In Case No. 0-PS-38, OPM requests that the Authority issue a general statement concerning zipper clause provisions and whether such provisions are mandatory subjects of bargaining. Interested persons are invited to express their views in writing as to whether the Authority should issue a general statement and, if it does, what the Authority's policy or guidance should be.

To Heads of Agencies, Presidents of Labor Organizations, and Other Interested Persons:

OPM has requested, under Section 2427.2(a) of the Authority's rules and regulations (5 CFR 2427.2(a)), that the Authority issue a general statement of policy or guidance addressing the negotiability of zipper clause provisions and whether such provisions are mandatory subjects of bargaining. OPM asserts that the Authority's precedent supports considering zipper clauses to be mandatory subjects of bargaining because such proposals clearly involve the parties' mid-term bargaining rights and obligations, which have been found to be mandatory subjects of bargaining. The Authority has held that mandatory subjects of bargaining are topics that are within the required scope of bargaining. FDIC, Headquarters, 18 FLRA 768, 771 (1985). Furthermore, any party may bargain to impasse over mandatory topics. Id.

Previously, judges of the D.C. Circuit have written separately to recognize the validity of zipper clauses. FLRA v. IRS, Dep't of the Treasury, 838 F.2d 567, 569-70 (D.C. Cir. 1988) (Edwards, J. and Silberman, J., concurring in denial of reh'g) ( IRS II ). They noted that the Authority's precedent established that “a union may contractually agree to waive its right to initiate bargaining in general by a `zipper clause,' ” id. at 570 (quoting IRS, 29 FLRA 162, 166 (1987)), and rejected an argument that the Authority's precedent established that zipper clauses are a permissive subject of bargaining. Id. In NTEU v. FLRA, the court found that “all conditions of employment are presumed to be mandatory subjects of bargaining . . . unless the Act explicitly or by unambiguous implication vests in a party an unqualified right.” 399 F.3d 334, 340 (D.C. Cir. 2005) (internal quotation marks omitted). Citing IRS, the court stated:

On remand, in NTEU, 64 FLRA 156, 157-59 (2009), the Authority found that “reopener clauses”—which are provisions that specify the conditions where a party may seek to negotiate over a term that is “covered by” a CBA—are a mandatory subject of bargaining because they relate to conditions of employment and seek to define the parties' mid-term bargaining rights and obligations.

Because the Authority has only recognized reopener clauses as mandatory subjects of bargaining, OPM contends that it is prevented from utilizing the Federal Service Impasses Panel (the Panel) when a union elects to not agree to zipper clauses during term negotiations for a new CBA. As support, OPM cites to U.S. Department of HHS and NTEU, 18 FSIP 077 (2019). In that case, the Panel declined to exercise jurisdiction over a zipper clause because the Union “raised colorable questions” regarding whether such clauses concern a permissive topic of bargaining.

OPM contends that the Authority's precedent regarding zipper and reopener clauses have created an inequality where only reopener clauses can be bargained to impasse. Therefore, parties seeking to include a zipper clause are disadvantaged during term bargaining and the Panel is precluded from considering the totality of the circumstances when deciding to limit or broaden mid-term bargaining. Therefore, OPM concludes that parties should be able to bargain zipper clauses to impasse. Furthermore, OPM argues that finding zipper clauses to be mandatory will avoid disputes during mid-term bargaining and reduce the number of unfair-labor-practice charges regarding actions taken pursuant to such clauses.

In its request, OPM asks the Authority to issue a general statement holding that:

1. Zipper clauses are a mandatory topic of bargaining and, therefore, parties may bargain to impasse regarding both reopener and zipper clauses.

Regarding the matters raised by OPM, the Authority invites written comments on whether issuance of a general statement of policy or guidance is warranted, under the standards set forth in Section 2427.5 of the Authority's rules and regulations (5 CFR 2427.5), and, if so, what the Authority's policy or guidance should be. Written comments must contain separate, numbered headings for each issue covered.

This action, pursuant to 5 U.S.C. 553, proposes to amend regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing Agreement and Order No. 956, as amended (7 CFR part 956), regulating the handling of sweet onions grown in the Walla Walla Valley of southeast Washington and northeast Oregon. Part 956 (referred to as the “Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Committee locally administers the Order and is comprised of producers and handlers of Walla Walla sweet onions operating within the production area, and a public member.

The Department of Agriculture (USDA) is issuing this proposed rule in conformance with Executive Orders 13563 and 13175. This proposed rule falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review. Additionally, because this proposed rule does not meet the definition of a significant regulatory action, it does not trigger the requirements contained in Executive Order 13771. See OMB's Memorandum titled “Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017, titled `Reducing Regulation and Controlling Regulatory Costs' ” (February 2, 2017).

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the Order now in effect, Walla Walla sweet onion handlers are subject to assessments. Funds to administer the Order are derived from such assessments. It is intended that the assessment rate would be applicable to all assessable Walla Walla sweet onions for the 2020 fiscal period and continue until amended, suspended, or terminated.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed no later than 20 days after the date of the entry of the ruling.

This proposed rule would increase the assessment rate from $0.10 per 50-pound bag or equivalent of Walla Walla sweet onions handled, the rate that was established for the 2017 and subsequent fiscal periods, to $0.15 per 50-pound bag or equivalent of Walla Walla sweet onions handled for the 2020 and subsequent fiscal periods.

The Order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members are familiar with the Committee's needs and with the costs of goods and services in their local area and are in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

For the 2017 and subsequent fiscal periods, the Committee recommended, and USDA approved, an assessment rate of $0.10 per 50-pound bag or equivalent of Walla Walla sweet onions handled. That assessment rate continues in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other information available to USDA.

The Committee met on February 13, 2020, and unanimously recommended expenditures of $84,200 and an assessment rate of $0.15 per 50-pound bag or equivalent of Walla Walla sweet onions handled for the 2020 and subsequent fiscal periods. In comparison, last year's budgeted expenditures were $99,800. The proposed assessment rate of $0.15 is $0.05 higher than the rate currently in effect. The Committee recommended increasing the assessment rate to provide adequate income, along with interest income and reserve funds, to cover all of the Committee's budgeted expenses for the 2020 fiscal period. Funds in the reserve are expected to be approximately $104,377 at the end of the 2020 fiscal period, which is within the Order's requirement of carrying over no more than approximately two years budgeted expenses.

The major expenditures recommended by the Committee for the 2020 year include $47,400 for administrative, $26,000 for promotions, $5,000 for travel, $5,000 for research, and $800 for miscellaneous expenses. Budgeted expenses for these items for the 2019 fiscal period were $47,400, $41,600, $5,000, $5,000, and $800 respectively.

The Committee derived the recommended assessment rate by considering anticipated expenses, an estimated crop of 389,952 50-pound bag or equivalents of Walla Walla sweet onions, and the amount of funds available in the authorized reserve. Income derived from handler assessments, calculated at $58,493 (389,952 50-pound bags or equivalent multiplied by $0.15 assessment rate), along with interest income and funds from the Committee's authorized reserve, would be adequate to cover budgeted expenses of $84,200. Funds in the reserve are estimated to be $104,377 at the end of the 2020 fiscal period.

The assessment rate proposed in this rule would continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate would be in effect for an indefinite period, the Committee will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA would evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's 2020 budget, and those for subsequent fiscal periods, will be reviewed and, as appropriate, approved by USDA.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this proposed rule on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 15 producers of Walla Walla sweet onions in the regulated area and approximately 11 handlers of Walla Walla sweet onions who are subject to regulation under the Order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts of less than $1,000,000, and small agricultural service firms have been defined as those whose annual receipts are less than $30,000,000 (13 CFR 121.201).

According to the National Agricultural Statistics Service (NASS), the national average producer price for non-storage onions for the 2011-2015 marketing years ranged from $15.10 to $22.10 per hundredweight. The average over those years was approximately $18.30 per hundredweight, or $9.15 per 50-pound equivalent. NASS suspended reporting of non-storage onion prices in 2015 and no other more current third-party information regarding the producer price of sweet onions is available. Total production of Walla Walla sweet onions for the 2019 season was 414,880 50-pound bags or equivalent. Using the price range from the 2011-2015 years for which there is NASS data, the total 2019 farm gate value of the Walla Walla sweet onion crop could therefore be estimated to be between $6,264,688 and $9,168,848. Dividing the crop value by the estimated number of producers (15) yields an estimated average receipt per producer of between $417,646 and $611,257, which is well below the SBA threshold for small producers.

USDA Market News reported a free on board (FOB) average price of $26.25 per 50-pound bag or equivalent of Walla Walla sweet onions for the 2019 season. Multiplying this FOB price by total 2019 shipments of 414,880 50-pound bags or equivalent results in an estimated gross value of Walla Walla sweet onion shipments of $10,894,748. Dividing this figure by the number of handlers (11) yields estimated average annual handler receipts of $990,432, which is below the SBA threshold for small agricultural service firms. Therefore, using the above data, and assuming a normal distribution, the majority of producers and all of the handlers of Walla Walla sweet onions may be classified as small entities.

This proposal would increase the assessment rate collected from handlers for the 2020 and subsequent fiscal periods from $0.10 to $0.15 per 50-pound bag or equivalent of Walla Walla sweet onions. The Committee unanimously recommended 2020 expenditures of $84,200 and an assessment rate of $0.15 per 50-pound bag or equivalent of Walla Walla sweet onions. The proposed assessment rate of $0.15 per 50-pound bag or equivalent is $0.05 higher than the current rate. The volume of assessable Walla Walla sweet onions for the 2020 fiscal period is estimated to be 389,953 50-pound bags or equivalent. Thus, the $0.15 per 50-pound bag or equivalent rate should provide $58,493 in assessment income (389,953 multiplied by $0.15). Income derived from handler assessments, along with interest income and funds from the Committee's authorized reserve, would be adequate to cover budgeted expenses for the 2020 fiscal year.

The major expenditures recommended by the Committee for the 2020 year include $47,400 for administrative, $26,000 for promotions, $5,000 for travel, $5,000 for research, and $800 for miscellaneous expenses. Budgeted expenses for these items in 2019 were $47,400, $41,600, $5,000, $5,000, and $800 respectively.

In recent years, the Committee has utilized reserve funds to partially fund its budgeted expenditures. The Committee recommended increasing the assessment rate to fully fund 2020 fiscal period budgeted expenditures without excessively drawing down the funds held in its reserve. This action would maintain the Committee's reserve balance at a level that the Committee believes is appropriate and is compliant with the provisions of the Order.

Prior to arriving at this budget and assessment rate recommendation, the Committee discussed various alternatives, including maintaining the current assessment rate of $0.10 per 50-pound bag or equivalent, and increasing the assessment rate by a different amount. However, the Committee determined that the recommended assessment rate would fully fund budgeted expenses and avoid drawing down reserves at an unsustainable rate.

This proposed rule would increase the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to producers. However, these costs would be offset by the benefits derived by the operation of the Order.

The Committee's meeting was widely publicized throughout the Walla Walla sweet onion industry. All interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the February 13, 2020, meeting was a public meeting, and all entities, both large and small, were able to express views on this issue. Interested persons are invited to submit comments on this proposed rule, including the regulatory and information collection impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Order's information collection requirements have been previously approved by the OMB and assigned OMB No. 0581-0178 Vegetable and Specialty Crops. No changes in those requirements would be necessary as a result of this proposed rule. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would not impose any additional reporting or recordkeeping requirements on either small or large Walla Walla sweet onion handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any questions about the compliance guide should be sent to Richard Lower at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

A 60-day comment period is provided to allow interested persons to respond to this proposed rule.

All written comments timely received will be considered before a final determination is made on this matter.

For the reasons set forth in the preamble, 7 CFR part 956 is proposed to be amended as follows:

I. Obtaining Information and Submitting Comments A. Obtaining Information

Please refer to Docket ID NRC-2020-0073 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:

• Federal Rulemaking Website: Go to https://www.regulations.gov and search for Docket ID NRC-2020-0073.

• NRC's Agencywide Documents Access and Management System (ADAMS): You may obtain publicly-available documents online in the ADAMS Public Documents collection at https://www.nrc.gov/reading-rm/adams.html. To begin the search, select “Begin Web-based ADAMS Search.” For problems with ADAMS, please contact the NRC's Public Document Room (PDR) reference staff at 1-800-397-4209, 301-415-4737, or by email to pdr.resource@nrc.gov. The Regulatory Issue Summary 2020-XX, Clarification of Personnel Access Authorization Requirements for Non-Immigrant Foreign Nationals Working at Nuclear Power Plants is available in ADAMS under Accession No. ML20008D562.

• NRC's PDR: You may examine and purchase copies of public documents at the NRC's PDR, Room O1-F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852.

Please include Docket ID NRC-2020-0073 in your comment submission.

The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC will post all comment submissions at https://www.regulations.gov as well as enter the comment submissions into ADAMS. The NRC does not routinely edit comment submissions to remove identifying or contact information.

If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.

The NRC, in collaboration with the Department of Homeland Security, has identified several instances where a licensee has failed to appropriately verify, in the case of foreign nationals seeking UA and/or UAA, that the claimed non-immigration status that the individual has provided is correct. Consequently, foreign nationals have been granted UA and UAA at United States nuclear power plants for the purpose of work using visa categories that do not permit foreign nationals to work in the United States.

The NRC issues RISs to communicate with stakeholders on a broad range of matters. This may include communication and clarification of NRC technical or policy positions on regulatory matters that have not been communicated to or are not broadly understood by the nuclear industry.

As noted in 83 FR 20858 (May 8, 2018), this document is being published in the Proposed Rules section of the Federal Register to comply with publication requirements under 1 CFR chapter I.

The NRC is requesting public comments on the draft RIS. The NRC staff will make a final determination regarding issuance of the RIS after it considers any public comments received in response to this request.

I. Policy Objectives

The Federal Deposit Insurance Corporation (FDIC) monitors, evaluates, and takes necessary action to ensure the safety and soundness of State nonmember banks, 1 including industrial banks and industrial loan companies (together, industrial banks). 2 In granting deposit insurance, issuing a non-objection to a change in control, or approving a merger, the FDIC must consider the factors listed in sections 6, 3 7(j), 4 and 18(c), 5 respectively, of the Federal Deposit Insurance Act (FDI Act). As deposit insurer and as the appropriate Federal banking agency for industrial banks, the FDIC supervises industrial banks. A key part of its supervision is evaluating and mitigating the risks arising from the activities of the control parties and owners of insured industrial banks to ensure they do not threaten the safe and sound operations of those industrial banks or pose undue risk to the Deposit Insurance Fund (DIF).

Existing State and Federal laws allows both financial and commercial companies to own and control industrial banks. Congress expressly adopted an exception to permit such companies to own and control industrial banks, without becoming a bank holding company (BHC) under the Bank Holding Company Act (BHCA), as part of the Competitive Equality Banking Act of 1987 (CEBA). 6 The purpose of the proposed rule is to codify existing practices utilized by the FDIC to supervise industrial banks and their parent companies, to mitigate undue risk to the DIF that may otherwise be presented in the absence of Federal consolidated supervision  7 of an industrial bank and its parent company, and to ensure that the parent company that owns or controls an industrial bank serves as a source of financial strength for the industrial bank, consistent with section 38A of the FDI Act. 8

In recent years, there has been renewed interest in establishing de novo institutions, including industrial banks. Proposals regarding industrial banks have presented unique risk profiles compared to traditional community bank proposals. These profiles have included potential owners that would not be subject to Federal consolidated supervision, affiliations with organizations whose activities are primarily commercial in nature, and non-community bank business models. 9 Some public comments regarding these proposals have argued that the current use of the charter inappropriately mixes banking and commerce and raises risk to the DIF as a result of a lack of Federal consolidated supervision over the parent company. Some commenters have requested that the FDIC impose a new moratorium on deposit insurance applications involving industrial banks. 10 Other commenters have supported the industrial bank charter citing the benefits of increased competition and the provision of financial services to underserved markets. These commenters further argue the charter poses no increased risk to the DIF.

Given the continuing evolution in the use of the industrial bank charter, the unique nature of applications seeking to establish de novo industrial banks, and the legitimate considerations raised by interested parties—both in support of and opposed to the industrial bank charter—the FDIC believes a rule formalizing and strengthening the FDIC's existing supervisory processes and policies that apply to parent companies of industrial banks that are not subject to Federal consolidated supervision is timely and appropriate. The proposed rule would also provide interested parties with transparency regarding the FDIC's practices when making determinations on filings involving industrial banks.

Industrial banks began as small State-chartered loan companies in the early 1900s to provide small loans to industrial workers. The industrial bank charter developed as an alternative to a traditional commercial bank charter because commercial banks generally were unwilling to offer uncollateralized loans to factory workers and other wage earners with moderate incomes. Industrial banks became the leading providers of consumer credit to this underserved market through the 1920s and 1930s. Over time, commercial banks expanded their consumer lending business and by the post-World War II period, industrial banks represented only a small segment of the consumer lending market.

Initially, many industrial banks did not accept any deposits and funded themselves instead by issuing investment certificates. However, the Garn-St. Germain Depository Institutions Act of 1982, 11 among other effects, made all industrial banks eligible for Federal deposit insurance. This expanded eligibility for Federal deposit insurance brought industrial banks under the supervision of both a State authority and the FDIC. 12 The chartering States gradually expanded the powers of their industrial banks so that today industrial banks generally have the same commercial and consumer lending powers as commercial banks.

Under the FDI Act, industrial banks are “State banks”  13 and all of the existing FDIC-insured industrial banks are “State nonmember banks”. 14 As a result, their primary Federal regulator is the FDIC. 15 Each industrial bank is also regulated by its respective State chartering authority. The FDIC generally exercises the same supervisory and regulatory authority over industrial banks as it does over other State nonmember banks.

In 1987, Congress enacted CEBA, which exempted industrial banks from the definition of “bank” in the BHCA. As a result, parent companies that control industrial banks are not BHCs under the BHCA and are not subject to the BHCA's activities restrictions or FRB supervision and regulation. The industrial bank exemption in the BHCA therefore provides an avenue for commercial firms to own or control a bank. By contrast, BHCs and savings and loan holding companies are subject to Federal consolidated supervision by the FRB and are generally prohibited from engaging in commercial activities. 16

More specifically, CEBA redefined the term “bank” in the BHCA to include: (1) Any FDIC-insured institution, and (2) any other institution that accepts demand or checkable deposit accounts and is engaged in the business of making commercial loans. 17 This change effectively closed the so-called “non-bank bank” exception implicit in the prior BHCA definition of “bank”. The CEBA created explicit exemptions from this definition for certain categories of Federally insured institutions, including industrial banks, credit card banks, and limited purpose trust companies. The exclusions from the definition of the term “bank” remain in effect today. To be eligible for the CEBA exemption from the BHCA definition of “bank,” an industrial bank must have received a charter from one of the limited number of States eligible to issue industrial bank charters, and the law of the chartering State must have required Federal deposit insurance as of March 5, 1987. In addition, an industrial bank must meet one of the following criteria: (i) Not accept demand deposits;  18 (ii) have total assets of less than $100 million; or (iii) have been acquired prior to August 10, 1987. 19

Industrial banks are currently chartered in California, Hawaii, Minnesota, Nevada, and Utah. Under CEBA, these States were permitted to grandfather existing industrial banks and continue to charter new industrial banks. 20 Generally, industrial banks offer limited deposit products, a full range of commercial and consumer loans, and other banking services. Most industrial banks do not offer demand deposits. Negotiable order of withdrawal (NOW) accounts  21 may be offered by industrial banks. 22 Industrial banks have branching rights, subject to certain State law constraints.

The industrial bank industry has evolved since the enactment of CEBA. The industry experienced significant asset growth between 1987 and 2006 when total assets held by industrial banks grew from $4.2 billion to $213 billion. 23 From 2000 to 2006, 24 industrial banks became insured. 24 As of January 30, 2007, there were 58 insured industrial banks with $177 billion in aggregate total assets. 25 The ownership structure and business models of industrial banks evolved as industrial banks were acquired or formed by a variety of commercial firms, including, among others, BMW, Target, Pitney Bowes, and Harley Davidson. For instance, certain companies established industrial banks, in part, to support the sale of the manufactured products ( e.g. automobiles) or other services, whereas certain retailers established industrial banks to issue general purpose credit cards. In addition, certain financial companies also formed or acquired industrial banks to provide access to Federal deposit insurance for brokerage customers' cash management account balances. The cash balances their customers maintain with the securities affiliate are swept into insured, interest-bearing accounts at the industrial bank subsidiary, thereby providing the brokerage customers with FDIC-insured deposits.

Since 2007, the industrial bank industry has experienced contraction both in terms of the number of institutions and aggregate total assets. As of December 31, 2019, there were 23 industrial banks  26 with $141 billion in aggregate total assets. Four industrial banks reported total assets of $10 billion or more; eight industrial banks reported total assets of $1 billion or more but less than $10 billion. The industrial bank industry today includes a diverse group of insured financial institutions operating a variety of business models. A significant number of the 23 existing industrial banks support the commercial or specialty finance operations of their parent company and are funded through non-core sources.

The reduction in the number of industrial banks from 2007 to 2019 was due to a variety of factors, including mergers, conversions, voluntary liquidations, and the failure of two small institutions. 27 For business, marketplace, or strategic reasons, several existing industrial banks converted to commercial banks and thus became “banks” under the BHCA. Four industrial banks were approved in 2007 and 2008; however, none of those institutions exist today. 28 No other industrial banks have been established since 2008, largely due to moratoria imposed by the FDIC and Congress (as discussed below).

Since the beginning of 2017, the FDIC has received nine Federal deposit insurance applications related to proposed industrial banks. Of those, four have been withdrawn and five are pending. 29 None of the potential parent companies of the pending industrial bank applicants would be subject to Federal consolidated supervision. The FDIC anticipates potential continued interest in the establishment of industrial banks, particularly with regard to proposed institutions that plan to pursue a specialty or limited purpose business model.

Because industrial banks are insured State nonmember banks, they are subject to the FDIC's Rules and Regulations, as well as other provisions of law, including restrictions under the Federal Reserve Act governing transactions with affiliates, 30 anti-tying provisions of the BHCA, 31 insider lending regulations, consumer protection laws and regulations, and the Community Reinvestment Act. Industrial banks are also subject to regular examination, including examinations focused on safety and soundness, Bank Secrecy Act and Anti-Money Laundering compliance, consumer protection, information technology (IT), and trust services, as appropriate. Pursuant to section 10(b)(4) of the FDI Act, the FDIC has the authority to examine the affairs of any industrial bank affiliate, including the parent company, as may be necessary to determine the relationship between the institution and the affiliate, and the effect of such relationship on the depository institution. 32

As part of the Dodd-Frank Act, 33 Congress adopted section 38A of the FDI Act, which imposes a “source of financial strength” requirement on any company that directly or indirectly controls an insured depository institution and is otherwise exempt from the BHCA or the HOLA. 34 Consistent with section 38A and other authorities under the FDI Act, the FDIC has historically required capital and liquidity maintenance agreements and other written agreements between the FDIC and controlling parties of industrial banks as well as the imposition of prudential conditions when granting deposit insurance to an industrial bank or issuing a nonobjection to a change in control notice involving an industrial bank. Such written agreements provide required commitments for the parent company to provide financial resources and a means for the FDIC to pursue formal enforcement action under sections 8 and 50 of the FDI Act  35 should a party fail to comply with the agreements.

Beginning in 2004, the FDIC Office of Inspector General (OIG) conducted two evaluations and the Government Accountability Office (GAO) conducted a statutorily mandated study regarding the FDIC's supervision of industrial banks, including its use of prudential conditions. 36 An OIG evaluation published in 2004 focused on whether industrial banks posed greater risk to the DIF than other financial institutions, and reviewed the FDIC's supervisory approach in identifying and mitigating material risks posed to those institutions by their parent companies. A July 2006 OIG evaluation reviewed the FDIC's process for reviewing and approving industrial bank applications for deposit insurance and monitoring conditions imposed with respect to industrial bank business plans. A September 2005 GAO study cited several risks posed to banks operating in a holding company structure, including adverse intercompany transactions, operations risk, and reputation risk. The GAO study also discussed concerns about the FDIC's ability to protect an industrial bank from those risks as effectively as the Federal consolidated supervisory approach under the BHCA. 37

These reports acknowledged the FDIC's supervisory actions to ensure the independence and safety and soundness of commercially owned industrial banks. The reports further acknowledged the FDIC's authorities to protect an industrial bank from the risks posed by its parent company and affiliates. These authorities include the FDIC's authority to conduct examinations, impose conditions on and enter into agreements with an industrial bank parent company, terminate an industrial bank's deposit insurance, enter into agreements during the acquisition of an insured depository institution, and pursue enforcement actions.

In 2005, Wal-Mart Bank's application for Federal deposit insurance generated considerable debate. The FDIC received more than 13,800 comment letters regarding Wal-Mart's proposal. Most of the commenters were opposed to the application. Commenters also raised broader concerns about industrial banks, including the risk posed to the DIF by industrial banks owned by holding companies that are not subject to Federal consolidated supervision. Similar concerns were expressed by witnesses during three days of public hearings held by the FDIC in the spring of 2006 concerning the Wal-Mart application. Also in 2006, The Home Depot filed a change in control notice in connection with its proposed acquisition of EnerBank, a Utah-chartered industrial bank. The FDIC received approximately 830 comment letters regarding this notice, almost all of which expressed opposition to the proposed acquisition. Ultimately, the Wal-Mart application and The Home Depot's notice were withdrawn.

To evaluate the concerns and issues raised with respect to the Wal-Mart and The Home Depot filings and industrial banks generally, on July 28, 2006, the FDIC imposed a six-month moratorium on FDIC action with respect to deposit insurance applications and change in control notices involving industrial banks. 38 The FDIC suspended agency action in order to further evaluate (i) industry developments; (ii) the various issues, facts, and arguments raised with respect to the industrial bank industry; (iii) whether there were emerging safety and soundness issues or policy issues involving industrial banks or other risks to the DIF; and (iv) whether statutory, regulatory, or policy changes should be made in the FDIC's oversight of industrial banks in order to protect the DIF or important Congressional objectives. 39

In connection with this moratorium, on August 23, 2006, the FDIC published a Notice and Request for Comment on a wide range of issues concerning industrial banks. 40 The FDIC received over 12,600 comment letters in response to this Notice. 41 The substantive comments related to the risk profile of the industrial bank industry, concerns over the mixing of banking and commerce, the FDIC's practices when making determinations in industrial bank applications and notices, whether commercial ownership of industrial banks should be allowed, and perceived needs for supervisory change.

The moratorium was effective through January 31, 2007, at which time the FDIC extended the moratorium one additional year for deposit insurance applications and change in control notices for industrial banks that would be owned by commercial companies. 42 This moratorium was not applicable to industrial banks to be owned by financial companies.

In addition to extending the moratorium for one year with respect to commercial parent companies, the FDIC published for comment a proposed rule designed to strengthen the FDIC's consideration of applications and notices for industrial banks to be controlled by financial companies not subject to Federal consolidated bank supervision, identified as Part 354 (2007 NPR). 43 The 2007 NPR would have imposed requirements on applications for deposit insurance, merger applications, and notices for change in control that would result in an industrial bank becoming a subsidiary of a company engaged solely in financial activities that is not subject to Federal consolidated bank supervision by either the FRB or the then-existing Office of Thrift Supervision (OTS). The rule would have established safeguards to assess the parent company's continuing ability to serve as a source of strength for the insured industrial bank, and identify and respond to problems or risks that may develop in the company or its subsidiaries.

In response to the 2007 NPR, the FDIC received 18 comment letters. The majority of commenters argued that the 2007 NPR should have also excluded parent companies supervised by other Federal regulators that provide similar oversight as the FRB and OTS, such as the Securities and Exchange Commission, to reduce the amount of duplicative regulation over these parent companies. Similarly, the commenters uniformly suggested that, to reduce the regulatory burden, the FDIC should defer to a parent company's primary regulator, which the commenters argued would be better suited to regulate the entity and better positioned to obtain relevant information. The majority of commenters also voiced opposition to limiting parent company representation on the industrial bank subsidiary's board of directors to 25 percent, and instead advocated for codifying the FDIC's informal standard of requiring a majority of directors to be independent.

Though the 2007 NPR did not affect industrial banks that would be controlled by companies engaged in commercial activities, several commenters addressed the distinction between industrial banks owned by financial and nonfinancial companies. Two commenters contended that the FDIC lacked authority to draw a distinction between financial and nonfinancial industrial bank owners absent a change in law. Several commenters argued that drawing such a distinction would essentially repeal the exemption of industrial banks from the definition of “bank” in the BHCA. There was little consensus among commenters as to whether commercially owned industrial banks pose unique safety and soundness issues.

