The number of personnel-hours required to develop the materials in support of reports required by the NESHAP remain unchanged.

The cost per facility for all of the facilities in both source categories to review the proposed rule requirements and to become familiar with the electronic reporting requirements are less than 1 percent of annual sales revenues. These costs are not expected to result in a significant market impact, regardless of whether they are passed on to the purchaser or absorbed by the firms.

In addition, the EPA prepared a small business screening assessment to determine whether any of the identified affected entities are small entities, as defined by the U.S. Small Business Administration. As result of our small business screening, we have identified 73 out of the 93 facilities in the Boat Manufacturing NESHAP as small entities, while 309 out of the 448 facilities in the Reinforced Plastic Composites Production NESHAP are small entities. For both industries, the costs associated with becoming familiar with the proposed rule requirements and to become familiar with the electronic reporting requirements are less than 1 percent of their annual sales revenues. Therefore, there are no significant economic impacts on a substantial number of small entities from these proposed amendments.

The EPA does not anticipate reductions in HAP emissions as a result of the proposed amendments to the Boat Manufacturing NESHAP or the Reinforced Plastic Composites Production NESHAP. Because these proposed amendments are not considered economically significant, as defined by Executive Order 12866, and because no emission reductions were estimated, we did not estimate any health benefits from reducing emissions.

The EPA performed a demographic analysis for each source category, which is an assessment of risks to individual demographic groups, of the population close to the facilities (within 50 kilometers (km) and within 5 km). In our analysis, we evaluated the distribution of HAP-related cancer risks and noncancer hazards from the Boat Manufacturing source category and the Reinforced Plastic Composites Production source category across different social, demographic, and economic groups within the populations living near operations identified as having the highest risks.

Results of the demographic analysis performed for the Boat Manufacturing source category indicate that, for seven of the 11 demographic groups, Hispanic or Latino, minority, people living below the poverty level, linguistically isolated people, adults without a high school diploma, adults 65 years of age or older, and African Americans that reside within 5 km of facilities in the source category is greater than the corresponding national percentage for the same demographic groups. When examining the risk levels of those exposed to emissions from boat manufacturing facilities, we find that no one is exposed to a cancer risk at or above 1-in-1 million or to a chronic noncancer TOSHI greater than 1, and that risks are acceptable for all populations.

The results of the Reinforced Plastic Composites Production source category demographic analysis indicate that populations residing within 50 km of facilities in the source category for three of the 11 demographic groups; minority populations, people living below the poverty level, ages 0 to 17, and adults without a high school diploma is greater than the corresponding national percentage for the same demographic groups. However, emissions from the source category expose approximately 1,600 people to a cancer risk at or above 1-in-1 million, but no cancer risk greater than 4-in-1 million (Docket ID Item No. EPA-HQ-OAR-2016-0449-0228). When examining the demographics for those exposed to cancer risks greater than 1-in-1 million from reinforced plastic composites production facilities, we find that four of the 10 demographic groups; African American, ages 0 to 17, over 25 without a high school diploma, and people below the poverty level are exposed to a cancer risk at or above 1-in-1 million. For chronic noncancer risks, no one is exposed to a chronic noncancer TOSHI greater than 1. A review of all risks from this source category is considered acceptable for all populations.

The EPA does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. This action's health and risk assessments are contained in sections IIIA. and IV.A and B of the proposal for this rule (84 FR 22684 through 22660, May 17, 2019) and are further documented in the Residual Risk Assessment for the Boat Manufacturing Source Category in Support of the 2018 Risk and Technology Review Proposed Rule, and the Residual Risk Assessment for the Surface Coating of Reinforced Plastic Composites Production Source Category in Support of the 2018 Risk and Technology Review Proposed Rule (Docket ID Item No. EPA-HQ-OAR-2016-0447-0035 and Docket ID Item No. EPA-HQ-OAR-2016-0449-0014).

Additional information about these statutes and Executive orders can be found at https://www.epa.gov/laws-regulations/laws-and-executive-orders.

This action is not a significant regulatory action and was, therefore, not submitted to the Office of Management and Budget (OMB) for review.

This action is not an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866.

The information collection activities in this rule have been submitted for approval to OMB under the PRA. The Information Collection Request (ICR) documents that the EPA prepared has been assigned EPA ICR number 1966.09 for the Boat Manufacturing source category and 1976.09 for the Reinforced Plastic Composites Production source category. You can find a copy of these ICR documents in the dockets for these rules, and they are briefly summarized here. The information collection requirements are not enforceable until OMB approves them. A brief summary of the information collection requirements for Boat Manufacturing and the Reinforced Plastic Composites Production categories is provided in sections VI.C.1 and VI.C.2 of this preamble.

We are finalizing changes to the recordkeeping and reporting requirements associated with 40 CFR part 63, subpart VVVV, in the form of eliminating the SSM plan and reporting requirements; including reporting requirements for deviations in the semiannual report; and including the requirement for electronic submittal of reports. In addition, the number of facilities subject to the standards changed since the original ICR was finalized.

Respondents/affected entities: The respondents to the recordkeeping and reporting requirements are owners or operators of boat manufacturing facilities subject to 40 CFR part 63, subpart VVVV.

Respondent's obligation to respond: Mandatory (40 CFR part 63, subpart VVVV).

Estimated number of respondents: 93 facilities.

Frequency of response: The frequency of responses varies depending on the burden item. Responses include one-time review of rule amendments, reports of periodic performance tests, and semiannual compliance reports.

Total estimated burden: The annual recordkeeping and reporting burden for responding facilities to comply with all the requirements in the NESHAP, averaged over the 3 years of this ICR, is estimated to be 7,914 hours (per year). Burden is defined at 5 CFR 1320.3(b).

Total estimated cost: The annual recordkeeping and reporting cost for responding facilities to comply with all the requirements in the NESHAP, averaged over the 3 years of this ICR, is estimated to be $816,500 (rounded, per year). There are no estimated capital and operation and maintenance (O&M) costs.

We are finalizing changes to the recordkeeping and reporting requirements associated with 40 CFR part 63, subpart WWWW, in the form of eliminating the SSM plan and reporting requirements; including reporting requirements for deviations in the semiannual report; and including the requirement for electronic submittal of reports. In addition, the number of facilities subject to the standards changed since the original ICR was finalized.

Respondents/affected entities: The respondents to the recordkeeping and reporting requirements are owners or operators of reinforced plastic composites production facilities subject to 40 CFR part 63, subpart WWWW.

Respondent's obligation to respond: Mandatory (40 CFR part 63, subpart WWWW).

Estimated number of respondents: 448 facilities.

Frequency of response: The frequency of responses varies depending on the burden item. Responses include one-time review of rule amendments, reports of periodic performance tests, and semiannual compliance reports.

Total estimated burden: The annual recordkeeping and reporting burden for responding facilities to comply with all of the requirements in the NESHAP, averaged over the 3 years of this ICR, is estimated to be 38,125 hours (per year). Burden is defined at 5 CFR 1320.3(b).

Total estimated cost: The annual recordkeeping and reporting cost for responding facilities to comply with all of the requirements in the NESHAP, averaged over the 3 years of this ICR, is estimated to be $3,933,400 (rounded, per year). There are no estimated capital and O&M costs.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. The small entities subject to the requirements of this action include small businesses engaged in either the Boat Manufacturing or Reinforced Plastic Composites Production source categories. The Agency has determined that 73 boat manufacturing facilities and 309 reinforced plastic composites production facilities are small entities, and that these small entities may experience an impact of less than 1 percent of annual sales. Additional discussion of the cost impacts can be found in section V.D of this preamble.

This action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local, or tribal governments or the private sector.

This action does not have federalism implications. It will 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 action does not have tribal implications as specified in Executive Order 13175. No tribal facilities are known to be engaged in the Boat Manufacturing or Reinforced Plastic Composites Production source categories and would not be affected by this action. Thus, Executive Order 13175 does not apply to this action.

This action is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866, and because the EPA does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. This action's health and risk assessments are contained in sections III.A and IV.A and B of the proposal for this rule (84 FR 22684 through 22660, May 17, 2019).

This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.

This rulemaking does not involve technical standards.

The EPA has determined that this action does not have disproportionately high and adverse human health or environmental effects on minority populations, low-income populations, and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994). The documentation for this decision is contained in sections IV.A, IV.B, IV.F, and IV.G of the proposal preamble (84 FR 22658 through 22667 , May 17, 2019 ). For both source categories, the risks were found to be acceptable for all populations, including minority pollutions, low-income populations, and/or indigenous people.

This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

For the reasons set forth in the preamble, 40 CFR part 63 is amended as follows:

This is a summary of the Bureau's Public Notice in WC Docket Nos. 18-143, 10-90, 14-58; DA 20-133, released on February 5, 2020. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 12th Street SW, Washington, DC 20554 or at the following internet address: https://www.fcc.gov/document/uniendo-puerto-rico-fund-and-connect-usvi-fund-procedures-pn.

1. The Bureau established procedures for the PR-USVI Stage 2 Competition, thus furthering the Commission's goal of closing the digital divide for all Americans, including those in non-contiguous areas of our country. The Stage 2 Competition will award up to $691.2 million annually for 10 years to service providers that commit to offer voice and broadband services to all fixed locations in the Commonwealth of Puerto Rico and the U.S. Virgin Islands (USVI) (together, the “Territories”). The Bureau will release an application form and instructions, and announce the application deadline in a public notice following Paperwork Reduction Act approval from the Office of Management and Budget.

2. Those wishing to participate in this competition must:

• Submit an application form for Stage 2 of the Uniendo a Puerto Rico Fund or the Connect USVI Fund (Application Form) via electronic mail to ConnectAmerica@fcc.gov prior to the application deadline; and

• Comply with all provisions outlined in this Public Notice and applicable Commission rules.

3. Each winning applicant that is authorized to receive Stage 2 fixed support will be required to offer voice and broadband services meeting the relevant performance requirements to fixed locations. It must make these services available to all fixed locations associated with the geographic area for which it is the winning applicant.

4. In the competition, the Bureau will accept applications for service at one of three performance levels, each with its own minimum download and upload speed and usage allowance, and for either high or low latency service, as shown in the tables herein. Winning applicants that become authorized to receive Stage 2 fixed support must deploy broadband service that meets the performance speed, usage and latency requirements associated with their winning applications. The performance requirements for authorized winning applicants are described in more detail in the following tables and in the PR-USVI Stage 2 Order.

5. Stage 2 support recipients may offer a variety of broadband service offerings as long as they offer at least one standalone voice plan and one service plan that provides broadband at the relevant performance tier and latency requirements, and these plans must be offered at rates that are reasonably comparable to rates offered in urban areas. For voice service, a support recipient will be required to certify annually that the pricing of its service is no more than the applicable reasonably comparable rate benchmark that the Bureau releases each year. For broadband services, a support recipient will be required to certify that the pricing of a service that meets the required performance tier and latency performance requirements is no more than the applicable reasonably comparable rate benchmark, or that it is no more than the non-promotional price charged for a comparable fixed wireline broadband service in the state or U.S. territory where the eligible telecommunication carrier (ETC) receives support.

6. The Commission has adopted specific service deployment milestones that require each winning applicant authorized to receive Stage 2 support to offer service to all locations associated with the geographic area included in its authorized winning application. Specifically, each support recipient must complete construction and begin commercially offering service to at least 40% of the locations in an area by the end of the third year of support, to at least 60% by the end of the fourth year, at least 80% and by the end of the fifth year, and to 100% by the end of the sixth year. A support recipient is deemed to be commercially offering voice and/or broadband service to a location if it provides service to the location or could provide it within 10 business days upon request.

7. Compliance will be determined by geographic area. The Bureau will verify that the support recipient offers the required service to the total number of locations across all winning areas included in the support recipient's authorized application areas ( i.e., municipios or island(s)). If a support recipient is authorized to receive support in an area for different performance tier/latency and resiliency/redundancy combinations, it will be required to demonstrate that it is offering service meeting the relevant performance requirements to the required number of locations throughout each geographic area for each such combination within the application.

8. The Commission established a one-year location adjustment process, as described more completely in the PR-USVI Stage 2 Order and in the following. In the event a support recipient cannot identify all locations in its winning geographic areas, it will have one year from release of the Stage 2 Competition winning applicants public notice to file evidence of the total number of locations in those blocks, including geolocation data of all the locations it was able to identify. The support recipient's filing will be subject to review and comment by relevant stakeholders and to audit. If the support recipient demonstrates that the number of actual, on-the-ground locations is lower than the number announced by the Bureau on December 19, 2019, its location total will be adjusted, and its support will be reduced on a pro rata basis. If a support recipient finds that the number of actual locations has increased, its total support will not be increased, but it will be required to deploy to all actual locations.

9. Additionally, the Commission adopted a voluntary five-year assessment prior to the end of the fifth year of support, as described more completely in the PR-USVI Stage 2 Order. This process allows a support recipient that faces unforeseen challenges to request a review of and adjustment to its deployment obligations. As directed by the Commission, the Bureau will establish a process no later than the beginning of the fifth year of support to provide recipients an opportunity to request reassessment of their obligations. The support recipient's filing will be subject to review and public comment. If, based on the Bureau's review, an adjustment of deployment obligations or locations is warranted for any winning applicant, the Bureau will announce those changes in a public notice.

10. To monitor each support recipient's compliance with the Stage 2 public interest obligations, the Commission has adopted reporting requirements described in detail in the PR-USVI Stage 2 Order. These include reporting a list of geocoded locations each year to which the support recipient is offering the required voice and broadband services, making a certification when the support recipient has met service milestones, and submitting the annual FCC Form 481 report. A support recipient that fails to offer service to all locations by a service milestone will be subject to non-compliance measures. A support recipient will also be subject to any non-compliance measures that are adopted in conjunction with the uniform methodology applicable to high-cost support recipients for testing and reporting network performance.

11. Single-Round Competition Format. As adopted in the PR-USVI Stage 2 Order, the Bureau will conduct the Stage 2 Competition using a single-round, confidential submission, objective scoring process. The Bureau will consider all eligible Stage 2 applications simultaneously and select applicants based on the lowest score for a series of weighted objective criteria. Applicants must commit to meeting the established minimum performance requirements identified in its application, and the scoring gives greater preference to proposals based on how much they exceed the minimum thresholds. The Bureau establishes the procedures in the following in order to implement a competition that is efficient, orderly, transparent, and impartial.

