Table of Contents I. Introduction A. Authority and Background B. Rulemaking Process II. Request for Information and Comments A. Products Covered by This Analysis B. Test Procedure C. Market and Technology Assessment 1. Product Classes 2. Technology Assessment D. Screening Analysis E. Engineering Analysis 1. Representative Product Characteristics 2. Efficiency Levels a. Baseline Efficiency Levels b. Intermediate Energy Efficiency Levels c. Maximum Technologically Feasible Efficiency Levels 3. Technology Pathway a. Gas-Fired Storage Water Heaters b. Electric Storage Water Heaters c. Oil-Fired Storage Water Heaters d. Tabletop Water Heaters e. Gas-Fired Instantaneous Water Heaters f. Electric Instantaneous Water Heaters g. Oil-Fired Instantaneous Water Heaters h. Grid-Enabled Water Heaters 4. Manufacturer Production Costs and Manufacturer Selling Prices F. Markups Analysis 1. Distribution Channels a. Replacement and New Owner b. New Construction 2. Markups G. Energy Use Analysis 1. Building Sample 2. Hot Water Use 3. Determination of Consumer Water Heating Energy Use H. Life-Cycle Cost and Payback Period Analysis 1. Total Installed Cost 2. Operating Costs I. Shipments Analysis J. National Impact Analysis K. Manufacturer Impact Analysis L. Other Energy Conservation Standards Topics 1. Market Failures 2. Market-Based Approaches to Energy Conservation Standards III. Submission of Comments I. Introduction

Consumer water heaters are included in the list of “covered products” for which DOE is authorized to establish and amend energy conservation standards and test procedures. (42 U.S.C. 6292(a)(4)) DOE's energy conservation standards for consumer water heaters are prescribed in title 10 of the Code of Federal Regulations (“CFR”) part 430, section 32(d). The following sections discuss DOE's authority to establish and amend energy conservation standards for consumer water heaters, as well as relevant background information regarding DOE's evaluation of energy conservation standards for this product.

The Energy Policy and Conservation Act, as amended (“EPCA”), 1 Public Law 94-163 (42 U.S.C. 6291-6317, as codified), among other things, authorizes DOE to regulate the energy efficiency of a number of consumer products and industrial equipment. Title III, Part B  2 of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles. These products include consumer water heaters, the subject of this document. (42 U.S.C. 6292(a)(4)) EPCA prescribed energy conservation standards for these products and directed DOE to conduct two cycles of rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(e)(1) and (4))

Under EPCA, DOE's energy conservation program consists essentially of four parts: (1) Testing, (2) labeling, (3) Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of EPCA specifically include definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), energy conservation standards (42 U.S.C. 6295), and the authority to require information and reports from manufacturers (42 U.S.C. 6296).

Federal energy efficiency requirements for covered products established under EPCA generally supersede State laws and regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal preemption in limited instances for particular State laws or regulations, in accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d).

DOE completed the first of these rulemaking cycles on January 17, 2001 by publishing amended performance standards for consumer water heaters. 66 FR 4474 (establishing amended standards to apply starting on January 20, 2004) (“January 2001 Final Rule”). Additionally, DOE completed a second rulemaking cycle to amend the standards for consumer water heaters by publishing a final rule on April 16, 2010. 75 FR 20112 (establishing amended standards to apply starting on April 16, 2015) (“April 2010 Final Rule”). As directed by EPCA (42 U.S.C. 6295(e)(4)(E)), on July 11, 2014, DOE published a final rule amending the test procedure for consumer water heaters to change the efficiency metric from energy factor (“EF”) to uniform energy factor (“UEF”). 79 FR 40542. The existing EF-based energy conservation standards were then translated from EF to UEF in a separate DOE conversion factor final rule that established a method for converting EF to UEF for water heater basic models that were previously in existence. 81 FR 96204 (Dec. 29, 2016) (“December 2016 Conversion Factor Final Rule”). The current energy conservation standards are located at 10 CFR 430.32(d). The currently applicable DOE test procedures for consumer water heaters appear at 10 CFR part 430, subpart B, appendix E (“Appendix E”).

EPCA also requires that, not later than 6 years after the issuance of any final rule establishing or amending a standard, DOE evaluate the energy conservation standards for each type of covered product, including those at issue here, and publish either a notice of determination that the standards do not need to be amended, or a NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(1)) EPCA further provides that, not later than 3 years after the issuance of a final determination not to amend standards, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(3)(B)) DOE must make the analysis on which the determination is based publicly available and provide an opportunity for written comment. (42 U.S.C. 6295(m)(2)) In making a determination, DOE must evaluate whether more-stringent standards would: (1) Yield a significant savings in energy use; (2) be technologically feasible; and (3) be cost-effective under 42 U.S.C. 6295(o)(2)(B)(i)(II). (42 U.S.C. 6295(m)(1)(A))

DOE is publishing this RFI to collect data and information to inform its decision consistent with its obligations under EPCA.

DOE must follow specific statutory criteria for prescribing new or amended standards for covered products. EPCA requires that any new or amended energy conservation standard be designed to achieve the maximum improvement in energy or water efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) To determine whether a standard is economically justified, EPCA requires that DOE determine whether the benefits of the standard exceed its burdens by considering, to the greatest extent practicable, the following seven factors:

(1) The economic impact of the standard on the manufacturers and consumers of the affected products;

(2) The savings in operating costs throughout the estimated average life of the product compared to any increases in the initial cost, or maintenance expenses;

(3) The total projected amount of energy and water (if applicable) savings likely to result directly from the standard;

(4) Any lessening of the utility or the performance of the products likely to result from the standard;

(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;

(6) The need for national energy and water conservation; and

(7) Other factors the Secretary of Energy (Secretary) considers relevant.

DOE fulfills these and other applicable requirements by conducting a series of analyses throughout the rulemaking process. Table I.1 shows the individual analyses that are performed to satisfy each of the requirements within EPCA.

As detailed throughout this RFI, DOE is publishing this document seeking input and data from interested parties to aid in the development of the technical analyses on which DOE will ultimately rely to determine whether (and if so, how) to amend the standards for consumer water heaters.

In the following sections, DOE has identified a variety of issues on which it seeks input to aid in the development of the technical and economic analyses regarding whether amended standards for consumer water heaters may be warranted. Additionally, DOE welcomes comments on other issues relevant to the conduct of this rulemaking that may not specifically be identified in this document. In particular, DOE notes that under Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” Executive Branch agencies such as DOE are directed to manage the costs associated with the imposition of expenditures required to comply with Federal regulations. See 82 FR 9339 (Feb. 3, 2017). Consistent with that Executive Order, DOE encourages the public to provide input on measures DOE could take to lower the cost of its energy conservation standard rulemakings, recordkeeping and reporting requirements, and compliance and certification requirements applicable to consumer water heaters while remaining consistent with the requirements of EPCA.

In addition, DOE seeks comment on whether there have been sufficient technological or market changes since the most recent standards update that may justify a new rulemaking to consider more-stringent standards. Specifically, DOE seeks data and information that could enable the agency to determine whether DOE should propose a “no new standard” determination because a more-stringent standard: (1) Would not result in a significant savings of energy; (2) is not technologically feasible; (3) is not economically justified, or (4) any combination of the foregoing.

Finally, DOE notes that it recently published an RFI on the emerging smart technology appliance and equipment market. 83 FR 46886 (Sept. 17, 2018). In that RFI, DOE sought information to better understand market trends and issues in the emerging market for appliances and commercial equipment that incorporate smart technology. DOE's intent in issuing the RFI was to ensure that DOE did not inadvertently impede such innovation in fulfilling its statutory obligations in setting efficiency standards for covered products and equipment. DOE seeks comments, data, and information on the issues presented in that RFI as they may be applicable to consumer water heaters.

This RFI covers those products that meet the definitions for consumer water heaters, as codified at 10 CFR 430.2. The definitions for consumer water heaters were most recently amended in a standards final rule that defined the term “grid-enabled water heater.” 80 FR 48004 (August 11, 2015).

Generally, DOE defines a “water heater,” consistent with EPCA's definition, as a product which utilizes oil, gas, or electricity to heat potable water for use outside the heater upon demand, including—

(a) Storage type units which heat and store water at a thermostatically controlled temperature, including gas storage water heaters with an input of 75,000 Btu per hour or less, oil storage water heaters with an input of 105,000 Btu per hour or less, and electric storage water heaters with an input of 12 kilowatts or less;

(b) Instantaneous type units which heat water but contain no more than one gallon of water per 4,000 Btu per hour of input, including gas instantaneous water heaters with an input of 200,000 Btu per hour or less, oil instantaneous water heaters with an input of 210,000 Btu per hour or less, and electric instantaneous water heaters with an input of 12 kilowatts or less; and

(c) Heat pump type units, with a maximum current rating of 24 amperes at a voltage no greater than 250 volts, which are products designed to transfer thermal energy from one temperature level to a higher temperature level for the purpose of heating water, including all ancillary equipment such as fans, storage tanks, pumps, or controls necessary for the device to perform its function.

In addition, at 10 CFR 430.2, DOE further defines several specific categories of consumer water heaters, as follows:

(1) “Electric instantaneous water heater” means a water heater that uses electricity as the energy source, has a nameplate input rating of 12 kW or less, and contains no more than one gallon of water per 4,000 Btu per hour of input.

(2) “Electric storage water heater” means a water heater that uses electricity as the energy source, has a nameplate input rating of 12 kW or less, and contains more than one gallon of water per 4,000 Btu per hour of input.

(3) “Gas-fired instantaneous water heater” means a water heater that uses gas as the main energy source, has a nameplate input rating less than 200,000 Btu/h, and contains no more than one gallon of water per 4,000 Btu per hour of input.

(4) “Gas-fired storage water heater” means a water heater that uses gas as the main energy source, has a nameplate input rating of 75,000 Btu/h or less, and contains more than one gallon of water per 4,000 Btu per hour of input.