Similar to this proposed rule, the 2007 NPR would have required a parent company to enter into a written agreement with the FDIC containing required commitments related to the examination of, and reporting and recordkeeping by, the industrial bank, the parent company, and its affiliates. The majority of commenters did not oppose these requirements, noting the FDIC already has authority to collect such information under section 10(b)(4) of the FDI Act. 44 The majority of commenters stated that the FDIC should not impose capital requirement commitments as contemplated in the 2007 NPR on commercial parents of industrial banks because of the idiosyncratic business models and operations of such companies.

As discussed above, the Dodd-Frank Act amended the FDI Act by adding section 38A. 45 Under section 38A, for any insured depository institution that is not a subsidiary of a BHC or savings and loan holding company, the appropriate Federal banking agency for the insured depository institution must require any company that directly or indirectly controls such institution to serve as a source of financial strength for the institution. 46 As a result, the FDIC is required to impose a requirement on companies that directly or indirectly own or control an industrial bank to serve as a source of financial strength for that institution. In addition, subsection (d) of section 38A of the FDI Act provides explicit statutory authority for the appropriate Federal banking agency to require reports from a controlling company to assess the ability of the company to comply with the source of strength requirement, and to enforce compliance by such company. 47

Through the Dodd-Frank Act, Congress also imposed a three-year moratorium on the FDIC's approval of deposit insurance applications for industrial banks that were owned or controlled by a commercial firm. 48 The Dodd-Frank Act moratorium also applied to the FDIC's approval of any change in control of an industrial bank that would place the institution under the control of a commercial firm. 49 The moratorium expired in July 2013, without any action by Congress.

In addition, the Dodd-Frank Act directed the GAO to conduct a study of the implications of removing all exemptions from the definition of “bank” under the BHCA. The GAO report was published in January of 2012. 50 This report examined the number and general characteristics of exempt institutions, the Federal regulatory system for such institutions, and potential implications of subjecting the holding companies of such institutions to BHCA requirements. The GAO report noted that the industrial bank industry experienced significant asset growth in the 2000s and, during this time, the profile of industrial banks changed: Rather than representing a class of small, limited-purpose institutions, industrial banks became a diverse group of insured institutions with a variety of business lines. 51 Ultimately, the GAO found that Federal regulation of the exempt institutions' parent companies varied, noting that FDIC officials interviewed in connection with the study indicated that supervision of exempt institutions was adequate, but also noted the added benefit of Federal consolidated supervision. Finally, data examined by the GAO suggested that removing the BHCA exemptions would likely have a limited impact on the overall credit market, chiefly because the overall market share of exempt institutions was, at the time of the study, small.

As discussed above, the 2007 NPR would have imposed certain conditions and requirements for approval of certain deposit insurance applications and nonobjections to change in control notices involving industrial banks. However, the FDIC did not finalize the 2007 NPR. Although multiple factors contributed to the FDIC's decision to not advance a final rule, the most significant factor was the onset of the financial crisis. With the advent of the crisis, applications to form de novo insured institutions, or to acquire existing institutions, declined significantly, including with respect to industrial banks. Further, provisions included in the 2007 NPR, which reflected the FDIC's practices beginning in 2005 with respect to proposed de novo industrial banks, were being tested in an adverse economic environment for the first time. As such, embodying the provisions in a final rule would have been premature without knowledge of the consequences of the rule's requirements and restrictions.

The crisis demonstrated that the FDIC's supervisory approach with respect to industrial banks was effective. Only two industrial banks failed during the crisis, and both failures were of small industrial banks that did not present circumstances raising concern with respect to industrial banks proposed prior to the crisis. Several industrial banks and their parent companies pursued conversions to commercial banks and BHC structures for financial and strategic reasons.

Recently, a number of companies have considered options for providing financial products and services through establishing an industrial bank subsidiary. Many companies have publicly noted the benefits of deposit insurance and establishing a deposit-taking institution. Although many interested parties operate business models focused on traditional community bank products and services, others operate unique business models, some of which are focused on innovative technologies and strategies.

Some of the companies recently exploring an industrial bank charter engage in commercial activities or have diversified business operations and activities that would not otherwise be permissible for BHCs under the BHCA and applicable regulations. Given the continuing evolution of the industrial bank charter, the utility of codifying certain supervisory requirements for industrial banks, the nature of entities interested in de novo industrial banks, the statutory changes enacted in the Dodd-Frank Act that clearly address the source of financial strength obligations of any company that controls an industrial bank, as well as the legitimate considerations raised by interested parties, the FDIC believes a rule is appropriate to provide necessary transparency for market participants. Through the proposed rule, the FDIC would formalize its framework to supervise industrial banks and mitigate risk to the DIF that may otherwise be presented in the absence of Federal consolidated supervision of an industrial bank and its parent company.

The FDIC has the authority to issue rules to carry out the provisions of the FDI Act, 52 including rules to ensure the safety and soundness of industrial banks and to protect the DIF. Moreover, as the only agency with the power to grant or terminate deposit insurance, the FDIC has a unique responsibility for the safety and soundness of all insured institutions. 53 In granting deposit insurance, the FDIC must consider the factors in section 6 of the FDI Act;  54 these factors generally focus on the safety and soundness of the proposed institution and any risk it may pose to the DIF. The FDIC is also authorized to permit or deny various transactions by State nonmember banks, including merger and change in bank control transactions, based to a large extent on safety and soundness considerations and on its assessment of the risk to the DIF. 55

The FDIC has the responsibility to consider filings based on statutory criteria and make decisions. The proposed rule generally would codify the FDIC's current supervisory processes and policies with respect to industrial banks that would not be subject to Federal consolidated supervision. The proposed rule also includes additional safeguards the FDIC believes are appropriate based on its experience, such as requiring a tax allocation agreement.

This section describes the industrial banks and parent companies that would be subject to the proposed rule. The proposed rule would apply to industrial banks that, as of the effective date, become subsidiaries of companies that are Covered Companies, as such term is defined in § 354.2. Industrial bank subsidiaries of companies that are subject to Federal consolidated supervision by the FRB would not be covered by the proposed rule. An industrial bank that, on or before the effective date, is a subsidiary of a company that is not subject to Federal consolidated supervision by the FRB (a grandfathered industrial bank) generally would not be covered by the proposed rule. 56 A grandfathered industrial bank could become subject to the proposed rule following a change in control, merger, or grant of deposit insurance occurring after the effective date in which the resulting institution is an industrial bank that is a subsidiary of a Covered Company. Thus, a grandfathered industrial bank would be subject to the proposed rule, as would its parent company that is not subject to Federal consolidated supervision, if such a parent company acquired control of the grandfathered industrial bank pursuant to a change in bank control transaction that closes after the effective date, or if the grandfathered industrial bank is the surviving institution in a merger transaction that closes after the effective date. Industrial banks that are not subsidiaries of a company, for example, those wholly owned by one or more individuals, would not be subject to the proposed rule.

Question 1: Should the proposed rule apply only prospectively, that is, to industrial banks that become a subsidiary of a parent company that is a Covered Company? Or should the proposed rule also apply to all industrial banks that, as of the effective date, are a subsidiary of a parent that is not subject to Federal consolidated supervision by the FRB? What are the concerns with each approach?

Question 2: Should the proposed rule apply to industrial banks that do not have a parent company? How should the rule be applied in such a case?

Question 3: Should the proposed rule apply to industrial banks that are controlled by an individual rather than a company?

Question 4: If an individual controls the parent company of an industrial bank, should the individual be responsible for the maintenance of the industrial bank's capital and liquidity at or above FDIC-specified levels? Should an individual who controls a parent company be responsible for causing the parent company to comply with the written agreements, commitments, and restrictions imposed on the industrial bank? How should the rule be applied in such a case?

This section lists the definitions that would apply to part 354. Terms that are not defined in the proposed rule that are defined in section 3 of the FDI Act have the meanings given in section 3 of the FDI Act. 57

The term “control” would be defined to mean the power, directly or indirectly, to direct the management or policies of a company or to vote 25 percent or more of any class of voting securities of a company and specifically would include the rebuttable presumption of control at 12 CFR 303.82(b)(1) and the presumptions of acting in concert at 12 CFR 303.82(b)(2) in the same manner and to the same extent as if they applied to an acquisition of securities of a company instead of a “covered institution”. These definitions are nearly the same as the definitions of “control” in the Change in Bank Control Act (CBCA)  58 and the FDIC's regulations implementing the CBCA except that they broaden the term to apply to control of a company and not solely insured depository institutions so that the definition can accurately describe the relationship between the parent company of an industrial bank and any of its nonbank subsidiaries, which also would be affiliates of the industrial bank.

The term “Covered Company” means any company that is not subject to Federal consolidated supervision by the FRB and that, directly or indirectly, controls an industrial bank (i) as a result of a change in bank control under section 7(j) of the FDI Act, 59 (ii) as a result of a merger transaction pursuant to section 18(c) of the FDI Act, 60 or (iii) that is granted deposit insurance under section 6 of the FDI Act, 61 in each case after the effective date of the rule.

Under these provisions, a company would control an industrial bank if the company would have the power, directly or indirectly, (i) to vote 25 percent or more of any class of voting shares of any industrial bank or any company that controls the industrial bank ( i.e., a parent company), or (ii) to direct the management or policies of any industrial bank or any parent company. In addition, the FDIC presumes that a company would have the power to direct the management or policies of any industrial bank or any parent company if the company will, directly or indirectly, own, control, or hold with power to vote at least 10 percent of any class of voting securities of any industrial bank or any parent company, and either the industrial bank's shares or the parent company's shares are registered under section 12 of the Securities Exchange Act of 1934, or no other person (including a company) will own, control, or hold with power to vote a greater percentage of any class of voting securities. If two or more companies, not acting in concert, will each have the same percentage, each such company will have control. As noted above, control of an industrial bank can be indirect. For example, company A may control company B which in turn may control company C which may control an industrial bank. Company A and company B would each have indirect control of the industrial bank, and company C would have direct control. As a result, the industrial bank would be a subsidiary of companies A, B, and C.

Question 5: Would there be any benefit in having or requiring a Covered Company that conducts activities other than financial activities to conduct some or all of its financial activities (including ownership and control of an industrial bank) through an intermediate holding company similar to what a grandfathered unitary savings and loan holding company may be required to do pursuant to section 626 of the Dodd-Frank Act? What other approaches may be appropriate?

The term “FDI Act” would be defined to mean the Federal Deposit Insurance Act, 12.U.S.C. 1811 et seq.

The term “filing” would mean an application, notice, or request submitted to the FDIC. This is the definition used in the FDIC's rules of procedure and practice  62 and allows the use of one term to describe the different documents submitted to the FDIC.

The term “FRB” would be defined to mean the Board of Governors of the Federal Reserve System and each Federal Reserve Bank.

The term “industrial bank” would be defined to mean any insured State bank that is an industrial bank, industrial loan company or other similar institution that is excluded from the BHCA definition of “bank” pursuant to section 2(c)(2)(H) of the BHCA. 63 The effect of section 2(c)(2)(H) is that the parent company of an industrial bank need not be a BHC. 64

Question 6: Should the proposed rule also apply to other institutions that are excluded from the BHCA definition of “bank” pursuant to section 2(c)(2), such as credit card banks and trust banks? For example, the CEBA amended the BHCA to exempt certain other institutions from the requirement that the parent company of a bank must be a BHC, 65 meaning that the parent companies of such institutions are not subject to Federal consolidated supervision. Explain what types of institutions should be addressed by the proposed rule and why.

The term “senior executive officer” would have the meaning given to it in the FDIC's regulations on changes in senior executive officer at 12 CFR 303.101(b). Thus, the term “senior executive officer” would mean a person who holds the title of president, chief executive officer, chief operating officer, chief managing official (in an insured State branch of a foreign bank), chief financial officer, chief lending officer, or chief investment officer, or, without regard to title, salary, or compensation, performs the function of one or more of these positions. “Senior executive officer” also would include any other person identified by the FDIC, whether or not hired as an employee, with significant influence over, or who participates in, major policymaking decisions of the industrial bank.

Question 7: Are the definitions clear in their meaning and application? Should any other terms used in the proposed rule be defined?

This section would prohibit any industrial bank from becoming a subsidiary of a Covered Company unless the Covered Company enters into one or more written agreements with the FDIC and its subsidiary industrial bank. In such agreements, the Covered Company would make certain required commitments to the FDIC and the industrial bank, including those listed in paragraphs (a)(1) through (8) of § 354.4, the restrictions in § 354.5, and such other provisions as the FDIC may deem appropriate in the particular circumstances. When two or more Covered Companies will control (as the term “control” is defined in § 354.2), directly or indirectly, the industrial bank, each such Covered Company would be required to execute such written agreement(s). This circumstance could occur, for example, (i) when two or more Covered Companies will each have the power to vote 10 percent or more of the voting stock of an industrial bank or of a company that controls an industrial bank, the stock of which is registered under section 12 of the Securities Exchange Act of 1934, or (ii) when one Covered Company will control another Covered Company that directly controls an industrial bank.

In certain instances, the FDIC may, in its sole discretion, require, as a condition to the approval of or nonobjection to a filing, that a controlling shareholder of a Covered Company join as a party to any written agreement required in § 354.3. In such cases, the controlling shareholder would be required to cause the Covered Company to fulfill its obligations under the written agreement, through voting his or her shares, or otherwise.

In addition to the written agreements, commitments, and restrictions of the proposed rule, the FDIC may, and likely will, condition an approval of an application or a nonobjection to a notice on one or more actions or inactions of the applicant or notificant. 66 The FDIC may enforce conditions imposed in writing in connection with any action on any application, notice, or other request by an industrial bank or a company that controls an industrial bank, 67 so it is not necessary to include provisions regarding conditions in the proposed rule.

The FDIC historically has included conditions in deposit insurance approval orders for industrial banks that are intended to create a sufficient supervisory structure with respect to a Covered Company. The commitments that the FDIC has required industrial banks and their parent companies to undertake in written agreements have varied on a case-by-case basis, depending on the facts and circumstances and the particular concerns the FDIC has identified during the review of the application materials.

This section would require each party to a written agreement to comply with subsections (a)(1) through (8) of § 354.4. These required commitments are intended to provide the safeguards and protections that the FDIC believes are prudent to impose to maintain the safety and soundness of industrial banks that are controlled by Covered Companies. These required commitments and other provisions are intended to establish a level of information reporting and parent company obligations similar to that which would be in place if the Covered Company were subject to Federal consolidated supervision. The requirements reflect commitments and additional provisions that, for the most part, the FDIC has previously required as a condition of granting deposit insurance to industrial banks. The FDIC is proposing to include these required commitments in the rule to provide transparency to current and potential industrial banks, the companies that control them, and the general public.

In order to provide the FDIC with more timely and more complete information about the activities, financial performance and condition, operations, prospects, and risk profile of each Covered Company and its subsidiaries and affiliates, the proposed rule would require that each Covered Company must furnish to the FDIC an initial listing, with annual updates, of all of the Covered Company's subsidiaries (commitment (1)); consent to the FDIC's examination of the Covered Company and each of its subsidiaries to monitor compliance with any written agreements, commitments, conditions, and certain provisions of law (commitment (2)); submit to the FDIC an annual report on the Covered Company and its subsidiaries, and such other reports as the FDIC may request (commitment (3)); maintain such records as the FDIC deems necessary to assess the risks to the industrial bank and to the DIF (commitment (4)); and cause an independent audit of each subsidiary industrial bank to be performed annually (commitment (5)).

Question 8: For purposes of transparency and identifying any potential risks to the industrial bank, we have included commitments requiring examination and reporting. Is this approach the best way to gain that transparency, or is there a better way? To what extent, if any, is the FDIC's supervision enhanced by requiring a Covered Company to consent to examination of the Covered Company and each of its subsidiaries as proposed? Is there another way to identify any potential risks?

Question 9: The Gramm-Leach-Bliley Act of 1999 imposed certain restrictions on the extent to which a Federal banking agency may regulate and supervise a functionally regulated affiliate of an insured depository institution. 68 Conversely, the Federal banking agencies, including the FRB, impose various periodic reporting requirements on depository institutions and their parent companies. In view of these restrictions and requirements, are the commitments and requirements appropriately tailored to adequately carry out the purpose and intent of the proposed rule?

Question 10: The proposed rule would require a Covered Company to disclose to the FDIC the subsidiaries of the Covered Company. Should the proposed rule also require disclosure to the FDIC of certain additional affiliates or portfolio companies of the Covered Company, given that such entities could engage in transactions with, or otherwise impact, the subsidiary industrial bank?

In order to limit the extent of each Covered Company's influence over a subsidiary industrial bank, each Covered Company would commit to limit its representation on the industrial bank's board of directors to 25 percent of the members of the board, or if the bank is organized as a limited liability company and is managed by a board of managers, to 25 percent of the members of the board of managers, or if the bank is organized as a limited liability company and is managed by its members, to 25 percent of managing member interests (commitment (6)). For example, if company A, which has 15 percent representation on the subsidiary industrial bank's board, controls company B, then the companies' representation would be aggregated and limited to no more than 25 percent. Thus, company B's representation would be limited to no more than 10 percent.

Question 11: The proposed rule would limit board of directors (or similar body) representation to 25 percent of the members of the board of directors (or similar entity). The FDIC has chosen this threshold with the idea that 25 percent is a key threshold for control purposes. Is another threshold more appropriate? If so, what and why?

Additionally, in order to ensure that a subsidiary industrial bank has available to it the resources necessary to maintain sufficient capital and liquidity, each party to a written agreement would commit to maintain each subsidiary industrial bank's capital and liquidity at such levels as the FDIC deems necessary for the safe and sound operation of the industrial bank, and to take such other actions as the FDIC finds appropriate to provide each subsidiary industrial bank with the resources for additional capital or liquidity (commitment (7)).

Question 12: If there is an individual who is the dominant shareholder of a Covered Company, should that individual be required to commit to the maintenance of appropriate capital and liquidity levels?

Lastly, the proposed rule includes a requirement that each Covered Company and its subsidiary industrial bank(s) enter into a tax allocation agreement that expressly recognizes an agency relationship between the Covered Company and the subsidiary industrial bank with respect to tax assets generated by such industrial bank, and that all such tax assets are held in trust by the Covered Company for the benefit of the subsidiary industrial bank and promptly remitted to such industrial bank (commitment (8)). Companies and their subsidiaries, including insured depository institutions and their holding companies, will often file a consolidated income tax return. A 1998 interagency policy statement issued by the Federal banking agencies and the U.S. Department of the Treasury, and an addendum thereto  69 (collectively, Policy Statement), acknowledges such practices, noting that a consolidated group may prepare and file Federal and State income tax returns as a group so long as the interests of any insured depository institution subsidiaries are not prejudiced. Given the potential harm to insured subsidiary institutions, the Policy Statement encourages holding companies and their insured depository institution subsidiaries to enter into written, comprehensive tax allocation agreements, and notes that inconsistent practices regarding tax obligations may be viewed as an unsafe and unsound practice prompting either informal or formal corrective action. The proposed rule similarly seeks to avoid potential harm to the insured subsidiary institution by requiring such a written tax allocation agreement.

In addition to the eight commitments discussed above, pursuant to proposed § 354.4(b), the FDIC may condition the approval of an application or nonobjection to a notice on the Covered Company and industrial bank committing to adopt, maintain, and implement an FDIC-approved contingency plan that presents one or more actions to address potential significant financial or operational stress that could threaten the safe and sound operation of the insured industrial bank. The plan also would reflect strategies for the orderly disposition of the industrial bank without the need for the appointment of a receiver or conservator. Such disposition could include, for example, sale of the industrial bank to, or merger with, a third party. The proposed rule describes this contingency plan commitment in general terms, thereby preserving the FDIC's supervisory discretion to tailor the contents of any contingency plan to a given Covered Company and its insured industrial bank subsidiary. The FDIC's ability to tailor the contents of a contingency plan for a given Covered Company and its industrial bank minimizes the burden of developing and implementing the plan. In the case where a contingency plan commitment is included as a condition to approval of an application or nonobjection to a notice, the FDIC may take into account the size, complexity, interdependencies, and other factors relevant to the industrial bank and Covered Company. The FDIC is of the view that requiring a contingency plan would lead the FDIC, as well as the Covered Company and its subsidiary industrial bank, to a better understanding of the interdependencies, operational risks, and other circumstances or events that could create safety and soundness concerns for the insured industrial bank and attendant risk to the DIF. The contingency plan would not be a resolution plan, but rather, an explanation of the steps the industrial bank and Covered Company could take to mitigate the impacts of financial and operational stress outside of the receivership process.

While the contingency plan is one type of commitment that the FDIC would be able to require of Covered Companies and their industrial bank subsidiaries, there may be other commitments that the FDIC may determine to be appropriate given the business plan, capital levels, or organizational structure of a Covered Company or its subsidiary industrial bank. Section 354.4(c) would provide, then, that the FDIC may require such additional commitments in addition to those described in § 354.4(a) or (b) in order to ensure the safety and soundness of the industrial bank and reduce potential risk to the DIF.

Question 13: Some of the provisions include continuing commitments, such as to maintain capital. Should the proposed rule include a cure period in the event that the industrial bank or its parent company initially comply with these commitments, but later fall out of compliance? If so, should such a cure period be provided for all commitments or certain commitments (please specify)? Alternatively, should the FDIC rely on its enforcement authorities under sections 8 and 50 of the FDI Act to take action as appropriate?

Question 14: In order to ensure that each Covered Company can serve as a source of financial strength to its industrial bank subsidiary and fulfill its obligations under a capital maintenance agreement, should the FDIC include a commitment that the parent company will maintain its own capital at some defined level on a consolidated basis in all circumstances? How should the FDIC determine the level?

Section 354.5 would require the FDIC's prior written approval before an industrial bank that is a subsidiary of a Covered Company may take certain actions. These restrictions, like the required commitments discussed above, are generally intended to provide the safeguards and protections that the FDIC believes would be prudent to impose with respect to maintaining the safety and soundness of industrial banks that become controlled by companies that are not subject to Federal consolidated supervision. Accordingly, the proposed rule would require prior FDIC approval if the subsidiary industrial bank wanted to take any of five actions set forth in § 354.5(a).

In order to ensure that the industrial bank does not immediately after becoming a subsidiary of a Covered Company engage in high-risk or other inappropriate activities, the subsidiary industrial bank would be required to obtain the FDIC's prior approval to make a material change in its business plan after becoming a subsidiary of a Covered Company (paragraph (1)). In order to limit the influence of the parent Covered Company, the subsidiary industrial bank would have to obtain the FDIC's prior approval to add or replace a member of the board of directors or board of managers or a managing member, as the case may be (paragraph (2)); add or replace a senior executive officer (paragraph (3)); employ a senior executive officer who is associated in any manner with an affiliate of the industrial bank, such as a director, officer, employee, agent, owner, partner, or consultant of the Covered Company or a subsidiary thereof (paragraph (4)); or enter into any contract for material services with the Covered Company or a subsidiary thereof (paragraph (5)). Pursuant to proposed § 354.5(b), the FDIC could, on a case-by-case basis, impose additional restrictions on the Covered Company or its controlling shareholder if circumstances warrant.

Question 15: Should the FDIC further define “services material to the operations of the industrial bank” as that phrase is used in the proposed § 354.5(e)? If so, how should the term be defined?

Question 16: Should any of the restrictions in § 354.5 be temporally limited, for example, to the first three years after becoming a subsidiary of such Covered Company?

The FDIC proposes to clarify that it retains the authority to take supervisory or enforcement actions, including actions to address unsafe or unsound practices, or violations of law.

Thus, the FDIC could require grandfathered industrial banks and their parent companies that are not subject to Federal consolidated supervision by the FRB to enter into written agreements, provide commitments, or abide by restrictions if necessary to maintain the safety and soundness of the industrial bank. Similarly, the FDIC retains the authority to require additional commitments from a Covered Company and its subsidiary industrial bank to enter into written agreements, provide commitments, or abide by restrictions if necessary to maintain the safety and soundness of the industrial bank, even if not in the context of a filing.

Question 17: Should the FDIC retain the authority to require additional written agreements, commitments, or conditions on or by an industrial bank or Covered Company after the nonobjection to a change in bank control, approval of a merger transaction, or a grant of deposit insurance by the FDIC? Should the FDIC retain the power to require additional written agreements, commitments, or conditions on or by an industrial bank or parent company of an industrial bank that became a subsidiary of a parent company that is not subject to Federal consolidated supervision by the FRB prior to the effective date?

As previously discussed, the proposed rule would require or impose certain commitments, restrictions, and conditions for each deposit insurance application approval, nonobjection to a change in control notice, and merger application approval that would result in an industrial bank becoming, pursuant to the proposed rule, a subsidiary of a Covered Company. The proposal would require such Covered Company to enter into one or more written agreements with the FDIC and the industrial bank subsidiary.

As of December 31, 2019, the FDIC supervised 3,344 insured depository institutions, with combined assets of $3.4 trillion. Of these, 23 institutions were industrial banks, comprising 0.7 percent of all FDIC-supervised institutions. The industrial banks hold combined assets of $150.3 billion, comprising 4.4 percent of the combined assets of FDIC-supervised institutions. 70 The majority of industrial banks are headquartered in Utah and Nevada, and hold nearly all of the combined assets of industrial banks. As of December 31, 2019, 14 industrial banks were headquartered in Utah, four in Nevada, three in California, one in Hawaii, and one in Minnesota.

The proposed rule would apply prospectively to deposit insurance, change in control, and merger transactions involving an industrial bank as the resultant institution that is controlled by a Covered Company. It is difficult to estimate the number of potential Covered Companies that will seek to establish or acquire an industrial bank, as such an estimate depends on considerations that affect Covered Companies' decisions. These considerations, and how they affect decision making, are difficult for the FDIC to forecast, estimate, or model, as the considerations include external parties' evaluations of potential business strategies for the industrial bank as well as future financial conditions, rates of return on capital, and innovations in the provision of financial services, among others. However, during the period of 2017 through 2019, the FDIC received nine industrial bank deposit insurance applications and one change in control application. 71 Consistent with the Paperwork Reduction Act (PRA) estimates presented elsewhere in this notice of proposed rulemaking, for this analysis the FDIC is estimating that the proposed rule, if implemented, would apply to four filings per year seeking to establish or acquire an industrial bank.

The proposed rule could indirectly affect subsidiaries of Covered Companies. Such Covered Companies operate through a variety of structures that include a range of subsidiaries and affiliates. Further, the proposal includes the FDIC's reservation of authority to require any industrial bank and its parent company, if not otherwise subject to part 354, to enter into written agreements, provide commitments, or abide by restrictions, as appropriate. Therefore, it is difficult to estimate the number of subsidiaries and affiliates of prospective Covered Companies, based on information currently available to the FDIC. However, based on the FDIC's experience as the primary Federal regulator of industrial banks, 72 the FDIC believes that the number of subsidiaries of the prospective Covered Companies affected by the proposed rule is likely to be small.

Under the proposal, prospective Covered Companies would be required to agree to the eight commitments, and may be required to agree to additional commitments under certain circumstances, which in summary include commitments by the Covered Company to:

• Furnish an initial listing, with annual updates, of the Covered Company's subsidiaries.

• Consent to the examination of the Covered Company and its subsidiaries.

• Submit an annual report on the Covered Company and its subsidiaries, and such other reports as requested.

• Maintain such records as deemed necessary.

• Cause an independent annual audit of each industrial bank.

• Limit the Covered Company's representation on the industrial bank's board of directors or managers (board), as the case may be, to 25 percent.

• Maintain the industrial bank's capital and liquidity at such levels as deemed appropriate and take such other action to provide the industrial bank with a resource for additional capital or liquidity.

• Enter into a tax allocation agreement.

• Depending on the facts and circumstances, provide, adopt, and implement a contingency plan that sets forth strategies for recovery actions and the orderly disposition of the industrial bank without the need for a receiver or conservator.