12. Eligible Providers. The Commission determined that it would allow all providers that had existing fixed network facilities and made broadband service available in Puerto Rico or in the U.S. Virgin Islands, according to June 2018 FCC Form 477 data, to be eligible to participate in their respective territory's competitive process. Therefore, for example, a provider that has deployed broadband in Puerto Rico but not the U.S. Virgin Islands according to June 2018 FCC Form 477 data would be eligible to apply for support throughout Puerto Rico, but not in the U.S. Virgin Islands. The Commission determined that it would allow broadband providers that, according to June 2018 FCC Form 477 data, serve only business locations to participate. The Commission also allowed participation by fixed providers who rely on any technology, including satellite, that can meet the Stage 2 service requirements.

13. Eligible Areas and Minimum Geographic Area. All areas of the Territories are eligible for support. As the Commission determined in the PR-USVI Stage 2 Order, the Bureau will use the 78 municipios in Puerto Rico and create two areas in USVI—one that is composed of St. John and St. Thomas islands together and a second of just St. Croix island—as the geographic areas for which applicants may request support in the competition.

14. As directed by the Commission, the Bureau released a public notice listing the number of locations for each geographic area for the Stage 2 Competition in December 2019 based on the most recent census data (Reserve Price Notice). The Reserve Price Notice identifies the geographic areas eligible for Stage 2 fixed funding, and lists the municipio or island name, the number of locations in each area, and the reserve price.

15. Applicants must use the municipio as the minimum geographic area for applying for Stage 2 support in Puerto Rico. An applicant may apply for up to 78 geographic areas in an application to compete for Stage 2 fixed support in Puerto Rico. Applicants may apply for up to two geographic areas in an application to compete for Stage 2 support in the USVI.

16. Reserve Prices. The Bureau released the reserve prices for the Territories on December 19, 2019. The Bureau applied the three-step process adopted by the Commission to determine the reserve price for each minimum geographic area. First, the Bureau employed the Connect America Model (CAM) to calculate the average cost per location for all locations in a census block. Second, the Bureau applied the full amount of the budgets for Puerto Rico and for the U.S. Virgin Islands to create territory-specific high-cost thresholds and to ensure the entire budget is available over the 10-year term. Third, the Bureau established a reserve price for each geographic area in proportion to the support amounts calculated for each census block within that area. The reserve prices are $25.58 per location per month for Puerto Rico and $23.34 per location per month for USVI.

17. Competition Delay or Suspension. The Bureau may, by announcement, delay or suspend the competition in the event of natural disaster, technical obstacle, network disruption, evidence of an competition security breach or unlawful application activity, administrative or weather necessity, or for any other reason that affects the fair and efficient conduct of the competitive proposal process. In such cases, the Bureau will resume the competition starting from the point at which the competition was suspended.

18. Application Overview. The Stage 2 Competition will establish the amount of support that each winning applicant will be eligible to receive over the 10-year term. An applicant can submit an application that includes a proposal for each geographic area for which it seeks support. The price proposed for each geographic area represents the amount of support the applicant is willing to receive per location per month in a geographic area (Proposal Price). The Proposal Price will apply to all locations within a geographic area for which the applicant is seeking support. The Proposal Price must be at a price that is equal to or less than the reserve price established by the Bureau. An applicant may submit a different Proposal Price for each geographic area it proposes to serve in the territory. Each application represents an irrevocable offer to meet the terms of the application if it becomes a winning application. That is, an application indicates that the applicant, if selected, commits to provide service to all locations in the minimum geographic area(s) in which it is chosen as the winning applicant in accordance with its specified performance tier and latency requirements in exchange for Stage 2 support. An authorized winning applicant will receive support in amounts corresponding to the Proposal Price for each geographic area in which it is the winning applicant.

19. The application and scoring procedures described herein implement the Commission's decisions on the process for evaluating applications in the Stage 2 Competition.

20. Required Application Form. An applicant must timely and properly file an Application Form to be considered a participant in the Stage 2 Competition for support in the Territories. This form can be accessed at the FCC's website.

21. Application Submission. An application to participate in the Stage 2 Competition will provide information used to determine whether the applicant has the legal, technical, and financial qualifications to participate in a Commission competition for universal service support. An entity seeking to participate in the competition must file an application in which it certifies, under penalty of perjury, its qualifications. Eligibility to participate in the Stage 2 Competition is based on an applicant's submission of required information, Application Form and certifications. A potential applicant must take seriously its duties and responsibilities and carefully determine before filing an application that it is able to meet the public interest obligations associated with Stage 2 support if it ultimately becomes a winning applicant in the competition. An applicant's selection as a winning applicant does not guarantee that the applicant will also be deemed qualified to receive Stage 2 support. Each winning applicant must file all required forms, information and certifications, which the Bureau will review to determine if a winning applicant should be authorized to receive support for its winning applications.

22. An entity seeking to participate in the Stage 2 Competition must file an application electronically via email at ConnectAmerica@fcc.gov by the deadline announced by the Bureau. Among other things, an applicant must submit operational and financial information demonstrating that it can meet the service requirements associated with the performance tier and latency combination(s) for which it submits an application. In the following, the Bureau describes more fully the information disclosures and certifications required in the application. An applicant is also subject to the Commission's rules prohibiting certain communications, as explained in the following, beginning on the date the window for filing applications opens. The Bureau will publish a notice announcing the window opening date and a notice announcing all parties that have successfully filed a Stage 2 Fixed application following the application deadline.

23. An applicant bears full responsibility for submitting an accurate, complete, and timely application. An applicant should consult the Commission's rules to ensure that, in addition to the materials described in the following, all required information is included in its application. To the extent the information in this Public Notice does not address an applicant's particular circumstances, or if the applicant needs additional information or guidance concerning the following disclosure requirements, the applicant should review the PR-USVI Stage 2 Order and the instructions for the Application Form and/or use the contact information provided in this Public Notice to consult with Commission staff to better understand the information it must submit in its application.

24. An applicant should note that submitting an application (and any amendments thereto) constitutes a representation by the certifying official that he or she is an authorized representative of the applicant, that he or she has read the form's instructions and certifications, and that the contents of the application, its certifications, and any attachments are true and correct. As more fully explained in the following, an applicant may not make major modifications to its application after the application filing deadline. Submitting a false certification to the Commission may result in penalties, including monetary forfeitures, the forfeiture of universal service support, license forfeitures, ineligibility to participate in future auctions, competitions, and/or criminal prosecution.

25. After the initial application filing deadline, Bureau staff will review all timely submitted applications to determine whether each application complies with the application requirements and has provided all required information concerning the applicant's qualifications. After this review is complete, Bureau staff may contact an applicant regarding minor application defects that may be corrected. Staff will establish a deadline for resubmitting modified applications. After any applications have been resubmitted, Bureau staff will complete review of all qualified applications, and the selected winners will be announced in a public notice.

26. Acceptable Applications. To submit an application for support to provide service to an area in the Stage 2 Competition, an applicant must specify the area, a performance tier and latency combination, a Proposal Price, resiliency and redundancy information that explains how the applicant is building in network or path diversity, and a Disaster Preparation and Response Plan. Several requirements, as set forth in the following, will also apply to application submission and the Bureau will advise applicants if an application does not meet these conditions.

27. Each applicant should submit a single application for each territory in which it seeks to provide qualifying voice and broadband services. The application should include all proposals for each geographic area within the territory for which the applicant seeks to provide service. To effectuate this direction from the Commission, the Bureau prohibits commonly controlled applicants from applying for the same geographic areas.

28. An applicant may submit the Proposal Price as a price point percentage of the reserve price for a geographic area. The price point percentage submitted in the application may be specified with up to two decimal places ( e.g., 98.44%). The option to apply at intermediate price point percentages will allow an applicant to indicate more precisely the minimum amount of support it will accept for an area, and it reduces the likelihood of ties.

29. An application must specify a percentage that implies a support amount that is one percent or more of an area's reserve price to be acceptable. One percent represents a sufficiently small fraction of the model-derived reserve price to serve as a minimum acceptable application for applicants with legitimate support needs. An applicant that requires—or receives—no Stage 2 support to build out in an area is free to provide service in the area if it wishes, and furthermore, it can do so without the requirements imposed on Stage 2 support recipients.

30. Modifying the Application Form. As indicated in this document, an entity seeking to participate in the Stage 2 Competition must file an Application Form electronically via electronic mail to the Bureau at ConnectAmerica@fcc.gov. During the filing window, an applicant will be allowed to make any necessary permissible modifications to its Application Form through resubmission via electronic mail to the Bureau. An applicant that has certified and submitted its Application Form before the close of the filing window may continue to make modifications as often as necessary until the application deadline; however, the applicant must re-certify and resubmit its Application Form before the close of the filing window to confirm and effect its latest application changes.

31. After the Application Form filing deadline, a Stage 2 Competition applicant will be permitted to make only minor changes to its application consistent with the Commission's rules. An applicant's ability to modify its Application Form will be limited between the closing of the filing window and the release of the public notice announcing the Stage 2 Competition winning applicants. During this period, an applicant will be permitted to modify only the applicant's address, responsible party address, and contact information ( e.g., name, address, telephone number, etc.) via resubmission through electronic mail to the Bureau.

32. If an applicant needs to make other permissible minor changes to its Application Form, or changes to maintain the accuracy and completeness of its application pursuant to § 1.65 of the Commission's rules, the applicant must submit a letter briefly summarizing the changes to its Application Form via electronic mail to the Bureau at ConnectAmerica@fcc.gov. The email summarizing the changes must include a subject line referring to the Stage 2 Competition and the name of the applicant, for example, “Re: Changes to the Stage 2 Competition Application of XYZ Corp.” Any attachments to the email must be formatted as Adobe® Acrobat® (PDF) or Microsoft® Word documents.

33. An applicant will not be able to modify any other portions of the Application Form, and in particular an applicant may not, after the filing deadline, add a proposal for an area that it did not submit by the filing deadline or subtract a proposal from those areas that it submitted by the filing deadline. Major modifications to an Application Form ( e.g., changes in ownership that would constitute an assignment or transfer of control of the applicant, change in applicant's legal classification that results in a change in control, change in the area(s) for which proposals are submitted) will not be permitted after the Application Form filing deadline. If an amendment reporting change is a “major modification,” the major modification will not be accepted and may result in the dismissal of the application.

34. Pursuant to § 1.65 of the Commission's rules, each applicant has a continuing obligation to maintain the accuracy and completeness of information furnished in a pending application, including a pending application to participate in the Stage 2 Competition. Consistent with the requirements for the Commission's spectrum competitions, an applicant for the Stage 2 Competition must furnish additional or corrected information to the Commission within five business days after a significant occurrence, or amend its Application Form no more than five business days after the applicant becomes aware of the need for the amendment. An applicant is obligated to amend its pending application even if a reported change may result in the dismissal of the application because it is subsequently determined to be a major modification.

35. If, at any time, an applicant needs to make changes in order to maintain the accuracy and completeness of its application pursuant to § 1.65 of the Commission's rules, it must make the change(s) by resubmitting its application with an email to the Bureau, which must include a re-certification to confirm and effect the change(s).

36. As with filing the Application Form, any amendment(s) to the application and related statements of fact must be certified by an authorized representative of the applicant with authority to bind the applicant. Applicants should note that submission of any such amendment or related statement of fact constitutes a representation by the person certifying that he or she is an authorized representative with such authority and that the contents of the amendment or statement of fact are true and correct.

37. Questions about Application Form amendments should be directed to the Telecommunications Access Policy Division, Wireline Competition Bureau at (202) 418-0660.

38. Disclosure of Agreements. An applicant must identify in its application all real parties in interest to any agreements relating to the participation of the applicant in the Stage 2 Competition. This disclosure requirement applies to any arrangements with parties that are applying to participate in the Stage 2 Competition as well as parties that are not. An applicant that discloses any such agreement(s) in its application must also provide a brief description of each agreement.

39. An applicant must certify under penalty of perjury in its application that it has disclosed all real parties in interest to any agreements involving the applicant's participation in the Stage 2 Competition. The Bureau requires an applicant to certify under penalty of perjury that it has not entered into any explicit or implicit agreements, arrangements, or understandings of any kind related to the support to be sought through the Stage 2 Competition, other than those disclosed in its application. For purposes of making the required agreement disclosures, if parties agree in principle on all material terms prior to the application filing deadline, each applicant should provide a brief description of, and identify the other party or parties to, the agreement on its respective Application Form, even if the agreement has not been reduced to writing. If an applicant has had discussions, but it has not reached an agreement by the close of the filing deadline, it should not include the matter on its application and may not continue such discussions with any applicants after the close of the filing window.

40. Ownership Disclosure Requirements. Each applicant must comply with the ownership disclosure requirements in §§ 1.2112(a) and 54.315(a)(1) of the Commission's rules. Specifically, in completing the application, an applicant must fully disclose information regarding the real party- or parties-in-interest in the applicant and the ownership structure of the applicant, including both direct and indirect ownership interests of 10% or more, as prescribed in § 1.2112(a) of the Commission's rules. Each applicant is responsible for ensuring that information submitted in its application is complete and accurate.

41. In certain circumstances, an applicant may have previously filed an FCC Form 602 ownership disclosure information report or filed a competition application for a previous competition in which ownership information was disclosed. Although an applicant might have filed this information using the same FRN, the applicant should resubmit that information in its Application Form. Each applicant must carefully review any ownership information contained in its Application Form, including any ownership attachments, to confirm that all information supplied on the Application Form is complete and accurate as of the application filing deadline for the Stage 2 Competition. An applicant should note if there are any changes to information recently submitted. Any information that needs to be corrected or updated must be changed in the Application Form.

42. Specific Universal Service Certifications. An applicant must certify that it is in compliance with all statutory and regulatory requirements for receiving Stage 2 universal service support. Alternatively, if expressly allowed by the rules specific to a high-cost support mechanism, an applicant may certify that it acknowledges that it must be in compliance with such requirements before being authorized to receive Stage 2 support.