(5) “Grid-enabled water heater” means an electric resistance water heater that—

(a) Has a rated storage tank volume of more than 75 gallons;

(b) Is manufactured on or after April 16, 2015;

(c) Is equipped at the point of manufacture with an activation lock and;

(d) Bears a permanent label applied by the manufacturer that—

(i) Is made of material not adversely affected by water;

(ii) Is attached by means of non-water-soluble adhesive; and

(iii) Advises purchasers and end-users of the intended and appropriate use of the product with the following notice printed in 16.5 point Arial Narrow Bold font: “IMPORTANT INFORMATION: This water heater is intended only for use as part of an electric thermal storage or demand response program. It will not provide adequate hot water unless enrolled in such a program and activated by your utility company or another program operator. Confirm the availability of a program in your local area before purchasing or installing this product.”

(6) “Oil-fired instantaneous water heater” means a water heater that uses oil as the main energy source, has a nameplate input rating of 210,000 Btu/h or less, and contains no more than one gallon of water per 4,000 Btu per hour of input.

(7) “Oil-fired storage water heater” means a water heater that uses oil as the main energy source, has a nameplate input rating of 105,000 Btu/h or less, and contains more than one gallon of water per 4,000 Btu per hour of input.

As stated in section I of this RFI, EPCA prescribed energy conservation standards for all consumer water heaters ( i.e., those that meet the definition of “water heater” above). For the purpose of this RFI and the evaluation of potential amended energy conservation standards, DOE is considering all consumer water heaters, as defined by EPCA.

DOE previously established a separate product class and definition for “tabletop water heaters,” which required such products to be in a rectangular box enclosure designed to slide into a kitchen countertop space with typical dimensions of 36 inches high, 25 inches deep, and 24 inches wide. 66 FR 4474, 4497 (Jan. 17, 2001) The definition of “tabletop water heater” was established in appendix E, but a subsequent relocation of definitions removed that definition from appendix E without re-establishing it in 10 CFR 430.2.

Issue A.1  DOE requests feedback on whether the previous definition for “tabletop water heater” is still appropriate, whether such products should continue to be considered separately from other classes of consumer water heaters, and whether such definition should be added to the list of definitions in 10 CFR 430.2.

DOE's existing test procedures for consumer water heaters are set forth at 10 CFR part 430, subpart B, Appendix E—Uniform Test Method for Measuring the Energy Consumption of Water Heaters. DOE's consumer water heater test procedure provides methods for determining the first-hour rating (“FHR”), maximum gallons per minute (“max GPM”), and UEF for consumer gas-fired, oil-fired, and electric storage and instantaneous water heaters. As stated in section I.A of this document, the test procedure for consumer water heaters was updated in July 2014 to transition from the EF metric to the UEF metric, and to expand the scope of the test method to cover all covered consumer water heaters, as well as certain commercial water heaters ( i.e., those meeting the definition of a “residential-duty commercial water heater”). 79 FR 40542 (July 11, 2014). The major difference between the EF and UEF metrics is that the EF test consists of six hot water draws of equal volume and flow rate followed by a standby period for all water heaters, while the UEF test procedure consists of varying draw patterns depending on the delivery capacity of the consumer water heater, which include between 9 and 14 draws of varying volumes and flow rates. Due to the difference in draw pattern as well as other differences established in the UEF test method ( e.g., changes to the set point temperature and method for setting the thermostat) the EF and UEF values are not directly comparable. For this evaluation of potential amended energy conservation standards, DOE will use UEF as the basis for its analysis.

The market and technology assessment that DOE routinely conducts when analyzing the impacts of a potential new or amended energy conservation standard provides information about the consumer water heater industry that will be used in DOE's analysis throughout the rulemaking process. DOE uses qualitative and quantitative information to characterize the structure of the industry and market. DOE identifies manufacturers, estimates market shares and trends, addresses regulatory and non-regulatory initiatives intended to improve energy efficiency or reduce energy consumption, and explores the potential for efficiency improvements in the design and manufacturing of consumer water heaters. DOE also reviews product literature, industry publications, and company websites. Additionally, DOE considers conducting interviews with manufacturers to improve its assessment of the market and available technologies for consumer water heaters.

When evaluating and establishing energy conservation standards, DOE may divide covered products into product classes by the type of energy used, or by capacity or other performance-related features that justify a different standard. (42 U.S.C. 6295(q)) In making a determination whether capacity or another performance-related feature justifies a different standard, DOE must consider such factors as the utility of the feature to the consumer and other factors DOE deems appropriate. ( Id. )

For consumer water heaters, the current energy conservation standards specified at 10 CFR 430.32(d) vary based on fuel type (gas-fired, oil-fired, or electric), product category (storage, instantaneous, tabletop, grid-enabled), stored volume, and capacity (draw pattern).

The December 2016 Conversion Factor Final Rule converted the EF-based energy conservation standards established in the January 2001 and April 2010 Final Rules to ratings based on the UEF metric. 81 FR 96204 (Dec. 29, 2016). Table II.1 describes the product classes and which standards apply to each range of rated storage volume and input rate.

Relevant to the establishment of product classes, EPCA provides that the Secretary may not prescribe an amended or new standard for covered products if the Secretary finds (and publishes such finding) that interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary's finding. 42 U.S.C. 6295(o)(4) Where the Secretary finds such “performance characteristics (including reliability), features, sizes, capacities, and volumes” (collectively referred to hereafter as “features”) to exist, the statute provides for the potential of establishing separate product classes. (42 U.S.C. 6295(q)(1))

On November 1, 2018, DOE published for comment a petition for rulemaking submitted by Spire, Inc., the National Gas Supply Association, the National Propane Gas Association, the American Public Gas Association, and the American Gas Association (“Gas Industry Petition”), which in part, raised the question of whether for residential furnaces and commercial water heating equipment (and similarly situated covered products and equipment) non-condensing technology and associated venting constitutes a performance-related “feature” under 42 U.S.C. 6295(o)(4), as would support a separate product/equipment class under 42 U.S.C. 6295(q)(1). 83 FR 54883. The comment period on the notice of petition for rulemaking was originally set to end on January 30, 2019, but DOE received two requests from interested parties seeking an extension of the comment period in order to develop additional data relevant to the petition. DOE granted these requests in a notice published in the Federal Register on January 29, 2019, which extended the comment period until March 1, 2019.

On July 11, 2019, following consideration of the Gas Industry Petition, public comments, and other information received on the petition, DOE published a notice of proposed interpretative rule (“NOPIR”), proposing to revise its interpretation of EPCA's “features” provision in the context of condensing and non-condensing technology used in furnaces, commercial water heating equipment, and similarly situated appliances (where permitted by EPCA). 84 FR 33011, 33020. DOE stated that as compared to products that rely on non-condensing technology, products that use condensing technology may result in more complicated/costly installations, require physical changes to a home that impact aesthetics ( e.g., by adding new venting into the living space or decreasing closet or other storage space), and may result in some enhanced level of fuel switching. Id. DOE also acknowledged that although energy efficiency improvements may pay for themselves over time, there is a significant increase in first-cost associated with residential furnaces and commercial water heaters using condensing technology, and for consumers with difficult installation situations ( e.g., inner-city row houses) there would be the added cost of potentially extensive venting modifications. Id. DOE proposed in the July 2019 NOPIR to interpret the statute to provide that adoption of energy conservation standards that would limit the market to natural gas and/or propane furnaces, water heaters, or similarly situated products/equipment (where permitted by EPCA) that use condensing combustion technology would result in the unavailability of a performance related feature within the meaning of 42 U.S.C. 6295(o)(4). 84 FR 33011, 33021 (July 11, 2019). DOE is currently considering the comments received on the July 2019 NOPIR, after which the Department will determine whether and how to proceed with the interpretive rule in response to the Gas Industry Petition.

DOE is evaluating all the product classes for consumer water heaters presented in Table II.1 of this RFI. DOE may also consider additional product classes based on any performance-related features that justify the establishment of a different energy conservation standard, or it may consider consolidating product classes in appropriate cases. (42 U.S.C. 6295(q)) In light of the July 2019 NOPIR, DOE plans to evaluate the effects of treating non-condensing technology and associated venting as a performance-related “feature” under 42 U.S.C. 6295(o)(4), as would support a separate product class for consumer water heaters under 42 U.S.C. 6295(q)(1).

Issue C.1  DOE requests feedback on the current consumer water heater product classes and whether changes to these individual product classes and their descriptions should be made or whether certain classes should be separated or merged. Specifically, with regard to consumer water heaters that use condensing technology and the related venting, DOE requests information and data on potential impacts as compared to consumer water heaters that use non-condensing technology, such as, but not limited to, the complexity/cost of installation, changes to a home's aesthetics, and the potential for fuel switching. DOE also requests comment on other instances where it may be appropriate to separate any of the existing product classes and whether it might reduce any compliance burdens. DOE further requests feedback on whether combining certain classes could impact product utility by eliminating any performance-related features or impact the stringency of the current energy conservation standard for these products.

Issue C.2  DOE seeks information regarding any other new product classes it should consider for inclusion in its analysis. Specifically, DOE requests information on the performance-related features that provide unique consumer utility and data detailing the corresponding impacts on energy use that would justify separate product classes ( i.e., explanation for why the presence of these performance-related features would increase energy consumption).