The FDIC historically has imposed prudential conditions similar to the commitments listed above in connection with approving or not objecting to certain industrial bank filings. These conditions generally relate to the board and senior management, the business plan, operating policies, financial records, affiliate relationships, and other conditions on a case-by-case basis, depending on the facts and circumstances identified during the review of the respective filings. 73

The table below presents the FDIC's analysis of the estimated costs to institutions that would be affected by the proposed rule of each required commitment included in the proposal. In each case, the FDIC used a total hourly compensation estimate of $94.15 per hour. 74

The proposed rule also authorizes the FDIC to require additional commitments, including a contingency plan that sets forth strategies for recovery actions and the orderly disposition of the industrial bank without the appointment of a receiver or conservator. The additional contingency plan commitment would be required only in certain circumstances, based on the facts and circumstances presented and taking into consideration the size, complexity, interdependencies, and other factors relevant to the industrial bank and Covered Company. Because this commitment is an enhancement to the FDIC's historical approach, and because the commitment is not expected to be required in all cases, the FDIC analyzed the estimated burden in greater detail.

It is difficult to estimate the recordkeeping, reporting, and disclosure costs associated with the contingency plan aspect of the proposed rule because it depends on the organizational structure and activities of potential future Covered Companies. The FDIC currently lacks such detailed information on potential future Covered Companies. While the contingency plan commitment is meaningfully different from resolution plan requirements for large banks, and while industrial banks that might need to develop such contingency plans are meaningfully different from large banks subject to resolution planning requirements, the FDIC considered prior analyses regarding resolution planning requirements imposed on certain institutions to instruct its analysis.

Based in part on the FDIC's experience implementing and managing the resolution planning requirements of 12 CFR 360.10, the FDIC estimates that Covered Companies and their industrial banks subject to the contingency plan commitment could incur $326,000 in recordkeeping, reporting, and disclosure compliance costs annually. To put the estimated cost of this commitment into context, the pre-tax net income of the median industrial bank in 2019 was $64,515,000. 75 But, because the FDIC would have the supervisory discretion to tailor the contents of any contingency plan to a given Covered Company and its industrial bank, and because of the unique circumstances of the respective Covered Companies and industrial banks, the compliance costs incurred by Covered Companies would vary on a case-by-case basis, and could be lower.

As illustrated by the preceding analysis, the proposed rule could pose as much as $348,000 in additional recordkeeping, reporting, and disclosure compliance costs for each Covered Company that seeks to establish or acquire an industrial bank. 76 Covered Companies would also be likely to incur some regulatory costs associated with making the necessary changes to internal systems and processes. For context, the estimated $348,000 recordkeeping, reporting, and disclosure costs only comprise 0.8 percent of the median non-interest expense for the 23 existing industrial banks. 77

The FDIC believes that the proposed rule would benefit the public by providing transparency for market participants and other interested parties. Additionally, the FDIC believes that the proposed rule would benefit the public by formalizing a framework by which the FDIC would supervise industrial banks and mitigate risk to the DIF that may otherwise be presented.

It is difficult to estimate whether the proposed rule would serve as an incentive or disincentive for affected parties. Decisions to establish or acquire an industrial bank depend on many considerations that the FDIC cannot accurately forecast, estimate, or model, such as future financial conditions, rates of return on capital, and innovations in the provision of financial services. The proposed rule would enhance transparency in the FDIC's evaluation of filings, which could increase the number of applications received. However, such transparency could also serve to limit the number of applications received.

The FDIC analyzed historical trends in filings that would be subject to the proposal. Based on that analysis, and consistent with the FDIC's PRA analysis, the FDIC assumes four applications: Three deposit insurance applications, and one change in bank control notice per year, on average. Between 2000 and 2009, the FDIC received as many as 12 and as few as two deposit insurance applications from entities seeking to organize an industrial bank; between 2017 and 2019, the FDIC received as many as four and as few as two such applications. Therefore, the FDIC believes it is reasonable to assume an annual deposit insurance application volume of three for the purpose of this analysis. In addition, the FDIC has received three change in bank control notices relating to industrial banks since 2010; therefore, the FDIC believes it is reasonable to assume an annual volume of one for the purpose of this analysis.

The FDIC believes the proposed rule is consistent with supervisory approaches the FDIC has used to insulate industrial banks from risks posed by their parent companies, and that these supervisory approaches have been effective. For example, as previously noted, only two small industrial banks failed during the crisis. The FDIC believes the proposed rule would provide a prudentially sound framework for reaching decisions on industrial bank filings that the FDIC receives from time to time.

To the extent that the proposed rule results in higher numbers of industrial banks, the increase could lead to increased competition for depositors and borrowers. The increased competition could result in one or more of: Higher yields on deposit products, lower interest rates on loan products, reduced fees, less restrictive underwriting standards, greater account opening bonuses for new customers, and other benefits. To the extent that the proposed rule does not result in a higher number of industrial banks, this would not be expected to lead to increased competition for depositors and borrowers.

To the degree the proposal, once adopted, results in an increase in the number of industrial banks, consumers could benefit from increased competition within the banking industry. These benefits could take the form of higher rates on deposit accounts, improved access to credit with better terms or lower rates, and lower fees for banking services. To the extent that the proposed rule does not result in a higher number of industrial banks, this would not be expected to lead to potential benefits from increased competition within the banking industry.

The proposal's effects on the economy are likely to be modest, in line with its potential effects on the banking industry and consumers. If the proposal results in a modest increase in the number of industrial banks or improvement in the provision of banking products and services, the effects on the economy are likely to be modest.

The FDIC is inviting comment on all aspects of the proposed rule. In addition to the questions above, the FDIC seeks responses to the following additional questions:

Question 18: In evaluating the statutory factors under section 6 of the FDI Act for deposit insurance applications, should the FDIC consider an evaluation of the competitive effects of the parent company's or the parent company's affiliates' provision of consumer products aggregated with the activities of the industrial bank?

Question 19: The current Interagency Charter and Federal Deposit Insurance Application  78 requests information related to two broad categories, Market Characteristics and Community Reinvestment Act Plan, to assist the FDIC in determining whether the convenience and needs of the community to be served by an industrial bank will be met with the overall purpose of maintaining a sound and effective banking system. Are there any other categories of information that the FDIC should consider in evaluating an industrial bank's ability to meet the convenience and needs of the community to be served by such industrial bank where the industrial bank will have a limited physical presence or will rely heavily on technology to deliver products and services?

Question 20: The FDIC has typically required, as conditions for approval, a number of additional commitments when considering applications involving foreign ownership of a proposed insured depository institution. These conditions address matters regarding service of process and access to information on the operations and activities of the parent company and its subsidiaries. Are there additional safeguards, commitments, or restrictions the FDIC should consider for a foreign Covered Company? Should additional capital or liquidity levels be considered?

The Regulatory Flexibility Act (RFA) generally requires an agency, in connection with a proposed rule, to prepare and make available for public comment an initial regulatory flexibility analysis that describes the impact of a proposed rule on small entities. 79 However, an initial regulatory flexibility analysis is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. 80 The Small Business Administration (SBA) has defined “small entities” to include banking organizations with total assets of less than or equal to $600 million. 81

Generally, the FDIC considers a significant effect to be a quantified effect in excess of 5 percent of total annual salaries and benefits per institution, or 2.5 percent of total non-interest expenses. The FDIC has considered the potential impact of the proposed rule on small entities in accordance with the RFA. Based on its analysis and for the reasons stated below, the FDIC believes that this proposed rule will not have a significant economic impact on a substantial number of small entities.

As of September 30, 2019, the FDIC supervises 3,390 institutions, of which 2,662 are defined as small institutions by the terms of the RFA. 82 Of these 3,390 institutions, 23 are industrial banks.

As previously discussed, a currently chartered industrial bank would be subject to the proposed rule, as would its parent company that is not subject to Federal consolidated supervision, if such a parent company acquired control of the grandfathered industrial bank pursuant to a change in bank control transaction that closes after the effective date of the proposed rule, or if the grandfathered industrial bank is the surviving institution in a merger transaction that closes after the effective date of the proposed rule.

Of the 23 existing industrial banks, eight reported total assets less than $600 million, indicating that they could be small entities. However, to determine whether an institution is “small” for the purposes of the RFA, the SBA requires consideration of the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates. 83 The FDIC conducted an analysis to determine whether each industrial bank's parent company was “small”, according to the SBA size standards applicable to each particular parent company. 84 Of the eight industrial banks that reported total assets less than $600 million, the FDIC was able to determine that three of these potentially small industrial banks were owned by holding companies which were not small for purposes of the RFA. However, the FDIC currently lacks information necessary to determine whether the remaining five industrial banks are small. Therefore, of the 23 existing industrial banks, 18 are not small entities for purposes of the RFA, but no more than five, or about 22 percent, may be small entities.

Additionally, the FDIC has received three change in control notices relating to industrial banks since 2010. Of those three, only one was from an industrial bank that could possibly be small for purposes of the RFA.

Therefore, given that no more than five of the 23 existing industrial banks are small entities for the purposes of the RFA, and that no more than one change in control notice received by the FDIC since 2010 may be from a small entity, the FDIC believes the aspects of the proposal relating to change in control notices or merger applications involving industrial banks is not likely to affect a substantial number of small entities among existing industrial banks.

As previously discussed, the proposed rule would apply to industrial banks that, as of the effective date, become subsidiaries of companies that are Covered Companies, as such term is defined in § 354.2. It is difficult for the FDIC to estimate the volume of future applications from entities who seek to own and operate an insured industrial bank, or whether those entities would be considered “small” according to the terms of RFA, with the information currently available to the FDIC. Such estimates would require detailed information on the particular business models of institutions, prevailing economic and financial conditions, the decisions of senior management, and the demand for financial services, among other things. However, the FDIC reviewed the firms with industrial bank applications pending before the FDIC as of December 31, 2019. Each publically traded applicant had a market capitalization of at least $1 billion as of March 6, 2020. Each applicant operates either nationally within the United States, or operates worldwide, and none appear likely to be small for purposes of the RFA. Therefore, the FDIC believes that the aspects of the proposal relating to entities who seek to own and operate an insured industrial bank is not likely to affect a substantial number of small entities among existing industrial banks.

Therefore, based on the preceding information, the FDIC certifies that the proposed rule does not significantly affect a substantial number of small entities.

The FDIC invites comments on all aspects of the supporting information provided in this section, and in particular, whether the proposed rule would have any significant effects on small entities that the FDIC has not identified.

In accordance with the requirements of the PRA, 85 the FDIC may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number.

As discussed above, the proposed rule imposes PRA reporting and recordkeeping requirements for each industrial bank subject to the rule and its Covered Company. In particular, each industrial bank, and each Covered Company that directly or indirectly controls the industrial bank, must (i) agree to furnish the FDIC an initial listing, with annual updates, of all of the Covered Company's subsidiaries; (ii) submit to the FDIC an annual report on the Covered Company and its subsidiaries, and such other reports as the FDIC may request; (iii) maintain such records as the FDIC deems necessary to assess the risks to the industrial bank and to the DIF; and (iv) in the event that the FDIC has concerns about a complex organizational structure or based on other circumstances presented by a particular filing, the FDIC may condition the approval of an application or the nonobjection to a notice—in each case that would result in an industrial bank being controlled, directly or indirectly, by a Covered Company—on the Covered Company and industrial bank committing to providing to the FDIC, and thereafter adopting and implementing, a contingency plan that sets forth, at a minimum, one or more strategies for recovery actions and the orderly disposition of such industrial bank, without the need for the appointment of a receiver or conservator.

The FDIC will request approval from the OMB for this proposed information collection and the PRA reporting and recordkeeping requirements. OMB will assign an OMB control number. The information collection requirements contained in this proposed rulemaking will be submitted by the FDIC to OMB for review and approval under section 3507(d) of the PRA  86 and section 1320.11 of the OMB's implementing regulations. 87 Comments are invited on:

(a) Whether the collection of information is necessary for the proper performance of the FDIC's functions, including whether the information has practical utility;

(b) The accuracy of the estimate of the burden of the 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 the information collection on respondents, including through the use of automated collection techniques or other forms of information technology; and

(e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

All comments will become a matter of public record. Comments on the collection of information should be sent to the address listed in the ADDRESSES section of this document. A copy of the comments may also be submitted to the OMB desk officer: By mail to U.S. Office of Management and Budget, 725 17th Street NW, #10235, Washington, DC 20503; or by facsimile to 202-395-6974; or email to oira_submission@omb.eop.gov, Attention, Federal Banking Agency Desk Officer.

Proposed Information Collection

Title: Industrial Banks and Industrial Loan Companies.

OMB Number: 3064-NEW.

Affected Public: Prospective parent companies of industrial banks and industrial loan companies.

Section 722 of the Gramm-Leach-Bliley Act  88 requires each Federal banking agency to use plain language in all of its proposed and final rules published after January 1, 2000. As a Federal banking agency subject to the provisions of this section, the FDIC has sought to present the proposed rule in a simple and straightforward manner.

The FDIC invites comments on whether the proposal is clearly stated and effectively organized, and how the FDIC might make the proposal easier to understand. For example:

• Has the FDIC organized the material to suit your needs? If not, how could it present the rule more clearly?

• Has the FDIC clearly stated the requirements of the rule? If not, how could the rule be more clearly stated?

• Does the rule contain technical jargon that is not clear? If so, which language requires clarification?

• Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand? If so, what changes would make the regulation easier to understand?

• What else could the FDIC do to make the regulation easier to understand?

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA), 89 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions, each Federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on insured depository institutions generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form. 90 The FDIC invites comments that further will inform its consideration of RCDRIA.

Comments Invited

The FAA invites interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

The FAA will consider all comments received by the closing date for comments. The FAA may change these special conditions based on the comments received.

On June 12, 2019, Qantas applied for a supplemental type certificate to install PED retention straps on passenger seat backs in Boeing Model 737-800 airplanes. The Boeing Model 737-800 airplane is a twin-engine transport airplane with seating for 189 passengers, and a maximum takeoff weight of 174,200 pounds.

Under the provisions of title 14, Code of Federal Regulations (14 CFR) 21.101, Qantas must show that the Boeing Model 737-800 series airplane, as changed, continues to meet the applicable provisions of the regulations incorporated by reference in Type Certificate No. A16WE, or the applicable regulations in effect on the date of application for the change.

If the Administrator finds that the applicable airworthiness regulations ( e.g., 14 CFR part 25) do not contain adequate or appropriate safety standards for the Boeing Model 737-800 airplane because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the applicant apply for a supplemental type certificate to modify any other model included on the same type certificate to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.

In addition to the applicable airworthiness regulations and special conditions, the Boeing Model 737-800 airplane must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36.

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.

The Boeing Model 737-800 airplane, as modified by Qantas, will incorporate the following novel or unusual design feature:

Personal electronic-device (PED) retention straps installed on the backs of passenger seats.

In recent years, PEDs have been known to cause smoke and fires inside the fuselage due to the PED falling into areas of the cabin where it cannot be retrieved. The installation of a PED retention strap is intended to reduce the possibly of smoke or fire in flight due to PED loss throughout the cabin.

The addition of a PED strap on the backs of passenger seats will be a functional design feature to enable passengers to view their own device without losing them throughout the cabin. The PED strap's practical use is envisaged particularly during the meal service where meal tray space is limited.

Tablet devices and related PED designs are continually evolving, so it is challenging to find a suitable method of retention. These special conditions address the design and integration of a PED strap installed onto the back of the headrest cover of the B/E Aerospace Millennium (J class) and B/E Aerospace Innovator II (Y class) seats. The PED strap will allow passengers to view a tablet device without having to hold the device during the inflight phase. The PED strap must not be used during taxi, takeoff, and landing. The PED strap is also subject to certain load limits to ensure the strap can accommodate different PED sizes.

The proposed special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.

As discussed above, these special conditions are applicable to the Boeing Model 737-800 airplane, as modified by Qantas. Should Qantas apply at a later date for a supplemental type certificate to modify any other model included on Type Certificate No. A16WE to incorporate the same novel or unusual design feature, these special conditions would apply to that model as well.

This action affects only a certain novel or unusual design feature on one model of airplanes. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the airplane.

The authority citation for these special conditions is as follows:

1. The PED strap must meet the requirements of § 3.1 (Abuse Loads) of SAE International Aerospace Recommended Practice “Aircraft Seat Design Guidance and Clarifications” document no. ARP5526C.

2. The limitations section of the airplane flight manual must prohibit use of PED straps during taxi, takeoff, and landing phases of flight. Operational procedures may be used to achieve this.

3. A means must be provided to limit the use of the PED strap to passenger tablets and related PEDs. Placards may be used to achieve this.

4. The PED strap must be designed to support a 2.2-pound (1.0 Kg) PED.

5. Placards indicating the 2.2-pound (1.0 Kg) load limit of the PED straps must be conspicuously posted.

6. The PED straps must not impede egress, including in emergency-exit passageways.

7. Instructions for Continued Airworthiness (ICA) must be incorporated into the design, including wear and stretch limitations, to ensure that strap wear is detected.

a. PED straps must be inspected every 4,000 flight hours to ensure that strap retraction and PED retention are maintained.

b. The strap must not protrude beyond the dress cover by more than 1 inch (2.54 cm) to ensure that passengers do not use the strap as a handle.

c. Defective head-rest covers must be changed in accordance with B/E Aerospace component maintenance manual (CMM) 25-20-82 (Millennium J Class Seats) and CMM 25-21-42 (Innovator II Y Class Seats). Reference: Qantas Engineering Controlled Report C7246—B738 +6Y Reconfiguration 2015—Instruction for Continued Airworthiness.

Comments Invited

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

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

EASA, which is the Technical Agent for the Member States of the European Union, has issued a series of superseded and revised ADs to correct an unsafe condition for Leonardo S.p.A. Helicopters (formerly Finmeccanica S.p.A., Helicopter Division (FHD), AgustaWestland S.p.A., Agusta S.p.A.), AgustaWestland Philadelphia Corporation (formerly Agusta Aerospace Corporation), Model AB139 and AW139 helicopters, all serial numbers (S/Ns) except S/Ns 31004, 31007, and 41237. EASA advises of multiple failures of M/R dampers part number (P/N) 3G6220V01351 and 3G6220V01352. EASA states that in some cases these failures occurred at the eye end and body lugs resulting in disconnection of the M/R damper in-flight. EASA further states that a combination of factors, including cracks on the M/R damper rod end and body end and in-service failure of the eye end and body lugs may have contributed to the M/R damper disconnections. Information issued by Leonardo advises of M/R damper cracking, loose rod ends, bearing rotation in the damper seat, and damage, incorrect engagement, and misalignment of the lag damper broached ring nut, particularly the broached ring teeth and the damper piston slots.

EASA states that this condition could result in loss of the lead-lag damping function of the M/R blade, damage to adjacent critical rotor components, and subsequent reduced control of the helicopter. EASA AD No. 2018-0112R1, dated June 4, 2018 (EASA AD 2018-0112R1), which is the most recent EASA AD, requires various one-time and repetitive inspections of the M/R damper, a torque check of the damper body end, and replacing any M/R damper with a crack or that fails the torque check. EASA AD 2018-0112R1 also requires replacing M/R damper P/N 3G6220V01351 and 3G6220V01352 with P/N 3G220V01353, as additional tests determined that M/R damper P/N 3G220V01353 does not need to be subject to inspections for cracks, provided it is removed from service before it reaches its retirement life.

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 about the unsafe condition described in its AD. The FAA is proposing this AD after evaluating all known relevant information and determining that an unsafe condition is likely to exist or develop on other helicopters of the same type designs.

The FAA reviewed Leonardo Helicopters Alert Service Bulletin No. 139-450, Revision C, dated April 10, 2018, which contains procedures for visual and dye penetrant inspections of the M/R damper for cracks and for verifying the torque of the M/R damper body ends (body ends).

The FAA also reviewed Leonardo Helicopters Alert Service Bulletin No. 139-452, Revision B, dated April 10, 2018, which contains procedures for reducing the body end nut torque.

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.

This proposed AD would require compliance with certain procedures described in the manufacturer's service bulletin. Based on the helicopter's S/N and the M/R damper P/N installed, this proposed AD would require within 5 hours time-in-service (TIS) and thereafter before the first flight of each day:

• A repetitive visual inspection using a magnifying glass of the M/R damper rod end (rod end) and body ends for a crack, and depending on the inspection results, removing the rod end from service or replacing the M/R damper.

• A repetitive inspection of the rod and body end bearings for rotation in the damper seat and for misaligned slippage marks, and depending on the inspection results, removing from service the rod end or replacing the M/R damper.

This proposed AD would also require within 10 hours TIS:

• Reducing the installation torque of each hub attachment bolt for each M/R damper.

This proposed AD would also require within 30 hours TIS, before the M/R damper accumulates 300 hours TIS, or within 300 hours TIS since last overhaul, whichever occurs later:

• A dye penetrant inspection using a magnifying glass or eddy current inspection of the rod and body ends for a crack, and depending on the inspection results, removing from service the rod end and replacing the M/R damper, or marking the rod and body ends.

This proposed AD would require within 30 hours TIS and thereafter at intervals not to exceed 20 hours TIS until the M/R damper has accumulated 600 hours TIS:

• A repetitive visual inspection of the rod end broached ring nut for broken teeth, improper engagement, and misalignment, and depending on the inspection results, removing from service the broached ring nut.

This AD would require within 50 hours TIS and thereafter at intervals not to exceed 100 hours TIS:

• A repetitive inspection of the bearing friction torque value of the body and rod ends, and depending on the inspection results, removing from service the rod end or replacing the M/R damper.

• A repetitive inspection the M/R damper anti-rotation block (block), and depending on the inspection results, removing the block from service.

This AD would also require, within 50 hours TIS:

• If special washer P/N 3G6220A05052 is installed, aligning the rod ends and broached rings, and replacing any broached ring that cannot be aligned.

• If special washer P/N 3G6220A05052 is not installed, inspecting the broached rings for wear and damage, and depending on the inspection results, replacing the broached ring and installing a special washer.

This proposed AD would also require installing M/R damper P/N 3G220V01353, prohibit installing M/R damper P/N 3G6220V01351 and P/N 3G6220V01352 on any helicopter, and allow the installation of M/R damper P/N 3G220V01353 to serve as terminating action for all the repetitive requirements of this proposed AD.

The EASA AD requires contacting the manufacturer under certain conditions, while this proposed AD would not.

The FAA estimates that this proposed AD would affect 123 helicopters of U.S. Registry. The FAA estimates that operators may incur the following costs in order to comply with this proposed AD. Labor costs are estimated at $85 per work-hour.

Performing the M/R damper inspections would take about 24 work-hours, for an estimated cost of $2,040 per helicopter and $250,920 for the U.S. fleet, per inspection cycle.

Replacing a rod end would take about 3 work-hours and parts would cost about $500, for an estimated cost of $755 per rod end.

Replacing a broached ring and broached ring nut would take about 3 work-hours and parts would cost about $125, for an estimated cost of $380 per broached ring and broached ring nut.

Replacing an anti-rotation block would take about 3 work-hours and parts would cost about $50, for an estimated cost of $305 per anti-rotation block.

Replacing an M/R damper would take about 2 work-hours and parts would cost about $18,000, for an estimated cost of $18,170 per M/R damper.

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

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

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

For the reasons discussed, I certify this proposed regulation:

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 proposes to amend 14 CFR part 39 as follows:

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority, as it would amend the Class E airspace at Gold Beach Municipal Airport, Gold Beach, OR to support instrument flight rules (IFR) operations at the airport.

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Persons wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2020-0234; Airspace Docket No. 19-ANM-90”. The postcard will be date/time stamped and returned to the commenter.

All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

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

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the ADDRESSES section for the address and phone number) between 9:00 a.m. and 5:00 p.m., Monday through Friday, except federal holidays. An informal docket may also be examined during normal business hours at the Northwest Mountain Regional Office of the Federal Aviation Administration, Air Traffic Organization, Western Service Center, Operations Support Group, 2200 S 216th Street, Des Moines, WA 98198.

This document proposes to amend FAA Order 7400.11D, Airspace Designations and Reporting Points, dated August 8, 2019, and effective September 15, 2019. FAA Order 7400.11D is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11D lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) Part 71 by establishing Class E airspace extending upward from 700 feet or more above the surface at the Gold Beach Municipal Airport, Gold Beach, OR. The establishment of the new Class E airspace will support the airport's transition from VFR to IFR operations. Specifically, to the extent possible, it will contain IFR departures until reaching 1,200 feet above the surface and IFR arrivals when descending below 1,500 feet above the surface.

The first airspace area will extend upward from 700 feet above the surface within a 6.3-mile radius to the airport, and within 1 mile each side of the 325° bearing from the airport, extending from the 6.3-mile radius to 9.3 miles northwest of the airport.

The second airspace area will extend upward from 1,200 feet above the surface within a 15-mile radius of the Gold Beach Municipal Airport, excluding that airspace that extends beyond 12 miles from the coast.

Class E5 airspace designations are published in paragraph 6005 of FAA Order 7400.11D, dated August 8, 2019, and effective September 15, 2019, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.

FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

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

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

Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

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

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers (FAA Docket No. FAA-2020-0306; Airspace Docket No. 20-ASO-13) and be submitted in triplicate to the Docket Management Facility (see ADDRESSES section for address and phone number). You may also submit comments through the internet at https://www.regulations.gov.

Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2020-0306; Airspace Docket No. 20-ASO-13.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified comment closing date will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the comment closing date. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

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

You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see ADDRESSES section for address and phone number) between 9:00 a.m. and 5:00 p.m., Monday through Friday, except federal holidays. An informal docket may also be examined during normal business hours at the office of the Operations Support Group, Central Service Center, Federal Aviation Administration, 10101 Hillwood Blvd., Fort Worth, TX, 76177.

This document proposes to amend FAA Order 7400.11D, Airspace Designations and Reporting Points, dated August 8, 2019, and effective September 15, 2019. FAA Order 7400.11D is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11D lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is planning to decommission the VOR portion of the Bowling Green, KY (BWG), VORTAC in September 2020. The Bowling Green VOR was one of the candidate VORs identified for discontinuance by the FAA's VOR MON program and listed in the Final policy statement notice, “Provision of Navigation Services for the Next Generation Air Transportation System (NextGen) Transition to Performance-Based Navigation (PBN) (Plan for Establishing a VOR Minimum Operational Network),” published in the Federal Register of July 26, 2016 (81 FR 48694), Docket No. FAA-2011-1082. Although the VOR portion of the Bowling Green VORTAC is planned for decommissioning, the DME portion is being retained with the “BWG” identifier. The air traffic service (ATS) routes affected by the Bowling Green VOR decommissioning are jet route J-6; VOR Federal airways V-5, V-49, V-52, and V-243; and RNAV route T-325. A separate NPRM was published in the Federal Register (85 FR 16585; March 24, 2020) for Docket No. FAA-2020-0188 to amend ATS routes J-6, V-5, V-49, V-243, and T-325. This NPRM proposes to amend V-52 due to the planned decommissioning of the VOR portion of the Bowling Green VORTAC.

With the planned decommissioning of the Bowling Green VOR, the remaining ground-based NAVAID coverage in the area is insufficient to enable the continuity of V-52 within the affected area. As such, the proposed modification to V-52 would result in the airway segment south of the Central City, KY, VORTAC being removed.

To overcome the removal of the V-52 airway segment, the FAA plans to retain the current fix located along the affected airway segment to assist pilots and air traffic controllers already familiar with it, for navigation purposes. Additionally, the Bowling Green, KY, DME facility is planned to be retained and charted in its current location as a DME facility with the “BWG” identifier.

Instrument flight rules (IFR) traffic could use existing adjacent ATS route segments (including V-4, V-11, V-47, V-51, V-140, V-513, and T-325), file point-to-point using the fixes that will remain in place, or receive air traffic control radar vectors to continue operating through the affected area. Visual flight rules (VFR) pilots who elect to navigate via the airways through the affected area could also take advantage of the air traffic services previously listed.

The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 to modify VOR Federal airway V-52 due to the planned decommissioning of the VOR portion of the Bowling Green, KY, VORTAC. The proposed VOR Federal airway action is described below.

V-52: V-52 currently extends between the Des Moines, IA, VORTAC and the Livingston, TN, VOR/DME. The FAA proposes to remove the airway segment overlying the Bowling Green, KY, VORTAC between the Central City, KY, VORTAC and the Livingston, TN, VOR/DME. Additional changes to other portions of the airway have been proposed in a separate NPRM. The unaffected portions of the existing airway would remain as charted.

The NAVAID radials listed in the V-52 description below are unchanged and stated in True degrees.

VOR Federal airways are published in paragraph 6010(a) of FAA Order 7400.11D dated August 8, 2019, and effective September 15, 2019, which is incorporated by reference in 14 CFR 71.1. The VOR Federal airway listed in this document would be subsequently published in the Order.

FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

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

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

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

Invitation to Comment: We invite you to submit comments regarding these proposed regulations. To ensure that your comments have maximum effect in developing the final regulations, we urge you to identify clearly the specific section or sections of the proposed regulations that each of your comments addresses and to arrange your comments in the same order as the proposed regulations.

We invite you to assist us in complying with the specific requirements of Executive Orders 12866 and 13563 and their overall requirement of reducing regulatory burden that might result from these proposed regulations. Please let us know of any further ways we could reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the Department's programs and activities.

During and after the comment period, you may inspect all public comments about these proposed regulations by accessing Regulations.gov . You may also inspect the comments in person at 400 Maryland Ave. SW, Room 3W327, Washington, DC 20202-6110, between 8:30 a.m. and 4:00 p.m., Eastern Time, Monday through Friday of each week except Federal holidays. To schedule a time to inspect comments, please contact the person listed under FOR FURTHER INFORMATION CONTACT .

Assistance to Individuals with Disabilities in Reviewing the Rulemaking Record: On request, we will provide an appropriate accommodation or auxiliary aid to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for these proposed regulations. To schedule an appointment for this type of accommodation or auxiliary aid, please contact the person listed under FOR FURTHER INFORMATION CONTACT .

The Department proposes to revise the regulations that govern the Demonstration Grants for Indian Children and Youth Program authorized under title VI of ESEA to implement changes to title VI resulting from the enactment of ESSA and to better enable the Department and grantees to meet the objectives of the program. As described in the Tribal Consultation section of this document, Tribes favored expanding the ability of families to choose high-quality educational opportunities during recent consultation sessions on the topic. Accordingly, the Department proposes a new priority and accompanying requirements and selection criteria for applicants proposing to empower parents and students to choose education services best suited to their needs.

Applicants addressing the proposed priority on education choice would have the flexibility to determine which academic outcomes are most critical for students in their communities, including students with disabilities, in the overall effort to promote college and career readiness. Applicants would then identify education service options they believe are most likely to help students achieve those outcomes and provide parents and students with the options to choose the services best suited to their needs, while also allowing parents to request a particular service or provider not already identified. Under the proposed priority, applicants would propose to use grant funds to pay for the services that parents or students select. The applicant would need to explain how it would transfer funds directly to the selected service provider, such as an individual providing tutoring services or a service provider offering supplemental counseling, which could be through an online payment portal.

Because Tribes are not the only eligible applicants for the Demonstration Grants program, we propose to require a non-Tribal applicant addressing the proposed priority to partner with a Tribe. If the student population to be served by the applicant consists of students from multiple Tribes and less than half of the students to be served are from one Tribe, the applicant could partner with a Tribal organization rather than a Tribe. We note that for projects that will serve primarily students who are members of federally recognized Tribes, grantees would be required to give preference in hiring and contracting to Indian persons and entities. (25 U.S.C. 5307(b); 34 CFR 263.23)

Under the proposed priority, the grantee, or the non-Tribal grantee and its partnering Tribe, would identify the services and specific providers from which parents and students would choose and institute a method by which a parent may request a service or provider not included among those identified by the grantee or partnering Tribe. If a grantee or Tribe does not permit the provider or service a parent requests, it must explain in writing to the parent the rationale for that denial. The grantee would set up a service selection method, such as an online portal, walk-in center, or other method by which parents and students would choose from the list of preapproved providers.

The proposed priority would recognize Tribal sovereignty by giving Tribes a lead role in identifying both the range of services to be provided and the pre-approved providers of those services. For example, one Tribe may determine, based on an analysis of community-level data, that its largest barrier to student success is the lack of school counseling services and mentoring in schools attended by its students. That Tribe could then enter into agreements with entities that would provide students with access to individual counseling services or mentoring when selected by students and parents. As another example, a Tribal applicant may determine that its greatest local need is improving the high school graduation rate. That Tribe could select multiple services and providers to meet that project objective, such as tutoring, and courses provided by a community college from which a parent could choose. Applicants can identify multiple project objectives.

For all proposed projects, we propose language in this priority that would require services to be supplemental to existing school services and existing funding sources. For example, if there is an existing Native American language course during the school day, grant funds could not be used to pay for the existing teacher but could be used to expand the number of educators offering language classes. Grantees could also establish a new after-school Native American language instruction program.

We would permit applicants addressing the proposed priority to request a planning period within the first year of funding to allow grantees to develop a service selection process and finalize written agreements with service providers before beginning implementation.

We note that, under ESEA section 6121(e), no more than five percent of funds awarded for a grant under this program may be used for administrative purposes, and for grants made using FY 2020 funds this administrative cost cap applies only to direct administrative costs, not indirect costs.

As further described in the proposed regulation, we propose in § 263.25(h) to require grantees to spend at least 80 percent of their grant funds on direct services to eligible students. If applicants propose a planning year in the first year of the grant, this 80 percent limit would not apply to that first year. Grantees would also be prohibited from spending more than 15 percent of grant funds on the service selection method or the parent involvement and feedback process.

We invite comment specifically on the following issues:

(1) We are interested in ensuring that we review all applications in a fair and equitable manner. Would asking applicants to self-select into “rural” and “non-rural” categories help ensure we fairly evaluate applicants with greater or fewer relevant resources to support this work? If not, are there other ways for the Department to objectively and fairly consider applicants?

(2) The Department is considering establishing new performance measures for this program under the Government Performance and Results Act of 1993 (GPRA). While we are not required to seek comment on GPRA performance measures, the Department believes the development of effective performance measures can benefit from public input and invites public comment to help inform the final performance measures for this program. Although the Department will consider the public comments, the Department is not limited by the terms of the proposed performance measures or public comment on those measures in establishing final performance measures. We specifically invite comment on whether the following measures would provide meaningful data, and also on the feasibility for grantees of collecting and reporting data that would inform the measures:

A. The total number of options offered through the project from which participating students can choose.

B. The percentage of options offered through the project from which participating students can choose education-related services that are culturally relevant, as determined by the grantee.

C. The number of grantees that met their educational outcomes objective(s) ( e.g., decreased school suspension rates, increased graduation rates), as defined by the grantee.

D. The total number of students served.

E. The percentage of parents who report that the number, variety, and quality of options offered meet their children's needs.

F. The average time it took a grantee to respond to requests for specific services.

G. The percentage of parent requests for additional services that resulted in adding new services to the offerings (submission should include both numerator and denominator).

(3) The Department is considering conducting a national study of the Demonstration program to learn more about how grantees expand educational choice in Tribal communities. How might the Department best implement such a study to yield helpful information about promising practices related to increased educational choice?

The Department solicited Tribal input on whether to add a new priority focused on educational choice to the Demonstration Grants for Indian Children and Youth Program by issuing several email messages to Tribal leaders from each of the federally recognized Indian Tribes, all Tribal College or University (TCU) presidents, current grantees under ESEA title VI formula and discretionary grant programs, and other stakeholders.

The Department held a blended in-person and virtual Tribal consultation in Seattle on May 2, 2019, and another in Washington DC, on May 7, 2019, and continued to solicit Tribal comment through June 7, 2019, through the tribalconsultation@ed.gov mailbox. Specifically, we sought input on whether to add a priority to this program that would allow for opportunities for grantees to give students and parents more choice in deciding which education services will better help their children become ready to succeed in college and careers, and on the best ways to design and implement such a program, taking into account the current needs of Indian students for such services, the capacity of eligible entities to implement such a program, and the types of education options currently available to help Indian children become ready to succeed in college and career.

The Department requested responses to nine specific questions. We list each question below, followed by a summary of the input we received from the in-person and virtual consultations and from written comments, and provide our response. Several of the written comments provided helpful suggestions for improvement of the proposed priority, and we have incorporated several of the suggestions into these proposed regulations, as indicated below.

1. Do you support a priority to permit grantees to operate a project through which parents of eligible Indian students could choose education services for their child, from a list of Tribally chosen education services?

In total, 63 comments on this topic were received, a majority of which were in favor. The comments in opposition included helpful suggestions for improving the priority.

One Tribe stated in its written comments that it does not have either State-funded charter schools or private schools in its service area, and there are no commercial options that are culturally relevant. The proposed priority would not require that specific education options, such as charter schools or private schools, be present for an applicant to receive a grant. Applicants would be able to propose services that meet the needs of the local community.

Several Tribal participants objected to using contractors for services rather than letting the Tribe provide all services; one stated that it would be preferable to use the funds to build Tribal capacity for providing all services. Under the proposed priority, applicants could propose to provide services directly, but would also need to name at least one independent provider of the proposed services. Applicants would be required to enter into written agreements with service providers, other than the applicant, to ensure accountability of the funds and oversight of services. If Tribes are interested in grants that support building capacity to administer education programs, the Department also offers grants through the State Tribal Education Partnership grants.

2. Which of the following possible services would your Tribe be interested in including in such a project?

a. Native language, history, or culture courses.

b. Advanced, remedial, and elective courses, including those offered exclusively online.

c. Apprenticeships and industry certifications.

d. Concurrent and dual enrollment.

e. Private or home education.

f. Special education or related services such as speech or physical therapy.

g. Education technology, including learning software or hardware.

h. Transportation needed to access supplemental school services, such as after-school or summer services.

i. Tutoring, especially for students in low-performing schools.

j. Summer and after-school education programs.

k. Testing preparation and fees and application fees.

Tribal leaders expressed interest in all of these services, although the ones most favored were Native language, history, or culture (a), tutoring, especially for students in low-performing schools (i), summer and after-school education programs (j), and apprenticeships and industry certifications (c). Several Tribal leaders also emphasized the importance of transportation (h), including being able to support student travel for summer and after-school opportunities, such as a late bus.

One Tribe submitted written comments expressing opposition to including home schooling as a service that could be funded under the proposed priority because in its State there is limited support or monitoring to ensure that home-schooled children are being educated. In addition, the Tribe stated that, instead of permitting tutoring services, the focus should be on improved teaching. The proposed priority would allow home schooling to be an option, but would not require applicants to offer home schooling under their project. Additionally, while this proposed priority could not support educator professional development since it focuses on expanding the ability of families to choose high-quality educational opportunities, the Department shares the commenter's interest with regard to improving instruction. The Department also provides Indian Education Professional Development grants to train Indian individuals to become effective teachers and administrators serving Indian students.

Another Tribe opposed the idea of encouraging parents to choose off-reservation schools for their students. The proposed priority would not require applicants to offer any particular services from the list above; rather, the applicant would choose which services to offer to parents based on the needs of the local community and would establish a method by which a parent may request a service not included on such a list. The list of services in this consultation question was provided to illustrate examples of the types of services an applicant might consider.

One Tribe stated that online courses do not have appropriate content for the Tribe's needs but that a hybrid of online and on-site project-based learning would be invaluable. We think that Tribes are best suited to determine a range of education options that would work well for students in their community and that parents are best suited to select services for their children. We note that the model described by the commenter could satisfy the proposed priority.

3. Are there any other education services that you would be interested in including in a project?

At the Seattle consultation, several participants suggested that student counseling services be included in the list, due to the lack of school mental health or counseling services in Indian country. We have added individual counseling as a service that could be included, provided it would be supplemental to existing services. Additionally, grantees would need to offer more than one type of service.

Participants also suggested we allow grantees to spend grant funds on books and other materials. Books and other materials would be an allowable cost for certain services from which parents could choose under the proposed priority, for example, for homeschooling or afterschool reading services.

One Tribe stated in its written comments that it would be interested in using funds for curricula that address decolonization and resiliency programming. The option to select services that teach these topics could be provided as a service choice to parents under the proposed priority; the Department does not dictate curricula.

Another Tribe suggested that we add intensive in-service professional development in literacy for grades pre-K through 4. As described above, the Department shares the commenter's interest with regard to improving instruction. The Department also provides Indian Education Professional Development grants to train Indian individuals to become effective teachers and administrators serving Indian students. Educators supported by the Professional Development program can include those focused on literacy in grades pre-K through 4. In addition, Indian Education formula grants to LEAs can support educator professional development, including for literacy educators in grades pre-K through 4. The proposed priority would focus on services that parents could choose rather than ones that schools provide to all teachers.

One Tribe suggested that we permit certifications and trainings given by Tribal governments to build the next generation of Tribal administrators. Assuming that this service would target high school students and not postsecondary adult learners, this could be a possible service that parents could choose, if it met the local needs of the community.

One Tribal leader suggested that the funds be used to support student participation in after-school sports, arts, and music programs. Because the purpose of the Demonstration grant program is to improve educational opportunities and achievement of Indian children and youth, the proposed priority would permit the use of funds for such activities if the applicant can demonstrate that the activity is culturally relevant or is supported by evidence that ties the activity to relevant education outcomes, and if there is parental interest in the activity.

4. From the list in question 2 above, which are currently available in your area? Are the current options adequate, and are there adequate secular options in your area?

Responses on the issue of current availability varied a great deal depending on the size and location of the Tribe. Many current Demonstration grantees felt that, given their local graduation and dropout rates, even if some of the services are currently being offered, the options provided are insufficient to meet demand. One Tribe noted it currently offers home education and special education services and therapies; however, the local community is greatly lacking in Native American language courses, advanced and remedial academic courses, access to online courses, summer educational programs, and transportation services for after-school programs. We did not receive any responses to the specific question about secular options.

5. To ensure accountability and allowability of expenses, should the Tribe be responsible for approving providers of the education services? Do you have other ideas for how to ensure that funds are spent on allowable expenses?

Most Tribal leaders supported the concept that Tribes be responsible for approving service providers, although several participants opposed the idea, stating that if a non-Tribal applicant receives a grant, it should be the responsible party, rather than putting the burden on the partnering Tribe to select or approve providers. One commenter suggested in its written comments that the grantee be responsible, through a subcommittee, rather than requiring the Tribe to be responsible. Under the proposed priority, a Tribal applicant would choose the project focus and specific services based on local needs, but for a non-Tribal applicant, such as a State educational agency (SEA), the applicant and its Tribal partner would jointly make these decisions.

One Tribe suggested in its written comments that, to ensure funds are spent on allowable expenses, the approved providers should provide pre- and post-project assessment data, including student and parent perception surveys as well as budget line-items and budget summaries. We have incorporated this suggestion into a proposed selection criterion under which applicants would be awarded points based on the extent to which the project is designed to improve student and family satisfaction with the student's overall education experience through means such as pre- and post-project surveys. We note that applicants for all Department discretionary grant programs are required to submit detailed information about their proposed budgets (34 CFR 75.117), so we do not need program-specific regulations on that point.

Another Tribe stated that service providers should go through a competitive process at the local level. One Tribe stated that services should be approved for a limited period of time, subject to review and renewal by the Tribe. We think that applicants will be in the best position to determine how to appropriately select providers while also giving parents the option to request a provider not included on an approved list, subject to written approval or disapproval by the grantee. The selection and oversight process would be up to the applicant to design under the proposed priority, consistent with applicable procurement policies.

Another Tribe that is a current Demonstration program grantee wrote in favor of the proposed priority and suggested that projects include a liaison with parents to address issues and mediate disputes, such as in situations in which a parent is unhappy with the services provided. We have added a proposed requirement for a parent feedback process under this priority. In addition, we note that an applicant could establish a parent liaison position to support this important work, which we propose to include in § 263.25 as an example of ways an applicant may implement parent outreach. Such a role would be especially helpful in assisting grantees as they identify options parents can select, or in responding to requests for specific services from individual parents. An individual serving as a parent liaison could also assist with outreach and communications to parents regarding the availability of services through this program.

6. The Department is considering incentivizing or requiring grantees to establish a website (which could be managed through a contractor) that would allow families to choose how to apply an allotted stipend to certain preapproved education expenses, so that families would not receive payments directly. Do you support the inclusion of such an incentive or requirement for a website in the new priority? Would families have internet access to make that feasible?

Tribal leaders were generally opposed to requiring grantees to create a website portal for families to choose services; they preferred that it be an option, due to lack of internet availability in many areas. However, one participant stated that an online portal would make it easier for parents to choose services and would improve accountability.

One Tribal leader was concerned that requiring grantees to contract with a third party would create additional unnecessary bureaucracy and stated that the Tribe already has a system for paying vendors. Some stated that a better way to have parents select services would be at community meetings, or through home visits. Accordingly, we are not proposing to require service selection systems to be web-based. Tribes could create or use existing systems or websites or use a different method for choosing services that better fits the needs of their community. Regardless of the mechanism, applicants should ensure that parents are empowered to select individual services for each participating student. These services selected will likely vary among participating students.

7. Should the new priority require eligible entities that are not Tribal ( e.g., State educational agencies (SEAs) or LEAs) to partner with a Tribe, Indian organization, or TCU?

Comments were uniformly in favor of requiring non-Tribal applicants to partner with a Tribe. Several written comments urged that we permit only Tribes to be lead applicants. We cannot restrict the statutory eligibility for this program, which permits SEAs and LEAs to apply, in addition to Tribally connected entities ( i.e., Tribes, TCUs, Bureau of Indian Education (BIE)-funded schools, and Indian organizations). We propose requiring an applicant that is not a Tribe to partner with a Tribe if it proposes to serve primarily students from that Tribe; if it proposes to serve students from many different Tribes, the applicant would be required to partner with a Tribally connected entity.

One Tribe suggested that the proposed priority would create a risk that a non-Tribal entity could target a vulnerable Indian school population for monetary gain while providing poor-quality services. Under the proposed priority, the grantee would be responsible for overseeing all providers and ensuring quality. We have added to the proposed requirements a plan for how the applicant would oversee service providers and ensure that students are receiving high-quality services under the project, and a description, in the requirement for an agreement with providers, of how the grantee will hold the provider accountable to the terms of the agreement. We have also proposed a selection factor evaluating the quality of an applicant's proposed plan to oversee the service providers.

8. How should grant amounts be determined?

a. Should the grant amounts for projects planning to fund a full-time education program be based on a percentage of the per-pupil expenditure in your area or State multiplied by the number of students to be served?

One Tribe, in its written comments, opposed this idea on the basis that per-pupil expenditures do not consider local and geographic constraints; another stated that due to differences between urban and rural areas, consideration should be given to regional rather than State-average expenditures. Accordingly, we propose a selection criterion related to the way an applicant determines the appropriate requested amount for their projects, which should generally reflect the average per-pupil amount to be made available, and the number of students whom the applicant intends to serve.

b. How should grant amounts for applicants who propose to provide supplemental services be calculated?

One Tribal leader stated that this should be based on the Tribe's capacity and budget. We agree.

c. On what other factors should the budget be based?

One Tribe suggested in its written comments that in awarding grants we use the factors of innovation, reproducibility, and post-grant sustainability. We agree that the ability to sustain the project following the grant period, as well as the applicant's plans and ability to share the project design and results with others, are important considerations, and we will take those into account when choosing which selection criteria to include in the NIA.

9. What other considerations should go into the design of this priority?

Several Tribes commented that the program should reflect Tribal sovereignty, in particular the sovereign right to determine education programming and services. We agree with these comments and have drafted the proposed priority in a way that we believe reflects Tribal sovereignty, but we welcome feedback on the specific language in the proposed regulations.

One Tribe suggested that we consider urban and rural applicants separately, as rural applicants often face higher costs and have fewer existing resources, and that we consider the applicant's capacity and infrastructure. Another stated that we should take into account a Tribe's existing capacity. The existing regulations already include a priority for rural applicants, so we are not proposing such a priority for rural applicants in this NPRM. We are proposing a priority for applicants who do not meet the existing rural priority; this proposed “non-rural” priority would allow us to consider rural and non-rural applicants separately in future competitions. We have included in this NPRM a targeted question regarding whether differentiating between rural and non-rural applicants is an appropriate proxy for discerning between applicants with limited resources and applicants with multiple resources.

Another Tribe that is a current Demonstration grantee, writing in favor of the proposed priority, stated that the Department should consider outcomes as a factor when making award decisions, and that continued communication and ongoing feedback should be used for planning and implementation of the projects. We agree that measurable project objectives and clear plans for continuous improvement should be important parts of an applicant's proposal and will consider including selection criteria in the NIA to ensure that peer reviewers consider these factors.

We group major issues according to section of the regulations.

Statute: ESEA section 6121(d)(3) requires that applications include a description of how parents and family of Indian children have been and will be involved in implementing the project activities. ESEA section 8101(38) contains a definition of “parent.”

Current Regulations: The current regulations do not define “parent.”

Proposed Regulations: We propose to add the definition of “parent” from section 8101 of the ESEA.

Reasons: We propose to add the ESEA definition of “parent” to make it clear that the term includes a legal guardian or other person standing in loco parentis, such as a grandparent (§ 263.20).

Statute: ESEA section 6121(a) provides that the purpose of the program is to support projects to develop, test, and demonstrate the effectiveness of services and programs to improve education opportunities and achievement of Indian children and youth. Section 6143 requires the Secretary to give a preference to Indian Tribes, Tribal organizations, and TCUs in making grants under this program.

Current Regulations: Section 263.21 contains three mandatory priorities in paragraphs (a) and (b), and five optional priorities in paragraph (c) that the Secretary may choose in any year in which there is a new competition.

Proposed Regulations: We propose to add BIE-funded schools to the list of entities in § 263.21(b)(1) that receive competitive preference. We also propose to add a priority in § 263.21(c) for entities that are not rural, that is, that do not meet the existing priority for rural entities.

In addition, we propose to add a priority for projects that would expand educational choice for parents, allowing them to direct funding to particular education services to expand the ability of parents to choose high-quality educational opportunities to meet the needs of Native youth. The requirements pertaining to this proposed priority would be in a new § 263.25.

Reasons: We propose to add BIE-funded schools to the list of entities for which we give competitive preference in order to clarify in the regulations our long-standing interpretation of section 6143 of the ESEA in this regard. That statutory provision requires that, in making grants under the Demonstration program as well as under certain other programs, the Department must give preference to Indian tribes, organizations, and institutions of higher education. The Department treats all BIE-funded schools as “Indian organizations” for purposes of this provision, and this regulation would provide clarity to applicants that are BIE-funded schools.

We propose to add a priority for entities that do not meet the existing rural priority in order to give the Department the ability to consider rural and non-rural applicants separately. The regulations already contain a priority for rural applicants in § 263.21(c). The proposed priority would define the inverse population and would be used in conjunction with the priority for rural applicants; the Department could use multiple absolute priorities to create separate funding slates for applicants that propose to serve rural communities compared with applicants that do not. This would give the Department the ability to distribute the grants fairly among high-scoring rural and non-rural applicants, so as not to disadvantage rural entities that may not have access to the same resources as non-rural applicants.

We propose the new educational choice priority in order to support Tribal communities in designing projects to meet their goals and objectives while giving parents the opportunity to select the specific services that best meet the needs of their own children. Under the priority used in the Demonstration Grants program for fiscal years (FY) 2015-2018, the Native Youth Community Projects, the applicant, whether an LEA, a Tribe, or a Tribal organization, designed the objectives and services and arranged to provide those services. The proposed priority would include parents and families in the decision-making process by providing them with a choice of services or of service providers, consistent with the statutory provision in section 6121(d)(3) of the ESEA that requires all applicants for Demonstration Grants to describe how parents and families of Indian children will be involved in developing and implementing the activities in each project.

The proposed priority would give to Tribes and other grantees the ability to select local entities that can provide high-quality services to students. The grantee would enter into a contract with these providers and oversee the providers to ensure quality. Parents would then select the specific service(s) and provider(s) for their child. The grantee would also establish a process by which a parent may request a service or provider not specifically offered. The process would include a response, in writing, from the grantee to the parent if such a request cannot be accommodated, which must explain the reason for denying the request, as further described in new § 263.25.

We are not proposing to remove any of the existing priorities from the regulations. The new proposed priority would be added to the regulations to provide an additional option from which the Department may choose, for any competition under the Demonstration Grants program. Because the purpose of the Demonstration Grants program is to test and demonstrate the effectiveness of various programs in improving education opportunities and achievement of Indian children and youth, adding this proposed priority would provide a new way to potentially improve outcomes and may provide the Department with new information to disseminate to the field to inform future local efforts to improve students' outcomes. The details of this proposed priority, as reflected in these proposed regulations, were informed by the Tribal consultations held on this topic.

Statute: ESEA section 6121 includes four specific application requirements, in addition to other assurances and information as the Secretary may reasonably require.

Current Regulations: Section 263.22 contains the statutory application requirements.

Proposed Regulations: We propose to add two application requirements in new § 263.22(b)(4) that could be used in any year, although they are designed to accompany the proposed priority for educational choice. Under the first proposed application requirement, a non-Tribal applicant would be required to partner with a Tribe or Tribal organization in order to receive a grant; if 50 percent or more of the students to be served are from one Tribe, the application must include that Tribe as a partner. If the majority of students are from different Tribes, however, then the applicant could choose as a partner a single local Tribe, local or national Tribal organization, a TCU, or a BIE-funded school. Under the second proposed application requirement, an applicant would be required to include in its application a plan for how the applicant will oversee service providers and ensure that students are receiving high-quality services under the project.

Reasons: We agree with the input received from Tribes during consultation that, in order to maximize opportunities for Tribal sovereignty, projects that serve Native students must include a Tribal partner. We propose the 50 percent cutoff for Tribal affiliation in order to provide clear guidance for applicants that are not Tribes regarding when they are required to partner with a specific Tribe. We chose 50 percent because that is the percentage of the school district enrollment that is set forth in section 8538 of the ESEA to distinguish school districts that must consult with Tribes from those that do not. To the extent that certain areas lack local Tribal organizations, we acknowledge that an applicant might need to partner with a national Tribal organization. We propose the requirement that applicants provide a plan to oversee service providers in order to ensure that applicants carry out their oversight responsibilities and that students receive high-quality services.

Statute: ESEA section 6121 does not include selection criteria.

Current Regulations: The current regulations do not include selection criteria for this program.

Proposed Regulations: Proposed § 263.24 would add three selection criteria, for this program. Under the selection criterion relating to project services, we propose three selection factors. The proposed selection factor in § 263.24(a)(1), which would be specific to the priority for educational choice, would allow us to evaluate an application based on the extent to which the project would offer high-quality choices of services, including culturally relevant services, and providers that build on existing options. The second and third proposed selection factors could be applied regardless of which priority is used: the factor in § 263.24(a)(2) would require applicants to describe the extent to which the services to be offered meet the needs of the local population, as demonstrated by an analysis of community-level data, including input from students and/or parents; the factor in § 263.24(a)(3) would allow applications to be judged on the quality of their response to the statutory provision in section 6121(d)(3) of the ESEA regarding evidence-based projects. The definition of “evidence-based” in section § 77.1 would apply; this definition includes all four levels of evidence: strong, moderate, and promising evidence as well as evidence that demonstrates a rationale. The definition of “demonstrates a rationale” in the same section clarifies that it “means a key project component included in the project's logic model is informed by research or evaluation findings that suggest the project component is likely to improve relevant outcomes.” Accordingly, an applicant may provide a logic model for the proposed project, including at least one component informed by research, and receive points under this proposed criterion.

We propose four selection factors under the criterion relating to project design. One proposed factor could be used with any priority and would allow us to evaluate applicants based on the extent to which their project is designed to improve student and parent satisfaction with the student's overall education experience through pre- and post-project data. Two of the proposed factors would be specific to the priority for educational choice and would ask applicants to describe (1) their process for selecting providers and (2) their method for informing parents of the choices available to them. The fourth proposed factor would allow us to evaluate the quality of the applicant's plan to oversee service providers and ensure that students are receiving high-quality services under the project.

Finally, we propose a selection criterion relating to reasonableness of budget, with two sub criteria. The first relates to the reasonableness of the proposed per-pupil amount for services in relation to the project objectives, and the second concerns the transparency of those per-pupil costs for parents.

Reasons: By establishing in the regulations selection factors that are tailored to the needs of Tribal applicants, the Department would have the ability to choose, in any grant competition, from the unique selection criteria established through these proposed regulations as well as from the general selection criteria in 34 CFR 75.210.

Statute: ESEA section 6121 does not address educational choice.

Current Regulations: The current regulations do not address educational choice.

Proposed Regulations: Proposed § 263.25 would add eight requirements that would apply to any competition in which the Secretary uses the proposed priority for educational choice. Section 263.25(a) would require grantees to choose a project focus and specific service providers that are based on the needs of the local community. In § 263.25(b) we propose to require grantees to offer more than one education-related option for services from among the twelve listed in that paragraph. Multiple service providers may address a single education-related option. Separately, we propose in § 263.26(d) to require multiple service providers, including service providers that are not the applicant, though the applicant may also provide services. We propose in § 263.25(c) to ensure that all services would supplement and not supplant existing services and funding sources.