43. In addition, the Bureau requires that an applicant must certify that it will make any default payment that may be required and that it is aware that if its application is shown to be defective, the application may be dismissed without further consideration and penalties may apply.

44. Specific Stage 2 Eligibility Requirements and Certifications. In the PR-USVI Stage 2 Order, the Commission established that an applicant must demonstrate its operational experience and financial qualifications to participate in the Stage 2 Competition. Therefore, all applicants are required to provide the information described in the following in this section.

45. An applicant must certify on its Application Form that it has provided voice and/or broadband services since at least the time period required for filing the June 30, 2018 FCC Form 477. An applicant must specify the number of years it has been operating and identify the services it has provided. An applicant will be deemed to have started providing a service on the date it began commercially offering that service to end users.

46. An applicant must certify that it (or its parent company, if it is a wholly owned subsidiary) has filed FCC Form 477s as required during that time period. And it must identify the FRNs it (or its parent company) used to file the FCC Form 477s for the relevant filing periods. The relevant FCC Form 477 filing periods include data as of June 30, 2018; December 31, 2018; June 30, 2019; and December 31, 2019. The Bureau will use FCC Form 477 data for these periods to validate an applicant's representation on its application.

47. An applicant that intends to use wireless technologies to meet the relevant Stage 2 public interest obligations must demonstrate that it currently has sufficient access to spectrum—either licensed and unlicensed—for each performance combination it selects in each area. Specifically, in its application, an applicant must (i) identify the spectrum band(s) it will use for the last mile, backhaul, and any other parts of the network; (ii) describe the total amount of uplink and downlink bandwidth (in megahertz) that it has access to in each spectrum band for the last mile; (iii) describe the authorizations (including leases) it has obtained to operate in the spectrum, if applicable; and (iv) list the call signs and/or application file numbers associated with its spectrum authorizations, if applicable. An applicant that intends to provide service using satellite technology should describe its expected timing for applying for earth station license(s), and an applicant that intends to obtain microwave license(s) for backhaul should describe its expected timing for applying for microwave license(s) if these licenses have not already been obtained.

48. To the extent that an applicant will use licensed spectrum, it should provide details about how the licensed service area covers its winning application area(s) ( e.g., provide a list of geographic areas that the spectrum license covers and describe how those areas relate to the application area(s)). In the Public Notice, the Bureau identifies the spectrum bands that it anticipates could be used for the last mile to meet the performance obligations and indicate whether the spectrum bands are licensed or unlicensed. The Bureau would expect that a service provider operating in these bands could, at a minimum, offer service meeting the requirements for the minimum performance tier provided that the service provider is using sufficient bandwidth in the spectrum band(s) and a technology that can operate on these spectrum bands consistent with applicable U.S. and international rules and regulations. The Bureau notes that the spectrum chart in the Public Notice is a non-exhaustive list of spectrum bands that an applicant could potentially use to meet its performance obligations. An applicant is not precluded from proposing to use a spectrum band that is not included in Appendix A of the Public Notice, provided that the applicant can demonstrate that it is reasonably capable of meeting the performance requirements over the entire support term for the selected performance tier and latency combination(s) using that spectrum. The Bureau also notes that an applicant that selects a spectrum band listed in in the Public Notice for a particular performance tier and latency combination may not necessarily be deemed eligible for that combination.

49. An applicant must also certify that the description of the spectrum access is accurate and that it will retain such access for at least 10 years after the date on which it is authorized to receive Stage 2 fixed support. Applications will be reviewed to assess the reasonableness of the certification.

50. The Commission required all applicants to demonstrate sufficient financial qualifications to participate in the Stage 2 Competition in order to minimize the number of winning applicants that default because they are unable to meet their obligations. The Bureau staff will review and evaluate the financial information provided to assess the reasonableness of the applicant's financial qualifications. In support of its financial showing, an applicant may choose to submit its (or its parent company's) unaudited or audited financial statements from the prior fiscal year, including balance sheets, net income and cash flow, to support its application and financial certification. Staff may request further information from an application if there are questions about its qualifications. An applicant will ultimately be provided a pass or fail rating on its financial qualifications. If an applicant receives a failing score, its application will not be reviewed, and the applicant will be disqualified from competing in the Stage 2 Competition.

51. An applicant must certify in its application that it will have available funds for all project costs that exceed the amount of Stage 2 support to be received for the first two years of its support term. An applicant must also describe how the required construction will be funded in each territory. The description should include the estimated project costs for all facilities that are required to complete the project, including the costs of upgrading, replacing, or otherwise modifying existing facilities to expand coverage or meet performance requirements. The estimated costs must be broken down to indicate the costs associated with each proposed service area and must specify how Stage 2 support and other funds, if applicable, will be used to complete the project. The description must include financial projections demonstrating that the applicant can cover the necessary debt service payments over the life of any loans. The Bureau will treat all the information included with this submission as confidential and will withhold it from routine public inspection.

52. Each applicant must select in its application the performance tier (speed and usage) and latency combination(s) for which it intends to apply in each area where it seeks support. For each performance combination, an applicant must indicate the technology or technologies it intends to use to meet the associated requirements. The Bureau also requires an applicant to demonstrate its eligibility to apply for the performance tier and latency combination(s) it selects in its application. It is the Bureau's objective to safeguard consumers from situations where applicants unable to meet the specified service requirements divert support from applicants that can meet the public interest obligations.

53. An applicant must demonstrate that it is technically qualified to meet the relevant Stage 2 public interest obligations in its application areas by submitting technical information to support the operational assertions. An applicant must submit a detailed technology and system design description, including a network diagram that must be certified by a professional engineer. The professional engineer must certify that the network can deliver, to all locations in each geographic area, voice and broadband service that meets the requisite performance requirements.

54. Initial Overview. All applicants must submit with their application an overview of its intended technology and system design for each area in its application. The overview must describe at a high level how the applicant will meet its Stage 2 public interest obligations for the relevant performance tier and latency combination(s) using Stage 2 support ( e.g., building a new network or expanding an existing network, deploying new technology or existing technology). This overview should avoid highly technical terminology or jargon unless such language is integral to the understanding of the project. The overview will be made publicly available.

55. Detailed Description. All applicants must submit with their application, for each area, a more detailed description of its technology and system design that describes the network to be built or upgraded, demonstrates the project's feasibility, and includes the network diagram certified by a professional engineer. It must describe in detail a network that fully supports the delivery of consumer voice and broadband service that meets the requisite performance requirements to all locations in each area by the end of the six-year build-out period and for the duration of the 10-year support term. It also must contain sufficient detail to demonstrate that the applicant can meet the interim service milestones if it becomes authorized to receive support. If an applicant submits a technology and system design description that lacks sufficient detail to demonstrate that the applicant has the technical qualifications to meet the relevant Stage 2 obligations, the applicant will be asked to provide further details about its proposed network. The Bureau will treat all the information submitted as confidential and will withhold it from routine public inspection.

56. In the following, the Bureau provides guidance on how an applicant can successfully meet the requirement to provide a description of its technology and system design. Specifically, the Bureau describes the types of information it would expect an applicant to include, at a minimum, in a detailed description of its technology and system design in order to demonstrate that it has the technical qualifications to meet its Stage 2 obligations. The Bureau's guidance is informed by the types of information that applicants submitted in the CAF II Auction and for rural broadband experiment support. These are also the types of information about which the Bureau expects a technically qualified applicant will have made preliminary decisions in order to determine how much support it would need to meet the relevant Stage 2 Competition public interest obligations and to begin planning how it will meet the required service milestones.

57. The Bureau expects an applicant, regardless of the technology (or technologies) it proposes to use, to:

• Describe the proposed last mile architecture(s) and technologies, middle mile/backhaul topology, and the architecture used to provide voice service.

• Describe the network's scalability and features that improve reliability (such as redundancy).

• Indicate whether parts of the network will use the applicant's or another party's existing network facilities, including non-wireless facilities extending from the network to customers' locations. For non-wireless facilities that do not yet exist, the description should indicate whether the new facilities will be aerial, buried, or underground.

• Provide technical information about the methods, “rules of thumb,” and engineering assumptions used to size the capacity of the network's nodes (or gateways) and links. The information provided should demonstrate how the required performance for the relevant performance tier will be achieved during periods of peak usage.

• Provide a project plan that includes a network build-out schedule that includes but is not restricted to plans for construction of last mile and middle mile facilities. The build-out schedule should show the applicant's projected milestones on an annual basis, including achievement of the interim service milestones described in the PR-USVI Stage 2 Order and completion of the network by the end of the sixth year of funding authorization. The project plan and included schedule should incorporate detailed information showing how the applicant plans to offer, to all locations in each geographic area, voice and broadband service meeting the relevant performance requirements when the system is complete. The project plan and included schedule should also incorporate the applicant's plans for monitoring and maintaining the performance of the service for the duration of the 10-year support term.

58. The network diagram, which must be certified by a professional engineer, should:

• Identify all wireline and wireless segments of the proposed networks.

• Uniquely identify (i) major network nodes including their manufacturer and model, as well as their functions, locations, and throughput/capacity; (ii) access nodes or gateways, including their technology, manufacturer and model, location, and throughput/capacity; and (iii) major inter-nodal links (not last mile), and their throughput/capacity.

• Indicate how many locations will be offered service from each access node or from each gateway, and which performance tier or tiers will be supported at each access node.

• Indicate what parts of the network will be new deployment and what parts will use the applicant's or another party's existing network facilities.

• Identify specialized nodes used in providing voice service.

• Explain how nodes or gateways are connected to the internet backbone and Public Switched Telephone Network.

59. Additionally, an applicant that proposes to use terrestrial fixed wireless technologies should:

• Explain, with technical detail, how the proposed spectrum can meet or exceed the relevant performance requirements at peak usage periods.

• Provide the calculations used, for each performance tier and frequency band, to design the last mile link budgets in both the upload and download directions at the cell edge, using the technical specifications of the expected base station and customer premise equipment.

• Provide coverage maps for the planned and/or existing networks that will be used to meet the Stage 2 public interest obligations, indicating where the upload and download speeds will meet or exceed the relevant performance tier speed(s). The coverage maps should be provided for each interim and final service milestone and should display the required service areas and target locations (or a representation thereof).

• Describe the underlying propagation model used to prepare the coverage maps and how the model incorporates the operating spectrum, antenna heights, distances, digital elevation, and clutter resolutions.

• Describe, for each relevant performance tier and latency combination, the base station equipment that the applicant plans to use.

• Describe the planned customer premise equipment configuration.

60. Additionally, an applicant that proposes to use primarily satellite technologies should:

• Describe how many satellites that are in view simultaneously from any specific location will be required to meet the relevant Stage 2 public interest obligations.

• Describe how many uplink and downlink gateway antenna beams will be required on each satellite, and the capacity of each beam in megabits per second.

• Describe how many uplink and downlink user antenna beams will be required on each satellite, and the capacity of each beam in megabits per second.

• Describe how the gateway capacity is connected to user beams on the satellite, in terms of beams and data capacity per beam.

• Describe whether the capacity on the uplink and downlink beams would be able to be reallocated once a satellite commences operation, if the subscription rate is less in one beam but than in another beam.

61. An applicant must submit with its application a letter from a bank acceptable to the Commission, as set forth in § 54.1508, committing to issue an irrevocable stand-by letter of credit, in the required form, to the applicant. The letter must, at a minimum, provide the dollar amount of the letter of credit and the issuing bank's agreement to follow the terms and conditions of the Commission's model letter of credit, attached hereto as Appendix B of the Public Notice. The Bureau will treat this letter as confidential trade secrets and/or commercial information and thus withhold it from routine public inspection.

62. Each applicant has sole responsibility for investigating and evaluating all technical and marketplace factors that may have a bearing on the amount of Stage 2 support it will seek in its application. Each qualified applicant is responsible for certifying that, if it becomes a winning applicant and is ultimately authorized to receive Stage 2 support, it will be able to build and operate facilities in accordance with the Stage 2 obligations and the Commission's rules generally.

63. Applicants should be aware that the Stage 2 Competition represents an opportunity to apply for Stage 2 support, subject to certain conditions and regulations. The Stage 2 Competition does not constitute an endorsement by the Bureau or Commission of any particular service, technology, or product, nor does the award of Stage 2 support constitute a guarantee of business success.

64. An applicant should perform its due diligence research and analysis before proceeding, as it would with any new business venture. In particular, the Bureau strongly encourages each applicant to review all underlying Commission orders and to assess all pertinent economic factors relating to the deployment of service in a particular area.

65. Each applicant should perform technical analyses or refresh its previous analyses to assure itself that, should it become authorized to receive Stage 2 support, it will be able to build and operate facilities that fully comply with all applicable technical and legal requirements and will advertise and provide the service to customers. Each applicant should verify the number of actual locations within the geographic areas that it proposes to serve in its application. Each Stage 2 support recipient will be required to offer service meeting the relevant requirements to all locations across all the winning areas where it is authorized to receive support. The Bureau provided location counts in the Stage 2 Reserve Price Public Notice, released on December 19, 2019. As described in this document and in the following, the Commission has adopted a process by which support recipients that cannot identify all locations can demonstrate that the number of actual, on-the-ground locations is lower than the number estimated by the CAM. Such a demonstration must be made within one year after the release of the Stage 2 Competition public notice announcing the winners and will be subject to review by the Bureau following comment by relevant stakeholders and potentially an audit. Applicants' due diligence should be informed by the availability of and requirements for this process, in addition to other factors.

66. The Bureau also reminds each applicant that pending and future judicial proceedings, as well as certain pending and future proceedings before the Commission—including applications, applications for modification, notices of proposed rulemaking, notices of inquiry, petitions for rulemaking, requests for special temporary authority, waiver requests, petitions to deny, petitions for reconsideration, informal objections, and applications for review—may relate to or affect licensees or applicants for support in the Stage 2 Competition. Each applicant is responsible for assessing the likelihood of the various possible outcomes and for considering the potential impact on Stage 2 support available through this competition. The due diligence considerations mentioned in this Public Notice do not comprise an exhaustive list of steps that should be undertaken prior to participating in this competition. As always, the burden is on the applicant to determine how much research to undertake, depending upon specific facts and circumstances related to its interests.