In analyzing the feasibility of potential new or amended energy conservation standards, DOE uses information about existing and past technology options and prototype designs to help identify technologies that manufacturers could use to meet and/or exceed a given set of energy conservation standards under consideration. In consultation with interested parties, DOE intends to develop a list of technologies to consider in its analysis. That analysis will initially include a number of the technology options DOE previously considered during its most recent rulemaking for consumer water heaters ( i.e., the April 2010 Final Rule). 75 FR 20112, 20136-20145 (April 16, 2010). In addition, DOE conducted preliminary market research by examining manufacturer product literature and published technical literature ( e.g., reports, journal articles, or presentations) which identified specific technologies and design options, and DOE will consider these along with any others identified during the rulemaking process, should it determine that a rulemaking is necessary. The technologies DOE has identified to date, including several technology options from the previous rulemaking, are presented in Table II.2 of this RFI. DOE notes that while this list includes all technology options that DOE is aware of with the potential to reduce energy consumption, a number of the technology options would not affect the UEF ( i.e., the regulatory metric) as measured by the DOE test procedure even though they may reduce actual energy consumption when installed. DOE has included such technologies in this list for informational purposes only, as technologies that do not affect UEF would not necessarily be implemented to comply with potential amended energy conservation standards. While some of the technology options that do not increase UEF could still benefit consumers by reducing field energy consumption and/or improving performance, technologies that do not increase UEF would not be considered in an engineering analysis for a rulemaking, should one be initiated. In addition, some technologies may be screened out in the screening analysis, as discussed in section II.D of this RFI.

Issue C.3  DOE seeks information related to these technologies regarding their applicability to the current market and how these technologies may impact the efficiency of consumer water heaters as measured according to the DOE test procedure. DOE also seeks information on how these technologies may have changed since they were considered in the April 2010 Final Rule analysis. Specifically, DOE seeks information on the range of efficiencies or performance characteristics for products that are currently equipped with each technology option.

Issue C.4 DOE seeks information on the technologies listed in Table II.2 regarding their market adoption, costs, and any concerns with incorporating them into products ( e.g., impacts on consumer utility, potential safety concerns, manufacturing/production/implementation issues).

Issue C.5 DOE seeks comment on other technology options that it should consider for inclusion in its analysis and whether these technologies may impact product features or consumer utility.

The purpose of the screening analysis is to evaluate the technologies that improve equipment efficiency to determine which technologies will be eliminated from further consideration and which will be passed to the engineering analysis for further consideration.

DOE determines whether to eliminate certain technology options from further consideration based on the following criteria:

(1) Technological feasibility. Technologies that are not incorporated in commercial products or in working prototypes will not be considered further.

(2) Practicability to manufacture, install, and service. If it is determined that mass production of a technology in commercial products and reliable installation and servicing of the technology could not be achieved on the scale necessary to serve the relevant market at the time of the compliance date of the standard, then that technology will not be considered further.

(3) Impacts on product utility or product availability. If a technology is determined to have significant adverse impact on the utility of the product for significant subgroups of consumers, or result in the unavailability of any covered product category or class with performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as equipment generally available in the United States at the time, it will not be considered further. 3

(4) Adverse impacts on health or safety. If it is determined that a technology will have significant adverse impacts on health or safety, it will not be considered further.

10 CFR part 430, subpart C, appendix A, sections 4(a)(4) and 5(b).

Technology options identified in the technology assessment are evaluated against these criteria using DOE analyses and inputs from interested parties ( e.g., manufacturers, trade organizations, and energy efficiency advocates). Technologies that pass through the screening analysis are referred to as “design options” in the engineering analysis. Technology options that fail to meet one or more of the four criteria are eliminated from consideration.

Table II.3 summarizes the technology options that DOE screened out in the April 2010 Final Rule, as well as the applicable screening criteria.

Issue D.1 DOE requests feedback on what impact, if any, the four screening criteria described in this section would have on consideration of each of the technology options listed with respect to consumer water heaters. Similarly, DOE seeks information regarding how these same criteria would affect consideration of any other technology options not already identified in this document with respect to their potential use in consumer water heaters.

Issue D.2 With respect to the screened out technology options listed in Table II.3, DOE seeks information on whether these options would, based on current and projected assessments regarding each of them, remain screened out under the four screening criteria described in section II.D of this RFI. With respect to each of these technology options, what steps, if any, could be (or have already been) taken to facilitate the introduction of each option as a means to improve the energy performance of consumer water heaters and the potential to impact consumer utility of the consumer water heaters.

Finally, DOE notes that the four screening criteria do not directly address the propriety status of design options. DOE only considers potential efficiency levels achieved through the use of proprietary designs in the engineering analysis if they are not part of a unique pathway to achieve that efficiency level ( i.e., if there are other non-proprietary technologies capable of achieving the same efficiency level).

The engineering analysis estimates the cost-efficiency relationship of products at different levels of increased energy efficiency (“efficiency levels”). This relationship serves as the basis for the cost-benefit calculations for consumers, manufacturers, and the Nation. In determining the cost-efficiency relationship, DOE estimates the increase in manufacturer production cost (“MPC”) associated with increasing the efficiency of products above the baseline, up to the maximum technologically feasible (“max-tech”) efficiency level for each product class.

DOE historically has used the following three methodologies to generate incremental manufacturing costs and establish efficiency levels (“ELs”) for analysis: (1) The design-option approach, which provides the incremental costs of adding to a baseline model design options that will improve its efficiency; (2) the efficiency-level approach, which provides the relative costs of achieving increases in energy efficiency levels, without regard to the particular design options used to achieve such increases; and (3) the cost-assessment (or reverse engineering) approach, which provides “bottom-up” manufacturing cost assessments for achieving various levels of increased efficiency, based on detailed data as to costs for parts and materials, labor, shipping/packaging, and investment for models that operate at particular efficiency levels.

DOE intends to perform a teardown analysis on a set of models with “representative” characteristics to estimate the cost-efficiency relationship for consumer water heaters. For consumer storage-type water heaters, the tank volume significantly affects the energy consumed. That is, it takes more energy to heat a larger volume of water from a given temperature to a higher temperature. Additionally, the tank surface area increases as tank volume increases and, among other factors, the heat transfer rate is a function of surface area. Therefore, increased surface area increases the rate of heat transfer to the ambient air, which increases standby losses. This is reflected in the existing Federal energy conservation standards, as UEF is a function of the tank storage volume for storage water heaters.

DOE plans to conduct teardowns at specific storage volumes (referred to as representative storage volumes) that are the most common on the market, and extrapolate those results for the entire market. Based on information from the previous consumer water heater rulemaking and a survey of models currently on the market, DOE has preliminarily determined the characteristics of representative units for each product class. In particular, DOE examined the number of models available at distinct rated storage volumes and intends to use the most common storage volume as a representative characteristic in each product class. Storage volume typically does not vary for gas-fired and electric instantaneous water heaters, so DOE conducted a similar review of the available input rates of these instantaneous water heaters. Table II.4 presents the preliminary representative storage volumes and input rates for existing product classes of consumer water heaters.

Issue E.1  DOE requests feedback on the appropriate representative storage volumes and input capacities for each product class of consumer water heaters. DOE also requests feedback on whether there are additional representative characteristics that should be considered.

The energy conservation standards prescribed by EPCA apply more broadly than those listed in 10 CFR 430.32(d) and do not exclude water heaters based on storage volume or minimum input rate (in the case of consumer gas-fired instantaneous water heaters). (42 U.S.C. 6295(e)(1)) Furthermore, DOE's previous EF test procedure did not cover water heaters listed in Table II.5; however, DOE's updated UEF test procedure does cover these products. Because these products now have an applicable test procedure and are covered products, DOE is considering them in its analysis. Table II.5 presents these classes and their tentative representative characteristics. For many of these product classes, DOE has been unable to identify any models on the market, and, therefore, no representative values are provided in the table. For these classes, DOE has tentatively concluded that a lack of models indicates there are also no shipments. Thus, there is no potential for energy savings from amended standards for these classes at this time. If DOE ultimately confirms this to be true, DOE plans to merely convert the existing standards from EF to equivalent UEF standards for these product classes.

Issue E.2  DOE requests feedback on the appropriate representative storage volumes and specifically whether those identified in Table II.5 are reasonable. DOE also seeks feedback on whether products exist in the classes for which DOE was unable to find models on the market, and, if so, relevant information about those products and appropriate representative characteristics.

For each established product class, DOE selects a baseline efficiency as a reference point against which any changes resulting from energy conservation standards can be measured. For products with an existing energy conservation standard, the baseline efficiency level is typically the current minimum energy conservation standard. For products that do not have an existing minimum energy conservation standard, DOE considers the least-efficient product on the market as a baseline product. DOE will establish the baseline efficiency level for each product class in terms of UEF. For products where UEF standards are established, DOE will use those standards as the baseline level; for covered consumer water heaters where the standard has not yet been converted to UEF ( i.e., water heaters stated as being covered by EF standards from EPCA in Table II.1 of this RFI), DOE will undertake an analysis to translate the EF standard to an equivalent UEF standard, which will serve as the baseline level. 4 The baseline model in each product class represents the characteristics of common or typical products in that class. Typically, a baseline model is one that just meets the current minimum energy conservation standards and provides basic consumer utility.

DOE uses baseline units for comparison in several phases of the analyses, including the engineering analysis, life-cycle cost (“LCC”) analysis, payback period (“PBP”) analysis, and national impact analysis (“NIA”). In the engineering analysis, to determine the changes in price to the consumer that result from amended energy conservation standards, DOE compares the price of a baseline unit to the price of a unit at each higher efficiency level.

Consistent with this analytical approach, DOE tentatively plans to consider the current minimum energy conservation standards to establish the baseline efficiency levels for each product class. The current standards that rely on UEF are found at 10 CFR 430.32(d). For consumer water heaters not identified at 10 CFR 430.32(d), the standards rely on EF and are set forth at 42 U.S.C. 6295(e)(1). For storage water heaters, the baseline level varies based on the storage volume, and DOE would focus on the baseline efficiency standard for models at the representative storage volume. For the product classes without UEF-based standards ( i.e., products listed in Table II.5 of this RFI), DOE would translate the EF-based standards to UEF to determine the baseline level.

DOE has preliminarily identified a technology pathway for each product class. The preliminary baseline technology options that DOE has identified as being representative for each product class are discussed in section II.E.3 of this RFI.