We further propose in § 263.26(d) to require grantees to establish a method through which parents could select from various services and providers tailored to the project objective. The service selection method could not include direct financial transfers to parents. Grantees would also be required under proposed § 263.25(e) to have a system in place for parents to advocate for services their children need, such as a parent feedback process, that would require the grantee to provide a written explanation for not providing the requested service; the explanations would need to be provided within thirty (30) days.

We also propose in § 263.25(f) a requirement that grantees enter into a written agreement with each service provider under the project, and that the agreement include a nondiscrimination clause, including a provision prohibiting the provider from discriminating against Indian students who are eligible for services under this program on the basis of affiliation with a particular Tribe. The agreement would also be required to contain a description of the oversight to be provided by the grantee, a description of how students' progress will be measured, and provide for the termination of the agreement if the provider is unable to meet the terms of the agreement.

In the event that the number of requests from parents of eligible students for services under the project exceeds the available capacity, we would require in proposed § 263.25(g) that the grantee or provider include a fair and documented process to choose students to be served, such as a lottery, or another transparent set of consistently-applied criteria, such as first-come, first-served, or need-based criteria.

Finally, we propose in § 263.25(h) to require grantees to spend at least 80 percent of their grant funds on direct services to eligible students. If applicants propose a planning year in the first year of the grant, this 80 percent limit would not apply to that first year. Grantees would also be prohibited from spending more than 15 percent of grant funds on the service selection method or the parent involvement and feedback process described in paragraph (e) of this section. If an applicant proposes a planning year in the first year of the grant, this 15 percent limit would not apply to that first year.

Reasons: We propose to require that services be based on local needs because we heard from Tribes that it is important that projects be tailored to the unique needs of each community. We propose the requirement that grantees offer more than one specific service to ensure that families have adequate choices. We propose to require that services supplement existing options in the community to ensure that these funds are not used to supplant other funding sources that already exist. We propose to require a service selection method to help ensure that grantees have a carefully planned administrative system through which parents can access the services. It is important that grant funds go only to service providers and not the parents, as there will be an agreement with service providers that includes expectations for reporting activities and financial oversight. We propose to require a system for parent input, in response to suggestions from Tribal consultation, to ensure that parent voices are heard and responded to with regard to quality of services, the administrative convenience of the system, choice of providers and specific services, and other matters. This system must include a mechanism by which parents can request specific services or providers and receive responses in writing indicating the reason for denying any request the grantee cannot satisfy.

We propose to require that grantees enter into written agreements with each provider to ensure that grantees have the necessary programmatic and fiscal oversight of all services under the project and that grantees and providers are held accountable to the terms of the agreement. In addition, the proposed requirement that agreements include a nondiscrimination clause, including a provision prohibiting the service provider from giving priority to members of one Tribe over another, is designed to ensure that all American Indian and Alaska Native students who are eligible for services under this program (pursuant to the definition of Indian in ESEA section 6151) have an equal opportunity to obtain services. We propose the requirement of a fair and documented selection process, such as a lottery, to ensure there would be no favoritism in choosing which students are included in the project.

We propose that at least 80 percent of grant funds be used for direct services so that most of the grant funds are used to support services for students, not to implement the service selection process. Under the proposed rule, grantees could use up to 15 percent of the award for the service selection method or the parent involvement and feedback process. We propose that the 80 percent requirement would not apply in the planning year, if the grantee requests and obtains permission for the first year of the grant to be used for planning, because we understand that setting up a service selection method can require a large amount of funds at the start of the grant that would not be continued in subsequent years. Thus, if a grantee uses the first year of the grant as a planning year, it will not have its costs limited to a total of 20 percent of the grant for the service selection method, its indirect cost rate, and its direct administrative costs, as will be the case in future grant years.

We are also making minor technical changes to these program regulations, some of which are required to align the regulations with the ESEA, as amended by ESSA. The technical changes to align the regulations with the ESSA amendments to title VI of ESEA are as follows:

1. We add “and youth” to the name of the program in the title for subpart B of part 263, in the title of § 263.20, and in the definitions in § 263.20, to align with ESEA section 6121(a)(1).

2. In § 263.20, we delete the definition of “Indian institution of higher education” and replace it with the statutory definition of “Tribal college or university,” and make conforming changes to § 263.21, in alignment with ESEA section 6121(b).

3. In § 263.22, we add to the application requirements the expansion from involvement of parents to include family members, and we change “scientifically-based” to “evidence-based,” in alignment with ESEA section 6121(d)(3)(B).

Under Executive Order 12866, the Office of Management and Budget must determine whether this regulatory action is “significant” and, therefore, subject to the requirements of the Executive order and subject to review by OMB. Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may—

(1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities in a material way (also referred to as an “economically significant” rule);

(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles stated in the Executive order.

OMB has determined that this proposed regulatory action is not a significant regulatory action subject to review by OMB under section 3(f) of Executive Order 12866.

Under Executive Order 13771, for each new regulation that the Department proposes for notice and comment, or otherwise promulgates, that is a significant regulatory action under Executive Order 12866 and that imposes total costs greater than zero, it must identify two deregulatory actions. For FY 2020, any new incremental costs associated with a new regulation must be fully offset by the elimination of existing costs through deregulatory actions. The proposed regulations are not a significant regulatory action. Therefore, the requirements of Executive Order 13771 do not apply.

We have also reviewed these proposed regulations under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—

(1) Propose or adopt regulations only upon a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);

(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account—among other things and to the extent practicable—the costs of cumulative regulations;

(3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);

(4) To the extent feasible, specify performance objectives rather than the behavior or manner of compliance a regulated entity must adopt; and

(5) Identify and assess available alternatives to direct regulation, including economic incentives—such as user fees or marketable permits—to encourage the desired behavior, or provide information that enables the public to make choices.

Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”

We are issuing these proposed regulations only on a reasoned determination that their benefits would justify their costs. In choosing among alternative regulatory approaches, we selected those approaches that would maximize net benefits. Based on the analysis that follows, the Department believes that these proposed regulations are consistent with the principles in Executive Order 13563.

We have also determined that this regulatory action would not unduly interfere with State, local, and Tribal governments in the exercise of their governmental functions.

In accordance with both Executive orders, the Department has assessed the potential costs and benefits, both quantitative and qualitative, of this regulatory action. The potential costs associated with this regulatory action are those resulting from statutory requirements and those we have determined as necessary for administering the Department's programs and activities. The potential costs associated with the proposed priorities and requirements would be minimal, while the potential benefits are significant.

We have determined that these proposed regulations would impose minimal costs on eligible applicants. Program participation is voluntary, and the costs imposed on applicants by these proposed regulations would be limited to paperwork burden related to preparing an application. The potential benefits of implementing the programs—for example, expanding the choices available to parents and students, and improving access to services such as Native language programs or providing new internship or apprenticeship programs—would outweigh any costs incurred by applicants, and the costs of carrying out activities associated with the application would be paid for with program funds. For these reasons, we have determined that the costs of implementation would not be excessively burdensome for eligible applicants, including small entities.

Elsewhere in this section under Paperwork Reduction Act of 1995, we identify and explain burdens specifically associated with information collection requirements.

Executive Order 12866 and the Presidential memorandum “Plain Language in Government Writing” require each agency to write regulations that are easy to understand.

The Secretary invites comments on how to make these proposed regulations easier to understand, including answers to questions such as the following:

• Are the requirements in the proposed regulations clearly stated?

• Do the proposed regulations contain technical terms or other wording that interferes with their clarity?

• Does the format of the proposed regulations (grouping and order of sections, use of headings, paragraphing, etc.) aid or reduce their clarity?

• Would the proposed regulations be easier to understand if we divided them into more (but shorter) sections? (A “section” is preceded by the symbol “§ ” and a numbered heading; for example, “§ 263.2 What definitions apply to the Demonstration Grants for Indian Children and Youth program?”)

• Could the description of the proposed regulations in the SUPPLEMENTARY INFORMATION section of this preamble be more helpful in making the proposed regulations easier to understand? If so, how?

• What else could we do to make the proposed regulations easier to understand?

To send any comments that concern how the Department could make these proposed regulations easier to understand, see the instructions in the ADDRESSES section.

The Secretary certifies that these proposed regulations would not have a significant economic impact on a substantial number of small entities. The small entities that would be affected by these regulations are LEAs, TCUs, Tribes, Indian organizations, and BIE-funded schools receiving Federal funds under this program. The proposed regulations would not have a significant economic impact on the small entities affected because the regulations would not impose excessive regulatory burdens or require unnecessary Federal supervision. Participation in the Demonstration Grant program is voluntary and the Department believes that the costs imposed on an applicant by the proposed priorities, requirements, definitions, and selection criteria would be limited to the costs related to providing the documentation outlined in the proposed definitions and requirements when preparing an application and that those costs would not be significant. We note that those grantees that would be subject to the minimal requirements that these proposed regulations would impose would be able to meet the costs of compliance using Federal funds provided through the Indian Education Demonstration Grant program.

However, the Secretary specifically invites comments on the effects of the proposed regulations on small entities, and on whether there may be further opportunities to reduce any potential adverse impact or increase potential benefits resulting from these proposed regulations without impeding the effective and efficient administration of the Indian Education Demonstration Grant program. Commenters are requested to describe the nature of any effect and provide empirical data and other factual support for their views to the extent possible.

As part of its continuing effort to reduce paperwork and respondent burden, the Department provides the general public and Federal agencies with an opportunity to comment on proposed and continuing collections of information, in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). This helps ensure that: The public understands the Department's collection instructions, respondents can provide the requested data in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the Department can properly assess the impact of collection requirements on respondents.

Proposed §§ 263.22 (Application Requirements) and 263.24 (Selection Criteria) contain information collection requirements (ICR) for the program application package. As a result of the proposed revisions to these sections, we would transfer the grant application package information collection burden from 1810-0722 to 1894-0006, resulting in discontinuation of 1810-0722. In Table 1 below, we assume 100 applicants each spend 30 hours preparing their applications.

If your comments relate to the ICR for these proposed regulations, please specify the Docket ID number and indicate “Information Collection Comments” on the top of your comments.

Written requests for information or comments, submitted by postal mail or delivery, related to the information collection requirements should be addressed to the Director of the Information Collection Clearance Program, U.S. Department of Education, 550 12th Street SW, Room 9086, Washington, DC 20202.

Intergovernmental Review: This program is subject to Executive Order 12372 and the regulations in 34 CFR part 79. One of the objectives of the Executive order is to foster an intergovernmental partnership and a strengthened federalism. The Executive order relies on processes developed by State and local governments for coordination and review of proposed Federal financial assistance.

This document provides early notification of our specific plans and actions for this program.

Executive Order 13132 requires us to ensure meaningful and timely input by State and local elected officials in the development of regulatory policies that have federalism implications. “Federalism implications” means 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. These proposed regulations may have federalism implications. We encourage State and local elected officials to review and provide comments on these proposed regulations.

In accordance with section 411 of the General Education Provisions Act, 20 U.S.C. 1221e-4, the Secretary particularly requests comments on whether these proposed regulations would require transmission of information that any other agency or authority of the United States gathers or makes available.

Accessible Format: Individuals with disabilities can obtain this document in an accessible format ( e.g., braille, large print, audiotape, or compact disc) on request to the person listed under FOR FURTHER INFORMATION CONTACT .

Electronic Access to This Document: The official version of this document is the document published in the Federal Register . You may access the official edition of the Federal Register and the Code of Federal Regulations at www.govinfo.gov. At this site you can view this document, as well as all other documents of this Department published in the Federal Register , in text or portable document format PDF. To use PDF, you must have Adobe Acrobat Reader, which is available for free on the site.

You may also access documents of the Department published in the Federal Register by using the article search feature at www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.

For the reasons discussed in the preamble, the Secretary of Education proposes to amend part 263 of title 34 of the Code of the Federal Regulations as follows:

The additions read as follows:

The revision and additions read as follows:

The revision and addition read as follows:

Invitation to Comment: We invite you to submit comments regarding the proposed priorities, requirement, and definitions. To ensure that your comments have maximum effect in developing the final priorities, requirement, and definitions, we urge you to identify clearly the specific proposed priority, requirement, or definition your comment addresses.

We invite you to assist us in complying with the specific requirements of Executive Orders 12866, 13563, and 13371 and their overall requirement of reducing regulatory burden that might result from the proposed priorities, requirement, and definitions. Please let us know of any further ways we could reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the program.

During and after the comment period, you may inspect all public comments about the proposed priorities, requirement, and definitions by accessing Regulations.gov . You may also inspect the comments in person in Room 3E335, 400 Maryland Avenue SW, Washington, DC, between the hours of 8:30 a.m. and 4:00 p.m., Eastern Time, Monday through Friday of each week except Federal holidays. Please contact the person listed under FOR FURTHER INFORMATION CONTACT .

Assistance to Individuals with Disabilities in Reviewing the Rulemaking Record: On request we will provide an appropriate accommodation or auxiliary aid to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for the proposed priorities, requirement, and definitions. If you want to schedule an appointment for this type of accommodation or auxiliary aid, please contact the person listed under FOR FURTHER INFORMATION CONTACT .

Purpose of Program: The Open Textbooks Pilot program supports projects at institutions of higher education (IHEs) that create new open textbooks or expand the use of open textbooks in order to achieve savings for students while maintaining or improving instruction and student learning outcomes. Applicants are encouraged to develop projects that demonstrate the greatest potential to achieve the highest level of savings for students through sustainable, expanded use of open textbooks in high-enrollment courses (as defined in this notice) or in programs that prepare individuals for in-demand fields.

Program Authority: 20 U.S.C. 1138-1138d.

This notice contains four proposed priorities. We may use one or more of these priorities in any year in which this program is in effect.

Background: The growth in college textbook costs is an important contributing factor to the overall increase in the cost of attending college. The cost of college textbooks increased 88 percent between 2006 and 2016. 1 In the 2017-18 academic year, the average college student budget for books and supplies was $1,265 for students attending four-year institutions and $1,471 for students attending two-year institutions. 2 Increasing textbook costs creates financial barriers to college access and completion, particularly for low-income students who have a higher propensity to forego purchasing textbooks.

The Department seeks to promote student success, especially for non-traditional students, adult learners, and students from traditionally underserved populations, by supporting the development and expanded use of open textbooks. The proposed priorities, requirement, and definitions are based largely on those used in the notice inviting applications published in the Federal Register on July 30, 2018 (83 FR 36577), which introduced the Open Textbooks Pilot program. This notice is intended to establish a programmatic structure to further support the widespread adoption and use of existing open textbooks and the development of new open textbooks for courses in one or more high-enrollment programs.

In addition to seeking public comment on the proposed priorities, requirement, and definitions, the Department seeks feedback on the following four topics to help guide future Open Textbooks Pilot program grant competitions:

1. Award Size: In the FY 2020 notice inviting applications for the Open Textbook Pilot program, the Department will establish a maximum award and provide estimates regarding the range of award sizes, the total number of awards, and the average award. In establishing a maximum award, the Department seeks to balance the desire to make multiple awards with the need to provide adequate support to ensure that only the highest quality materials will be developed, will be adopted and implemented by a number of institutions, and will be updated beyond the grant period. The Department seeks feedback from the public on the appropriate amounts for each of these elements, assuming a 48-month project period and approximately $6 million available for new awards.

2. Matching Contributions: Many Department programs and competitions include matching requirements to support key policy goals, including leveraging Federal dollars to maximize program impact or encouraging the institutionalization or sustainability of a program or project. The Department seeks feedback from the public on whether a matching requirement would be appropriate and, if so, the appropriate threshold to establish for matching contributions.

3. High-enrollment: In the FY 2018 competition, the Department defined “high-enrollment courses” as courses required for an associate or bachelor's degree at the IHE and that have a student enrollment above the average enrollment of courses at that institution or have higher than average enrollments nationally as compared to other academic or career and technical education courses. Likewise, the definition for a “high-enrollment program” was a program with a student enrollment above the average enrollment for programs at that institution or that has higher than average enrollments nationally as compared to other academic or career and technical education programs. To establish a direction for this program that ensures funds are reaching courses and programs with the highest enrollment, the Department seeks feedback on the proposed revised definition, which broadens the definition of “high-enrollment courses” to include courses in a recognized postsecondary credentialing pathway, as well as increases the benchmark for high-enrollment courses and programs to course and program enrollments within, at least, the top third of all courses and programs offered within the institution.

4. Open Textbook: The learning resources marketplace has evolved beyond single textbooks to include supporting digital resources such as homework systems, assessment modules, and tutoring and support applications that are ubiquitous in classrooms and institutions. To more fully meet the needs of students and professional educators in higher education, the Department proposes a definition of “open textbook” that is broader than what was used in the FY 2018 competition. The Department seeks feedback on the revised definition included in this notice.

Background: Institutions with textbook affordability programs have reported successful implementation of open textbooks by faculty and instructional support through collaboration with librarians, instructional designers, government, and other partners. 3 4 5

However, there are a variety of challenges in developing and continuously updating open textbooks as well as in facilitating their widespread adoption and use. These include faculty awareness of open textbooks, real or perceived concerns about textbook quality, faculty self-interest in commercial textbooks they wrote, and availability of ancillary learning resources. National surveys  6 have shown that while approximately 46 percent of faculty are aware of open textbooks in their area of study, only 20 percent of faculty are aware of a specific open textbook initiative at their university. To address these challenges, this proposed priority would emphasize partnerships within and among institutions and organizations that promote the development, implementation, and use of existing openly licensed resources and provide professional development opportunities for instructors and faculty as they create or adapt open textbooks.

Proposed Priority: To meet this priority, an eligible applicant must propose to lead and carry out projects that involve a consortia of institutions, instructors, and subject matter experts, including no less than three IHEs, along with relevant employers, workforce stakeholders (as defined in this notice), and/or trade or professional associations (as defined in this notice). Applicants must explain how the members of the consortium will work together to develop and implement open textbooks that: (a) Reduce the cost of college for large numbers of students through a variety of cost saving measures; and (b) contain instructional content and ancillary instructional materials that align student learning objectives with the skills or knowledge required by large numbers of students (at a given institution or nationally), or in the case of a career and technical postsecondary program, meet industry standards in in-demand industry sectors or in-demand occupations (as defined in this notice).

To meet this priority, an applicant must identify the gaps in the open textbook marketplace that it seeks to address and propose how to close such gaps. An applicant must propose a comprehensive plan to: (a) Identify and assess existing open educational resources in the proposed subject area before creating new ones, such as by identifying any existing open textbooks that could potentially be used as models for the design of the project or ancillary learning resources that would support the development of courses that use open textbooks; (b) focus on the creation and expansion of education and training materials that can be scaled, within and beyond the participating consortium members, to reach a broad range of students participating in high-enrollment courses or preparing for in-demand industry sectors or in-demand occupations; (c) create and disseminate protocols to review any open textbooks created or adapted through the project for accuracy, rigor, and accessibility for students with disabilities; (d) disseminate information about the results of the project to other IHEs, including promoting the adoption of any open textbooks created or adapted through the project, or adopting open standards of interoperability for any digital assets created; (e) include professional development to build capacity of faculty, instructors, and other staff to adapt and use open textbooks; and (f) describe the courses for which open textbooks and ancillary materials are being developed.

To meet this priority, an applicant must propose to build upon existing open textbook materials and/or develop new open textbooks for high-enrollment courses or high-enrollment programs in order to achieve the highest level of savings for students.

Additionally, this priority requires the applicant to include plans for: (a) Promoting and tracking the use of open textbooks in postsecondary courses across participating members of the consortium, including an estimate of the projected direct cost savings for students which will be reported during the annual performance review; (b) monitoring the impact of open textbooks on instruction, learning outcomes, course outcomes, and educational costs; (c) investigating and disseminating evidence-based practices associated with using open textbooks that improve student outcomes; and (d) updating the open textbooks beyond the funded period.

To meet this priority, an applicant must propose a project that focuses on improving instruction and student learning outcomes by integrating personalized learning strategies, such as artificial intelligence and adaptive learning, and providing support to faculty, instructors, and other staff who are delivering courses using these techniques. The project must enable students to tailor and monitor their own learning and/or allow instructors to monitor the individual performance of each student in the classes or courses for which the applicant proposes to develop open textbooks. In addition, online and technology-enabled content and courses developed under this project must incorporate the principles of universal design in order to ensure that they are readily accessible by all students. The openly licensed resources that are developed should support traditional, text-based materials, including through such tools as adaptive learning modules, digital simulations, and tools to assist student engagement.

Types of Priorities: When inviting applications for a competition using one or more priorities, we designate the type of each priority as absolute, competitive preference, or invitational through a notice in the Federal Register . The effect of each type of priority follows:

Absolute Priority: Under an absolute priority, we consider only applications that meet the priority (34 CFR 75.105(c)(3)).

Competitive Preference Priority: Under a competitive preference priority, we give competitive preference to an application by: (1) Awarding additional points, depending on the extent to which the application meets the priority (34 CFR 75.105(c)(2)(i)); or (2) selecting an application that meets the priority over an application of comparable merit that does not meet the priority (34 CFR 75.105(c)(2)(ii)).

Invitational Priority: Under an invitational priority we are particularly interested in applications that meet the priority. However, we do not give an application that meets the priority a preference over other applications (34 CFR 75.105(c)(1)).

Background: Consistent with the explanatory statement accompanying the FY 2020 appropriations bill, we propose to expand the entities eligible to apply to lead the activities of the consortium to include State higher education agencies.

Proposed Requirement: The Assistant Secretary for Postsecondary Education proposes the following requirement for this program. We may apply this requirement in any year in which this program is in effect.

Eligible Applicants: Eligible applicants are IHEs as defined in section 101 of the Higher Education Act of 1965, as amended (HEA) (20 U.S.C. 1001), or State higher education agencies that—

(a) Lead the activities of a consortium that is comprised of at least—

(1) Three IHEs, as defined in section 101 of the HEA;

(2) An educational technology or electronic curriculum design expert (which may include such experts that are employed by one or more of the consortium institutions); and

(3) An advisory group of at least five employers, workforce organizations, or sector partners (as defined in this notice); and

(b) Have demonstrated experience in the development and implementation of open educational resources.

Background: Multiple terms associated with this program have not been defined. We discuss our reasoning for the proposed definitions of “high-enrollment courses,” “high-enrollment program,” and “open textbook” in the Background section under PROPOSED PRIORITIES. For the other proposed definitions, we are drawing on language and defined terms in the Workforce Innovation and Opportunity Act (WIOA) (Pub. L. 113-128) to ensure consistency across programs. In addition to the proposed definitions, we also use the following defined term in the proposed priorities, requirement, and definitions: State higher education agency as defined in section 103 of the HEA (20 U.S.C. 1003).

Proposed Definitions: The Assistant Secretary for Postsecondary Education proposes the following definitions for this program. We may apply one or more of these definitions in any year in which this program is in effect.

High-enrollment courses means courses that are required for a credential conferred by an eligible IHE that either have total student enrollments within the top third of courses: (a) At the lead institution, if applicable, or at one or more of the consortia partner institutions; (b) in the State; or (c) nationally as compared to other academic or career and technical education courses.

High-enrollment program means a program that yields a postsecondary credential that either has total student enrollments within the top third of programs: (a) At the lead institution, if applicable, or at one or more of the consortia partner institutions; (b) in the State; or (c) nationally as compared to other academic or career and technical education courses.

In-demand industry sector means an industry sector that has a substantial current or potential impact (including through jobs that lead to economic self- sufficiency and opportunities for advancement) on the State, regional, or local economy, as appropriate, and that contributes to the growth or stability of other supporting businesses, or the growth of other industry sectors.

In-demand occupation means an occupation that currently has or is projected to have a number of positions (including positions that lead to economic self-sufficiency and opportunities for advancement) in an industry sector so as to have a significant impact on the State, regional, or local economy, as appropriate.

Open textbook means a textbook that is licensed under a worldwide, non-exclusive, royalty-free, perpetual, and irrevocable license to the public to exercise any of the rights under copyright conditioned only on the requirement that attribution be given as directed by the copyright owner. An open textbook may also include a variety of open educational resources or materials used by instructors in the development of a course and those learning activities necessary for successful completion of a course by students. These include any learning exercises, technology-enabled experiences ( e.g., simulations), and adaptive support and assessment tools.

Sector partner means a member of a workforce collaborative, convened by or acting in partnership with a State board or local board, that organizes key stakeholders interconnected by labor markets, technologies, and worker skill needs into a working group that focuses on shared goals and resource needs.

Trade or professional association means a membership organization that inspects employers or practitioners, or leads credentialing programs, in a specific industry or sector.

Workforce stakeholder means an individual or organization with an interest in the employability of others either for self-interest or the interest of other employers.

Final Priorities, Requirement, and Definitions: We will announce the final priorities, requirement, and definitions in a notice in the Federal Register . We will determine the final priorities, requirement, and definitions after considering responses to the proposed priorities, requirement, and definitions and other information available to the Department. This document does not preclude us from proposing additional priorities, requirements, definitions, or selection criteria, subject to meeting applicable rulemaking requirements.

Note: This notice does not solicit applications. In any year in which we choose to use any of the proposed priorities, requirement, or definitions, we invite applications through a notice in the Federal Register .

Under Executive Order 12866, it must be determined whether this regulatory action is “significant” and, therefore, subject to the requirements of the Executive order and subject to review by the Office of Management and Budget (OMB). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may—

(1) Have an annual effect on the economy of $100 million or more, or adversely affect in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or Tribal governments or communities (also referred to as an “economically significant” rule);

(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles stated in the Executive order.

This proposed regulatory action is not a significant regulatory action subject to review by OMB under section 3(f) of Executive Order 12866.

Under Executive Order 13771, for each new rule that the Department proposes for notice and comment or otherwise promulgates that is a significant regulatory action under Executive Order 12866, and that imposes total costs greater than zero, it must identify two deregulatory actions. For FY 2020, any new incremental costs associated with a new regulation must be fully offset by the elimination of existing costs through deregulatory actions. Because the proposed regulatory action is not significant, the requirements of Executive Order 13771 do not apply.

We have also reviewed this proposed regulatory action under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—

(1) Propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify);

(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account, among other things and to the extent practicable, the costs of cumulative regulations;

(3) Select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);

(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance that regulated entities must adopt; and

(5) Identify and assess available alternatives to direct regulation, including economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.

Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”

We are issuing these proposed priorities, requirement, and definitions only on a reasoned determination that their benefits would justify their costs. In choosing among alternative regulatory approaches, we selected those approaches that would maximize net benefits. Based on the analysis that follows, the Department believes that this regulatory action is consistent with the principles in Executive Order 13563.

We also have determined that this regulatory action would not unduly interfere with State, local, and Tribal governments in the exercise of their governmental functions.

In accordance with both Executive orders, the Department has assessed the potential costs and benefits, both quantitative and qualitative, of this regulatory action. The potential costs are those resulting from statutory requirements and those we have determined as necessary for administering the Department's programs and activities.

The proposed priorities, requirement, and definitions contain information collection requirements that are approved by OMB under OMB control number 1894-0006; the proposed priorities, requirement, and definitions do not affect the currently approved data collection.

Executive Order 12866 and the Presidential memorandum “Plain Language in Government Writing” require each agency to write regulations that are easy to understand.

The Secretary invites comments on how to make the proposed priorities, requirement, and definitions easier to understand, including answers to questions such as the following:

• Are the requirements in the proposed regulations clearly stated?

• Do the proposed regulations contain technical terms or other wording that interferes with their clarity?

• Does the format of the proposed regulations (grouping and order of sections, use of headings, paragraphing, etc.) aid or reduce their clarity?

• Would the proposed regulations be easier to understand if we divided them into more (but shorter) sections?

• Could the description of the proposed regulations in the SUPPLEMENTARY INFORMATION section of this preamble be more helpful in making the proposed regulations easier to understand? If so, how?

• What else could we do to make the proposed regulations easier to understand?

Regulatory Flexibility Act Certification: The Secretary certifies that this proposed regulatory action would not have a significant economic impact on a substantial number of small entities. The U.S. Small Business Administration (SBA) Size Standards define “small entities” as for-profit or nonprofit institutions with total annual revenue below $7,000,000 or, if they are institutions controlled by small governmental jurisdictions (that are comprised of cities, counties, towns, townships, villages, school districts, or special districts), with a population of less than 50,000.

The small entities that this proposed regulatory action would affect are public or private nonprofit agencies and organizations, including Indian Tribes and institutions of higher education that may apply. We believe that the costs imposed on an applicant by the proposed priorities, requirement, and definitions would be limited to paperwork burden related to preparing an application and that the benefits of the proposed priorities, requirement, and definitions would outweigh any costs incurred by the applicant.