67. Each applicant is solely responsible for identifying associated risks and for investigating and evaluating the degree to which such matters may affect its ability to apply for or otherwise receive Stage 2 support. Each applicant is responsible for undertaking research to ensure that any support won in this competition will be suitable for its business plans and needs. Each applicant must undertake its own assessment of the relevance and importance of information gathered as part of its due diligence efforts.

68. The Bureau makes no representations or guarantees regarding the accuracy or completeness of information in the Commission's databases or any third-party databases, including, for example, court docketing systems. To the extent the Commission's databases may not include all information deemed necessary or desirable by an applicant, an applicant must obtain or verify such information from independent sources or assume the risk of any incompleteness or inaccuracy in said databases. Furthermore, the Bureau makes no representations or guarantees regarding the accuracy or completeness of information that has been provided by incumbent licensees and incorporated into the Commission's databases.

69. To confirm an applicant's understanding of its obligations, the Bureau requires each applicant to certify under penalty of perjury in its application that:

70. This certification will help ensure that an applicant acknowledges and accepts responsibility for its application and any forfeitures imposed in the event of default, and that it will not attempt to place responsibility for the consequences of its activity in this process on either the Commission or any of its contractors.

71. An applicant must acknowledge in its application that it must be designated as an ETC for the areas in which it will receive support prior to being authorized to receive support. Only ETCs designated pursuant to section 214(e) of the Communications Act of 1934, as amended (the Act) “shall be eligible to receive specific Federal universal service support.” Section 214(e)(2) gives states the primary responsibility for ETC designation. However, section 214(e)(6) provides that this Commission is responsible for processing requests for ETC designation when the service provider is not subject to the jurisdiction of any state commission. Support is disbursed only after the provider receives an ETC designation and satisfies the requirements.

72. The Commission decided that an applicant need not be an ETC as of the application filing deadline for the Stage 2 Competition, but that it must obtain a high-cost ETC designation for the areas covered by its winning applications within 60 days after being announced as a winning applicant.

73. Absent a waiver, an applicant that fails to obtain the necessary ETC designations by that deadline will be subject to a forfeiture as described in the following, and will not be authorized to receive Stage 2 support. In addition to all the requirements for participating in the Stage 2 Competition, each applicant should be familiar with the requirements of a high-cost ETC. For example, all high-cost ETCs are required to offer Lifeline voice and broadband service to qualifying low-income consumers pursuant to the Lifeline program rules. Moreover, when the requirement has been fully implemented, each Stage 2 support recipient will be required to bid on Category One telecommunications and internet access services in response to a posted FCC Form 470 seeking broadband service that meets the connectivity targets for the Schools and Libraries universal service support program (E-rate) for eligible schools and libraries located within any area in a census block where the ETC is receiving Stage 2 support. A high-cost ETC may also be subject to state-specific requirements imposed by the state that designates it as an ETC.

74. An applicant is required to submit with its application a Disaster Preparation and Response Plan (DPRP), which will be reviewed by the Bureau for completeness. The DPRP should, at a minimum, address in detail how an applicant intends to prepare for and respond to disasters in Puerto Rico and/or the U.S. Virgin Islands according to five criteria: (1) Strengthening Infrastructure; (2) Ensuring Network Diversity; (3) Ensuring Backup Power; (4) Network Monitoring; and (5) Emergency Preparedness. The detailed DPRP must include, for each criterion:

• A description of your commitments to maintain, improve or modify your facilities based on reasonably-selected best practices, checklists and industry standards;

• commitments that are auditable and your agreement to be subject to reasonable audit procedures; and

• identification of your employee official(s) responsible for management and compliance.

For each criterion, the Bureau has provided example best practices, checklists, and/or standards in Appendix C of the Public Notice. It may be useful to consider and/or incorporate some or all of these materials in preparing the DPRP; however, the Bureau does not endorse any of the specific examples, but rather it simply provides them as examples that may prove useful. The applicant should explain why it believes compliance with any specific standard it identifies will prove adequate to meet the criteria the Bureau sets forth.

75. As directed by the Commission and as part of its review of the application, Bureau staff will review each applicant's DPRP for completeness, and may contact the applicant for further information. The Bureau will provide detailed written notification of the deficiencies, if any, to the carrier and withhold authorization to receive support until the support recipient has cured the deficiencies.

76. Notwithstanding the prohibition against major modifications to an application after the submission deadline, the Bureau will allow an applicant to amend its DPRP submission in order to maintain best practices to prepare for and respond to disasters.

77. A support recipient must certify annually to USAC that it has recently reviewed the DPRP and considered whether any changes or revisions were necessary. A support recipient has the obligation to provide the Bureau with an updated DPRP within 10 days of making any material changes to the DPRP, and for as long as it receives Stage 2 support.

78. Consistent with the Commission's practice in the CAF II Auction (Auction 903), Mobility Fund I and Tribal Mobility Fund I (Auctions 901 and 902) and recent spectrum auctions, the Bureau adopts procedures for limiting the application information that will be disclosed to the public.

79. Specifically, the Bureau will withhold from the public and other applicants the application information listed in the following to help ensure anonymous applications and to protect applicants' competitively sensitive information. This Bureau will withhold the application information until at least after the winning applicants have been authorized to receive Stage 2 high-cost support. The application information to be withheld includes, but is not limited to:

• The minimum geographic areas selected by an applicant.

• The performance tier and latency combination(s) selected by an applicant and the associated weight for each combination.

• The applicant's price percentage(s).

• The spectrum access description.

• An applicant's responses to the questions in this Public Notice and any supporting documentation submitted in any attachment(s) that are intended to demonstrate an applicant's ability to meet the public interest obligations for each performance tier and latency combination that the applicant has selected in its application.

• Any financial information contained in an applicant's Stage 2 application for which the applicant has requested confidential treatment under the abbreviated process in § 0.459(a)(4) of the Commission's rules.

• An applicant's letter of interest from a qualified bank that the bank would provide a letter of credit to the applicant.

• The applicant's DPRP.

80. Unlike the typical § 0.459 process, which requires that an applicant submit a statement of the reasons for withholding the information for which confidential treatment is sought from public inspection, an applicant that seeks confidential treatment of the financial information contained in its application need not submit a statement that conforms with the requirements of § 0.459(b) unless and until its request for confidential treatment is challenged. Because the Bureau has found in other contexts that financial information that is not otherwise publicly available could be competitively sensitive, it permits applicants seeking confidential treatment of financial information to use this abbreviated process.

81. The § 0.459(a)(4) abbreviated process for requesting confidential treatment may not be used by an applicant to request confidential treatment of any information in its application other than its financial information. Thus, an applicant that wishes to seek confidential treatment of any other portion(s) of its application must file a regular § 0.459 request for confidential treatment of any such information with its application (other than responses to the questions in the Public Notice and associated supporting documentation that the Bureau presumes to be competitively sensitive). This request must include a statement of the reasons for withholding those portions of the application from public inspection. Additionally, in the event an applicant's abbreviated request for confidential treatment of the financial information contained in its application is challenged, the applicant must submit a request for confidential treatment of its financial information that conforms with the requirements of § 0.459 within 10 business days after receiving notice of the challenge.

82. After the winning applicant(s) is authorized to receive Stage 2 fixed support, the Bureau no longer has a need to preserve the confidentiality of the contents of applications. Accordingly, the Bureau will make publicly available all application information, except for an applicant's operational information (including its DPRP), letter of interest, and confidential financial information. This approach is consistent with the Bureau's interest in a transparent competition process and the Commission's recent practices in the CAF II Auction 903, Mobility Fund Phase I competition and the Commission's typical spectrum competitions.

83. To help protect competition during the Stage 2 Competition, the Bureau incorporates into this process the Commission's rules prohibiting an applicant from communicating certain proposal-related information to another applicant from the application filing deadline until awards are announced. More specifically, § 1.21002 of the Commission's rules prohibits an applicant from cooperating or collaborating with any other applicant with respect to its own, or one another's, or any other competing applicant's applications or application strategies, and from communicating with any other applicant in any manner the substance of its own, or one another's, or any other competing applicant's applications or application strategies during the prohibition period. The rule provides an exception for communications between applicants if those applicants identify each other on their respective applications as members of a joint application arrangement and certify that the application identifies all real parties in interest to agreements related to the applicant's participation in the competition. Consistent with the Commission's direction in the PR-USVI Stage 2 Order, the Bureau applies a prohibition identical to § 1.21002 to the Stage 2 Competition.

84. This section provides guidance on the application of the rule during the Stage 2 Competition. As in past competitions and auctions for support, the targeted restrictions imposed by the rule are necessary to serve the important public interest in a fair and competitive process.

85. Entities Covered by Communications Prohibition. Consistent with § 1.21002, the prohibition of certain communications that the Bureau adopts will apply to any party that submits an application to participate in the Stage 2 Competition. This prohibition applies to all parties that submit an application by the deadline regardless of whether such parties become winning applicants authorized to receive Stage 2 support.

86. “Applicant” for purposes of this rule includes the entity filing the application, each party capable of controlling the applicant, and each party that may be controlled by the applicant or by a party capable of controlling the applicant.

87. Subject to the exception described in this document, the prohibition applies to communications by an applicant that are conveyed to another applicant. The prohibition of “communicating in any manner” includes public disclosures as well as private communications and indirect or implicit communications, as well as express statements. Consequently, an applicant must take care to determine whether its Stage 2 Competition-related communications may reach another applicant, unless the exception applies.

88. Applicants should take special care in circumstances where their officers, directors, and employees may receive information directly or indirectly relating to any other applicant's Stage 2 applications or application strategies. Information received by a party related to the applicant may be deemed to have been received by the applicant under certain circumstances. For example, Commission staff have found that, where an individual serves as an officer and director for two or more applicants, the applications and application strategies of one applicant are presumed conveyed to the other applicant, and, absent a disclosed agreement that makes the rule's exception applicable, the shared officer creates an apparent violation of the rule.

89. Prohibition Applies Until Deadline. Consistent with § 1.21002, the prohibition of certain communications begins at the application filing deadline and ends when the winning applicants are authorized to receive Stage 2 support.

90. Prohibited Communications. Consistent with § 1.21002 as applied to this Stage 2 Competition, the rule prohibits an applicant from communicating with another applicant only with respect to “its own, or one another's, or any other competing applicant's application or application strategies.” Thus, the prohibition does not apply to all communications between or among applicants; it applies to any communication conveying, in whole or part, directly or indirectly, the applicant's or a competing applicant's “application or application strategies.”

91. All applicants seeking support in the competitive proposal process are “competing applicants” under the rule. Parties apply to participate in the Stage 2 Competition to obtain support from a fixed budget. As such, applicants are competing with one another regardless of whether each seeks to serve different geographic areas with Stage 2 support.

92. Business discussions and negotiations that are unrelated to applications in the Stage 2 Competition and that do not convey information about Stage 2 applications or application strategies are not prohibited by the rule. Moreover, not all competition-related information is covered by the prohibition. For example, communicating merely whether a party has or has not applied to participate in the Stage 2 Competition will not violate the rule. In contrast, communicating how a party is participating, including specific areas and/or tier and latency combinations selected, specific price percentages, and/or whether or not the party has submitted an application, would convey application strategies and would be prohibited.

93. In the present context, the prohibited communications rule will take effect after applications are due and continue to be in effect until the Bureau announces the winning applicants that are authorized for support. Although there are no subsequent rounds, and applicants may not add or subtract competitive area-specific proposals after that date, it is imperative that an applicant not discuss with any other applicant any aspect of its application and proposals until the winning applicants are authorized for support to comply with the rule. Previously, the Commission has found discussions related to strategic defaults between winning auction bidders after the close of bidding in an auction to violate the prohibited communications rule.

94. While consistent with § 1.21002 the Bureau does not prohibit business discussions and negotiations among applicants that are not competition related, each applicant must remain vigilant not to communicate, directly or indirectly, information that affects, or could affect, applications or application strategy. Certain discussions might touch upon subject matters that could convey cost information and application strategies. Such subject areas include, but are not limited to, management, sales, local marketing agreements, and other transactional agreements.

95. The Bureau cautions applicants that applications or application strategies may be communicated outside of situations that involve one party subject to the prohibition communicating privately and directly with another such party.

96. Applicants should use caution in their dealings with other parties, such as members of the press, financial analysts, or others who might become conduits for prohibited communication of application information. For example, even though communicating that it has applied to participate in the competition will not violate the rule, an applicant's statement to the press about the details of its application or proposal in the competition could give rise to a finding of a violation of the prohibition on certain communications that the Bureau adopts.

97. Communicating with Third Parties. Consistent with § 1.21002, the Bureau does not prohibit an applicant from communicating application or application strategies to a third party, such as a consultant or consulting firm, counsel, or lender, provided that the applicant takes appropriate steps to ensure that the third party does not become a conduit for prohibited communications to other applicants, unless both applicants are parties to a joint application arrangement disclosed on their respective applications. For example, an applicant might require a third party, such as a lender, to sign a non-disclosure agreement before the applicant communicates any information regarding application or application strategy to the third party. Within third-party firms, separate individual employees, such as attorneys or competition consultants, may advise individual applicants on application or application strategies, as long as such firms implement firewalls and other compliance procedures that prevent such individuals from communicating the application or application strategies of one applicant to other individuals representing separate applicants. Although firewalls and/or other procedures should be used, their existence is not an absolute defense to liability if a violation of the rule has occurred.

98. As the Commission has previously explained, in the case of an individual, the objective precautionary measure of a firewall is not available. As a result, an individual that is privy to bids or bidding information of more than one applicant presents a greater risk of engaging in a prohibited communication. The Bureau will take the same approach to interpreting the prohibited communications rule in the Stage 2 Competition. The Bureau emphasizes that whether a prohibited communication has taken place in a given case will depend on all the facts pertaining to the case, including who possessed what information, what information was conveyed to whom, and the status of the competition.

99. The Bureau reminds potential applicants that they may discuss the application or proposals for specific geographic areas with the counsel, consultant, or expert of their choice before the application deadline. Furthermore, the same third-party individual could continue to give advice after the deadline regarding the application, provided that no information pertaining to application or application strategies is conveyed to that individual.