Issue E.3  For the products listed in Table II.5 for this RFI as being covered by EPCA standards but not the included in the December 2016 Conversion Factor Final Rule that converted standards to UEF, DOE requests EF and UEF test data and/or other relevant information that could assist in the development of UEF-based standard levels to serve as the baseline levels.

Issue E.4  DOE requests feedback on the preliminary baseline technology options for each product class. (Note, DOE discusses its preliminary understanding of the technology options used in baseline products in section III.E.3 of this RFI) DOE requests feedback on whether there are any important features of baseline models (other than energy efficiency, storage volume, and input capacity) that should be accounted for in its analysis.

DOE conducted a survey of the consumer water heater market to determine the designs and efficiencies of products that are currently available to consumers. For each representative product, DOE surveyed various manufacturers' product offerings to identify the efficiency levels that correspond to the highest number of models and the prevailing technologies used to reach those efficiency levels. By identifying the most prevalent energy efficiencies in the range of available products and examining the designs used at those efficiencies, DOE has preliminarily identified a technology path that manufacturers typically use to increase the energy efficiency of consumer water heating products (see section III.E.3 of this RFI).

DOE analyzes intermediate energy efficiency levels between the baseline and max-tech levels for each product class. The intermediate efficiency levels are generally representative of the most commonly available efficiency levels available on the market, and follow technology paths that manufacturers of consumer water heaters commonly use to maintain cost-effective designs while increasing energy efficiency. DOE conducted a preliminary review of manufacturer literature, the Air-Conditioning Heating and Refrigeration Institute (“AHRI”) directory of certified product performance, 5 and DOE's compliance certification database to compile efficiency information for a wide range of water heaters available on the market. 6 DOE also reviewed manufacturer literature to assess, to the extent possible, the technologies in use in consumer water heaters. DOE notes that different manufacturers may use different technology pathways to achieve the same efficiency level, and, if it determines that a rulemaking is necessary, the Department would expect to attempt to capture this in the analysis. Section II.E.3 presents the product classes and the respective technology pathways that DOE anticipates analyzing.

Issue E.5  DOE seeks comment on whether there are any key intermediate efficiency levels (in terms of UEF values) that should be considered in the analysis. DOE also seeks comment on common technology pathways to reach higher efficiency levels ( i.e., the order in which manufacturers implement energy-saving technologies). (Note, DOE discusses its preliminary understanding of the technology options used in consumer water heaters in section III.E.3 of this RFI.)

The maximum available efficiency level is the efficiency level of the highest-efficiency unit currently available on the market. The current maximum available efficiencies are included in Table II.6 of this RFI.

DOE also determines the maximum technologically feasible (max-tech) improvement in energy efficiency for consumer water heaters. DOE defines a max-tech efficiency level to represent the theoretical maximum possible efficiency if all available design options are incorporated in a model. In many cases, the max-tech efficiency level is not commercially available because it is not economically feasible. Based on DOE's initial review of the consumer water heater market (as discussed in the previous section), DOE has preliminarily identified technology options commonly used to increase efficiency, including those associated with the max-tech efficiency level for each product class. DOE intends to analyze the available efficiency data to determine the UEF values that correspond to the technology options currently used to reach max-tech levels to determine the appropriate max-tech UEF values. DOE describes the technologies currently used to reach the max-tech efficiency levels in section II.E.3 of this RFI.

Issue E.6  DOE seeks input on whether the maximum available efficiency levels are appropriate for potential consideration as possible energy conservation standards for the products at issue—and if not, why not.

Issue E.7  DOE seeks feedback on what design options would be incorporated at a max-tech efficiency level, and the efficiencies associated with those levels. As part of this request, DOE also seeks information as to whether there are limitations on the use of certain combinations of design options. (Note, DOE discusses its preliminary understanding of the technology options in max-tech products in section III.E.3 of this RFI.)

DOE plans to consider and analyze various technologies for improving the energy efficiency of consumer water heaters. To accurately represent the current market in its analyses, DOE uses information from publicly-available product literature to determine which technologies are used in commercially-available products. DOE also identifies which technologies manufacturers would be most likely to include in products to meet potential amended energy conservation standards based on current designs observed on the market. DOE's preliminary understanding of the most prevalent technologies to obtain the intermediate and max-tech energy efficiency levels for each product class are described immediately below. DOE may revise the technology pathway for each category of consumer water heater in the preliminary analysis based on stakeholder comments and observations made during teardowns.

As stated previously, DOE conducted a review of the currently-available consumer gas-fired storage water heaters on the market. DOE has observed that the baseline design typically consists of a standing pilot, atmospheric venting, and 2 inches of foam insulation. DOE found that models in the representative volume and draw pattern (40 gallons and medium draw pattern) use similar technology options to those found in the baseline (0.58 UEF) up to 0.61 UEF and can achieve higher efficiencies by increasing insulation thickness or increasing the heat exchange via improvements to the flue and/or baffling. To obtain efficiencies above 0.61 UEF, manufacturers can make use of the aforementioned options, and also typically remove the standing pilot ignition system in favor of an electronic ignition system and add a flue damper or power venting system, or some combination of these options. The highest efficiency products currently on the market utilize condensing technology. However, gas-fired heat pump water heater designs are currently under development and would likely result in higher efficiencies than those achieved by condensing gas-fired water heaters currently available on the market. In the event of any rulemaking resulting from this RFI, DOE would assess gas-fired heat pump water heater technology using the screening criteria discussed in section II.D to determine whether it is appropriate for consideration in the analysis.

Issue E.8 DOE requests feedback on the specific technologies used to increase efficiency of atmospherically-vented, standing pilot models that have efficiencies between the baseline (0.58 UEF) and 0.61 UEF. Specifically, how much insulation and/or baffling/heat exchange area is used at each level, and are there other design changes that increase the efficiency?

Furthermore, in any rulemaking resulting from this RFI, DOE tentatively intends to consider separately analyzing models that use standard and low-nitrogen oxide (“NO X ”) burners from those that use ultra-low-NO X burners, as was done in the April 2010 Final Rule. However, due to the similarity between these categories of gas-fired storage water heaters, for this RFI, DOE did not identify a separate technology pathway for consumer gas-fired water heaters that use standard and low-NO X burners from those that use ultra-low-NO X burners.

Issue E.9 DOE requests feedback on the typical technology pathway for increasing the energy efficiency of consumer gas-fired storage water heaters. DOE is also interested in differences in the design pathway between water heaters with standard and low-NO X burners and those with ultra-low-NO X burners. This includes information on the order in which manufacturers would incorporate the different technologies to incrementally improve the efficiencies of products. DOE also requests feedback on whether the increased energy efficiency would lead to other design changes that would not occur otherwise. DOE is also interested in information regarding any potential impact of design options on a manufacturer's ability to incorporate additional functions or attributes in response to consumer demand.

Issue E.10 DOE requests feedback on whether gas-fired heat pump water heaters should be considered as the max-tech design for consumer gas-fired water heaters.

Issue E.11 DOE requests feedback on the thickness of insulation in products currently available on the market and what would be technologically feasible as the maximum insulation thickness. DOE has particular interest in understanding the insulation thickness beyond which an increase in thickness would not produce a noticeable effect on energy efficiency.

For consumer electric storage water heaters with a rated storage volume of 50 gallons, the baseline efficiency level is achieved with electric resistance heating elements. To obtain slightly higher efficiencies, increased insulation or optimized geometry could be employed for water heaters using only electric resistance heating elements. For larger increases in efficiency, heat pump technology is used. From a review of manufacturer literature, DOE was unable to assess specific differences between the less-efficient and more-efficient heat pump water heater designs, up to the max-tech efficiency level. The magnitude of the increase between these levels suggests that improvements to the various heat pump components are responsible for these efficiency level increases. DOE intends to explore these efficiency and design differences further during its testing and teardown analysis.

Issue E.12 DOE requests feedback on the technology pathway for electric storage water heaters. This includes information on the order in which manufacturers would incorporate the different technologies to incrementally improve the efficiencies of products. DOE also requests feedback on whether the increased energy efficiency would lead to other design changes that would not occur otherwise. DOE is also interested in information regarding any potential impact of design options on a manufacturer's ability to incorporate additional functions or attributes in response to consumer demand.

Issue E.13  DOE requests feedback on heat pump components used in heat pump water heaters of varying efficiency, up to the max-tech level.

Issue E.14  DOE requests feedback on the insulation thickness and materials used in electric storage water heaters (both electric resistance and heat pump water heaters).

Issue E.15  DOE requests feedback on the maximum efficiency potential of CO 2 heat pump water heaters.

DOE examined the representative storage volume of 30 gallons for consumer oil-fired storage water heaters. Very few models currently exist on the market compared to the other product classes. DOE found oil-fired storage water heaters at the representative storage volume with rated UEF values up to 0.68. Consumer oil-fired storage water heaters typically incorporate electronic ignition and power venting; therefore, efficiency improvement technologies are likely to include increasing the surface area within the flue, and to a lesser extent increasing the insulation thickness or upgrading the insulation material. Improvements to the flue include increased baffling, multiple flues, and/or multi-pass flues.

Issue E.16  DOE requests feedback on the technology pathway for consumer oil-fired water heaters and in particular the insulation material and thickness currently being used. This includes information on the order in which manufacturers would incorporate the different technologies to incrementally improve the efficiencies of products. DOE also requests feedback on whether the increased energy efficiency would lead to other design changes that would not occur otherwise. DOE is also interested in information regarding any potential impact of design options on a manufacturer's ability to incorporate additional functions or attributes in response to consumer demand.

DOE has found that all tabletop water heaters currently on the market have a rated storage volume of either 38 or 40 gallons and a rated UEF of 0.81 and 0.90 in the low and high draw patterns, respectively. Tabletop water heaters use electric resistance elements to heat water and are contained in a rectangular box enclosure designed to slide into a kitchen countertop space with typical dimensions of 36 inches high, 25 inches deep, and 24 inches wide. 66 FR 4474, 4497 (Jan. 17, 2001). Efficiency improvements, if possible, would most likely be accomplished though upgrading the insulation material and/or increasing the insulation thickness.