Participation in the Open Textbooks Pilot program is voluntary. For this reason, the proposed priorities, requirement, and definitions would impose no burden on small entities unless they applied for funding under the program. We expect that in determining whether to apply for the Open Textbooks Pilot program funds, an eligible entity would evaluate the requirement of preparing an application and any associated costs, and weigh them against the benefits likely to be achieved by receiving a program grant. An eligible entity would probably apply only if it determines that the likely benefits exceed the costs of preparing an application.

We believe that the proposed priorities, requirement, and definitions would not impose any additional burden on a small entity applying for a grant than the entity would face in the absence of the proposed action. That is, the length of the applications those entities would submit in the absence of the proposed regulatory action and the time needed to prepare an application would likely be the same.

This proposed regulatory action would not have a significant economic impact on a small entity once it receives a grant because it would be able to meet the costs of compliance using the funds provided under this program. We invite comments from eligible small entities as to whether they believe this proposed regulatory action would have a significant economic impact on them and, if so, request evidence to support that belief.

Intergovernmental Review: This program is subject to Executive Order 12372 and the regulations in 34 CFR part 79. One of the objectives of the Executive order is to foster an intergovernmental partnership and a strengthened federalism. The Executive order relies on processes developed by State and local governments for coordination and review of proposed Federal financial assistance.

This document provides early notification of our specific plans and actions for this program.

In accordance with section 411 of GEPA, 20 U.S.C. 1221e-4, the Secretary particularly requests comments on whether the proposed regulations would require transmission of information that any other agency or authority of the United States gathers or makes available.

Accessible Format: Individuals with disabilities can obtain this document in an accessible format ( e.g., braille, large print, audiotape, or compact disc) on request to the contact person listed under FOR FURTHER INFORMATION CONTACT .

Electronic Access to This Document: The official version of this document is the document published in the Federal Register. You may access the official edition of the Federal Register and the Code of Federal Regulations at www.govinfo.gov. At this site you can view this document, as well as all other documents of this Department published in the Federal Register, in text or Portable Document Format (PDF). To use PDF, you must have Adobe Acrobat Reader, which is available free at the site.

You may also access documents of the Department published in the Federal Register by using the article search feature at www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.

Throughout this document, “we,” “us,” or “our” refer to the EPA.

Table of Contents

On June 22, 2010, the EPA promulgated a revised primary NAAQS for SO 2 at a level of 75 parts per billion (ppb), based on a 3-year average of the annual 99th percentile of 1-hour daily maximum concentrations. 1 Pursuant to section 110(a)(1) of the CAA, states are required to submit SIPs meeting the applicable requirements of section 110(a)(2) within three years after promulgation of a new or revised NAAQS or a shorter period as the EPA may prescribe. These SIPs, which the EPA has historically referred to as “infrastructure SIPs,” are to provide for the “implementation, maintenance, and enforcement” of such NAAQS, and the requirements are designed to ensure that the structural components of each state's air quality management program are adequate to meet the state's responsibility under the CAA. Section 110(a) of the CAA imposes the obligation upon states to make a SIP submission to the EPA for a new or revised NAAQS, but the contents of individual state submissions may vary depending upon the facts and circumstances. The content of the revisions proposed in SIP submissions may also vary depending upon what provisions are already contained in the state's approved SIP.

On June 3, 2013, the State of Nevada submitted a revision to its SIP addressing the requirements of section 110(a)(2) of the CAA with respect to the 2010 SO 2 NAAQS (“2013 Nevada SIP revision”). On November 3, 2015, the EPA partially approved and partially disapproved portions of the 2013 Nevada SIP revision for the 2010 SO 2 NAAQS. 2 However, at that time, the EPA did not take action on the section 110(a)(2)(D)(i)(I), interstate transport portion of the 2013 Nevada SIP revision. 3 The EPA is now proposing to act on that portion of the 2013 Nevada SIP revision for the 2010 SO 2 NAAQS.

Section 110(a)(2)(D)(i)(I) requires states to include in their SIPs provisions prohibiting any source or other type of emissions activity in one state from emitting any air pollutant in amounts that will contribute significantly to nonattainment, or interfere with maintenance, of the NAAQS in another state. The two clauses of this section are referred to as prong 1 (significant contribution to nonattainment) and prong 2 (interference with maintenance of the NAAQS). The EPA commonly refers to SIP revisions addressing the requirements of section 110(a)(2)(D)(i)(I) as “good neighbor SIPs” or “interstate transport SIPs.”

The EPA's most recent infrastructure SIP guidance, the September 13, 2013 “Guidance on Infrastructure State Implementation Plan (SIP) Elements under Clean Air Act Sections 110(a)(1) and 110(a)(2),” did not explicitly include criteria for how the Agency would evaluate infrastructure SIP submissions intended to address section 110(a)(2)(D)(i)(I). 4 With respect to certain pollutants, such as ozone and particulate matter, the EPA has addressed interstate transport in eastern states in the context of regional rulemaking actions that quantify state emissions reduction obligations. 5 In other actions, such as the EPA actions on western interstate transport SIPs addressing ozone and particulate matter, the EPA has considered a variety of factors on a case-by-case basis to make a weight of evidence determination as to whether emissions from one state interfere with the attainment and maintenance of the NAAQS in another state. In such actions, the EPA has considered available information such as current air quality, emissions data and trends, meteorology, and topography. 6

As previously noted, section 110(a)(2)(D)(i)(I) requires an evaluation of any source or other type of emissions activity in one state and how emissions from these source categories may impact air quality in other states. The EPA believes that a reasonable starting point for determining which sources and emissions activities in Nevada are likely to impact downwind air quality with respect to the 2010 SO 2 NAAQS is to use information in the National Emissions Inventory (NEI). 7 The NEI is a comprehensive and detailed estimate of air emissions of criteria pollutants, criteria pollutant precursors, and hazardous air pollutants from air emissions sources, that is updated every three years using information provided by the states. At the time of this proposed rulemaking, the most recently available complete dataset is the 2014 NEI. The analysis in this proposed rulemaking also relies on facility-reported emissions data, the most recent of which is for 2017. 8 In addition, our analysis uses trends data, which the EPA prepares annually. 9 Trends data include facility reported emissions data and data extrapolated by the EPA from the most recent NEI year.

Although SO 2 is emitted from similar point and nonpoint sources, as is directly emitted fine particulate matter (PM 2.5 )  10 and the precursors to both ozone and PM 2.5 , interstate transport of SO 2 is unlike the transport of PM 2.5 or ozone because SO 2 emissions sources usually do not have long range SO 2 impacts. The transport of SO 2 relative to the 1-hour NAAQS is more analogous to the transport of lead (Pb) relative to the Pb NAAQS in that emissions of SO 2 typically result in 1-hour pollutant impacts of possible concern only near the emissions source. However, ambient 1-hour concentrations of SO 2 do not decrease as quickly with distance from the source as do 3-month average concentrations of Pb, because SO 2 gas is not removed by deposition as rapidly as are Pb particles and because SO 2 typically has a higher emissions release height than Pb. Emitted SO 2 has wider ranging impacts than emitted Pb, but it does not have such wide-ranging impacts that its treatment in a manner similar to ozone or PM 2.5 would be appropriate. Accordingly, while the approaches that the EPA has adopted for ozone or PM 2.5 transport would be too regionally focused for SO 2 , the approach for Pb transport would be too tightly circumscribed to the source. SO 2 transport is therefore a unique case and requires a different approach.

In this proposed rulemaking, as in prior SO 2 transport analyses, we focus on a 50 kilometer (km) wide zone because the physical properties of SO 2 result in relatively localized pollutant impacts near an emissions source that drop off with distance. Given the properties of SO 2 , the EPA selected a spatial scale with dimensions from four to 50 km from point sources—the “urban scale”—to assess trends in area-wide air quality that might impact downwind states. 11 As discussed further in section III.B, the EPA selected the urban scale as appropriate for assessing trends in both area-wide air quality and the effectiveness of large-scale pollution control strategies at SO 2 point sources. The EPA's selection of this transport distance for SO 2 is based upon 40 CFR 58, Appendix D, Section 4.4.4(4), “Urban scale”, which states that measurements in this scale would be used to estimate SO 2 concentrations over large portions of an urban area with dimensions from four to 50 km. The American Meteorological Society/Environmental Protection Agency Regulatory Model is the EPA's preferred modeling platform for regulatory purposes for near-field dispersion of emissions for distances up to 50 km. (Appendix W of 40 CFR part 51). 12 Thus, the EPA has applied the 50-km zone as a reasonable distance to evaluate emissions source impacts into neighboring states and to assess air quality monitors within 50 km of the State's border.

Current implementation strategies for the 2010 primary SO 2 NAAQS include the flexibility to characterize air quality for stationary sources via either data collected at ambient air quality monitors sited to capture the points of maximum concentration, or air dispersion modeling. 13 The EPA's assessment of SO 2 emissions from fuel combustion categories in Nevada and their potential on neighboring states is informed by all available data at the time of this rulemaking and include: SO 2 ambient air quality; SO 2 emissions and emissions trends; SIP-approved regulations that directly address SO 2 ; and other SIP-approved regulations, which may yield reductions of SO 2 . This notice describes the EPA's weight of evidence evaluation of the 2013 Nevada SIP revision to satisfy the requirements of CAA section 110(a)(2)(D)(i)(I). 14

On June 3, 2013, the Nevada Division of Environmental Protection (NDEP) submitted to the EPA the 2013 Nevada SIP revision. 15 The submittal includes the following:

• The Nevada Division of Environmental Protection Portion of the Nevada State Implementation Plan for the 2010 Sulfur Dioxide Primary NAAQS, and appendices, June 3, 2013;

• State Implementation Plan Revision to Meet the Sulfur Dioxide Infrastructure SIP Requirements of the Clean Air Act § 110(a)(2), and attachments Clark County, Nevada, May 29, 2013;

• The Washoe County Portion of the Nevada State Implementation Plan to Meet the Sulfur Dioxide Infrastructure SIP Requirements of Clean Air Act § 110(a)(2), and attachments, March 28, 2013

The submittal was deemed complete by operation of law on December 3, 2013.

The Washoe and the NDEP portions of the submittal state that they are not required to make submittals addressing the requirements of CAA section 110(a)(2)(D)(i)(I) and cite to a November 19, 2012 memo from EPA Administrator Gina McCarthy, which outlined the EPA's intention to abide by a 2012 D.C. Circuit decision. 16

Despite stating in the NDEP portion of the submittal that it was not obligated to address the requirements of CAA section 110(a)(2)(D)(i)(I), the NDEP included Appendix C “Interstate Transport Analysis for the 2010 Sulfur Dioxide Primary National Ambient Air Quality Standard” (“Appendix C” or “transport analysis”) to address the aforementioned CAA requirements.

As the NDEP's portion of the submittal explains, the Clark County Department of Air Quality (Clark County) and Washoe County Board of Health (Washoe County) regulate air pollution within their respective counties, with the exception of fossil-fuel-fired steam generators. The NDEP regulates air pollution in all other counties of the State as well as fossil-fuel-fired steam generators throughout the State, including Clark County and Washoe County.

The following summarizes the NDEP's rationale for concluding that transport of SO 2 from Nevada would not significantly contribute to nonattainment, or interfere with maintenance, of the 2010 SO 2 NAAQS in other states. 17

a. Summary of Nevada's transport analysis regarding nonattainment receptors in contiguous states: Arizona and Utah.

The NDEP's transport analysis cites Clean Air Status and Trends Network (CASTNET) monitoring data in Nevada, Utah, Montana, Colorado, and Arizona. CASTNET data measure air quality in areas where urban influences are minimal, and, thus, are representative of regional background levels of air pollution. 18 According to the NDEP, average weekly and seasonal SO 2 concentrations from six national parks and one national monument in Nevada, Utah, Montana, Colorado, and Arizona were below 2 ppb from 2007 to 2012, “indicating that the regional SO 2 background concentrations are relatively low, which in turn implies that the bulk of the SO 2 in the urban receptor areas is locally generated and not a regional or transport phenomenon.”

The Nevada transport analysis further explains that Arizona's only nonattainment receptors are the Hayden and Miami SO 2 nonattainment planning areas, located in Gila County and Pinal County, respectively. Total SO 2 emissions from Gila and Pinal counties were 29,470 tons from the 2008 NEI. The NDEP notes that Nevada's nearest SO 2 source, the recently closed Reid Gardner Generating Station, 19 is 305 miles (490 km) from the Miami nonattainment area and 330 miles (530 km) from the Hayden nonattainment area and emitted only 941 tons of SO 2 in 2008, which, for illustrative purposes, was about three percent of the SO 2 emissions originating from the Miami and Hayden copper smelters. 20 Additionally, the NDEP states that meteorological data show the prevailing wind direction in the southern part of the State is from the south-southwest blowing mainly north-northeast (indicating that winds in Nevada are generally not blowing south-southeast from Nevada toward Hayden and Miami in Arizona). 21

For Utah, the NDEP states that Salt Lake and Tooele counties are classified as nonattainment for the 24-hour and annual 1971 SO 2 NAAQS, but that the counties have not violated those NAAQS since 1981. 22 The Nevada transport analysis concludes that no areas in Utah are likely to exceed the 2010 NAAQS based on monitoring data indicating that elevated SO 2 levels in Salt Lake and Tooele counties ceased decades ago, and CASTNET data demonstrating low levels of regional background SO 2 .

b. Summary of Nevada's transport analysis regarding attainment areas in one contiguous western state: Arizona.

Nevada's transport analysis identifies four maintenance areas for the 1971 SO 2 NAAQS in Arizona: The Ajo, Douglas, Morenci, and San Manuel SO 2 planning areas. In its analysis, Nevada summarizes the approved maintenance plans for the areas and states that copper smelters were historically the primary source of SO 2 emissions. The transport analysis states that only one smelter, located in the San Manuel SO 2 maintenance area, remains operational and that there have been no recorded monitoring violations of the SO 2 NAAQS in any of these areas since the mid-1980s.

c. Summary of Nevada's transport analysis regarding nonattainment and maintenance receptor areas in non-contiguous states: Missouri, Montana, and New Mexico.

Nevada's transport analysis also examined transport to nonattainment receptors in Missouri and Montana and determined that SO 2 emissions from Nevada do not contribute to nonattainment in those areas based on a comparison of the emissions inventories in those states and Nevada, wind patterns, and the distance between those states and Nevada.

In addition, the Nevada transport analysis evaluated maintenance receptors in New Mexico and determined that Nevada does not interfere with maintenance in that state based on comparison of the emissions inventories in New Mexico and Nevada, overall regional background levels of SO 2 , and the distance between New Mexico and Nevada.

Prong 1 of the good neighbor provision requires state plans to prohibit emissions that will significantly contribute to nonattainment of a NAAQS in another state. In order to evaluate whether Nevada met prong 1 for the 2010 SO 2 NAAQS, the EPA evaluated the 2013 Nevada SIP revision with respect to the following two factors: (1) SO 2 ambient air quality in Nevada and neighboring states; and (2) SO 2 emissions sources in Nevada and neighboring states. Based on the detailed discussion of these factors below, the EPA proposes to find that Nevada's SIP meets the interstate transport requirements of CAA Section 110(a)(2)(D)(i)(I), prong 1, for the 2010 SO 2 NAAQS.

First, the EPA reviewed ambient air quality data in Nevada and neighboring states to see whether there were any monitoring sites with elevated SO 2 concentrations that might warrant further investigation with respect to interstate transport of SO 2 from emissions sources near any given monitor. As shown in Table 1, there are no violating design values  23 between 2014 and 2018 in Nevada or neighboring states apart from monitors located in the Hayden and Miami nonattainment areas in Arizona. 24

This is a summary of the Commission's Second Further Notice of Proposed Rulemaking ( FNPRM ), PS Docket No. 15-80; FCC 20-20, adopted on February 28, 2020, and released on March 2, 2020. The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Center (Room CY-A257), 445 12th Street SW, Washington, DC 20554 or via ECFS at http://fjallfoss.fcc.gov/ecfs/. The full text may also be downloaded at: https://apps.fcc.gov/edocs_public/attachmatch/FCC-16-63A1.pdf.

Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

• Electronic Filers: Comments may be filed electronically using the internet by accessing the ECFS: http://apps.fcc.gov/ecfs/.

• Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

• All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW, Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.

• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW, Washington, DC 20554.

People with Disabilities: To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202- 418-0432 (tty).

1. The Commission supports our Nation's incident preparedness goals and emergency response efforts by, among other things, collecting and providing accurate and timely communications outage and infrastructure status information via our Network Outage Reporting System (NORS) and Disaster Information Reporting System (DIRS). NORS and DIRS provide critical information about significant disruptions or outages to communication services, including among others, wireline, wireless, cable, broadcast (radio and television), satellite, and interconnected VoIP, as well as communications disruptions affecting Enhanced 9-1-1 facilities and airports. Given the sensitive nature of this data to both national security and commercial competitiveness, the outage data is presumed to be confidential.

2. Today when a major disaster or outage occurs, we make this information available to the Department of Homeland Security's (DHS) National Cybersecurity and Communications Integration Center (NCCIC). DHS uses this information to assess the needs of an affected area and to coordinate overall emergency response efforts with state and local first responders so that assets such as equipment, fuel, and personnel can be directed to where they are most needed.

3. Our experience over the years with major outages—from the 2017 hurricanes, tornadoes, and flooding, to power shutdowns in California and the latest earthquakes in Puerto Rico—all underscore the value of reliable and timely outage information to the rapid restoration of communications (including wireline and wireless telephone, television, radio, and satellite). This experience has also heightened our understanding of the crucial role state and local authorities can play in the successful restoration of disrupted communications. We thus now consider how more direct access to outage information might improve the situational awareness and ability of state and local authorities to respond more quickly to outages impacting their communities and to help save lives. Specifically, this Second Further Notice of Proposed Rulemaking proposes an information sharing framework that would provide state and federal agencies with access to NORS and DIRS information while also preserving the confidentiality of that data.

4. In 2004, the Commission adopted rules that require outage reporting for certain communications providers to address “the critical need for rapid, complete, and accurate information on service disruptions that could affect homeland security, public health or safety, and the economic well-being of our Nation, especially in view of the increasing importance of non-wireline communications in the Nation's communications networks and critical infrastructure.” 69 FR 68859 (Nov. 26, 2004) ( 2004 Part 4 Report and Order ).

5. Under these rules, certain service providers must submit outage reports to NORS for outages that exceed specified duration and magnitude thresholds. 47 CFR 4.9. Service providers are required to submit a notification into NORS generally within 30 minutes of determining that an outage is reportable to provide the Commission with timely preliminary information. The service provider must then either (i) provide an initial report within three calendar days, followed by a final report with complete information on the outage within 30 calendar days of the notification; or (ii) withdraw the notification and initial reports if further investigation indicates that the outage did not in fact meet the applicable reporting thresholds. 47 CFR 4.11.

6. All three types of NORS filings—notifications, initial reports, and final reports—contain service disruption or outage information that, among other things, include: The reason the event is reportable, incident date/time and location details, state affected, number of potentially affected customers, and whether enhanced 911 (E911) was affected. The Commission analyzes NORS outage reports to, in the short-term, assess the magnitude of major outages, and in the long-term, identify network reliability trends and determine whether the outages likely could have been prevented or mitigated had the service providers followed certain network reliability best practices. Information collected in NORS has contributed to several of the Commission's outage investigations and recommendations for improving network reliability.

7. NORS filings are presumed confidential and thus withheld from routine public inspection, 47 CFR 0.457(d)(vi), 4.2. The Commission grants read-only access to outage report filings in NORS to the NCCIC at DHS, but it does not currently grant access to other federal agencies, state governments, or other entities. DHS, however, may share relevant information with other federal agencies at its discretion. The Commission publicly shares limited analyses of aggregated and anonymized data to collaboratively address industry-wide network reliability issues and improvements.

8. In the wake of Hurricane Katrina, the Commission established DIRS as a means for service providers, including wireless, wireline, broadcast, and cable providers, to voluntarily report to the Commission their communications infrastructure status and situational awareness information during times of crisis. The Commission recently required a subset of service providers that receive Stage 2 funding from the Uniendo a Puerto Rico Fund or the Connect USVI Fund to report in DIRS when it is activated in the respective territories, 84 FR 59937, 59959-60 (Nov. 7, 2019) ( Puerto Rico & USVI USF Fund Report and Order ). DIRS, like NORS, is a web-based filing system. The Commission analyzes infrastructure status information submitted in DIRS to provide public reports on communications status during DIRS activation periods, as well as to help inform investigations about the reliability of communications following disasters.

9. The Commission treats DIRS filings as presumptively confidential and limits the disclosure of information derived from those filings. The Commission grants direct access to the DIRS database to the NCCIC at DHS. The Commission prepares and provides aggregated DIRS information, without company identifying information, to the NCCIC, which then distributes the information to Emergency Support Function #2 (ESF-2) participants, including other units in DHS, during an ESF-2 incident. ESF-2 is led by DHS and composed by other participants, including the Department of Agriculture, Department of Commerce, Department of Defense, General Services Administration, Department of Interior, and the Federal Communications Commission. Agencies use the analyses for their situational awareness and for restoration priorities for communications infrastructure in affected areas. The Commission also provides aggregated data, without company-identifying information, to the public during disasters.

10. In 2009, the California Public Utilities Commission (CPUC) filed a petition requesting that the Commission amend its rules in order to permit state agencies to directly access the Commission's NORS filings for outages filed in their respective states, Petition of the California Public Utilities Commission and the People of the State of California, ET Docket No. 04-35 (filed Nov. 12, 2009) (CPUC Petition). The Commission sought public comment on the CPUC's request.

11. In 2015, the Commission proposed to grant state governments “read-only access to those portions of the NORS database that pertain to communications outages in their respective states,” 80 FR 34321, 34357 (June 16, 2015) ( 2015 Part 4 NPRM ). The Commission also asked if this access should extend beyond states and include “the District of Columbia, U.S. territories and possessions, and Tribal nations.” The Commission proposed to condition access on a state's certification that it “will keep the data confidential and that it has in place confidentiality protections at least equivalent to those set forth in the federal Freedom of Information Act (FOIA).” The Commission sought comment on other key implementation details, including how to “ensure that the data is shared with officials most in need of the information while maintaining confidentiality and assurances that the information will be properly safeguarded.” Similarly, in the 2015 Part 4 NPRM, the Commission sought comment on sharing NORS filings with federal agencies pursuant to certain safeguards to protect presumptively confidential information.

12. In the 2016 Order and Further Notice, the Commission found that the record reflected broad agreement that state and federal agencies would benefit from direct access to NORS data and that “such a process would serve the public interest if implemented with appropriate and sufficient safeguards,” 81 FR 45055, 45064 (July 12, 2016) ( 2016 Part 4 Order and Further Notice ). The Commission determined that providing state and federal government agencies with direct access to NORS filings would have public benefits but concluded that the process required more development for “a careful consideration of the details that may determine the long-term success and effectiveness of the NORS program.” Finding that the record was not fully developed and that the “information sharing proposals raise a number of complex issues that warrant further consideration,” the Commission directed the Public Safety and Homeland Security Bureau (PSHSB) to further study and develop proposals regarding how NORS filings could be shared with state commissions and federal agencies in real time, keeping in mind the information sharing privileges already granted to DHS.

13. The Bureau subsequently conducted ex parte meetings to solicit additional viewpoints from industry, state public service commissions, trade associations, and other public safety stakeholders on the issue of granting state and federal government agencies direct access to NORS and DIRS filings.

14. This Second Further Notice of Proposed Rulemaking is part of our overarching effort to promote the reliability and redundancy of communications service in the United States. For example, the Commission is undertaking a comprehensive re-examination of the Wireless Resiliency Cooperative Framework to ensure that it is meeting the needs of communities, with a particular focus on increasing wireless service provider coordination with backhaul providers and electric utilities. Two federal advisory committees to the Commission, the Broadband Deployment Advisory Committee (BDAC) and the Communications Security, Reliability, and Interoperability Council VII (CSRIC VII) are developing recommendations to improve broadband and broadcast resiliency, respectively. PSHSB conducted an investigation into the preparations for and impact of 2018's Hurricane Michael on communications services and issued a report with recommendations to improve future recovery efforts. The Bureau also sent letters to wireless providers seeking information on their preparations for electric power shutoffs and wildfires in California, and it conducted outreach with communications and electric industry stakeholders to assess lessons learned.

15. Based on the record before us, the majority of commenters agree that sharing NORS and DIRS information with state and federal agencies—in a manner that preserves the confidentiality of that information—would provide important public safety benefits. Accordingly, we propose a framework for granting state and federal government agencies direct access to NORS and DIRS filings that will assist agencies in their efforts to keep the public safe while preserving confidentiality, ensuring appropriate access, and facilitating reasonable information sharing.

16. NORS filings contain timely information on communications service disruptions or outages impacting a provider's networks. For example, NORS filings may include useful information about the operational status of communications services or 911 elements that have been affected, as well as incident date, time, and location details. The Commission previously found that sharing NORS data with state and federal agencies would serve the public interest—provided that appropriate and sufficient safeguards were implemented. We now propose to reaffirm this finding and to refresh the record.

17. The Puerto Rico Telecommunications Bureau shared its experience in responding to Hurricane Maria in 2017, specifically that the outages impacted communication services for the government agencies responsible for providing essential services. Further, the Puerto Rico Telecommunications Bureau strongly encouraged the Commission to grant state access to NORS so that the agency can coordinate assistance to companies and to emergency government agencies in order to restore communication services and assist its citizens. The Massachusetts Department of Telecommunications and Cable (Massachusetts DTC) in turn argues that state agencies need “timely, unrestricted access to accurate outage information in order to respond quickly and maintain public safety.” Massachusetts DTC supports state access to NORS, citing the specific challenges it faced in accessing accurate and reliable information during the nationwide CenturyLink outage in December 2018, which also disrupted 911 service throughout the state. Massachusetts DTC states that during the December 2018 outage, “misinformation was disseminated” regarding the extent of the state's 911 outages.

18. We believe that subject to appropriate safeguards, giving qualified state and federal agencies NORS access would help restore affected communications and ultimately help save lives. To what extent are state or federal agencies' efforts to ensure the safety of the public frustrated by the fact that information about communications outages is either difficult to obtain or unavailable? Have there been recent public safety incidents where state or federal agencies could have led a more successful response had they been granted direct access to NORS filings at the time of the incident? How would direct access to NORS filings have assisted in the response for such public safety incidents? Are there additional benefits associated with granting direct access to NORS that we should consider?

19. As with NORS data sharing, we propose sharing DIRS filings with eligible state and federal agencies. Unlike NORS filings, which provide a baseline measure for network reliability in a jurisdiction prior to and after disasters, DIRS filings are focused on network status during disasters and in their immediate aftermath. As emergency management officials in California have reported, their currently available resources for identifying the status of communications networks reflect data gaps and inconsistencies at times, which make it difficult for officials to make informed emergency management decisions at the local level, such as identifying and knowing how to move the public of out danger and how to report “medically-difficult situations.”

20. DIRS filings, on the other hand, contain timely information about the operational status of service providers' networks and the associated infrastructure equipment, typically submitted on a daily basis during disaster conditions. DIRS filings also reflect a snapshot of whether specific service provider infrastructure equipment is running on backup power or out of service, as well as the operational status of 911 call centers. As we have found in past communications outages following a disaster, information indicating which counties have a large percentage of its cell towers out of service can provide state authorities the situational awareness they need to appropriately address the communications needs of vulnerable populations in affected areas. After its experience with Hurricane Maria, the Puerto Rico Telecommunications Bureau shared that the DIRS information that it received from communication service providers, not available from the DIRS public reports, was helpful and future access to DIRS information would be an “essential tool” to coordinate assistance to the companies and emergency government agencies in order to restore communication services and assist citizens affected by an outage. For these reasons, we believe that sharing DIRS information with qualified state and federal agencies would help them to better direct their limited resources, including field staff, to areas of most need, thereby enhancing their communications response and recovery efforts in times of disaster. Service providers who report in DIRS submit information as frequently as on a daily basis. Thus, the information submitted may often represent near-real time status updates on critical communications infrastructure inside the counties most devasted during a natural disaster like a category 5 hurricane or wildfire.

21. Moreover, because the Commission affirmatively waives mandatory NORS reporting requirements for service providers that voluntary report in counties where DIRS is activated, DIRS sharing will provide more complete and actionable status of communications outages. As the Michigan Public Service Commission observed, a state agency would have an “incomplete picture of outages” without access to both NORS and DIRS whenever DIRS is activated.