100. Certification. By submitting an application, each applicant in the Stage 2 Competition certifies its compliance with the prohibition on certain communications that the Bureau adopts, consistent with the Commission's direction in the PR-USVI Stage 2 Order. In particular, an applicant must certify under penalty of perjury that the application discloses all real parties in interest to any agreements involving the applicant's participation in the applying for Stage 2 support. Also, the applicant must certify that it and all applicable parties have complied with and will continue to comply with the prohibition the Bureau adopts, which is identical to 47 CFR 1.21002.

101. The Bureau cautions, however, that merely filing a certifying statement as part of an application will not outweigh specific evidence that a prohibited communication has occurred, nor will it preclude the initiation of an investigation when warranted. The Commission has stated that it “intend[s] to scrutinize carefully any instances in which applying patterns suggest that collusion may be occurring.” Any applicant found to have violated the prohibition on certain communications may be subject to sanctions.

102. Duty to Report Prohibited Communications. Consistent with § 1.21002(c), the Bureau requires that any applicant that makes or receives a communication that appears to violate the prohibition on certain communications that it adopts must report such communication in writing to the Commission immediately, and in no case later than five business days after the communication occurs. An applicant's obligation to make such a report continues until the report has been made.

103. In addition, § 1.65 of the Commission's rules requires an applicant to maintain the accuracy and completeness of information furnished in its pending application and to notify the Commission of any substantial change that may be of decisional significance to that application. Thus, § 1.65 requires a Stage 2 Competition applicant to notify the Commission of any substantial change to the information or certifications included in its pending application. An applicant is therefore required by § 1.65 to report to the Commission any communication the applicant has made to or received from another applicant after the application filing deadline that affects or has the potential to affect its application or application strategy, unless such communication is made to or received from an applicant that is a member of a joint application arrangement identified on the application.

104. Sections 1.65(a) and 1.21002 of the Commission's rules require each applicant in competitive proceedings to furnish additional or corrected information within five days of a significant occurrence, or to amend its application no more than five days after the applicant becomes aware of the need for amendment. These rules are intended to facilitate the competition process by making information that should be publicly available promptly accessible to all participants and to enable the Bureau to act expeditiously on those changes when such action is necessary. For the avoidance of doubt, the Bureau applies the same requirement here.

105. Procedure for Reporting Prohibited Communications. A party reporting any prohibited communication pursuant to § 1.65 or the prohibition the Bureau adopts here ( i.e., a communication that would be prohibited by § 1.21001(b), or § 1.21002(c)) must take care to ensure that any report of the prohibited communication does not itself give rise to a violation of the communications prohibition the Bureau adopts. For example, a party's report of a prohibited communication could violate the rule by communicating prohibited information to other applicants through the use of Commission filing procedures that allow such materials to be made available for public inspection.

106. Parties must file only a single report concerning a prohibited communication and must file that report with the Commission personnel expressly charged with administering the Commission's competitions. This rule is designed to minimize the risk of inadvertent dissemination of information in such reports. Any required reports must be filed consistent with the instructions set forth in this Public Notice. For the Stage 2 Competition, such reports must be filed with Ryan Palmer, the Chief of the Telecommunications Access Policy Division, Wireline Competition Bureau, by the most expeditious means available. Any such report should be submitted by email to Mr. Palmer at the following email address: ConnectAmerica@fcc.gov. If you choose instead to submit a report in hard copy, any such report must be delivered only to: Ryan Palmer, Chief, Telecommunications Access Policy Division, Wireline Competition Bureau, Federal Communications Commission, 445 12th Street SW, Room 5-A426, Washington, DC 20554.

107. A party seeking to report such a prohibited communication should consider submitting its report with a request that the report or portions of the submission be withheld from public inspection by following the procedures specified in § 0.459 of the Commission's rules. The Bureau encourages such parties to coordinate with the Telecommunications Access Policy Division staff about the procedures for submitting such reports.

108. Disclosure of Agreement Terms. Each applicant may be required to disclose in its application the specific terms, conditions, and parties involved in any agreement into which it has entered. This may apply to an applicant that is a consortia, joint venture, partnership, or agreement, understanding, or other arrangement entered into relating to the Stage 2 competitive proposal process, including any agreement relating to the post-competition market structure. Failure to comply with the Commission's rules can result in enforcement action.

109. Additional Information Concerning Prohibition of Certain Communications. The prohibition the Bureau adopts here is consistent with similar rules the Commission has applied in other Commission competitions and auctions. Applicants may gain insight into the public policies underlying § 1.21002 by reviewing information about the application of these other rules. Decisions applying these rules by courts and by the Commission and its Bureau in other Commission competitions can be found at https://www.fcc.gov/summary-listing-documents-addressing-application-rule-prohibiting-certain-communications. Applicants utilizing these precedents should keep in mind the specific language of the rule applied in past decisions, as well as any differences in the context.

110. Antitrust Laws. Regardless of compliance with the Commission's rules, applicants remain subject to the antitrust laws, which are designed to prevent anticompetitive behavior in the marketplace. Compliance with the disclosure of prohibited communications pursuant to the rules the Bureau adopts in the Public Notice will not insulate a party from enforcement of the antitrust laws. For instance, a violation of the antitrust laws could arise out of actions taking place well before the application filing deadline, when the prohibited communications rule takes effect. The Commission has cited a number of examples of potentially anticompetitive actions that would be prohibited under antitrust laws: for example, actual or potential competitors may not agree to divide territories in order to minimize competition, regardless of whether they split a market in which they both do business, or whether they merely reserve one market for one and another market for the other. Similarly, Commission staff have previously reminded potential applicants and others that “[e]ven where the applicant discloses parties with whom it has reached an agreement on the application . . . the applicant is nevertheless subject to existing antitrust laws.”

111. To the extent the Commission becomes aware of specific allegations that suggest that violations of the federal antitrust laws may have occurred, the Commission may refer such allegations to the United States Department of Justice for investigation. If an applicant is found to have violated the antitrust laws or the Commission's rules in connection with its participation in the Stage 2 Competition application process, it may be subject to a forfeiture and may be prohibited from participating further in the Stage 2 Competition and in future competitions and auctions, among other sanctions.

112. The Commission has adopted rules, including a provision referred to as the “red light rule,” that implement the Commission's obligation under the Debt Collection Improvement Act of 1996, which governs the collection of debts owed to the United States, including debts owed to the Commission. Under the red light rule, applications and other requests for benefits filed by parties that have outstanding debts owed to the Commission will not be processed. Applicants seeking to participate in the Stage 2 Competition are subject to the Commission's red light rule. Pursuant to the red light rule, unless otherwise expressly provided for, the Commission will withhold action on an application by any entity found to be delinquent in its debt to the Commission.

113. Specifically, a red-lighted applicant seeking to participate in the Stage 2 Competition must pay any debt(s) associated with the red light prior to filing its application. If an applicant has not resolved its red light issue(s) prior to filing, its application will be deemed incomplete. Bureau staff will not process the applicant's Stage 2 application, and the applicant will be deemed not qualified to apply for Stage 2 support.

114. Potential applicants for the Stage 2 Competition should review their own records, as well as the Commission's Red Light Display System (RLD), to determine whether they owe any non-tax debt to the Commission and should try to resolve and pay any outstanding debt(s) prior to submitting a application. The RLD enables a party to check the status of its account by individual FCC Registration Numbers (FRNs) and links other FRNs sharing the same Tax Identification Number (TIN) when determining whether there are outstanding delinquent debts. The RLD is available at http://www.fcc.gov/redlight/. Additional information is available at https://www.fcc.gov/debt_collection/.

115. Additionally, the Bureau recognizes that a Stage 2 Competition applicant may incur debt to the Commission after it files its application and may fail to pay that debt when due. An applicant should note that the Commission will conduct additional red light checks prior to authorizing Stage 2 support. The Bureau therefore encourages qualified applicants to continue to review their own records as well as the RLD periodically during the Stage 2 Competition and to resolve and pay all outstanding debts to the Commission as soon as possible. The Commission will not authorize any winning applicant to receive Stage 2 support until its red light issues have been resolved.

116. The Commission's rules provide for the debarment of those convicted of or found civilly liable for defrauding the high-cost support program. Stage 2 Competition applicants are reminded that those rules apply with equal force to the Stage 2 Competition.

117. Evaluation Process Overview. The Bureau strongly encourages each applicant to carefully review its entire application, including specific proposals for each geographic area, for completeness and accuracy. Following an application's submission to the Commission, an applicant is not afforded any opportunity to cure deficiencies or make major modifications to its competitive proposal that may affect Commission staff's ultimate scoring of proposals. However, the Bureau may request additional information from applicants to facilitate its review of underlying applications.

118. Once the deadline to submit an application has passed, Bureau staff will determine whether each applicant has complied with the application requirements and provided all information concerning its competitive proposal(s). The Bureau will issue a public notice with each applicant's proposal status identifying (1) those that are complete and (2) those that are incomplete or deficient. Eligible applicants that submit complete proposals will be reviewed as part of the Stage 2 Competition for the Territories consistent with the methodology prescribed by the PR-USVI Stage 2 Order.

119. The Bureau will select only one winner per geographic area in the Territories. The Bureau staff will score the applications using at least two independent reviewers for each application who will not communicate about the contents or merits of the applications prior to issuing a final score. Each reviewer will score separately, and the final overall score for each competitive proposal will be the average score of the proposal based on all scores from reviewers. There will be no public comment period on competitive proposals submitted in the Stage 2 Competition.

120. Overall Scoring and Weighting. Bureau staff will apply three objective factors in scoring and selecting winning applicants based upon information provided in each applicant's competitive proposal for a specific geographic area: (1) Price per location; (2) network performance, including speed, latency, and usage allowance; and (3) network resilience and redundancy. For administrative simplicity in evaluating comprehensive proposals, applicants shall provide this information in a Microsoft Excel or Access format using Schedule B to the Application Form for each geographic area it seeks Stage 2 support.

121. Bureau staff will evaluate each geographic area contained in an applicant's competitive proposal based on a 270-point scale, as shown in the table in the following and allocated as follows: 100 points for price per location, 90 points for network performance, and 80 points for network resilience and redundancy. An applicant will be assigned a specific point value in each category, and it will receive a final overall score, calculated as the average of all scores from Commission staff for each geographic area for which it seeks support. Price per location will be given the greatest weight; however, a proposal for a network with top-notch performance and resilience and redundancy can prevail over a proposal for a less expensive but less robust and resilient network to encourage applicants to deploy high-performing, storm-hardened networks. The applicant with the lowest final overall point score out of a total of 270 possible points for a geographic area will win support for that area. In the event of a tied score for a geographic area, the Bureau will select the competitive proposal with the lowest price per location.

122. Price Per Location. The Bureau will use the Proposal Price submitted by applicants in their Application Form to determine their scores for price per location. The reserve price for each geographic area is the maximum amount that an applicant may commit to accept in its proposal. An applicant who proposes to accept the reserve price for a geographic area will receive the highest score of 100 points for price per location category. Unlike in the multi-round CAF II reverse auction previously used by the Commission, the competitive process here is only a single round, so applicants must provide their best price possible in the first instance.

123. The Bureau will subtract one point from the high score of 100 for each percentage point the Proposal Price is below the reserve price, as shown in the Table 2 herein. Applicants may submit a Proposal Price below the reserve price to the nearest hundredth of one percent. In such cases, the Bureau will round the percentage to the nearest whole percentage for the purpose of scoring. In the event two applicants have equal overall final scores, the applicant with the lowest Proposal Price will be selected the winning applicant. For example, if an applicant commits to a Proposal Price that is 10.55 percent less than the reserve price, the applicant will receive an 11-point reduction from the possible 100 points. In the event a second applicant submits a Proposal Price for the same geographic area that is 10.75 percent less than the reserve price, thereby also receiving an 11-point reduction, and has the same point total as the first applicant in every other respect, this later applicant would be the winning bidder because its Proposal Price would be less than the former applicant, assuming the final overall score for both applicants' proposals were equal. Thus, this single-round competitive process rewards applicants to reveal their best price to increase the likelihood of being the winning applicant.

124. Network Performance. In the PR-USVI Stage 2 Order the Commission established three tiers for a combination of network speed and usage allowances, and two tiers for network latency, as reflected in Table 3 in the following. The Bureau requires applicants to commit to the deployment of a network capable of providing a minimum upload and download speeds of at least 25/3 Mbps with at least 200 gigabytes (GB) of monthly data usage or a usage allowance that reflects the average usage of a majority of fixed broadband customers, using Measuring Broadband America data or a similar data source, whichever is greater. For each geographic area the applicant seeks support, the applicant specifies the specific speed, usage, and latency in Schedule B of the Application Form. The Bureau does not require an applicant to propose the same network performance measures for each geographic area it proposes to provide voice and broadband service in the territory.

125. Applicants that propose to meet these minimum network speed and usage requirements will be assigned the maximum 50 points allotted for this category.

126. To promote the deployment of advanced networks and access to quality services, the Bureau provides point reductions only by meeting specific performance metrics. Applicants will be given a points reduction if its proposed network speed and data usage is greater than or equal to speeds of 100/20 Mbps and greater than or equal to 2 TB of monthly data usage. Staff will assign 25 points out of a possible 50 points to applicants that commit to deploy networks meeting or exceeding these specified speeds and minimum data usage. And staff will assign zero points only if an applicant's proposal meets or exceeds speeds of 1 Gbps/500 Mbps with at least 2TB for monthly usage allowance. Unlike the price per location category, applicants do not receive incremental decreases in assigned points for increases in speed or monthly data usage allowance that are less than those specified for the next performance tier.

127. All applicants must provide services with a maximum roundtrip broadband and voice latency of ≤750 milliseconds (ms) or less, but the Bureau will give preference to applicants with low-latency broadband and voice at or below 100 ms as shown in Table 4 herein. Staff will assign high-latency commitments the full 40 points for this category and assign zero points for a proposal with low-latency. Similar to speed and usage, applicants do not receive incremental point reductions for latency performance that are between 750 ms and 100 ms.

128. Network Resiliency and Redundancy. Bureau staff will evaluate resiliency and redundancy by assigning points for a few key, objective criteria specified in Schedule B of the Application Form. Bureau staff will award a points preference based on the level of resilience an applicant proposes to build into its network and/or the redundancy or diversity it proposes to create in its network as measured in network miles.