Issue E.17  DOE requests feedback on what materials and methods are currently being used to insulate tabletop water heaters, and whether there are any technologies that can be used to improve the energy efficiency of these products. DOE also requests information on potential impacts any such technologies would have on the capacity or other performance-related features of tabletop water heaters.

Currently, all consumer gas-fired instantaneous water heaters, including those at the baseline, appear to use electronic ignition along with power venting. Based on an examination of literature for products currently available in the market, the primary method for increasing the energy efficiency of consumer gas-fired instantaneous water heaters is typically through increasing the heat exchanger surface area. As the heat exchanger surface area increases, heat transfer is improved, resulting in an increase in the efficiency of the unit. In addition, the heat transfer between flue gases and the water can be improved to the point where the flue gases are cooled below the dew point, resulting in condensation within the heat exchanger. Therefore, at higher efficiency levels, manufacturers design heat exchangers for condensing operation that are capable of managing the condensate, which include materials that can withstand corrosive condensate and methods for condensate disposal.

Issue E.18  DOE requests feedback on its assessment of the technologies used at the baseline for consumer gas-fired instantaneous water heaters, as well as the technologies used to improve efficiency.

Consumer electric instantaneous water heaters use electric resistance heating along with low flow rates to provide hot water, typically for applications with lower demand, such as handwashing. Most electric instantaneous water heaters that DOE identified currently on the market have rated UEF values close to 1. This is likely the result of minimal losses from the electric resistance heating elements, combined with a lack of standby losses due to the low or negligible amount of stored water. Consequently, DOE has not identified any technology options that are currently being used or could be used to improve the energy efficiency of electric instantaneous water heaters.

Issue E.19  DOE requests feedback on the technology options available for improving the energy efficiency of consumer electric instantaneous water heaters, if any.

DOE has found that consumer oil-fired instantaneous water heaters exist on the market. These water heaters use electronic ignition, are direct vented, and force air through the unit. Currently, EF and UEF values are not available for these water heaters, but the manufacturer literature advertises the “efficiency” as being up to 88 percent for these models.

Issue E.20  DOE requests feedback on the availability of consumer oil-fired instantaneous water heaters and the technology options available to improve UEF.

As a preliminary step for this RFI, DOE reviewed the current market for grid-enabled water heaters. Based on a review of product literature for grid-enabled designs, DOE has found that these water heaters use electric resistance heating elements and typically have between two to three inches of foam insulation. Plastic, stainless steel, and stone-lined steel storage tanks are currently available on the market, and these models do not use an anode rod. Glass-lined steel tanks are also available, and these models do use an anode rod. At the 96-gallon representative storage volume, all UEF ratings are at or just above the minimum efficiency standard.

Issue E.21  DOE requests feedback on the technology options available for improving the energy efficiency of grid-enabled water heaters.

As described at the beginning of this section, the main outputs of the engineering analysis are cost-efficiency relationships that describe the estimated increases in manufacturer production cost associated with higher-efficiency products for the analyzed product classes. For the April 2010 Final Rule, DOE developed the cost-efficiency relationships by first identifying specific efficiency levels and the technologies incorporated at those levels. DOE then performed reverse-engineering analysis to estimate the typical cost at each efficiency level from the baseline to the max-tech. 75 FR 20112, 20141 (April 16, 2010). For this analysis, DOE plans to use a similar approach to that used in the April 2010 Final Rule, by identifying efficiency levels and performing reverse-engineering on models from various manufacturers to identify the technology(ies) implemented at each efficiency level and the cost to achieve that level. DOE plans to use the data gathered in the reverse-engineering analysis to develop the manufacturing cost-efficiency relationship.

Issue E.22  DOE seeks input on the increase in MPC associated with incorporating each particular design option. Specifically, DOE is interested in whether and how the costs estimated for design options in the April 2010 Final Rule have changed since the time of that analysis. DOE also requests information on the investments necessary to incorporate specific design options, including, but not limited to, costs related to new or modified tooling (if any), materials, engineering and development efforts to implement each design option, and manufacturing/production impacts.

To account for manufacturers' non-production costs and profit margin, DOE applies a non-production cost multiplier (the manufacturer markup) to the MPC. The resulting manufacturer selling price (“MSP”) is the price at which the manufacturer distributes a unit into commerce. For the April 2010 Final Rule, DOE estimated the manufacturer markups as 1.31 for gas-fired storage water heaters, 1.28 for electric storage water heaters, 1.30 for oil-fired storage water heaters, and 1.45 for gas-fired instantaneous water heaters. See chapter 5 of the April 2010 Final Rule technical support document (“TSD”). 7

Issue E.23  DOE requests feedback on whether the manufacturer markups of 1.31, 1.28, 1.30, and 1.45 are still appropriate for gas-fired storage water heaters, electric storage water heaters, oil-fired storage water heaters, and gas-fired instantaneous water heaters, respectively.

In addition, for products where changes to the energy conservation standard are likely to cause a large difference in the size of the product, DOE sometimes considers shipping costs incurred by manufacturers to ship the product to their first customer separately from the manufacturer markup. In such cases, manufacturer selling price is calculated as the manufacturer production cost multiplied by the manufacturer markup, and shipping price is added (as shipping cost is not typically marked up). DOE plans to investigate this approach for consumer water heaters to determine how dimensions may change with increasing efficiency and whether such changes would increase the shipping costs for manufacturers.

Issue E.24  DOE requests comment on how the cost to ship a consumer water heater changes with efficiency.

The markups analysis develops appropriate markups ( e.g., for wholesalers, contractors, general contractors, mobile home manufacturers, and mobile home dealers) in the distribution chain and sales taxes to convert the MSP derived in the engineering analysis to consumer prices, which are then used in the LCC and PBP analyses and other analyses. At each step in the distribution channel, companies mark up the price of the product to cover business costs and profit margin.

In generating end-user price inputs for the LCC analysis and NIA, DOE must identify distribution channels ( i.e., how the products are moved from the manufacturer to the consumer), and estimate relative sales volumes through each channel.

Markups depends on the distribution channels for a product ( i.e., how the product passes through the chain of commerce from the manufacturer to the customer). Two different markets exist for consumer water heating systems: (1) Replacements and new owners  8 and (2) new construction. Based on several references, DOE plans to determine the main distribution channels for each water heater product class and the fraction of shipments through each channel. 9

For replacement and new owner applications, manufacturers sell mainly to either plumbing distributors or retailers (including retailers that sell online  10 ). The four main distribution paths that DOE intends to consider are: (1) A plumbing distributor sells a water heater to a contractor, who then sells it to a consumer and installs it, (2) a retailer sells a water heater to a contractor, who then sells it to a consumer and installs it, (3) a retailer sells a water heater to the consumer, who hires a contractor to install it, or (4) a retailer sells a water heater to the consumer, who self-installs it. 11 In addition, DOE plans to consider distribution channels where the manufacturer sells the consumer water heater directly to a commercial consumer through a national account or the commercial consumer purchases the consumer water heater directly through a wholesaler. These channels reflect those cases where the installation can be accomplished by site personnel.

In summary, DOE plans to characterize the replacement and new owner market distribution channels for consumer water heating systems as follows:

The new construction distribution channel for consumer water heaters includes an additional link in the chain—the general contractor. In most new construction applications, the consumer water heater is part of the overall plumbing package installed by a plumbing contractor or, in the case of large building companies, by its own master plumber and crew. A plumbing contractor usually purchases the consumer water heater from a plumbing distributor, and in this case, DOE includes a contractor mark-up. In the case of mobile home new construction, the distribution channel includes a mobile home manufacturer and mobile home dealer. In addition, similar to the replacement and new owner distribution channel, DOE plans to consider distribution channels in which the manufacturer sells the consumer water heater directly to a commercial consumer through a national account or the commercial consumer purchases the consumer water heater directly through a wholesaler.

In the case of new construction, DOE plans to characterize the distribution channels as follows:

Issue F.1  DOE seeks input on whether the distribution channels described above are appropriate for each of the consumer water heaters product classes and are sufficient to characterize distributions in this market. In particular, DOE seeks input on the appropriate distribution channel for grid-enabled water heaters.

Issue F.2  DOE seeks input on the percentage of consumer water heaters being distributed through the different distribution channels and whether the share of products through each channel varies based on product capacity, water heater product class, or water heater technology. In particular, DOE seeks input about the percentage of consumer water heaters being distributed through online sales and whether the percentage is likely to increase in the future.

To develop mark-ups for the parties involved in the distribution of the product, DOE plans to utilize several sources, including: (1) Form 10-K reports  16 from the main consumer water heater wholesalers  17 and retailers (for wholesalers and retailers); 3. the Heating, Air Conditioning & Refrigeration Distributors International (“HARDI”) 2013 Profit Report  18 (for wholesalers); 3.U.S. Census 2017 Annual Retail Trade Survey data  19 (for retailers); and 3. Census Bureau 2012 Economic Census data  20 on the residential and commercial building construction industry (for general contractors, mechanical contractors, retailers, and mobile home manufacturers). DOE plans to use the 2005 Air Conditioning Contractors of America's (“ACCA”) Financial Analysis on the Heating, Ventilation, Air-Conditioning, and Refrigeration (“HVACR”) contracting industry  21 to disaggregate the mechanical contractor mark-ups into replacement and new construction markets. DOE also plans to use several sources for the derivation of the mobile home dealer mark-up. 22

Issue F.3  DOE seeks recent data and recommendations regarding data sources to establish the markups for the parties involved with the distribution of the consumer water heating products.