22. We seek comment on our analysis and these anticipated benefits. To what extent would our proposal to share DIRS filings with state and federal agencies improve the effectiveness of response and recovery efforts during and after disasters and emergencies? Are there other, equally effective methods that state and federal agencies may already use to obtain communications status information on a daily basis, especially during and after a devastating event such as a hurricane or wildfire, that does not require access to DIRS? Conversely, what, if any, harms may arise from granting state and federal agencies access to DIRS information? Given that service providers may voluntarily report confidential information in DIRS, we seek comment on whether federal and state agency access to DIRS filings would in any way reduce service provider participation or diminish the level of detail that service providers submit in DIRS. To what extent would any such harms outweigh the benefits of sharing that information? Could those harms be mitigated through the implementation of the safeguards proposed below, and if so, to what extent?

23. We believe that providing state and federal agencies, including Tribal Nation government agencies, access to NORS and DIRS information will help promote the timely restoration of communications in affected communities. However, access to NORS and DIRS must be balanced against a need to safeguard and protect the presumed confidentiality of that information. We therefore believe it is necessary to limit the types of agencies that are eligible to receive direct access to NORS and DIRS. We propose that direct access to NORS and DIRS be limited to agencies acting on behalf of the federal government (we note that the NCCIC of DHS already has direct access to NORS and DIRS information; we do not propose to modify the terms by which the NCCIC accesses this information), the fifty states, the District of Columbia, Tribal Nation governments, and United States territories (including Puerto Rico and the U.S. Virgin Islands) that reasonably require access to the information in order to prepare for, or respond to, an event that threatens public safety, pursuant to its official duties ( i.e., agencies with a “need to know”). Henceforth, we use the term “state” in this Further Notice to broadly refer to any of the fifty states, the District of Columbia, tribal governments, and United States territories. For purposes of our proposal, we use the term “agency” to refer to any distinct governmental department, commission, board, office, or other organization established to fulfill a specific purpose or role, including a state public utility commission or state department of public safety. We also propose that NORS and DIRS information accessed by these agencies should only be used for public safety purposes. We believe that this proposal provides NORS and DIRS access to the agencies that are in the best position to use outage and infrastructure status information to promote public safety across their jurisdictions. We seek comment on our definition of “need to know” and on any objective criteria that would be sufficient or necessary for a state or federal agency to establish that it satisfies the “need to know” standard. What supporting materials should a state or federal agency provide to the Commission to support its assertion that it has a “need to know” as a condition of access to the NORS and DIRS data? We seek comment on the public safety purposes for which eligible agencies may use NORS and DIRS information, as well as on our proposal to condition access to this information on its use for public safety purposes only.

24. While local agencies will not be able to access NORS and DIRS directly under our proposal, we note that these agencies generally fall within the oversight jurisdiction of state agencies that are eligible. Therefore, the local entities would be in a position to obtain NORS and DIRS filings or information from an affiliated state agency, on a case-by-case basis, provided that the state agency finds that the local entities have a “need to know” justification. We further believe this approach is necessary for a NORS and DIRS information sharing framework to be administrable by the Commission, as county and local eligibility would be likely to result in tens of thousands of applications for access, which would take significant time to process and place significant burdens on Commission staff. We seek comment on our proposal.

25. Are there reasons why local entities require direct access to NORS and DIRS filings, and if so, how could these filings be protected from improper disclosure in view of the extremely large number of such local entities in the nation? Are there other entities, besides the state and federal agencies that we have identified above, that also should be eligible to participate in the proposed information sharing framework? How can we best balance addressing the public safety need for enhanced situational awareness against the risk of inadvertent disclosure of NORS and DIRS information, particularly given the large number of local entities in the nation?

26. For example, should additional criteria be applied to determine whether a specific type of local entity ( e.g., local alert-originating entities) should be granted direct access to NORS and DIRS filings? If so, what should those additional criteria be? Should we introduce additional criteria for state-level agencies, such as limiting access to certain types of state agencies ( e.g., state public safety and emergency management departments)? Should we exclude from eligibility agencies located in states that have diverted or transferred 911/Enhanced 911 (E911) fees for purposes other than 911/E911? If so, how should we address conditions of access for states that have inadequately responded to Commission inquiries as to their practices for using 911/E911 fees? Relatedly, should the types of federal agencies eligible for direct access to NORS and DIRS filings be limited and if so, what criteria should we consider?

27. Tribal Nation Governments. We seek comment on our inclusion of Tribal Nation governments in today's proposed information sharing framework. Given the rural location of many Tribal Nation governments, there may be fewer providers offering service in Tribal lands and each piece of communications equipment may be more critical to maintaining connectivity. Does this consideration weigh in favor of different standards for determining whether Tribal Nation government agencies should be granted access to NORS and DIRS filings compared to the other government agencies described in today's proposal? If so, what alternative standards should we use to best tailor our proposal to Tribal Nation governments?

28. The Commission currently treats NORS and DIRS filings as presumptively confidential. This means that the filings and the information contained therein would be withheld from public disclosure, shared on a limited basis to eligible entities, and provided to others in summarized and aggregated form and only in narrow circumstances. We propose to extend this policy by requiring that participating state and federal government agencies treat NORS and DIRS filings as confidential unless the Commission finds otherwise. For clarity, “eligible agencies” refers to agencies that qualify for direct access to NORS and DIRS under this proposal, while “participating agencies” refers to agencies that have applied for and been granted direct access by the Commission.

29. We continue to believe that NORS filings should be presumptively confidential due to the “sensitive data” they contain that “could be used by hostile parties to attack . . . networks, which are part of the Nation's critical information infrastructure.” We also continue to believe that DIRS filings should be presumptively confidential “[b]ecause the information that communications companies input to DIRS is sensitive, for national security and/or commercial reasons.” We remain concerned that our national defense and public safety goals could be undermined if information from outage reports could be used by malicious actors to harm, rather than improve, the nation's communications infrastructure.

30. Further, we continue to be sensitive to the notion that the public disclosure of the NORS information, and more likely, the public disclosure of voluntarily submitted DIRS information, could make “regulated entities less forthright in the information submitted to the Commission” due to the “likelihood of substantial competitive harm from disclosure” of their submitted outage or infrastructure status information. We seek comment on these views and on any alternative approaches. We note that some service providers have recently announced plans to publicly release outage information not previously disclosed. We seek comment on the status of current policies, as well as any future plans, of service providers with regard to publicly releasing outage and infrastructure status information, including specific details as to the types of information that providers intend to release and the circumstances under which they will release it. Verizon has argued that “increased public disclosure of company-specific outage information will further improve information flow and transparency during disasters and other emergencies without compromising competitively sensitive data.” We seek comment on how this argument should affect our views on the presumption of confidentiality afforded to NORS and DIRS data.

31. Moreover, we seek to provide confidence to NORS and DIRS filers that the information they submit would continue to be protected against public disclosure at its current level and to ensure consistency in the information that is publicly disclosed. We believe that a uniform confidentiality standard for granting state and federal agencies access to NORS and DIRS filings would help secure these results. We therefore propose that a participating agency's direct access to NORS and DIRS filings be conditioned on the participating agency agreeing to treat the filings as confidential and not disclose them absent a finding by the Commission that allows them to do so. We propose that participating agencies that seek to disclose information would request the Commission's review, which would occur in the same manner that the Commission reviews requests for disclosure under FOIA. This proposal mirrors the way in which federal agencies share homeland security information with state governments under section 892 of the Homeland Security Act of 2002, in which the federal agency remains in control of the information and state law that otherwise authorizes disclosure of information does not apply, 6 U.S.C. 482(e). We believe that our proposal would limit distribution of the information for unauthorized purposes, ensure the security and confidentiality of the information, and protect the rights of companies that submit the information. We seek comment on this approach.

32. We seek comment on alternative proposals that may address confidentiality concerns. Do any states have substantially different disclosure standards than federal FOIA and, if so, would this condition be satisfied in jurisdictions with more permissive state open record laws or with court decisions favoring more permissive disclosure? We note that the Commission has dealt with similar issues before. With respect to competitively sensitive information submitted by carriers with respect to the North American Numbering Plan, the Commission recognized that some states had open record laws that might not allow state public utility commissions to protect the information from public disclosure. The Commission stated that it would work with those commissions to enable them to obtain the information they needed while protecting the confidential nature of the information. We acknowledge that in all cases, agencies would need to determine whether they can certify to the Commission that the agency would uphold the confidentiality protections we propose. We seek comment on whether these approaches are appropriate and workable here. Should the Commission rely on additional procedures to protect confidential materials from public disclosure by participating state or federal government agencies in this context?

33. To further ensure consistency in disclosure and confidence that submitted information will continue to be protected as it is today, we also propose to require participating state and federal agencies to notify the Commission on issues related to confidentiality in two instances. First, we propose that state and federal agencies notify the Commission within 14 calendar days from the date the agency receives requests from third parties for NORS filings and DIRS filings, or related records. This would provide the Commission the ability to notify the original NORS or DIRS submitter and give them an opportunity to object. Second, we propose that state and federal agencies notify the Commission at least 30 calendar days prior to the effective date of any change in relevant statutes or rules that would affect the agency's ability to adhere to the confidentiality protections that we require. This would provide the Commission with an opportunity to determine whether to terminate an agency's access to NORS or DIRS filings or take other appropriate steps as necessary, before the agency is no longer in a position to protect this information. We seek comment on this approach or on any alternative approaches that may achieve the stated goals.

34. We believe that agencies should receive access to NORS and DIRS in a format that reduces or eliminates the risk that their employees would make unauthorized modifications to the filings, whether unintentional or malicious. The current NORS database only allows users assigned to a company to modify reports submitted by that company. Preventing such modifications would ensure the accuracy of the Commission's oversight work and that of its partners, who rely on the accuracy of NORS and DIRS filings at all times. We thus renew our proposal that participating state and federal agencies be granted direct access to NORS and DIRS filings in a read-only manner. Many commenters to the 2015 Part 4 NPRM supported a read-only access approach. For example, Verizon stated that “limit[ing] access to read-only format is [an] appropriate safeguard” based on “public safety, security, and competitive sensitivities.” We seek further comment on the proposed read-only approach. Have any developments occurred since 2015, when we proposed to grant state governments read-only access, that weigh in favor or against providing access in a read-only manner? In addition, we currently require each user account in NORS and DIRS to use a password to access the systems. We seek comment on whether we should implement other technology protections to prevent unauthorized access to these databases given today's proposal, which would expand the number and scope of individuals with access to NORS and DIRS.

35. We believe that providing participating agencies with direct access to historical NORS and DIRS information would allow them to identify trends in outages and infrastructure status that would further enhance their real-time recovery and restoration efforts. We thus propose to grant participating agencies access to NORS and DIRS filings made after the effective date of this proposed information sharing framework, even if the agency begins its participation at a later date. Historical information will allow agencies to determine outage and infrastructure status baseline levels in their jurisdictions and identify trends, so that they can better predict and respond to emerging exigencies more rapidly than would otherwise be possible. We propose to limit access agency access to filings made after the effective date of this framework to address potential concerns that service providers may have about a potential dissemination of filings that they originally made to the Commission under an expectation that we would keep the filings presumptively confidential and withhold them from disclosure, even from federal and state government agencies that might seek them.

36. Are there reasons why we should not provide an agency access to filings after the effective date and prior to their participation in the proposed framework? Are there reasons that we should provide access to all historical filings that can be made available or, instead, that are made as of the date of today's proposal? The Commission estimates internal costs of approximately $50,000 to revise its NORS and DIRS processes to ensure the compatibility of the NORS and DIRS databases with historical ( e.g., non-multistate) filings. We seek comments on these costs. Alternatively, should participating agencies' access to NORS and DIRS information be limited to timeframes relevant to specific disasters or other events that threaten public safety for which those agencies are contemporaneously preparing or responding?

37. We recognize that, in many cases, there are individuals, including key decision-makers and first responders, who would not directly access NORS and DIRS and yet play a vital role within their respective jurisdictions in ensuring public safety during times of crisis. We believe there would be significant benefit in ensuring that these individuals also have access to the information in NORS and DIRS filings, in whatever form is most useful to them in furtherance of their duties. Accordingly, for each participating state or federal government agency, we propose to allow individuals granted credentials for direct access to NORS and DIRS filings to share copies ( e.g., printouts) of NORS and DIRS filings, in whole or part, and any confidential information derived from NORS or DIRS filings (collectively, confidential NORS and DIRS information), within or outside their participating agency, on a strict “need to know” basis. Confidential NORS and DIRS information may include, as illustrative examples, presentations, email summaries, and analysis and oral communication reflecting the content of, or informed by, NORS and DIRS filings. We also propose to require that this information be used for public safety purposes only.

38. A “need to know” basis exists where the recipient would need to reasonably require access to the information in order to prepare for, or respond to, an event that threatens public safety, pursuant to the recipient's official duties. We propose that the sharing of confidential NORS and DIRS information be allowed “downstream” as well, meaning that once an agency with direct NORS and DIRS access shares confidential NORS and DIRS information with a recipient, that recipient can further summarize and/or share the information with others who also have a “need to know.” To ensure that non-participating agencies maintain the confidentiality of NORS and DIRS information, we propose to require that participating agencies condition access to this information on non-participating agencies' certification that it will treat the information as confidential, not disclose it absent a finding by the Commission that allows them to do so, and securely destroy information when the public safety event that warrants their access to the information has concluded. We propose to hold participating agencies responsible for inappropriate disclosures of NORS and DIRS information by the non-participating agencies with which they share it and expect that participating agencies will take all necessary steps to have confidence that confidentiality will be preserved. We also note that individuals or agencies that make inappropriate disclosures of NORS in DIRS information may be subject to disciplinary action and/or liability under federal, Tribal and/or state laws that protect data, containing, e.g., trade secrets or other commercially sensitive information. We seek comment on any federal and non-federal restrictions that may apply to the improper dissemination of private information by employees of participating agencies and those with whom they share NORS and DIRS information, and the consequences of violating them.

39. We seek comment on this approach of participating agencies agreeing to be held responsible for downstream information sharing as a pre-requisite for accessing NORS and DIRS information. Would the measures proposed be sufficient to ensure that downstream recipients preserve the confidentiality of NORS and DIRS information they receive? Relatedly, we seek comment on state laws and penalties would be sufficient to deter any inappropriate disclosure of NORS/DIRS information. If these measures and state laws are not sufficient, we seek comment on any additional measures that we should include to ensure that confidentiality is maintained when sharing NORS and DIRS information downstream. For example, to what extent should the Commission hold downstream recipients responsible when NORS and DIRS information is improperly disclosed and what should the consequences be (apart from, for instance, immediate cut-off of access for the agency that accessed the NORS and DIRS filings)? To what extent would additional measures hinder the ability of first responders and other emergency response officials to receive critical information, thereby undermining their restoration and recovery efforts? Are there measures we can take that would adequately preserve the confidentiality of information that was earlier shared downstream after the public safety event that necessitated sharing is over? We seek comment on the public safety purposes for which downstream recipients may use NORS and DIRS information, as well as on our proposal to condition access to this information on its use for public safety purposes only.

40. We propose that the sharing agency determine whether a “need to know” exists on the part of the recipient. We believe that the sharing agency is in a strong position to make this determination based on their “on the ground” knowledge of the public safety-related activities of agencies that are not eligible to access NORS and DIRS directly. Moreover, we find that it would be impractical for Commission to either make these case-by-case determinations, which would often be made during on-going exigencies.

41. Under our proposals, confidential NORS and DIRS information could be shared when the recipient has a “need to know” basis, for example, in the following illustrative scenarios:

42. Does our approach provide sufficient benefits to key decision-makers and first responders to outweigh the risk of potential over-disclosure of confidential information? What additional steps can we take, if any, to mitigate such risks while preserving the benefits? What would be the burden to participating agencies and others if we were to take additional steps? For example, should we require, as a condition for access to the data, that participating agencies notify the Commission when they share NORS and DIRS information with a downstream recipient, and if so, what form should the notification take? Should notification include specific information on which individuals, localities, and Tribal lands are receiving this information downstream and describe the basis for any “need to know” determinations? Should notification be provided to the Commission within a certain timeframe after the sharing occurs? Alternatively, in order to ensure that participating agencies' focus during a public safety event remains on response and restoration, should notification be provided to the Commission in advance in the form of a list of those downstream agencies with which it is anticipated the information will be shared? For such an approach, we seek comment on whether, in the event there is an exigency that necessitates sharing with agencies that were not on the advance list, participating agencies should be given a certain period of time to notify the Commission of additional downstream agencies with which the information was shared?

43. What steps can we take to ensure that agencies are handling and sharing confidential information appropriately? Are there reasons why downstream sharing or sharing outside an agency should be more limited than described here? Should we adopt further measures to control or limit the downstream sharing of confidential NORS and DIRS information beyond the specific individuals with direct access, and if so, what specific measures should we adopt and what should be the consequences if they are not followed? On the other hand, should downstream agencies without access to NORS and DIRS be allowed to keep NORS and DIRS data, perhaps to allow it to be studied in an after-action review of their response efforts? To the extent that commenters recommend less or more restrictive frameworks (including ones that nonetheless facilitate broader sharing in emergency situations), we request that commenters identify in detail how such mechanisms would work, as well as their benefits and costs.

44. We believe that the aggregated information in NORS and DIRS filings can be of significant benefit to the general public. For example, this information can be used to keep the public informed of on-going emergency and network outage situations, timelines for recovery, and geographic areas to avoid while disaster and emergency events are ongoing. We therefore propose to allow agencies to provide aggregated NORS and DIRS information to any entity including the broader public ( e.g., by posting such information on a public website).

45. We define “aggregated NORS and DIRS information” to refer to information from the NORS and DIRS filings of at least four service providers that has been aggregated and anonymized to avoid identifying any service providers by name or in substance. We seek comment on this approach and whether there are other appropriate aggregation requirements that we should consider. For example, should we require aggregation over a larger number of service providers? We note that allowing the public disclosure of aggregated NORS and DIRS information is consistent with the Commission's own practices.

46. Here, we propose extending the ability to generate and supply aggregated NORS and DIRS information to participating state agencies themselves. We believe that granting participating agencies this flexibility will allow them to disseminate information to the broader public and better fulfill their public safety missions. Moreover, we believe that this proposal carries at most a minimal risk of the over-disclosure of sensitive information since participating agencies must anonymize aggregated NORS and DIRS information. We seek comment on this proposal. Are there any specifics steps that agencies should take beyond aggregating over four or more providers to ensure that NORS and DIRS information is adequately aggregated and anonymized prior to disclosure? Should we adopt specific measures to ensure that, as a condition of access to NORS and DIRS filings and information, participating agencies adequately aggregate and anonymize the information in NORS and DIRS filings and information prior to disclosure? If so, what should those measures be and what should be the consequences if they are not followed?

47. We observe that an outage or a disaster—such as a hurricane—may cross multiple jurisdictional boundaries. We believe that agency access to NORS and DIRS filings should account for this reality. We propose that a participating agency receive direct access to all NORS notifications, initial reports, and final reports and all DIRS filings for events reported to occur at least partially in their jurisdiction. For federal agencies, this generally means for events reported to occur anywhere in the country. For state agencies, this generally means for the events reported to occur at least partially in the state's geographic boundaries. Commenters support granting states access to NORS filings and DIRS filings for events that occur within their jurisdiction. We propose that it would serve the public interest for participating state agencies to access NORS and DIRS filings for outage events and disasters that occur in portions of their respective state but also span across additional states.

48. We seek comment on this proposal. How would participating agencies make use of NORS and DIRS filings that affect states beyond their own? Do participating agencies have a “need to know” about the effects of multistate outages and infrastructure status outside their jurisdiction? Do county or local agencies that cannot access NORS and DIRS under our proposal have similar needs? What benefits are expected to arise from granting participating state agencies access to these NORS and DIRS filings? Are there any harms that may potentially arise from granting participating state agency access to multistate outage and infrastructure information? As an alternative to our proposal, should participating agencies' access to NORS and DIRS filings be limited only to those aspects of multistate outages that occur solely in their jurisdiction? Are there specific aspects of multistate outages for which participating agencies do not have a “need to know?” In addition, we anticipate that there may be situations where a participating agency may share confidential information derived from DIRS or NORS filings with non-participating state or federal agencies on a strict “need to know” basis. We seek comment on this view.

49. Does a participating federally recognized Tribal Nation's government agency that receives direct access to NORS and DIRS filings have a “need to know” about events that occur entirely outside of its borders but within the border of one the state where the Tribal land is located? For example, should a participating Tribal Nation agency located in Arizona receive direct access to filings throughout all of Arizona? Conversely, should a state agency receive direct access to NORS and DIRS filings reflecting events occurring entirely within Tribal land located in the state's boundaries? For example, should a participating Arizona state agency receive direct access to NORS and DIRS filings for outages occurring only within Tribal lands located in Arizona? We believe that both aspects of this approach are justified given the technical nature of many outages, where equipment located in a Tribal land affects service in the traditional state(s) surrounding the territory, and vice versa. We seek comment on this approach. Are there any harms that may potentially arise from granting Tribal Nation authorities access to outage and infrastructure information outside of their territories? As an alternative to our proposal, should Tribal Nation authorities' access to NORS and DIRS filings be limited only to those aspects of multistate outages that occur solely in their territories? Are there specific aspects of multistate outages for which these authorities do not have a “need to know?”

50. We seek comment on the technical implementation of our proposals. Since the DIRS form already requests filers to include data at the county level, we do not anticipate that service providers will need to modify their DIRS reporting processes to accommodate multistate reporting. We thus estimate that the nation's service providers will incur minimal, if any, burdens related to DIRS. We seek comment on this assessment.

51. For NORS filings, however, commenters raise concerns that sharing filings with state agencies will require technical adjustments for both the service providers' systems and the Commission's internal systems. For example, the current NORS forms are designed with a drop-down menu for a user to select the state where the outage occurred. A NORS user may select either a single state or the general option of “MULTI STATE” in the current form without specifying the individual states. This existing approach makes it challenging to identify which multistate outage filings each participating state agency should have permission to access. As Intrado noted previously, in order to filter and display the NORS filings that pertain to any given state, including multi-outage filings, the NORS form would require adjustments.

52. We propose to change the Commission's NORS form to allow users to select more than one state when submitting a NORS filing. This approach will allow us to limit state agencies' access to only those outages that occur within their states. We expect that service providers will need to make corresponding changes to their NORS reporting processes to provide us with information on a state-by-state basis. We currently estimate that the nation's service providers will incur total initial set up costs of $3.2 million based on our estimate of 1,000 service providers incurring costs of $80 per hour and spending 40 hours to update or revise their software used to report multi-state outages to the Commission in NORS. In developing this analysis, the Commission estimates that the cost of a software developer of systems software is $80/hour, inclusive of wage and benefits. We seek comment on the burden and timelines associated with such modifications. We seek comment on whether the benefits associated with these modifications would outweigh the costs incurred by service providers.

53. We seek comment on this approach, as well as on any potential alternatives, including any adjustments, if needed, to account for Tribal land borders. For example, we seek comment on whether, instead of modifying the NORS form, we should require service providers to submit several state-specific filings instead of submitting single aggregated filings for each outage that list all affected states.

54. We believe that it would be beneficial to limit the number of users at an agency who have access to NORS and DIRS filings to minimize the potential for over-disclosure of the sensitive information contained in the filings. At the same time, we recognize that agencies typically employ teams of staff members, rather than a lone individual, to provide “around the clock” coverage for incident response. We propose to presumptively limit the number of user accounts granted to a participating agency to five NORS and DIRS accounts per state or federal agency with additional accounts permitted on an agency's reasonable showing of need. We further propose to require that an agency assign each user account to a unique employee and manage the process of reassigning user accounts as its roster of employees changes ( e.g., due to arrivals and departures or a chance in roles at the participating agency). We believe that these requirements will limit access to NORS and DIRS information to the employees that are intended to receive it and allow participating agencies to identify misuse by specific employees.

55. We seek comment on this approach. For example, are there reasons why the Commission, rather than participating agencies, should be responsible for assigning individualized user accounts, i.e., accounts corresponding with specific named employees, and for re-assigning user accounts as participating agency personnel changes with time? We observe that AT&T, based on concerns for safeguarding the commercially and national security-sensitive nature of NORS information, proposed a similar approach, suggesting that we impose a limit of “three individuals unless the state can provide adequate justification for more employees.” We agree with a presumptive limit, but we believe that the presumptive limit should be at least five employees, given our understanding of the size and complexity of network monitoring and emergency response operations at many state and most federal agencies. Other commenters to the 2015 Part 4 NPRM generally support limiting the number of direct access users to NORS.

56. We recognize that some agencies—such as federal agencies or state agencies responsible for large populations or coverage areas—may have a reasonable need to provide more than five employees with direct access to fulfill their public safety mandate. Thus, we propose to consider, on a case-by-case basis, an agency's request to increase their limit upon written request to the Commission specifying how many additional employees require access and providing specific reasons why their access is necessary. We propose to grant such requests upon an agency's reasonable showing of need. We seek comment on this approach. Would this approach provide such agencies with sufficient flexibility, or should we establish a different presumptive limit for federal agencies or state agencies with the largest populations or coverage areas? Should there be a different presumptive limit of employees for agencies that serve a coverage area or population above a certain size? If there should be a different presumptive limit, what presumptive limit and qualifying size would be appropriate to ensure the confidentiality of the information provided NORS and DIRS filings? Are there additional or alternative criteria that the Commission should use to evaluate requests?

57. We believe that multiple state and federal agencies often need to collaborate on issues such as disaster response, operating with jurisdictional boundaries that may not always be clearly demarcated under challenging and time-constrained circumstances. For this reason, we propose that the Commission review all reasonable requests from state and federal agencies, rather than proposing a presumptive limit on the number of participating state and federal agencies eligible for direct access to NORS and DIRS filings. Given the important and time sensitive work of these agencies, we seek to reduce the reliance of any one agency on another by allowing each to apply for direct access to NORS and DIRS filings. We seek comment on this proposal.

58. We believe that our proposed sharing framework would be more effective, and the risk of over-disclosure of NORS and DIRS information minimized, if individuals who receive direct access to NORS and DIRS filings also receive training on their privileges and obligations under the program, particularly given that NORS and DIRS filings implicate both national security and commercial interests. We believe that an annual training requirement is justified both generally as an industry standard practice and because there are a number of important procedural details associated with our proposed safeguards that could be easily forgotten and overlooked with time in the absence of continued training.

59. For each participating agency, we propose that each individual to be granted a user account for direct access to NORS and DIRS filings be required to complete security training on the proper access to, use of, and compliance with safeguards to protect these filings. We propose that this training be completed by each individual prior to being granted initial access to NORS and DIRS filings and then on at least an annual basis thereafter.

60. Rather than mandate an agency's use of a specific program, we propose to allow agencies to develop their own training program or rely on an outside training program that covers, at a minimum, each of the following topics or “program elements”: (i) Procedures and requirements for accessing NORS and DIRS filings; (ii) parameters by which agency employees may share confidential and aggregated NORS and DIRS information; (iii) initial and continuing requirements to receive trainings; (iv) notification that failure to abide by the required program elements will result in personal or agency termination of access to NORS and DIRS filings and liability to service providers and third-parties under applicable state and federal law; and (v) notification to the Commission, at its designated email address, concerning any questions, concerns, account management issues, reporting any known or reasonably suspected breach of protocol and, if needed, requesting service providers' contact information upon learning of a known or reasonably suspected breach. We seek comment on this proposal, including each of the elements.

61. The majority of commenters who opined on the issue of training believe that some form of training is necessary. For example, AT&T stated that the “[C]omission should require states to train their authorized employees (annually) on proper handling of NORS information,” and Sprint stated that “[t]he Commission should require that personnel charged with obtaining the information be required to have security training, and the identity of these individuals should be supplied to the FCC.” We acknowledge that a minority of commenters believe that training is not necessary. Contrary to the concerns expressed by some of these commenters, we are not proposing to require that any state or federal agency participate in the proposed sharing framework. Rather, participation by an agency would be entirely voluntary. Further, to the extent training costs are an issue for a participating agency, we propose to reduce the agency burden through the use of exemplar training programs.

62. To aid agencies' compliance with our training requirements, we propose that the Commission direct PSHSB to identify one or more exemplar training programs which would satisfy the required program elements. Once finalized, agencies could adopt these program(s) at their discretion in place of developing their own training program, thereby reducing their compliance time and costs. ATIS suggested that an exemplar-type training program could be developed (by its Network Reliability Steering Committee) in a matter of “months” once the Commission issues information sharing rules. We seek comment on the benefits and drawbacks to the Commission potentially working with one or more external partners, such as ATIS, to develop exemplar training programs(s).