129. Applicants must provide data concerning its proposed network for each geographic area for evaluation and scoring. Applicants must provide the total network miles within the geographic area. Applicants must further provide the amount of its total network miles that consists of buried fiber, aerial fiber using standard poles, aerial fiber using composite high-wind rated poles, and fixed wireless technology. An applicant will receive a score for network resilience based on the percentage of these technologies, as measured by network miles, that comprise the entire network within the geographic area. The Bureau assigns the full 60 points for this category to a network comprised entirely of aerial fiber using standard poles, and provide the greatest preference, with least amount of points, to an all-buried fiber network. Bureau staff will assign as few as zero points for a network resiliency solution that relies on all-buried fiber.

130. Finally, Bureau staff will assign up to 20 points depending on whether an applicant proposes a redundancy solution that includes a backup network or path diversity. Network diversity means maintaining a separate communications network that can provide services should the first type fail. Path diversity means that there is an alternate route to achieving communications within the network. Specifically, staff will assign no points for a proposal that includes either a backup network or path redundancy, and staff will assign 20 points to a proposal that includes neither a backup network or path redundancy. Applicants must specify the amount of network miles within the geographic area that include a backup network, path diversity, or both. Bureau staff will not deduct points for satellite providers for redundancy simply based on the availability of a backup satellite path. Satellite providers will receive a reduction in points based on the percentage of locations that it intends to reach with a backup network. Although scoring will equally reward a carrier for building in either network or path diversity, the Bureau encourages carriers to build both into their network wherever possible as a best practice for building a storm-hardened network.

131. Applicants may request confidential treatment of application information pursuant to the normal or abbreviated § 0.459 processes detailed in the public notice. For a typical request for confidential treatment, an applicant must submit a statement of the reasons for withholding information from public inspection. An applicant that seeks confidential treatment of financial information contained in its application need not submit a statement that conforms with the requirements of § 0.459(b) unless and until its request for confidential treatment is challenged. Notwithstanding an applicant's request for confidential treatment, the Bureau will withhold from public inspection certain application information until at least after the winning applicants have been authorized to receive support.

132. Forfeiture. Any Stage 2 Competition winning applicant will be subject to a forfeiture in the event of a default before it is authorized to begin receiving support. A winning applicant will be considered in default and will be subject to forfeiture if it fails to meet the document submission deadlines, is found ineligible or unqualified to receive Stage 2 support by the Bureau, and/or otherwise defaults on its winning applications or is disqualified for any reason prior to the authorization of support. Any such determination by the Bureau shall be final, and a winning applicant shall have no opportunity to cure through additional submissions, negotiations, or otherwise. Agreeing to such payment in the event of a default is a condition for participating in application in the Stage 2 Competition.

133. The Commission established a base forfeiture of $3,000 per census block group within a geographic area for any applicant that (i) fails to meet the document submission deadlines, (ii) is found ineligible or unqualified to receive support by the Bureau, or (iii) otherwise defaults on its bid or was disqualified for any reason prior to receiving authorization for support. The forfeiture amount resulting from an applicant's default prior to receiving authorization for support will be subject to adjustment based on the criteria set forth in the Commission's forfeiture guidelines.

134. A winning applicant will be subject to the base forfeiture for each separate violation of the Commission's rules. The Commission defined a violation as any form of default with respect to the geographic area. In other words, there shall be separate violations for each winning geographic area in an application. To ensure that the amount of the base forfeiture is not disproportionate to the amount of a winning applicant's application, the Commission decided to limit the total base forfeiture to five percent of the applicant's total assigned support for the application for the support term.

135. In the event of default, the Bureau will notify and identify the next-in-line applicant as the new winning applicant. The new winning applicant will have all the same obligations for submitting additional information and filings and obligations as did the initial winning applicant.

136. Non-Compliance Measures Post-Authorization. An applicant that has received notice from the Commission that it is authorized to receive Stage 2 support will be subject to non-compliance measures if it fails or is unable to meet its minimum coverage requirement, other service requirements, or fails to fulfill any other term or condition of Stage 2 support. As described in the PR-USVI Stage 2 Order, these measures will scale with the extent of non-compliance, and include additional reporting, withholding of support, support recovery, and drawing on the support recipient's letter of credit if the support recipient cannot pay back the relevant support by the applicable deadline. A support recipient may also be subject to other sanctions for non-compliance with the terms and conditions of Stage 2 support, including, but not limited to, potential revocation of ETC designations and suspension or debarment. Additionally, a support recipient will be subject to any non-compliance measures in conjunction with a methodology for high-cost support recipients to measure and report speed and latency performance to fixed locations.

137. The Stage 2 Competition window for applicants will close on a date to be announced by the Bureau. No further applications will be accepted after that time. To avoid concerns related to electronic or technical errors, the Bureau encourages applicants to submit ahead of this time and date. The Bureau will confirm receipt via electronic mail of each application received by the deadline.

138. The Bureau will make announcements as necessary to report or request information from applicants during the Stage 2 Competition. Announcements will be available at the FCC's website.

139. The Bureaus will determine the winning applicants as described elsewhere in this Public Notice and will announce the results in a public notice. The Bureau will make the final overall application scores for all applicants available for public viewing after winning applicants are authorized to receive support. Winning applicants will then be required to complete the necessary actions described in this Public Notice to become authorized for support.

140. After the Stage 2 Competition has ended, the Bureau will issue a public notice declaring the competition closed, identifying the winning applicants, and establishing the deadline for submission of further information for authorizing support. Winning applicants will file the information using ECFS and email to the Bureau. Details regarding the submission requirements will be provided in the public notice. After the information has been reviewed and is considered to be complete, including the Disaster Preparation and Response Plan, and the winning applicant has submitted an acceptable letter of credit and accompanying Bankruptcy Code opinion letter as described in the following, a public notice will be released authorizing the winning applicant to receive Stage 2 support.

141. Within 60 days after the release of the winning applicants public notice, a winning applicant is required to submit appropriate documentation of its high-cost ETC designation in all the areas for which it will receive support. Appropriate documentation should include the original designation order, any relevant modifications, e.g., expansion of service area or inclusion of wireless, along with any name-change orders. An applicant is also required to provide documentation showing that the designated areas ( e.g., census blocks, wire centers, etc.) cover the relevant winning application areas so that it is clear that the winning applicant has high-cost ETC status in each winning application area. Such documentation could include maps of the applicant's ETC designation area, map overlays of the winning application areas, and/or charts listing designated areas. Additionally, an applicant is required to submit a letter with its documentation from an officer of the company certifying that the applicant's ETC designation for each state covers the relevant areas where the applicant will receive support.

142. After an application has been reviewed and is considered to be complete, the Commission will issue a public notice identifying each winning applicant that may be authorized to receive Stage 2 support. No later than 10 business days after the release of the public notice, an applicant must obtain an irrevocable standby letter of credit at the value specified in § 54.1508(b) from a bank acceptable to the Commission as set forth in § 54.1508(c) for each territory where the applicant is seeking to be authorized. The letter of credit must be issued in substantially the same form as set forth in the model letter of credit provided in Appendix B of the Public Notice.

143. In addition, a winning applicant will be required to provide with the letter of credit an opinion letter from legal counsel clearly stating, subject only to customary assumptions, limitations, and qualifications, that, in a proceeding under the Bankruptcy Code, the bankruptcy court would not treat the letter of credit or proceeds of the letter of credit as property of the applicant's bankruptcy estate, or the bankruptcy estate of any other applicant-related entity requesting issuance of the letter of credit, under section 541 of the Bankruptcy Code.

144. New and Renewed Letter of Credit. A winning application receiving Stage 2 support may obtain a new or renewed Letter of Credit after successfully achieving its deployment milestones. When a winning applicant first obtains a letter of credit, it must be at least equal to the amount of the first year of authorized support. Before the winning applicant can receive its next year's support, it must modify, renew, or obtain a new letter of credit to ensure that it is valued at a minimum at the total amount of money that has already been disbursed plus the amount of money that is going to be provided in the next year.

145. The Commission found that, as a recipient makes progress towards building its network, it is appropriate to modestly reduce the value of the letter of credit in an effort to reduce the cost of maintaining a letter of credit as the recipient meets certain service milestones. Specifically, once an entity meets the 60 percent service milestone that entity may obtain a new letter of credit or renew its existing letter of credit so that it is valued at 90 percent of the total support amount already disbursed plus the amount that will be disbursed the next year. Once the entity meets the 80 percent service milestone that entity may obtain a new letter of credit valued at 80 percent of the total support amount already disbursed plus the amount that will be disbursed the next year. The letter of credit must remain open until the recipient has certified it has deployed broadband and voice service meeting the Commission's requirements to 100% of the required number of locations, and USAC has verified that the entity has fully deployed.

146. Submission Due Date and Format for Submission. The Bureau expects the adjustment window to open on or about one year following the notice announcing Stage 2 winning applicants. The Bureau will announce the specific dates of the location adjustment submission filing window and stakeholder comment period in the public notice announcing the winning Stage 2 applicants. By the closing date, if a winning applicant cannot identify actual locations totaling the number announced in the Reserve Price Public Notice on December 19, 2019, it must file its proposed actual location number and all relevant supporting information, including maps, studies, certifications, documents, and any other evidence with the Bureau via electronic mail at ConnectAmerica@fcc.gov. The applicant must include geolocation data (indicating the latitude/longitude and address) for each actual location it can identify and for each winning area. An applicant must also include a certification for its assertion. The information and evidence submitted will be subject to potential audit.

147. If a winning applicant does not need to adjust its deployment obligation, it must file a certification with the Bureau by the close of the window certifying to that effect and accepting the number of locations the Bureau announced in the Reserve Price Public Notice on December 19, 2019, as its location obligation.

148. Stakeholder Comment Period. Following the window closing date, relevant stakeholders will have 30 days to review and comment on the information submitted by the winning applicants. There will be no reply comment period for the winning applicants.

149. Adjustment Order. After the comment period is closed, Bureau staff will review all evidence submitted by the support recipients and all relevant comments. The Bureau will then issue an order addressing the recipients' showings, which will establish and announce the final location obligations for each recipient.

150. A support recipient may choose to participate in the voluntary five-year review process to reassess its deployment obligations. As directed, the Bureau will release a public notice detailing the five-year review process no later than the beginning of the fifth year of Stage 2 support to provide recipients an opportunity to request reassessment of their deployment obligations. The Bureau expects any request for reassessment will be accompanied by specific information, documents, evidence and data upon which the Bureau can make an informed decision. This reassessment will allow the Bureau to determine whether to adjust any deployment requirements based on newly available data or changed circumstances such as disruptive disasters, altered subscribership or significantly decreased revenue due to population shifts. In the five-year review process public notice, the Bureau will establish a public comment period for any support recipient requesting reassessment, which will allow public review of the documentation, data, and evidence put forward to support the request. Following the close of the public comment period, the Bureau will review and evaluate the record for each requesting support recipient. If, based on the Bureau's review, an adjustment of deployment obligations or locations is warranted for any winning applicant, the Bureau will announce those changes in a public notice.

151. As indicated in this document, a winning applicant has the obligation to provide the Bureau with an updated DPRP within ten business days of making any material change, and for as long as it receives Stage 2 support. The failure to update the DPRP may result in withholding of support or disqualification from future participation in the Commission's competitive competitions.

152. All Stage 2 support recipients are required to perform DIRS reporting when the system is activated. The Commission will determine whether to activate DIRS in coordination with DHS and FEMA, and will announce the areas that will be covered via public notice and electronic mail. Following normal Commission protocol, the Bureau will continue to activate DIRS and notify providers of its reporting schedule, typically in advance of an expected impending disaster event or immediately after such a disaster. Also pursuant to normal Commission protocol, DIRS reporting obligations begin at the time of DIRS activation, which may be immediately before, at the onset of, or immediately after a disaster event, with reports due each time a provider's restoration status changes. The Bureau notes that support recipients are not required to report daily via DIRS when there is no change in restoration status, and instead are only required to make updates on changes in restoration status when they occur. The only difference from ordinary Commission protocol is that DIRS reporting is mandatory for Stage 2 support recipients for as long as a recipient is receiving Stage 2 support.

153. Stage 2 funding recipients that fail to meet this mandatory DIRS reporting obligation may be subject to penalties and sanctions through the withholding of Stage 2 funds and/or disqualification from participating in future Stage 3 mobile support. However, the Bureau will not impose a penalty or sanctions if reporting deadline(s) cannot be met for reasons reasonably beyond a participant's control ( e.g. loss of communications that precludes access to DIRS). In that case, the Bureau requires instead that providers begin and/or resume DIRS reporting according to the reporting schedule as soon as they are reasonably able to do so.

154. This document implements the information collections adopted in the PR-USVI Stage 2 Order and does not contain any additional information collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. The Commission is currently seeking PRA approval for information collections related to the PR-USVI Stage 2 Competition application process. Therefore, this document does not contain any new or modified information collection burden for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198.

155. The Commission has determined, and the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, concurs that these rules are “non-major” under the Congressional Review Act, 5 U.S.C. 804(2). The Commission will send a copy of this Public Notice to Congress and the Government Accountability Office pursuant to 5 U.S.C. 801(a)(1)(A).

156. The Bureau establishes procedures for the Stage 2 Competition pursuant to the authority contained in sections 1, 2, 4(i), 214, 254, 303(r), 403, and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 214, 254, 303(r), 403, and 405, and §§ 1.1, 1.3, 1.425 and 1.429 of the Commission's rules, 47 CFR 1.1, 1.3, 1.425 and 1.429.

157. In the PR-USVI Stage 2 Order, the Commission conducted a Final Regulatory Flexibility Analyses (FRFAs) as required by the Regulatory Flexibility Act of 1980, as amended (RFA). The Bureau anticipated that the Order will not affect a substantial number of carriers and, therefore, certified the Order would not affect a substantial number of small entities.

158. This document establishes procedures for the Connect America Uniendo a Puerto Rico Fund and Connect USVI Fund Stage 2 Competition (PR-USVI Stage 2 Competition or Stage 2 Competition). The procedures established in this document are consistent with the PR-USVI Stage 2 Order and FRFA is not required for this document.