As part of a typical rulemaking process, DOE conducts an energy use analysis to identify how products are used by consumers, and thereby determine the energy savings potential of energy efficiency improvements. The purpose of the energy use analysis is to determine the annual energy consumption of consumer water heaters at different efficiencies in representative U.S. single-family homes, manufactured housing, multi-family residences, and commercial buildings, and to assess the energy savings potential of increased consumer water heater efficiency. The energy use analysis estimates the range of energy use of consumer water heaters in the field ( i.e., as they are actually used by consumers). The energy use analysis provides the basis for other analyses DOE performs, particularly assessments of the energy savings and the savings in consumer operating costs that could result from adoption of amended or new standards. DOE will estimate the annual energy consumption of consumer water heaters at specified energy efficiency levels across a range of applications, house or building types, and climate zones. The annual energy consumption includes use of natural gas, liquefied petroleum gas (“LPG”), oil, or electricity for hot water production, as well as use of electricity for the auxiliary components.

DOE intends to base the energy use analysis on key characteristics from the Energy Information Administration's (“EIA”) 2015 Residential Energy Consumption Survey (“RECS”)  23 for the subset of building types that use consumer water heating products covered by the standard. DOE also plans to look at the use of consumer water heaters in commercial applications, for which it plans to include characteristics from EIA's 2012 Commercial Building Energy Consumption Survey (“CBECS”)  24 for a subset of building types that use consumer water heating products covered by this standard.

RECS and CBECS survey data include information on the physical characteristics of building units, water heating products used, size of the products in terms of rated volume, fuels used, energy consumption and expenditures, and other characteristics. 25 DOE intends to use available shipments data by water heater size to disaggregate the sample into the considered product classes. 26 DOE will also consult Building America's 2015 report, “Strategy Guideline: Proper Water Heater Selection,”  27 as well as American Society of Heating, Refrigerating and Air-Conditioning Engineers (“ASHRAE”)  28 and Electric Power Research Institute (“EPRI”)  29 handbooks, which contain data on the typical categories and sizes (both input capacity and rated volume) of consumer water heaters used for different building types and applications, and can be used to compare to, supplement, and corroborate the RECS and CBECS data. In addition, DOE intends to review other data sets ( e.g., data from the End-Use Load and Consumer Assessment Program (“ELCAP”), 30 2016 Residential Building Stock Assessment for the Northwest, 31 2014 Commercial Building Stock Assessment for the Northwest, 32 2015 Residential Statewide Baseline Study of New York State, 33 2009 Residential Appliance Saturation Study (“RASS”), 34 and 2006 California Commercial End-Use Survey (“CEUS”)  35 ) to compare to RECS 2015 and CBECS 2012 data. Based on these data, DOE will develop a representative population of buildings for each consumer water heater product class. Calculating the hot water use for the sampled households requires assigning a specific water heater size (rated volume). DOE plans to use the RECS sizing data together with the available shipments and models data to assign the consumer water heaters sizes for each sampled RECS household.

Issue G.1  DOE seeks shipments data and input on typical categories (in terms of product classes) and sizes (including fuel type, input capacity, and rated volume) of consumer water heaters used for different building types and applications.

Issue G.2  DOE seeks input and sources of data or recommendations to support sizing of consumer water heaters typical in consumer water heater applications.

Issue G.3  DOE requests comment on the fraction of installations and classes of consumer water heaters that are used in commercial applications.

To estimate the annual hot water use of each sampled unit, DOE intends to use the RECS 2015 and CBECS 2012 estimates of water heating annual energy consumption  36 together with the existing water heater's estimated efficiency and other water heater characteristics. DOE intends to assume that some households or buildings have multiple water heaters, with the hot water use split evenly between them. The efficiency of the existing water heater will be determined using the consumer water heater vintage (the year of installation of the product) provided by RECS and historical efficiency data for water heaters.

DOE plans to compare the results of its methodology to total hot water use from field data, models based on field data (such as the 2015 Florida Solar Energy Center study  37 and the model used in the April 2010 Final Rule (75 FR 20112)  38 ), and any other model or data available in the literature. These total hot water use models typically account for the number and ages of the people who live in the household, the way they consume hot water, the presence of hot-water-using appliances, the tank size and thermostat set point of the consumer water heater, and the climate in which the residence is situated. DOE also plans to consider data regarding the total amount of water drawn per day for various draw patterns based on the field data collated by the Lawrence Berkeley National Laboratory (“LBNL”) and other sources. 39

For each analyzed consumer water heater and building type combination, DOE plans to determine the typical water heating usage profiles, water volumetric loads, and hot water usage temperatures using data from the ASHRAE Heating, Ventilation, and Air-Conditioning (“HVAC”) Systems and Equipment Handbook, EPRI Handbook, and reports from National Renewable Energy Laboratory (“NREL”)  40 and LBNL. 41 For residential applications, DOE plans to determine average set point temperature by using the 2006-2019 survey data from plumbing/hydronic heating contractor firms. 42 These data will capture the variability in water heating use due to factors such as building activity, schedule, occupancy, water supply temperature, tank losses, cycling losses, and distribution system piping losses. DOE intends to derive the inlet water temperature using an approach developed by NREL. 43 This approach accounts for seasonal variations in inlet water temperature as a function of annual average outdoor air temperature. The monthly average inlet water temperature varies directly with the average annual outdoor air temperature corrected by an offset term.

DOE also plans to consider market changes or future efficiency standards in technologies that reduce water heating loads in residential housing or commercial buildings using consumer water heaters, such as more-efficient clothes washers.

Issue G.4  DOE seeks field data and input on representative hot water usage, water heating usage load profile, and representative hot water usage temperatures for consumer water heaters used in various consumer and commercial water heater applications.

Issue G.5  DOE seeks input on the historical distribution of product efficiencies in the building population for different product classes.

Issue G.6  DOE seeks input on water use data by season to more accurately calculate the inlet water temperature.

In the past, DOE calculated the field energy use of water heaters using a simplified energy equation, the consumer water heater analysis model (“WHAM”), 44 and modified WHAM equations developed for the April 2010 Final Rule. WHAM accounts for a range of operating conditions and energy efficiency characteristics of water heaters. To describe energy efficiency characteristics of water heaters, WHAM uses parameters that were also used in the previous consumer water heater test procedure. DOE intends to create a similar set of equations to determine field energy use based on the most recent consumer water heater test procedure, which determines UEF.

For gas-fired and oil-fired water heaters, DOE plans to estimate the auxiliary electricity use associated with water heater operation, such as that consumed by the electronic ignition, controls, power vent fan, standby mode and off mode, etc. For heat pump water heaters, DOE plans to take into account that the energy efficiency and consumption are dependent on ambient temperature when in heat pump mode and the amount of time the unit operates using the electric resistance mode. DOE also intends to estimate the impact of heat pump water heaters on the home's space heating, air conditioning, and dehumidifier operation. 45 DOE also plans to take into account the electricity use associated with condensate withdrawal, such as that consumed by the condensate pump or heat tape for condensing and heat pump water heater technologies. For grid-enabled water heaters, DOE plans to use common draw patterns and utility program structure ( i.e., turned off at a fixed schedule or turned off during peak periods only) to determine the electricity use and match it with the appropriate electricity tariff structure.

Issue G.7  DOE requests field or test energy use data or other relevant information that could assist in the development of an equation or set of equations based on the latest consumer water heater test procedure that can calculate field water heating energy use for each product class.

Issue G.8  DOE requests comment on the methodology for determining energy use for each consumer water heater product class, including the impact of ambient conditions and draw patterns.

Issue G.9  DOE requests comment on the methodology for determining energy use of heat pump water heaters, including the impact of ambient conditions and draw patterns on efficiency, as well as taking into account the cooling effect and humidity withdrawal of heat pump water heaters installed in conditioned spaces.

Issue G.10  DOE requests comment on the methodology for determining energy use for grid-enabled water heaters.

Issue G.11  DOE requests comment on the fraction of installations and classes of consumer water heaters used for other applications such as space heating (in hydronic systems or fan-coils).

Issue G.12  DOE seeks input on the fraction of installations and types of buildings that use recirculation loops associated with consumer water heaters and the impact of recirculation loops on water heater performance.

DOE plans to conduct LCC and PBP analyses to evaluate the economic impacts on individual consumers of potential energy conservation standards for consumer water heaters. The effect of new or amended energy conservation standards on individual consumers usually involves a reduction in operating cost and an increase in purchase cost.

DOE intends to analyze the potential for variability by performing the LCC and PBP calculations on a representative sample of individual consumers. DOE plans to utilize the sample of buildings developed for the energy use analysis and the corresponding simulation results. 46 Within a given building, one or more consumer water heater units may serve the building's water heating needs, depending on the hot water requirements of the building. Therefore, DOE intends to express the LCC and PBP results for each of the individual consumer water heaters installed in the building. DOE plans to model uncertainty in many of the inputs to the LCC and PBP analysis using Monte Carlo simulation and probability distributions. As a result, the LCC and PBP results will be displayed as distributions of impacts compared to the no-new-standards case ( i.e., without amended standards) conditions.

Issue H.1  DOE requests comment on the overall methodology that it intends to use to conduct the LCC and PBP analysis for consumer water heaters.

Inputs to the LCC and PBP analysis are categorized as: (1) Inputs for establishing the purchase expense, otherwise known as the total installed cost, and (2) inputs for calculating the operating costs. Each type of input is discussed in the paragraphs that follow.

The primary inputs for establishing the total installed cost are the baseline consumer price, standard-level customer price increases, and installation costs. Baseline consumer prices and standard-level consumer price increases will be determined by applying markups to manufacturer selling price estimates and sales tax. For gas-fired water heaters, DOE intends to take into account location where ultra-low-NO X gas-fired water heaters would be required by the compliance date for any amended standards, such as the Bay Area Air Quality Management District (“AQMD”) (Regulation 9, Rule 6), 47 Sacramento Metropolitan AQMD (Rule 414), 48 San Joaquin Valley Air Pollution Control District (“APCD”) (Rule 4902), 49 Santa Barbara County APCD (Rule 352), 50 South Coast AQMD (Rule 1112), 51 Ventura County AQMD (Rule 74-11), 52 and Yolo-Solano AQMD (Rule 2.37). 53

Issue H.2  DOE seeks input on locations requiring ultra-low-NO X gas-fired water heaters.