63. We seek comment on whether the Commission should take steps to ensure that state and federal agencies' training programs comply with our proposed required program elements. Should the Commission require a third-party audit of a partner-developed training program? What specific steps should the Commission take, if any, to ensure the adequacy of such programs? We seek comment on whether additional individuals, beyond those granted a user account for direct access to NORS and DIRS filings, should be subject to the proposed training requirements. Should anyone who receives confidential NORS and DIRS information, including downstream recipients, be required to complete formal training? Would such a requirement be practical or overly burdensome? If we impose such a requirement, what should the consequences be if that training is not provided?

64. We believe that our proposed information sharing framework would be more effective, and the risk of over-disclosure of NORS and DIRS information minimized, if we institute specific procedures for state and federal agencies to follow in applying for and managing their direct access to NORS and DIRS filings. We believe that these goals would also be furthered if we require that agency representatives provide a signed certification acknowledging their agreement to adhere to the key safeguards of our proposed framework.

65. We therefore propose to institute the following procedures for state and federal agencies to apply for and manage their direct access to NORS and DIRS filings. Eligible state and federal agencies must apply for direct access to NORS and DIRS filings by sending a request to the agency's designated email address. The request would include: (i) A signed statement from an agency official, on the agency's official letterhead, including the official's full contact information and formally requesting access to NORS and DIRS filings; (ii) a description of why the agency has a need to access NORS and DIRS filings and how it intends to use the information in practice; (iii) if applicable, a request to exceed the proposed presumptive limits on the number of individuals ( i.e., user accounts) permitted to access NORS and DIRS filings with an explanation of why this is necessary and (iv) a completed copy of a Certification Form, a template of which is provided in this item as Appendix C. On receipt, the Commission would review the request, follow-up with the agency official with any potential questions or issues. Once the Commission has reviewed the application and confirmed the application requirements are satisfied, the Commission would grant NORS and DIRS access to the agency by issuing the agency NORS and DIRS user accounts.

66. As described in detail at Appendix C, an agency official with authority to obligate and bind the agency must certify that the agency: Will treat NORS and DIRS filings and data as confidential under federal and state FOIA statutes and similar laws and regulations, implement a NORS and DIRS security training program, adhere to continuing requirements for access (including annual recertification), understands that the Commission does not guarantee the accuracy of NORS or DIRS filings and understands that there may be times access to the filings is unavailable. We believe that these requirements would create accountability within a state agency and help avoid the over-disclosure of sensitive NORS and DIRS information sharing framework. We seek comment on this approach and the details included in Appendix C. Is our requirement, set forth in Appendix C, that the Commission be notified if an agency's certifying official ceases to have authority to obligate and bind the agency to the provisions of Appendix C justified or would this requirement cause undue burden for an agency?

67. In addition, we propose to direct PSHSB to promulgate any additional procedural requirements that may be necessary to implement our proposals for the sharing of NORS and DIRS information, consistent with the Administrative Procedure Act. We foresee that such procedural requirements may include implementation of agency application processing procedures, necessary technical modifications to the NORS and DIRS databases (including, potentially, modifications designed to improve data protection and guard against unauthorized disclosure), and reporting guidelines to ensure that the Commission receives the notifications identified in Appendix C. We seek comment on these proposals, and whether there are additional safeguards we should adopt for the application process. Are there other procedural requirements that are anticipated to be necessary to implement our proposals?

68. We seek to give interested state and federal agencies ample time to prepare their certifications and to give service providers sufficient time to adjust their NORS and DIRS filing processes to conform with the any technical changes required by the proposed final rule changes. We also anticipate that the Commission will require time to implement the regime contemplated by our proposed rules in order to take such steps as securing OMB approval to the extent required under the Paperwork Reduction Act and modifying NORS and DIRS.

69. To that end, we propose to require revised outage reports be filed by a date specified in a Public Notice issued by the Public Safety and Homeland Security Bureau, announcing: (i) OMB has approved the revised information collections for DIRS and NORS, respectively, in accordance with the final order; and (ii) the Commission has made the necessary technical adjustments to the NORS and DIRS databases to facilitate sharing. The Commission would begin accepting certification forms and granting direct NORS and DIRS access to eligible state and federal agencies as of the specified date. This approach would permit the Bureau to account for the contingencies, i.e., the readiness of the databases and the OMB approval that facilitates the implementation of the revised regime. We seek comment on this approach, as well as alternatives. Commenters proposing alternatives should explain the advantages and disadvantages of their preferred approaches.

70. Paperwork Reduction Act. This document contains proposed modified information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget (OMB) to comment on the information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public Law 104 through 13. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107 through 198, see 44 U.S.C. 3506(c)(4), we seek specific comment on how we might further reduce the information collection burden for small business concerns with fewer than 25 employees.

71. Ex Parte Rules—Permit-But-Disclose. This proceeding shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules, 47 CFR 1.1200 et seq. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with Rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format ( e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

72. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Federal Communications Commission (Commission) has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in the Further Notice of Proposed Rule Making ( Further Notice ). Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments provided in “Comment Period and Procedures” of the Further Notice.

73. The Further Notice seeks additional comment on various proposals first issued in a Notice of Proposed Rulemaking in PS Docket No. 15-80, adopted in 2015, and a Report and Order and Further Notice of Proposed Rulemaking in PS Docket Nos. 15-80 and 11-82, adopted in 2016, to update the Commission's part 4 outage reporting rules. More specifically, in the Further Notice the Commission proposes an information sharing framework to ensure that state and federal government agencies have access to communications network information to aid these agencies' response, recovery and restoration efforts and allow them to direct their resources quickly, and to the areas of greatest need.

74. The proposals in the Further Notice to grant participating agencies of the states, the District of Columbia, Tribal Nations, territories, and the federal government (we note that the NCCIC of DHS already has direct access to NORS and DIRS information; we do not propose to modify the terms by which the NCCIC accesses this information), hereinafter agencies, direct access to outage and infrastructure status information establish safeguards to protect the confidentiality of Network Outage Reporting System (NORS) and Disaster Information Reporting System (DIRS) filings. The Commission's proposals define the scope of eligible government entities that would be able to participate and propose confidentiality protections that include requiring that NORS and DIRS data be treated as presumptively confidential. The proposals consider providing read-only access, limiting access based on agency jurisdiction, limiting the number of employees with access at each agency, requiring training requirements for employees with access, and specifying procedures for the sharing of confidential NORS and DIRS information. The proposed rules also include access request and certifications procedures for agencies to apply for and manage their direct access NORS and DIRS filings.

75. The Further Notice seeks further comment on a number of the implementation details for proposed agencies' direct access to NORS and DIRS filings. To establish appropriate safeguards, the Further Notice specifically seeks comment on:

• Providing agencies with read-only access to NORS and DIRS filings to reduce the potential for unauthorized modifications;

• Presumptively limiting the number of identified and trained personnel that have direct access to NORS and DIRS filings by limiting the number of user accounts to five per agency;

• Requiring agencies to treat NORS and DIRS filings and data as confidential under federal and state FOIA statutes and similar laws and regulations;

• Requiring each individual granted a user account for direct access to NORS and DIRS filings complete security training on the proper access to, use of, and compliance with safeguards to protect the information contained in the filings;

• Limiting agency access to NORS and DIRS filings for events reported to occur at least partially within their jurisdictional or geographic boundaries;

• Allowing participating agencies to share confidential NORS and DIRS information inside or outside the agency if a recipient reasonably requires access to the confidential NORS and DIRS information to prepare for, or respond to, an event that threatens public safety, pursuant to the recipient's official duties;

• Allowing participating agencies to share information from the NORS and DIRS filings of at least four service providers that has been aggregated and anonymized to avoid identifying any service provider by name or in substance with any entity, including the broader public; and

• Requiring agencies to provide certain assurances and suitable attestation that they will take measures to protect NORS and DIRS filings from unauthorized access.

76. 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” the same as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). See 15 U.S.C. 632. Below is a list of such entities.

• Interconnected VoIP services;

• Wireline Providers;

• Wireless Providers—Fixed and Mobile;

• Satellite Service Providers; and

• Cable Service Providers.

77. We expect the proposed rules in the Further Notice will impose new or additional reporting or recordkeeping and/or other compliance obligations on service providers, and if they choose to participate, on agencies that are granted direct access to NORS and DIRS filings, and these entities may have to hire professionals to fulfill their compliance obligations. The rules proposed in the Further Notice would require minor adjustments to the existing reporting process used by service providers to account for new or refined multistate reporting for the NORS and DIRS filings. We estimate that service providers will incur total initial set up costs of $3.2 million based on our estimate of 1,000 service provider incurring costs of $80 per hour and spending 40 hours to implement update or revise their software used to report outages to the Commission in NORS and DIRS. We seek comment on costs to service providers associated with any updates or modifications to their automated software and other systems that would be required for them to continue to file NORS reports under our proposed information sharing framework.

78. Pursuant to the proposed confidential protections, if adopted, voluntarily participating agencies will be required to notify the Commission when they receive requests for NORS filings, DIRS filings, or related records and prior to the effective date of any change in relevant statutes of laws that would affect the agency's ability to adhere to the confidentiality protections that the Commission requires. We believe these agencies would incur initial costs to review and revise their confidentiality protections in accordance with the proposed information sharing framework and minimal reoccurring costs to notify the Commission about a request for NORS/DIRS filings or relevant statutory changes as described above. The Commission cannot quantify the costs for these activities, which would vary based on each participating agency's particular circumstances, however, we tentatively conclude that the benefits of participation would exceed the costs for any participating agency and seek comment on these matters.

79. Under the proposed information sharing framework, voluntarily participating agencies will be required to submit to the Commission requests for direct access to NORS and DIRS filings which includes a description of why the agency has a need to access NORS and DIRS filings and how it intends to use the information in practice. These agencies will also be required to administer annual security training to each person granted a user account for NORS and DIRS filings. In the event of any known or reasonably suspected breach of protocol involving NORS and DIRS filings participating agencies will be required to report this information to the Commission and all affected providers within 24 hours of the breach or suspected breach. The Commission believes these participating agencies will incur costs to comply with the above requirements, however, we cannot quantify the costs for these activities, which would vary based on each participating agency's particular circumstances, however, we tentatively conclude that the benefits of participation would exceed the costs for any participating agency and seek comment on these matters.

80. In the Further Notice, the Commission proposes to allow participating agencies to share confidential NORS and DIRS information within and outside the agency subject to certain limitations. A participating agency would likely incur initial costs to determine how to appropriately handle and disseminate confidential NORS and DIRS information consistent with the proposed information sharing framework. The Further Notice also proposes to require participating agencies to execute an annual attestation form certifying and acknowledging compliance with requirements of the information sharing framework that the Commission adopts. These agencies will undoubtably incur costs to comply these new requirements if adopted, but the Commission cannot quantify the costs for these activities, which would vary based on each participating agency's particular circumstances and therefore seeks comment on the matters.

81. None.

82. Authority for the actions proposed in this Second Further Notice of Proposed Rulemaking may be found in sections 1, 4(i), 4(j), 4(o), 251(e)(3), 254, 301, 303(b), 303(g), 303(r), 307, 309(a), 309(j), 316, 332, 403, 615a-1, and 615c of the Communications Act of 1934, as amended, and section 706 of the Communications Act of 1996, 47 U.S.C. 151, 154(i) through (j) & (o), 251(e)(3), 254, 301, 303(b), 303(g), 303(r), 307, 309(a), 309(j), 316, 332, 403, 615a-1, 615c, and 1302.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to be amend 47 CFR part 4 as follows:

In 1998, Congress amended section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d), to strengthen requirements for accessibility to electronic and information technology (now generally referred to as “information and communication technology” or “ICT”) provided by the Federal Government. Among other things, section 508 mandates that Federal agencies “develop, procure, maintain, or use” ICT in a manner that ensures that Federal employees with disabilities have comparable access to, and use of, such information and data relative to other Federal employees. Section 508 also requires Federal agencies to ensure that members of the public with disabilities have comparable access to publicly available information and data.

The Access Board, also known as the Architectural and Transportation Barriers Compliance Board, is tasked with issuing accessibility standards for ICT covered under section 508, and updating these standards periodically to reflect technological changes. The Federal Acquisition Regulatory Council, in turn, is required to revise the FAR to incorporate the Access Board's accessibility standards or any amendments thereto.

In December 2000, the Access Board published its initial set of accessibility standards at 65 FR 80500, (December 21, 2000). Thereafter, a final FAR rule was published incorporating the Access Board's accessibility standards at 66 FR 20894 (April 25, 2001).

The Access Board completed a multiyear effort to “refresh” its initial, existing set of accessibility standards under section 508 to address advances in ICT, harmonize with accessibility standards developed by standards organizations worldwide, and ensure consistency with the Access Board's regulations that had been promulgated since the late 1990s. The revised section 508 Accessibility Standards support the access needs of individuals with disabilities, while also considering the costs of providing accessible ICT to Federal agencies.

The Access Board's final rule was published in the Federal Register at 82 FR 5790 on January 18, 2017. This proposed rule updates the FAR to ensure that the updated standards are appropriately considered in Federal ICT acquisitions. The proposed rule includes a “safe harbor” provision for existing ( i.e., legacy) ICT, which considers legacy ICT in existence on or before January 18, 2018, to be compliant if it meets the earlier standard issued pursuant to section 508 of the Rehabilitation Act of 1973 (See E202.2 of Revised Standards) and the legacy ICT is not altered after January 18, 2018. In other words, such “untouched” ICT need not be modified or upgraded to conform to the revised 508 standards as long as it already conforms to the original 508 standards. However, ICT acquired on or before January 18, 2018, will need to be upgraded or modified to conform to the new standard if such ICT is altered after January 18, 2018, or does not comply with the original 508 standards. In addition, ICT acquired after January 18, 2018, must be upgraded or modified to conform to the new standard. Such direction will be included in requirements documents issued by the agency.

The proposed rule provides for the following:

(1) At FAR 2.101, the definition for “Electronic and information technology (EIT)” is removed and replaced with the definition of “Information and communication technology (ICT)”.

(2) At FAR 7.103, “EIT” is removed and replaced with “ICT”, the standard citation is updated, the term “service requirement” is added along with examples, and the unnecessary reference to 11.002(e) is removed.

(3) At FAR 7.105, language is added to require that the applicable accessibility standards be identified in the acquisition plan and provide the applicability, exception or exemption of the standards to the acquisition.

(4) At FAR 10.001, EIT is removed and replaced with ICT, and the name of the Architectural and Transportation Barriers Compliance Board is removed, and the citation is updated.

(5) At FAR 11.002, the text is revised to guide the contracting officer rather than requiring activities, and to more clearly identify the ICT information that is required in the requirements documents.

(6) At FAR 12.202, EIT is removed and replaced with ICT, and the standards citation is updated. The obligations for requirements documents are revised from “must comply with” to “shall identify” the applicable information and communication technology accessibility standards.

(7) At FAR 39.000, the term “electronic and information technology” is revised to “information and communication technology.”

(8) At FAR 39.001, the section is restructured to add a new paragraph (b) to clarify the scope of the applicability of part 39.

(9) At FAR 39.101, the term “accommodations” is removed and replaced with “accessibility,” to more closely align the FAR with the terminology in 36 CFR 1194.1.

(10) At FAR 39.201, the name “Architectural and Transportation Barriers Compliance Board” is replaced with the “U.S. Access Board,” and “EIT” is removed and replaced with “ICT.”

(11) At FAR 39.203, paragraph headings are added for easier navigation through the subject matter.

(i) In paragraph (a), “EIT” is replaced with “ICT.”

(ii) Paragraph (b) clarifies that an exception or a determination of an exemption is not required prior to the award of an indefinite-quantity contract, except for requirements that are to be satisfied by initial award.

(iii) In paragraph (c) (formerly paragraph (b)(3)), new language has been added to clarify that requiring and ordering activities shall document an exception or an exemption to the accessibility standards, if applicable, at the time of order issuance.

(iv) In paragraph (d) (formerly paragraph (c)(1), the requirement that commercial items must be available in time to meet the agency's delivery requirements is modified to state that the items must best meet the agency's needs.

(v) Paragraph (e) is new. It sets forth the requirements for legacy ICT, i.e., any component or portion of existing ICT that was procured, maintained, or used on or before January 18, 2018.

(vi) Paragraph (f) is also new. It addresses the requirements for alterations of legacy ICT after January 18, 2018.

(12) At FAR 39.204, obsolete language in paragraph (a) is removed. The new paragraph (a) has been restructured to clarify that the accessibility standards for ICT do not apply to acquisitions that fall under one of the three exception categories: (1) National security systems; (2) incidental contract items; and (3) maintenance or monitoring spaces. New language has been added as paragraph (b) which requires the contracting officer to receive written confirmation from the requiring activity of the exception. Current paragraph (e) regarding undue burden is moved to the new section 39.205 which covers exemptions.

(13) FAR 39.205 is a new section that is added to address exemptions. Paragraph (a)(1) addresses undue burden which was moved from 39.204(e). Paragraph (a)(2) provides an exemption for agencies to acquire ICT that conforms only to the extent that conformance with the accessibility standards in 36 CFR 1194.1 will not result in a fundamental alteration in the nature of the ICT. Paragraph (a)(3) addresses an exemption when there are no commercial items that fully conform to the ICT accessibility standards in 36 CFR 1194.1. Paragraph (b) requires an agency to provide individuals with disabilities access to and use of information and data by an alternative means when using an exemption. Paragraph (c) addresses the documentation requirements for using an exemption.

DoD, GSA, and NASA did not perform their own regulatory cost analysis on this proposed rule because the Final Regulatory Impact Analysis (FRIA), dated January 5, 2017, which accompanied the U.S. Access Board's Final ICT Rule, provides an adequate economic assessment of both the Board's rule and this proposed rule. Therefore, the calculated compliance costs of $79.0 million over a 10-year timeframe is attributable to the U.S. Access Board's Final ICT Rule.

The Access Board's FRIA estimates that, under the expected cost scenario, incremental compliance costs to Federal agencies for procured ICT under the revised 508 Accessibility Standards over a 10-year timeframe will be $79.0 million per year using a 7% discount rate, and $82.8 million per year using a 3% discount rate. These costs will largely be incurred from compliance with the revised 508 Accessibility Standards for procured ICT products and services.

With respect to monetized benefits attributable to procured ICT, the Access Board's FRIA estimates that, under the expected scenario, benefits for procured ICT (and, hence, this proposed rule) are likely to have an annualized value of $33.1 million over a 10-year timeframe using a 7% discount rate, and $35.2 million using a 3% discount rate. These benefits would accrue to Federal agencies as a result from productivity increases by Federal employees and time saved from reduced phone calls to Federal agencies. Additionally, persons with disabilities using public-facing Federal information and data ( e.g., Federal websites) would experience improved access and time savings. There are also substantial unquantifiable benefits. For example, enhanced ICT accessibility for persons with disabilities can be expected to improve independent living, increase civic engagement, decrease stigma, promote equality, and enhance integration into American society. Updating the FAR to incorporate the revised 508 Accessibility Standards is also expected to provide benefits to ICT firms that could not be monetized. For example, harmonization with national and international consensus standards is likely to assist American ICT companies by helping to achieve economies of scale created by wider use of these technical standards.

To access the U.S. Access Board's FRIA, go to the Access Board's website ( https://www.access-board.gov/guidelines-and-standards/communications-and-it/about-the-ict-refresh/final-regulatory-impact-analysis ), or the electronic docket for the Access Board's Final ICT rule at the Federal eRulemaking Portal ( https://www.access-board.gov/guidelines-and-standards/communications-and-it/about-the-ict-refresh/final-regulatory-impact-analysis ).

This rule does not add or modify any provisions or clauses. This rule proposes to amend FAR part 39, Acquisition of Information Technology, and other references to Government requirements for information and communication technology. The objective of the rule is to update the FAR text to align with the accessibility standards revisions made by the Access Board at 36 CFR 1194.1. The accessibility standards are currently applicable to all information and communication technology acquisitions. As such, determinations and findings under 41 U.S.C. 1905 to 1907 regarding the applicability of this rule to acquisitions at or below the SAT or to acquisitions for commercial and COTS items are not required.

The FAR rule will continue the existing applicability of Section-508 requirements, when acquiring ICT through contracts at or below the SAT, or contracts for the acquisition of commercial items, including COTS items.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a “significant regulatory action” under the terms of E.O. 12866 (58 FR 51735, October 4, 1993) and is therefore subject to review under E.O. 12866 and 13563 (76 FR 3821, January 21, 2011). This rule is not a major rule under 5 U.S.C. 804.

This proposed rule, if finalized as proposed, is expected to be an E.O. 13771 regulatory action.

The changes may have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The Initial Regulatory Flexibility Analysis (IRFA) is summarized as follows:

The Regulatory Secretariat Division has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the Regulatory Secretariat Division. DoD, GSA, and NASA invite comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD, GSA, and NASA will also consider comments from small entities concerning the existing regulations in subparts affected by the rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (FAR Case 2017-011) in correspondence.

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

Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 2, 7, 10, 11, 12, and 39 as set forth below:

Table of Contents I. Executive Summary II. Background III. Customer On-Time Performance IV. OTP, Train Schedules, and STB Investigations of Performance V. Section-by-Section Analysis VI. Regulatory Impact and Notices A. Executive Order 12866 and DOT Regulatory Policies and Procedures B. Regulatory Flexibility Act and Executive Order 13272; Initial Regulatory Flexibility Assessment C. Paperwork Reduction Act D. Federalism Implications E. Environmental Impact F. Executive Order 12898 (Environmental Justice) G. Executive Order 13175 (Tribal Consultation) H. Unfunded Mandates Reform Act of 1995 I. Energy Impact J. Trade Impact K. Privacy Act I. Executive Summary

On October 16, 2008, President George W. Bush signed the Passenger Rail Investment and Improvement Act of 2008, Public Law 110-432, 122 Stat. 4907 (PRIIA) into law. Section 207 of PRIIA requires FRA and Amtrak jointly to develop new or improved metrics and minimum standards for measuring the performance and service quality of intercity passenger train operations (the Metrics and Standards).

In compliance with the statutory directive, FRA and Amtrak jointly developed the Metrics and Standards proposed here. The Metrics and Standards are generally organized into four categories: On-time performance and train delays, customer service, financial, and public benefits.

Section 207 of PRIIA requires FRA and Amtrak to act jointly, in consultation with the Surface Transportation Board (STB), rail carriers over whose rail lines Amtrak trains operate, States, Amtrak employees, and groups representing Amtrak passengers, as appropriate, to develop new or improved metrics and minimum standards for measuring the performance and service quality of intercity passenger train operations, including cost recovery, on-time performance and minutes of delay, ridership, on-board services, stations, facilities, equipment, and other services.

Section 207 further provides that the metrics, at a minimum, must include: The percentage of avoidable and fully allocated operating costs covered by passenger revenues on each route; ridership per train mile operated; measures of on-time performance and delays incurred by intercity passenger trains on the rail lines of each rail carrier; and, for long-distance routes, measures of connectivity with other routes in all regions currently receiving Amtrak service and the transportation needs of communities and populations that are not well-served by other forms of intercity transportation.

Section 207 also provides that the Federal Railroad Administrator must collect the necessary data and publish a quarterly report on the performance and service quality of intercity passenger train operations, including Amtrak's cost recovery, ridership, on-time performance and minutes of delay, causes of delay, on-board services, stations, facilities, equipment, and other services.

Finally, Section 207 provides that, to the extent practicable, Amtrak and its host rail carriers shall incorporate the Metrics and Standards into their access and service agreements.

The Metrics and Standards also relate to Section 213 of PRIIA. Section 213 states that if the on-time performance of any intercity passenger train averages less than 80 percent for any 2 consecutive calendar quarters, or the service quality of intercity passenger train operations for which minimum standards are established under Section 207 fails to meet those standards for 2 consecutive calendar quarters, STB may initiate an investigation. STB shall also initiate such an investigation upon the filing of a complaint by Amtrak, an intercity passenger rail operator, a host freight railroad over which Amtrak operates, or an entity for which Amtrak operates intercity passenger rail service. Section 213 further describes the STB investigation and STB's related authority to identify reasonable measures and make recommendations to improve the service, quality, and on-time performance of the train and to award damages and prescribe other relief.

In March 2009, FRA published proposed Metrics and Standards, which were jointly developed with Amtrak. After receiving and considering comments, FRA published final Metrics and Standards in May 2010. However, the 2010 Metrics and Standards were subject to a legal challenge on the basis that Section 207 of PRIIA was unconstitutional. After protracted litigation, the United States Court of Appeals for the District of Columbia Circuit found that paragraph (d) of Section 207 was unconstitutional, and this holding had the effect of voiding in part the 2010 Metrics and Standards. Following additional litigation, that Court also found that paragraphs (a) through (c) of Section 207 were constitutional and remained in effect (this decision became final on June 3, 2019). As a result, in July 2019, FRA and Amtrak once again began the process of developing joint Metrics and Standards as required by Section 207(a).

For reference, FRA will place a copy of the 2010 Metrics and Standards in the docket for this rulemaking (FRA-2019-0069). The 2010 Metrics and Standards were organized into five categories—financial, on-time performance, train delays, other service quality, and public benefits—and set forth multiple on-time performance and train delays standards. FRA received comments on each of these categories, with on-time performance and train delays receiving the most attention.

The 2010 Metrics and Standards differ from the Metrics and Standards proposed in this rulemaking in several ways, including the following:

This NPRM sets forth a single on-time performance standard (customer on-time performance). FRA believes this single standard is the most effective manner to achieve dedicated focus on improving on-time performance. FRA invites comments on whether any metrics or standards included in the 2010 Metrics and Standards should be included.

Consistent with Section 207(a), FRA and Amtrak consulted with many stakeholders to develop the Metrics and Standards proposed in this NPRM.

Specifically, in August and September, 2019, FRA met separately with representatives of the following Class I railroads that host Amtrak trains: BNSF Railway, Canadian National Railway, Canadian Pacific Railway, CSX Transportation, Norfolk Southern Railway Company, and Union Pacific Railroad. On September 5, 2019, FRA and Amtrak met with representatives of the Rail Passengers Association. On September 10, 2019, FRA and Amtrak met with representatives of the Metro-North Railroad. On September 12, 2019, FRA and Amtrak met with representatives of the Transport Workers Union. On September 13, 2019, FRA and Amtrak met with Surface Transportation Board staff. On September 18, 2019, FRA and Amtrak convened a meeting with members of the State-Amtrak Intercity Passenger Rail Committee, whose members include: Caltrans, Capitol Corridor Joint Powers Authority, Connecticut Department of Transportation (DOT), Illinois DOT, Los Angeles-San Diego-San Luis Obispo Joint Powers Authority, Massachusetts DOT, Michigan DOT, Missouri DOT, New York State DOT, North Carolina DOT, Northern New England Passenger Rail Authority, Oklahoma DOT, Oregon DOT, Pennsylvania DOT, San Joaquin Joint Powers Authority, Texas DOT, Vermont Agency of Transportation, Virginia Department of Rail and Public Transportation, Washington State DOT, and Wisconsin DOT. On September 20, 2019, Amtrak met separately with representatives of the Union Pacific Railroad. On September 24, 2019, FRA and Amtrak met with representatives of the Vermont Railway. On November 15, 2019, Amtrak met separately with representatives of the BNSF Railway. On November 19, 2019, in two different meetings, FRA met separately with, first, representatives of the International Association of Sheet Metal, Air, Rail, and Transportation Workers, Transportation Division, and, second, with members of the Surface Transportation Board. FRA and Amtrak also sought input from other potentially interested entities who did not express interest in consulting at that time.

In compliance with Section 207 of PRIIA, FRA and Amtrak jointly developed the Metrics and Standards proposed in this NPRM, in consultation with the stakeholders described in subsection (C) above.

Section 207(b) requires FRA to publish a quarterly report on the performance and service quality of intercity passenger train operations, including Amtrak's cost recovery, ridership, on-time performance and minutes of delay, causes of delay, on-board services, stations, facilities, equipment, and other services. FRA's first quarterly report would be issued after the first full calendar quarter 3 months after the date of publication of the final rule in the Federal Register . For example, if the final rule was published on July 10, 2020, 3 months after that date would be October 10, 2020, and the first full calendar quarter after that would run from January 1, 2021 to March 31, 2021.