This is a summary of the Commission's Report and Order, FCC 20-8, in MB Docket Nos. 19-165 and 17-105, adopted on January 30, 2020, and released on January 31, 2020. The complete text of this document is available electronically via the FCC's Electronic Document Management System (EDOCS) website at https://www.fcc.gov/document/fcc-modernizes-delivery-mvpd-notices-broadcast-tv-stations-0. Documents will be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat. The complete text of this document is also available for public inspection and copying during regular business hours in the FCC Reference Information Center, Federal Communications Commission, 445 12th Street SW, CY-A257, Washington, DC 20554. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format) by sending an email to fcc504@fcc.gov or calling the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

1. We adopt the proposal to require electronic delivery of certain notices that cable operators are required to provide to broadcast television stations under our existing rules. To harmonize the rules applicable to cable operators and direct broadcast satellite (DBS) providers, we extend the same treatment to the notices that DBS providers are required to provide to broadcast television stations under our existing rules. We conclude that it will serve the public interest and enhance administrative efficiency to harmonize the notification rules discussed herein for cable operators and DBS providers with our modernized carriage election notice procedures for broadcast television stations.

2. As proposed in the notice of proposed rulemaking ( NPRM ) (84 FR 37979, August 5, 2019), we will require that cable operators use email to deliver notices to broadcast television stations in the following circumstances: informing local broadcast stations that a new cable system intends to commence service (§ 76.64(k)); sending required information to local broadcast stations when a new cable system is activated (§ 76.1617); notifying a television station about the deletion or repositioning of its signal (§ 76.1601); informing stations of a change in the designation of the principal headend of a cable operator (§ 76.1607); informing stations that a cable operator intends to integrate two cable systems, requiring a uniform carriage election (§ 76.1608); and notifying stations that a cable system serves 1,000 or more subscribers and is no longer exempt from the Commission's network non-duplication and syndicated exclusivity rules (§ 76.1609). To ensure that television stations continue to receive these important notices, we will require that cable operators deliver the notices to the email address that the station designates for carriage-related questions in accordance with the procedures adopted in the Carriage Election Notice Modernization proceeding. Under those procedures, commercial and noncommercial full-power and Class A television stations are already required to provide a current email address and phone number in their online public inspection file (OPIF) for carriage-related questions no later than July 31, 2020, and maintain up-to-date contact information at all times thereafter. Requiring cable operators to deliver notices to this email address will help ensure that notices are sent to the correct inbox without imposing any new obligations on these stations. Because the email address must be kept up-to-date, cable operators will easily be able to identify the email address that is current for purposes of sending notices to a television station. In addition, if questions arise pertaining to the notices, cable operators will be able to call the station at the phone number provided.

3. We conclude that transitioning the notices from paper to electronic delivery will serve the public interest. As discussed above, the Commission has already taken similar steps with respect to various other notices and filings required by our rules. In doing so, the Commission found that the benefits of transitioning the notices from paper to electronic delivery include reducing the costs, administrative burdens, and environmental waste associated with paper notices. Consistent with these previous determinations, we conclude that requiring notices under § 76.64(k) and subpart T to be delivered to broadcast television stations via email will reduce burdens on all parties and ensure that notices are still received in a timely manner, while reducing environmental waste.

4. Perhaps not surprisingly, we find unanimous support in the record for transitioning these notices from paper to electronic delivery. Cable operators and broadcasters commenting in this proceeding agree that electronic delivery will reduce the time and money spent on the required notices, enable quicker, more effective communication of necessary information, and decrease the environmental waste generated by paper notices. As the National Cable and Telecommunications Association (NCTA) explains, electronic notices need not be printed, posted, or tracked to ensure they reach their destination, making them far less expensive and much less administratively burdensome than paper notices. Because email transmission is nearly instantaneous and paper delivery methods often take up to several days, transitioning from paper notices to email will also help ensure that broadcasters receive notices much faster than they do currently. Further, as America's Communications Association (ACA) and NCTA attest, allowing the notices to be delivered via email is consistent with the way companies do business today. Public television broadcasters similarly support the use of email for notices to full-power noncommercial television stations, and the National Association of Broadcasters (NAB) suggests that email would be acceptable for delivering notices to low-power television (LPTV) stations. No commenter disputes our authority to require that cable operators deliver notices via email. And we conclude, consistent with our previous finding, that emailing television stations the information required by § 76.64(k) and subpart T of our rules satisfies the “written notice” requirement in sections 614(b)(9) and 615(g)(3) of the Communications Act of 1934, as amended, because “it is reasonable to interpret the term `written information' . . . to include information delivered by email.”

5. Given the unanimous support in the record for transitioning from paper to electronic delivery of notices from cable operators to broadcast television stations, we see no reason to retain paper delivery as an option for the notices required by § 76.64(k) and subpart T of our rules. Indeed, no commenter in this proceeding asserts that we should retain such an option. To the contrary, ACA cautions that exempting some broadcasters from receiving the notices electronically would substantially negate the benefits of our decision today to move to electronic distribution of the notices. We agree with ACA that requiring cable operators to deliver notices to some broadcast stations via email and other stations via paper delivery would introduce unnecessary complexity and additional costs, which could pose challenges, particularly for small cable operators with limited resources. Similarly, we believe that allowing some cable operators to continue using paper delivery to distribute the notices would impose unnecessary burdens and costs on broadcast television stations. To streamline delivery of the notices and reduce the associated costs and burdens for all parties, we adopt email as the required means for delivering notices to broadcast television stations under § 76.64(k) and subpart T of our rules. Accordingly, we will require that after July 31, 2020, cable operators must deliver to broadcast television stations electronically via email the notices required by the rules listed above.

6. For LPTV stations that are entitled to notices but not required to maintain an OPIF, we will require that notices be delivered to the general email address listed for the licensee in our Licensing and Management System (LMS). Unlike full-power and Class A television stations, non-Class A LPTV stations are not subject to our OPIF rules and will therefore need to use alternative means other than the OPIF to publicize an email address and phone number for receiving notices from cable operators. We agree with commenters that cable operators should be able to consult a single Commission website or database to obtain contact information for delivering notices to non-Class A LPTV stations, rather than having to attempt to locate this information on each station's website. While some commenters suggest the Commission should establish a new means to collect and share such contact information, we find that the information such stations are already required to provide in LMS is sufficient for this purpose. When submitting a broadcast license application in LMS, an applicant is required to provide contact information, including an email address and phone number, for itself and any contact representatives listed on the form. Thus, each LPTV station that has filed a license application in LMS should already have an email address and phone number listed in LMS. LPTV stations may add or update this information easily by filing an Administrative Update for a LPTV/Translator Station Application in LMS. After submission, this contact information is publicly available in LMS via the Facility Details page, which may be accessed by doing a Facility Search and then clicking the relevant Facility ID Number in the Facility Search results.

7. We conclude that notices to non-Class A LPTV stations should be delivered to the licensee's email address, rather than a contact representative's email address (if different from the licensee's email address), to ensure that all such notices are delivered consistently to the same inbox in cases where a station designates a third party as a contact representative or designates multiple types of contact representatives. Accordingly, we will require that after July 31, 2020, § 76.64(k) and subpart T notices to LPTV stations that are entitled to such notices but that lack Class A status must be delivered to the email address listed for the licensee (not a contact representative, if different from the licensee) in LMS. Delivering notices to the email address listed for the contact representative is not sufficient to satisfy the notice requirements in § 76.64(k) and subpart T. After July 31, 2020, non-Class A LPTV stations must be prepared to respond to carriage questions directed to the licensee's email address and phone number (not a contact representative's email address and phone number, if different) as displayed publicly in LMS and must ensure that this information is kept up-to-date in LMS. We conclude that relying on this existing information in LMS will ensure that cable operators are able to identify contact information easily for notices to non-Class A LPTV stations without imposing additional burdens on stations or the Commission. LPTV stations are responsible for the accuracy of this contact information, and cable operators may rely on its accuracy at any time after July 31, 2020, for purposes of delivering the notices required by § 76.64(k) and subpart T of the Commission's rules.

8. Similarly, with respect to qualified noncommercial educational (NCE) translator stations, we agree with the public broadcasting organizations that there is no need to adopt a new email posting requirement for such stations. Rather, we will require that after July 31, 2020, § 76.64(k) and subpart T notices to a qualified NCE translator station must be delivered to the email address listed for the licensee (not a contact representative, if different from the licensee) in LMS, or alternatively to the primary station's carriage-related email address, if the translator station does not have its own email address listed in LMS. Like LPTV and other broadcast stations, qualified NCE translator stations are already required to provide general contact information, including an email address and phone number, when filing license applications in LMS. While it is possible that some qualified NCE translator stations have yet to submit a filing in LMS, we expect that by the end of the next cycle for television license renewal applications in 2023, all such stations will have submitted an application requiring them to provide an email address and phone number in LMS. We conclude that delivering relevant notices to the primary station's carriage-related email address is sufficient for providing electronic notices to qualified NCE translator stations that have no email address listed in LMS. Unlike an LPTV station, a qualified NCE translator station is associated with the primary station that authorizes the retransmission of its signal by the translator station. To the extent a qualified NCE translator station and its primary station are not owned by the same party, we expect that the owner of the primary station will inform the translator station promptly upon receiving relevant notices. Because the Commission's rules prohibit a TV translator station from rebroadcasting the programs of a TV broadcast station without obtaining the TV broadcast station's prior consent, we anticipate that there will be an existing relationship between a qualified NCE translator station and its primary station even where the stations are not owned by the same party. Moreover, we believe that the primary station will have every incentive to inform its affiliated translator station of relevant notices quickly in order to maintain or expand the reach of its programming.

9. To effectuate these changes, we add to § 76.1600 of our rules a new subsection requiring that notices provided by cable operators to broadcast television stations under § 76.64(k) and subpart T must be delivered via email as discussed herein. To avoid potential discrepancies with § 76.1600 as revised herein, we also add language to §§ 76.64(k), 76.1607, 76.1608, 76.1609, and 76.1617 to reflect our decision to require that cable operators deliver the notices required by these rules electronically to broadcast television stations via email in accordance with revised § 76.1600. In addition, we codify the requirements discussed above for LPTV and qualified NCE translator stations. Further, as proposed in the NPRM, we make a minor correction to our rules in part 74 by moving our existing channel sharing rule for LPTV and TV translator stations from subpart H (Low Power Auxiliary Stations) to subpart G (Low Power TV, TV Translator, and TV Booster Stations). Because the rules in subpart G apply to LPTV stations, TV translator stations, and TV booster stations, subpart G is a more appropriate location for § 74.799 than subpart H, which contains rules for low power auxiliary stations that transmit over distances of approximately 100 meters for uses such as wireless microphones, cue and control communications, and synchronization of TV camera signals.

10. We adopt the same approach outlined above for the notices that DBS providers currently are required to provide to broadcast television stations pursuant to the following rules: §§ 76.54(e) and 76.66(d)(5) (intent to retransmit “significantly viewed” out-of-market station); 76.66(d)(2) (intent to launch new local-into-local or HD carry-one, carry-all service); 76.66(d)(1)(vi) and (d)(3)(iv) (response to carriage requests); 76.66(f)(3) and (4) (location of local receive facility or intent to relocate such facility); and 76.66(h)(5) (deletion of duplicating signal or addition of formerly duplicating signal). DISH and DIRECTV support the NPRM' s proposal to require that DBS providers deliver these notices electronically via email, and no commenter opposes such a requirement.

11. No commenter disputes our authority to adopt rules requiring that DBS operators deliver these notices via email. We believe it will serve the public interest and enhance administrative efficiency to have a consistent approach for delivery of notices discussed herein. We agree with DISH and DIRECTV that, given our previous decision to require electronic delivery of carriage election notices, failure to allow email delivery of the notices required by §§ 76.54(e) and 76.66 will result in disproportionate burdens on DBS providers and broadcasters, and raise logistical and operational challenges. Accordingly, we require that after July 31, 2020, DBS providers must deliver to broadcast television stations electronically via email the notices required by the rules listed above. Such notices must be delivered to the same email address the station designates for carriage-related questions, as discussed above for the notices from cable operators. We revise our rules accordingly.

12. Paperwork Reduction Act Analysis. This document contains new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. The requirements will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies are invited to comment on the new or modified information collection requirements contained in this proceeding. In addition, we note that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we previously sought specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees.

13. Congressional Review Act. The Commission has determined, and the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, concurs that this rule is “non-major” under the Congressional Review Act, 5 U.S.C. 804(2). The Commission will send a copy of this Report and Order to Congress and the Government Accountability Office pursuant to 5 U.S.C. 801(a)(1)(A).

14. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the notice of proposed rulemaking ( NPRM ) in MB Docket No. 19-165. The Commission sought written public comments on proposals in the NPRM, including comment on the IRFA. The Commission received no direct comments on the IRFA. The present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

15. Need for, and Objectives of, the Report and Order. In the Report and Order, the Commission takes additional steps to modernize certain notice provisions in part 76 of the Commission's rules governing multichannel video and cable television service. Currently, these rules require that cable operators and other multichannel video programming distributors (MVPDs) provide certain written notices to broadcast stations by paper delivery, such as mail, certified mail, or, in some instances, hand delivery. Section 76.64(k) and subpart T of the Commission's rules contain written notification requirements for cable operators, and §§ 76.54(e) and 76.66 of the Commission's rules contain written notification requirements for direct broadcast satellite (DBS) providers. The rules require written notice to a local broadcast television station prior to deleting or repositioning the station, changing the location of the principal headend or local receive facility, or commencing service in a market, among other things.