The installation cost is added to the consumer price to arrive at a total installed cost. DOE intends to develop installation costs using the most recent RS Means data available. 54 DOE also intends to use regional labor costs to more accurately estimate installation costs by applying the appropriate regional labor cost from RS Means to each sampled household or building.

For water heaters in new homes, DOE plans to include basic installation cost, such as adding a gas line branch and/or electrical connection and water piping, in addition to putting the new water heater in place and additional set-up. For natural draft venting gas-fired water heaters in new construction, DOE plans to account for both commonly-vented water heaters (together with a central furnace) and isolated water heaters (separately vented). For replacement cases, DOE plans to include the installation cost associated with disconnecting and removing the old water heater, removal/disposal fees, permit fees, as well as the cost of putting the new water heater in place and additional set-up.

DOE also intends to account for additional labor costs associated with larger water heaters, replacing a larger drain pan, and potential space-constraint issues when the original water heater location is too small to accommodate the replacement water heater. DOE also intends to add any costs associated with updating or repairing existing flue venting including vent resizing and chimney relining. For efficiency levels that include electronic ignition, power vent, or condensing design, DOE intends to add the cost of installing an electrical outlet, a new venting system, and any additional cost for condensate disposal. For heat pump water heater installation, DOE intends to apply several additional costs, including one additional hour of labor for the extra time required to install this product, potential space-constraint issues, adding condensate withdrawal, and adding ductwork for supply and/or outlet air from the heat pump component (including adding louvered doors for water heaters installed in indoor closets).

Issue H.3  DOE seeks input on the approach and data sources it intends to use to develop installation costs, specifically, its intention to use the most recent RS Means Mechanical Cost Data.

Issue H.4  DOE seeks input on the fraction and categories of water heaters that encounter space-constraint issues (such as impact of height and width on installation space constraints or constraints in getting the consumer water heater through attic or closet doors).

Issue H.5  DOE seeks input on issues and costs associated with venting of flue gases of gas-fired storage and instantaneous water heaters, in particular regarding retrofit issues related to installing a new vent system for power vent and condensing water heaters, disconnecting the existing water heater from non-condensing furnace common venting system, and upgrading existing non-condensing venting (chimney relining or vent resizing). DOE also seeks input on how often and in what applications direct venting or sealed combustion are used or required.

Issue H.6  DOE seeks input on issues and costs associated with condensate disposal for condensing gas-fired storage and instantaneous water heaters, specifically how often and in what applications a condensate filter is installed or a condensate pump is installed.

Issue H.7  DOE seeks input on issues and costs associated with installing consumer water heaters in multi-family buildings and mobile homes.

Issue H.8  DOE seeks input on issues and costs associated with installing heat pump water heaters, including adjustment of electrical circuits, additional labor, space constraints, adding condensate withdrawal, and adding ductwork for supply and/or outlet air from the heat pump component.

Issue H.9  DOE seeks input on issues and costs associated with installing consumer water heaters with large input capacities, such as instantaneous natural gas water heaters, when replacing an existing smaller capacity natural gas storage water heater. DOE requests comment on how often a new larger gas pipe is required.

The primary inputs for calculating the operating costs are energy consumption, product efficiency, energy prices, maintenance and repair costs, product lifetime, and discount rates. Both product lifetime and discount rates are used to calculate the present value of future operating costs.

The relevant energy consumption is the site energy use associated with providing water heating to the building. (The primary energy used to provide electricity for electric water heaters is accounted for in the NIA.) DOE intends to utilize the energy use calculation methodology described in section II.G of this document to determine water heater energy use.

DOE intends to determine recent gas, oil, and electricity prices based on geographically-available fuel cost data such as State level data, with consideration for the variation in energy costs paid by consumers living in different building types. DOE calculates energy expenses based on estimated marginal energy prices that customers are paying in different geographical areas of the country. DOE may consider data provided by EIA's Form EIA-861  55 to calculate residential and commercial electricity prices, EIA's Natural Gas Navigator  56 to calculate residential and commercial natural gas prices, and EIA's State Energy Data Systems (“SEDS”)  57 to calculate liquefied petroleum gas (LPG) and fuel oil prices. Future energy prices will be projected using trends from the latest Annual Energy Outlook (“ AEO” ). 58

Issue H.10  DOE seeks comment on its planned approach and sources for developing gas, oil, and electricity prices.

Maintenance costs are expenses associated with ensuring continued operation of the covered product over time. DOE intends to develop maintenance costs using the most recent RS Means data available  59 and manufacturer product literature. DOE intends to assess whether maintenance costs vary with product efficiency and product category. In addition, DOE plans to consider the cases when the product is covered by service and/or maintenance agreements. More specifically, DOE intends to account for the following: (1) Maintenance cost associated with storage water heaters being drained and flushed annually to minimize deposition of sediment, maintain operating efficiency, and prolong product life; (2) any maintenance cost associated with the flammable vapor ignition resistant (“FVIR”) component of gas-fired storage water heaters; (3) for a heat pump water heater, the cost of annual cleaning of the air filter and a preventive maintenance cost to check the evaporator and refrigeration system; (4) for gas-fired instantaneous water heaters, maintenance costs associated with the fouling of the heat exchanger from hard water, periodic sensor inspections, and filter changes; and (5) for oil-fired storage water heaters, the cost of annual maintenance contracts, which are available for this product category.

Issue H.11  DOE seeks input on the approach and data sources it intends to use to develop maintenance costs, specifically, its intention to use the most recent RS Means Facilities Maintenance & Repair Cost Data and to consider the cost of service and/or maintenance agreements.

Repair costs are expenses associated with repairing or replacing components of the covered product that have failed. DOE intends to develop maintenance costs using the most recent RS Means data available  60 and manufacturer literature. DOE intends to assess whether repair costs vary with product efficiency and product category. DOE intends to include repair cost for components that are more likely to fail during the consumer water heater's lifetime, such as pilot ignition, electronic ignition, and power vent fan for gas-fired water heaters; and electric resistance element, compressor, and the evaporator fan for electric water heaters. For oil-fired storage water heaters, DOE intends to calculate the cost of annual maintenance contracts, which typically include repair/replacement of failed components.

Issue H.12  DOE seeks comment as to whether water heater repair costs vary as a function of product efficiency. DOE also requests any data or information on developing repair costs.

Product lifetime is the age at which a unit is retired from service. DOE intends to conduct an analysis of water heater lifetimes using a combination of data on shipments, the consumer water heater stock, and RECS data on the age of existing water heaters in the sampled homes based on a methodology described in a journal article. 61 The data allow DOE to develop a Weibull probability distribution to characterize consumer water heater lifetime, which provides a range from minimum to maximum lifetime, as well as an average lifetime. 62

Issue H.13  DOE seeks comment on its planned approach of using a Weibull probability distribution to characterize product lifetime. DOE also requests product lifetime data and information on whether product lifetime varies based on product characteristics, product application, or product efficiency.

In the calculation of LCC, DOE applies discount rates appropriate to households to estimate the present value of future operating costs. The discount rate used in the LCC analysis represents the rate from an individual consumer's perspective. DOE estimates a distribution of residential discount rates based on the opportunity cost of funds related to appliance energy cost savings and maintenance costs. DOE estimates commercial discount rates as the weighted average cost of capital (“WACC”), using the Capital Asset Pricing Model (“CAPM”).

To establish residential discount rates for the LCC analysis, DOE intends to use the Federal Reserve Board's Survey of Consumer Finances  63 (“SCF”) for 1995, 1998, 2001, 2004, 2007, 2010, 2013, and 2016 data, as well as other data sources, 64 to develop a distribution of discount rates by income group to represent the rates that may apply in the year in which potential amended standards would take effect. For commercial discount rates, DOE intends to use Damodaran Online, which is a widely used source of information about company debt and equity financing for most types of firms, as the primary source of data. 65

Issue H.14  DOE seeks comment on its planned discount rate methodology.

DOE measures LCC and PBP impacts of potential standard levels relative to a no-new-standards case that reflects the likely market in the absence of amended standards. DOE plans to develop market-share efficiency data ( i.e., the distribution of product shipments by efficiency) for the product classes DOE is considering, for the year in which compliance with any potential amended standards would be required. To estimate the market shares of different water heater energy efficiency levels in the no-new-standards case, DOE intends to use historical data provided by AHRI for the April 2010 Final Rule, 66 along with more recent data that may be provided by stakeholders. DOE also intends to use 2010-2018 ENERGY STAR shipments data. 67 Because these data may not cover all of the energy efficiency levels under consideration, DOE also intends to use data on the number of water heater models at different energy efficiency levels, as reported in DOE's compliance certification database, 68 the AHRI directory of certified product performance, 69 the California Energy Commission (“CEC”) appliance efficiency database, 70 and the ENERGY STAR certified water heaters directory. 71

Issue H.15  DOE requests shipments data for consumer water heaters, broken down by product class, that show current market shares by efficiency level. DOE also seeks input on similar historic data.

A table of the types of data requested for shipments in Issue H.15 can be found in Table II.7 and Table II.8. Table II.7 represents efficiency data from 2007-2015 based on EF metric based on the test procedure that was effective prior to December 31, 2015, while Table II.8 represents efficiency data from 2016-2018 based on the amended test procedure using the UEF metric. Interested parties are also encouraged to provide additional shipment data as may be relevant.

Issue H.16  DOE also requests information on expected future trends in efficiency for consumer water heaters product classes, including the relative market shares of condensing versus non-condensing products in the market for storage water heaters and instantaneous water heaters, as well as the share of heat pump water heaters in the absence of amended efficiency standards.