16. The Report and Order revises the Commission's rules to require that cable operators deliver notices electronically to broadcast television stations in the following circumstances: Informing local broadcast stations that a new cable system intends to commence service (§ 76.64(k)); sending required information to local broadcast stations when a new cable system is activated (§ 76.1617); notifying a television station about the deletion or repositioning of its signal (§ 76.1601); informing stations of a change in the designation of the principal headend of a cable operator (§ 76.1607); informing stations that a cable operator intends to integrate two cable systems, requiring a uniform carriage election (§ 76.1608); and notifying stations that a cable system serves 1,000 or more subscribers and is no longer exempt from the Commission's network non-duplication and syndicated exclusivity rules (§ 76.1609). After July 31, 2020, cable operators must deliver required notices to full-power and Class A television stations electronically via email to the inbox that the station designates for carriage-related questions in its online public inspection file (OPIF). Similarly, notices to LPTV stations must be delivered to the email address listed for the licensee (not a contact representative, if different from the licensee) in the Commission's Licensing and Management System (LMS), and notices to qualified noncommercial educational (NCE) translator stations must be delivered to the email address listed for the licensee in LMS (not a contact representative, if different from the licensee) or alternatively the primary station's carriage-related email address, if the translator station does not have its own email address listed in LMS.

17. The Report and Order also requires that DBS providers similarly use email to deliver to broadcast television stations the notices required by the following rules: §§ 76.54(e) and 76.66(d)(5) (intent to retransmit “significantly viewed” out-of-market station); 76.66(d)(2) (intent to launch new local-into-local or HD carry-one, carry-all service); 76.66(d)(1)(vi) and (d)(3)(iv) (response to carriage requests); 76.66(f)(3) and (4) (location of local receive facility or intent to relocate such facility); and 76.66(h)(5) (deletion of duplicating signal or addition of formerly duplicating signal). Through this Report and Order, the Commission continues its efforts to update its rules and eliminate outdated requirements.

18. Summary of Significant Issues Raised by Public Comments in Response to the IRFA. No comments were filed in direct response to the IRFA.

19. Response to Comments by the Chief Counsel for Advocacy of the Small Business Administration. Pursuant to the Small Business Jobs Act of 2010, which amended the RFA, the Commission is required to respond to any comments filed by the Chief Counsel for Advocacy of the SBA and to provide a detailed statement of any change made to the proposed rules as a result of those comments. The Chief Counsel did not file any comments in response to this proceeding.

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

21. Cable Companies and Systems (Rate Regulation Standard). The Commission has also developed its own small business size standards, for the purpose of cable rate regulation. Under the Commission's rules, a “small cable company” is one serving 400,000 or fewer subscribers nationwide. The Commission determined that this size standard equates approximately to a size standard of $100 million or less in annual revenues. In addition, under the Commission's rules, a “small system” is a cable system serving 15,000 or fewer subscribers. Industry data indicate that there are currently 4,300 active cable systems in the United States. Of this total, 3,550 cable systems have fewer than 15,000 subscribers, and 750 systems have 15,000 or more. Thus, we estimate that most cable systems are small entities.

22. Cable System Operators (Telecommunications Act Standard). The Act also contains a size standard for a small cable system operator, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” There are approximately 49,011,210 cable video subscribers in the United States today. Accordingly, an operator serving fewer than 490,112 subscribers shall be deemed a small operator if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. Based on available data, we find that all but five incumbent cable operators are small entities under this size standard. We note that the Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million. Although it seems certain that some of these cable system operators are affiliated with entities whose gross annual revenues exceed $250 million, we are unable at this time to estimate with greater precision the number of cable system operators that would qualify as small cable operators under the definition in the Communications Act.

23. We also note that there currently are 182 cable antenna relay service (CARS) licensees. The Commission, however, neither requests nor collects information on whether CARS licensees are affiliated with entities whose gross annual revenues exceed $250 million. Although some CARS licensees may be affiliated with entities whose gross annual revenues exceed $250 million, we are unable at this time to estimate with greater precision the number of CARS licensees that would qualify as small cable operators under the definition in the Communications Act.

24. Direct Broadcast Satellite (DBS) Service. DBS service is a nationally distributed subscription service that delivers video and audio programming via satellite to a small parabolic dish antenna at the subscriber's location. DBS is now included in SBA's economic census category “Wired Telecommunications Carriers.” The Wired Telecommunications Carriers industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution; and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry. The SBA determines that a wireline business is small if it has fewer than 1,500 employees. Economic census data for 2012 indicate that 3,117 wireline companies were operational during that year. Of that number, 3,083 operated with fewer than 1,000 employees. Based on that data, we conclude that the majority of wireline firms are small under the applicable standard. Currently, however, only two entities provide DBS service, which requires a great deal of capital for operation: DIRECTV (owned by AT&T) and DISH Network. DIRECTV and DISH Network each report annual revenues that are in excess of the threshold for a small business. Accordingly, we conclude that, in general, DBS service is provided only by large firms.

25. Open Video Services. Open Video Service (OVS) systems provide subscription services. The open video system framework was established in 1996, and is one of four statutorily recognized options for the provision of video programming services by local exchange carriers. The OVS framework provides opportunities for the distribution of video programming other than through cable systems. Because OVS operators provide subscription services, OVS falls within the SBA small business size standard covering cable services, which is “Wired Telecommunications Carriers.” The SBA has developed a small business size standard for this category, which is: All such firms having 1,500 or fewer employees. To gauge small business prevalence for the OVS service, the Commission relies on data currently available from the U.S. Census for the year 2012. According to that source, there were 3,117 firms that in 2012 were Wired Telecommunications Carriers. Of these, 3,059 operated with less than 1,000 employees. Based on this data, the majority of these firms can be considered small. In addition, we note that the Commission has certified some OVS operators, with some now providing service. Broadband service providers (BSPs) are currently the only significant holders of OVS certifications or local OVS franchises. The Commission does not have financial or employment information regarding the entities authorized to provide OVS, some of which may not yet be operational. Thus, at least some of the OVS operators may qualify as small entities. The Commission further notes that it has certified approximately 45 OVS operators to serve 116 areas, and some of these are currently providing service. Affiliates of Residential Communications Network, Inc. (RCN) received approval to operate OVS systems in New York City, Boston, Washington, DC, and other areas. RCN has sufficient revenues to assure that they do not qualify as a small business entity. Little financial information is available for the other entities that are authorized to provide OVS and are not yet operational. Given that some entities authorized to provide OVS service have not yet begun to generate revenues, the Commission concludes that up to 44 OVS operators (those remaining) might qualify as small businesses that may be affected by the rules and policies adopted herein.

26. Satellite Master Antenna Television (SMATV) Systems, also known as Private Cable Operators (PCOs). SMATV systems or PCOs are video distribution facilities that use closed transmission paths without using any public right-of-way. They acquire video programming and distribute it via terrestrial wiring in urban and suburban multiple dwelling units such as apartments and condominiums, and commercial multiple tenant units such as hotels and office buildings. SMATV systems or PCOs are now included in the SBA's broad economic census category, “Wired Telecommunications Carriers,” which was developed for small wireline firms. Under this category, the SBA deems a wireline business to be small if it has 1,500 or fewer employees. Census data for 2012 indicate that in that year there were 3,117 firms operating businesses as wired telecommunications carriers. Of that 3,117, 3,059 operated with 999 or fewer employees. Based on this data, we estimate that a majority of operators of SMATV/PCO companies were small under the applicable SBA size standard.

27. Television Broadcasting. This Economic Census category “comprises establishments primarily engaged in broadcasting images together with sound.” These establishments operate television broadcast studios and facilities for the programming and transmission of programs to the public. These establishments also produce or transmit visual programming to affiliated broadcast television stations, which in turn broadcast the programs to the public on a predetermined schedule. Programming may originate in their own studio, from an affiliated network, or from external sources. The SBA has created the following small business size standard for such businesses: Those having $41.5 million or less in annual receipts. The 2012 Economic Census reports that 751 firms in this category operated in that year. Of this number, 656 had annual receipts of less than $25 million, 25 had annual receipts ranging from $25 million to $49,999,999, and 70 had annual receipts of $50 million or more. Based on this data we therefore estimate that the majority of commercial television broadcasters are small entities under the applicable SBA size standard.

28. Additionally, the Commission has estimated the number of licensed commercial television stations to be 1,380. Of this total, 1,267 stations (or 91.8%) had revenues of $41.5 million or less in 2018, according to Commission staff review of the BIA Kelsey Inc. Media Access Pro Television Database (BIA) on December 9, 2019, and therefore these licensees qualify as small entities under the SBA definition. In addition, the Commission estimates the number of licensed noncommercial educational (NCE) television stations to be 380. The Commission does not compile and does not have access to information on the revenue of NCE stations that would permit it to determine how many such stations would qualify as small entities.

29. We note, however, that in assessing whether a business concern qualifies as “small” under the above definition, business (control) affiliations must be included. Our estimate, therefore, likely overstates the number of small entities that might be affected by our action, because the revenue figure on which it is based does not include or aggregate revenues from affiliated companies. In addition, another element of the definition of “small business” requires that an entity not be dominant in its field of operation. We are unable at this time to define or quantify the criteria that would establish whether a specific television broadcast station is dominant in its field of operation. Accordingly, the estimate of small businesses to which rules may apply does not exclude any television station from the definition of a small business on this basis and is therefore possibly over-inclusive.

30. There are also 387 Class A stations. Given the nature of these services, the Commission presumes that all of these stations qualify as small entities under the applicable SBA size standard. In addition, there are 1,900 LPTV stations and 3,631 TV translator stations. Given the nature of these services as secondary and in some cases purely a “fill-in” service, we will presume that all of these entities qualify as small entities under the above SBA small business size standard.

31. Description of Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities. As discussed above, this Report and Order takes additional steps to update certain notice provisions in part 76 of the Commission's rules governing multichannel video and cable television service. The existing rules require that cable operators and other MVPDs provide certain written notices to broadcast stations by paper delivery, such as mail, certified mail, or, in some instances, hand delivery. The Report and Order revises the Commission's rules to require that cable operators and DBS providers distribute these notices to broadcast television stations electronically via email. After July 31, 2020, cable operators and DBS providers must deliver required notices to full-power and Class A television stations electronically via email to the inbox that the station designates for carriage-related questions in its OPIF. Similarly, notices to LPTV stations must be delivered to the email address listed for the licensee (not a contact representative, if different from the licensee) in LMS, and notices to qualified NCE translator stations must be delivered to the email address listed for the licensee (not a contact representative, if different from the licensee) in LMS or alternatively the primary station's carriage-related email address, if the translator station does not have its own email address listed in LMS.

32. Steps Taken To Minimize Significant Economic Impact on Small Entities and Significant Alternatives Considered. 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 and reporting requirements under the rule for such 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.

33. Through this Report and Order, the Commission takes steps to minimize the administrative burden on MVPDs, including small entities, by transitioning from paper to electronic delivery of certain notices to broadcast television stations, which will reduce the costs and burdens of providing such notices. The Commission has found that electronic delivery of notices would greatly ease the burden of complying with notification requirements for cable operators and DBS providers, including small entities. The Commission previously sought comment on other potential alternative means of delivering notices that might better serve the needs of broadcasters and MVPDs, including small entities, but still be less burdensome than sending notices by paper delivery, such as mail, certified mail, or, in some instances, hand delivery. Commenters, including those representing smaller entities, unanimously support transitioning the notices from paper to electronic delivery.

34. Accordingly, it is ordered that, pursuant to the authority found in sections 1, 4(i), 4(j), 303(r), 338, 340, 614, 615, and 653 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 303(r), 338, 340, 534, 535, and 573, this Report and Order is adopted .

35. It is further ordered that, pursuant to the authority found in sections 1, 4(i), 4(j), 303(r), 338, 340, 614, 615, and 653 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 303(r), 338, 340, 534, 535, and 573, the Commission's rules are amended as set forth in the Final Rules. These rules contain new or modified information collection requirements that require approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act and will become effective April 20, 2020. Compliance will not be required until after the Commission publishes a document in the Federal Register announcing OMB approval and the relevant compliance date.

36. It is further ordered that the Commission shall send a copy of this Report and Order in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

37. It is further ordered that, should no petitions for reconsideration or petitions for judicial review be timely filed, MB Docket No. 19-165 shall be terminated and its docket closed.

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR parts 74 and 76 as follows:

The South Atlantic snapper-grouper fishery includes black sea bass south of 35°15.9′ N latitude and is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The South Atlantic Fishery Management Council prepared the FMP and the FMP is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.

The recreational fishing year for black sea bass is April 1 through March 31. The recreational AM for black sea bass requires that before the April 1 start date of each recreational fishing year, NMFS projects the length of the recreational fishing season based on when NMFS projects the recreational ACL will be met, and announces the recreational season end date in the Federal Register (50 CFR 622.193(e)(2)). The purpose of this AM is to have a more predictable recreational season length while still constraining harvest at or below the recreational ACL to protect the stock from experiencing adverse biological consequences.

The recreational ACL for the 2020-2021 black sea bass fishing year is 323,161 lb (146,583 kg) gutted weight, or 381,330 lb (172,968 kg) round weight. The recreational ACL was set through the final rule for Abbreviated Framework Amendment 2 to the FMP (84 FR 14021, April 9, 2019).

NMFS estimates that recreational landings for the 2020-2021 fishing year will be less than the 2020-2021 recreational ACL. To make this determination, NMFS compared recreational landings in the last 3 fishing years to the recreational ACL for the 2020-2021 black sea bass fishing year. Recreational landings in each of the past 3 fishing years have been substantially less than the 2020-2021 recreational ACL; therefore, recreational landings are projected to be less than the 2020-2021 recreational ACL. Accordingly, the recreational sector for black sea bass is not expected to close during the fishing year as a result of reaching its ACL, and the season end date for recreational fishing for black sea bass in the South Atlantic EEZ south of 35°15.9′ N latitude is March 31, 2021.

The Regional Administrator for the NMFS Southeast Region has determined this temporary rule is necessary for the conservation and management of South Atlantic black sea bass and is consistent with the FMP, the Magnuson-Stevens Act, and other applicable laws.

This action is taken under 50 CFR 622.193(e)(2) and is exempt from review under Executive Order 12866.

These measures are exempt from the procedures of the Regulatory Flexibility Act because the temporary rule is issued without opportunity for prior notice and comment.

This action responds to the best scientific information available. The Assistant Administrator for NOAA Fisheries (AA) finds that the need to immediately implement the notice of the recreational season length constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth in 5 U.S.C. 553(b)(B), because prior notice and opportunity for public comment on this temporary rule is unnecessary. Such procedures are unnecessary, because the rule establishing the AM has already been subject to notice and comment and all that remains is to notify the public of the recreational season length.

For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).