DOE intends to consider the possibility for potential amended standards to impact the choice between categories of water heating products or product switching (including the potential for fuel switching), both for new construction and the replacement of existing products. Because home builders are sensitive to the cost of water heating products, standards that significantly increase the purchase price of one category of product relative to other options may induce some builders to switch to a different water heating product than they would have otherwise installed ( i.e., in the no-new-standards case). Such an amended standard level may also induce some home owners to replace their existing water heater at the end of its useful life with a different category of water heating product, or to repair the product instead of replacing, thereby delaying the replacement of the consumer water heater.

DOE plans to develop a consumer choice model to estimate the response of builders and homeowners to potential amended consumer water heater standards. DOE plans to consider three options available to each sample household: (1) Replace with the same category of consumer water heater that meets a particular standard level, (2) replace with a consumer water heater using a different fuel or a different product category ( e.g., switching from a storage gas-fired unit to an instantaneous gas-fired unit; storage gas-fired unit to storage electric unit, storage electric unit to a storage gas-fired unit), or (3) repair the existing product, thereby delaying replacement. DOE plans to have the consumer choice model use the installed cost of each option, as estimated for each sample household or building, and the operating costs, taking into account the water heating load for each household and the energy prices it will pay over the lifetime of the available product options. DOE intends to account for any additional costs to accommodate a new product or repair it. To determine which consumer choice option each sampled household or building is likely to select, DOE intends to use the estimated total installed cost and operating cost of each of the modeled choices together with decision criteria that take into account consumer willingness to pay for more-expensive but more-efficient products, as well as other factors such as income and purchase incentives.

Issue H.17  DOE seeks any data and comment on its planned consumer choice methodology approach.

Issue H.18  DOE seeks any data or comments on the consumer choice model in new construction, specifically identifying what the principal factors are driving the selection of different water heater categories in new construction. For example, how often are gas water heaters installed if a gas furnace is selected as the heating system in new construction?

DOE uses shipment forecasts to calculate the national impacts of potential amended energy conservation standards on energy consumption, net present value (“NPV”) of consumer benefits, and future manufacturer cash flows. DOE shipments projections are based on available historical data broken out by product class, capacity, and efficiency. Current sales estimates allow for a more accurate model that captures recent trends in the market. In the present case, DOE intends to develop a shipments model for consumer water heaters based on available historical shipments data. DOE currently has historical shipments data by product class listed in Table II.9, from data sources as listed in Table II.10. In addition, DOE has limited historical data to disaggregate water heaters by capacity. Unless more recent data become available, DOE intends to use AHRI and U.S. Census shipments data to disaggregate gas-fired storage water heaters and electric storage water heaters above 55 gallons. 72

Table of Contents I. Introduction A. Authority and Background B. Rulemaking Process II. Request for Information and Comments A. Equipment Covered by This Process B. Market and Technology Assessment 1. Equipment Class Groups and Equipment Classes 2. Technology Assessment C. Screening Analysis D. Engineering Analysis 1. Baseline Efficiency Levels 2. Maximum Available and Maximum Technologically Feasible Levels 3. Manufacturer Production Costs and Manufacturing Selling Price E. Distribution Channels F. Energy Use Analysis G. Life-Cycle Cost and Payback Period Analysis H. Shipments I. Manufacturer Impact Analysis J. Other Energy Conservation Standards Topics 1. Market Failures 2. Emerging Smart Technology Market 3. Other Issues III. Submission of Comments I. Introduction A. Authority and Background

The Energy Policy and Conservation Act, as amended (“EPCA”), 1 among other things, authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. (42 U.S.C. 6291-6317) Title III, Part C  2 of EPCA, added by Public Law 95-619, Title IV, section 441(a) (42 U.S.C. 6311-6317, as codified), established the Energy Conservation Program for Certain Industrial Equipment, which sets forth a variety of provisions designed to improve the energy efficiency of certain types of industrial equipment, including electric motors, the subject of this RFI. (42 U.S.C. 6311(1)(A)) The Energy Policy Act of 1992 (“EPACT 1992”) (Pub. L. 102-486 (October 24, 1992)) further amended EPCA by establishing energy conservation standards and test procedures for certain commercial and industrial electric motors that are manufactured alone or as a component of another piece of equipment. In December 2007, Congress enacted the Energy Independence and Security Act of 2007 (“EISA 2007”) (Pub. L. 110-140). Section 313(b)(1) of EISA 2007 updated the energy conservation standards for those electric motors already covered by EPCA and established energy conservation standards for a larger scope of motors not previously covered by standards. (42 U.S.C. 6313(b)(2)) EISA 2007 also revised certain statutory definitions related to electric motors. See EISA 2007, sec. 313 (amending statutory definitions related to electric motors at 42 U.S.C. 6311(13))

The energy conservation program under EPCA consists essentially of four parts: (1) Testing, (2) labeling, (3) Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of EPCA include definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C. 6313), test procedures (42 U.S.C. 6314), labeling provisions (42 U.S.C. 6315), and the authority to require information and reports from manufacturers (42 U.S.C. 6316).

Federal energy efficiency requirements for covered equipment established under EPCA generally supersede State laws and regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6316(a) and (b); 42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions set forth under EPCA. ( See 42 U.S.C. 6316(a) and 42 U.S.C. 6297(d))

On October 5, 1999, DOE published a final rule to codify the EPACT 1992 electric motor requirements. 64 FR 54114. After EISA 2007's enactment, DOE updated, among other things, the corresponding electric motor regulations at 10 CFR part 431 by incorporating the new definitions and energy conservation standards that the law established. See 74 FR 12058 (March 23, 2009) (codifying various amendments enacted by Congress through EISA, including the adoption of specific energy conservation standards for certain classes of electric motors). DOE subsequently proposed new test procedures for small electric motors, 3 see 73 FR 78220 (December 22, 2008), and later finalized key provisions related to small electric motor testing. See 74 FR 32059 (July 7, 2009). Further updates to the test procedures for electric motors and small electric motors followed when DOE issued a rule that primarily focused on updating various definitions and incorporations by reference related to the current test procedure. See 77 FR 26608 (May 4, 2012). That rule defined the term “electric motor” to account for EISA 2007's removal of the previous statutory definition of “electric motor.” DOE also clarified definitions related to those motors that EISA 2007 laid out as part of EPCA's statutory framework, including motor types that DOE had not previously regulated. See generally, 77 FR 26608, 26613-26619. DOE also published a new test procedure on December 13, 2013, that further refined various electric motor definitions and added certain definitions and test procedure preparatory steps to address a wider variety of electric motor types than are regulated, including those electric motors that are largely considered to be special-or definite-purpose motors. 78 FR 75962. On May 29, 2014, DOE published a final rule adopting new and amended energy conservation standards for electric motors that applied the standards to a wider scope of electric motors, required regulated motors, with the exception of fire pump electric motors, to satisfy the efficiency levels (“ELs”) prescribed in Table 12-12 of National Electrical Manufacturers Association (“NEMA”) Standards Publication MG 1-2011, “Motors and Generators,” and retained the standards for fire pump motors. 79 FR 30934 (May 2014 Final Rule”).

DOE must also periodically evaluate the energy conservation standards for each type of covered equipment, including those at issue here, after the issuance of any final rule establishing or amending a standard. See 42 U.S.C. 6316(a) and 42 U.S.C. 6295(m)(1). In doing so, DOE must issue (and have published) either a notice of determination that the standards do not need to be amended or a proposal that includes new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6316(a); 42 U.S.C. 6295(m)(1)) In making a determination that the standards do not need to be amended, DOE must evaluate whether amended standards (1) will result in significant conservation of energy, (2) are technologically feasible, and (3) are cost effective as described under 42 U.S.C. 6295(o)(2)(B)(i)(II). (42 U.S.C. 6316(a); 42 U.S.C. 6295(m)(1)(A); 42 U.S.C. 6295(n)(2)) Under 42 U.S.C. 6295(o)(2)(B)(i)(II), DOE must determine whether the benefits of a standard exceed its burdens by, to the greatest extent practicable, considering the savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered products which are likely to result from the imposition of the standard. If DOE decides not to amend a standard based on the statutory criteria, not later than 3 years after that determination DOE must issue (and submit for publication) either a determination that the standards do not need to be amended or propose amended energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6316(a); 42 U.S.C. 6295(m)(3)(B)) DOE must make the analysis on which a determination is based publicly available and provide an opportunity for written comment. (42 U.S.C. 6316(a); 42 U.S.C. 6295(m)(2))

In proposing new standards, DOE must evaluate that proposal against the criteria of 42 U.S.C. 6295(o), as described in the following section, and follow the rulemaking procedures set out in 42 U.S.C. 6295(p). (42 U.S.C. 6316(a); 42 U.S.C. 6295(m)(1)(B) If DOE decides to amend the standard based on the statutory criteria, DOE must publish a final rule not later than two years after energy conservation standards are proposed. (42 U.S.C. 6316(a); 42 U.S.C. 6295(m)(3)(A))

DOE is publishing this RFI to collect data and information to inform its decision consistent with its obligations under EPCA.

DOE must follow specific statutory criteria when prescribing new or amended standards for covered equipment. EPCA generally requires that any new or amended energy conservation standard prescribed by the Secretary be designed to achieve the maximum improvement in energy or water efficiency that is technologically feasible and economically justified. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(A)) To determine whether a standard is economically justified, EPCA requires that DOE determine whether the benefits of the standard exceed its burdens by considering, to the greatest extent practicable, the following seven factors:

(1) The economic impact of the standard on the manufacturers and consumers of the affected products;

(2) The savings in operating costs throughout the estimated average life of the product compared to any increases in the initial cost, or maintenance expenses;

(3) The total projected amount of energy and water (if applicable) savings likely to result directly from the standard;

(4) Any lessening of the utility or the performance of the products likely to result from the standard;

(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;

(6) The need for national energy and water conservation; and

(7) Other factors the Secretary of Energy (“Secretary”) considers relevant.

DOE fulfills these and other applicable requirements by conducting a series of analyses throughout the rulemaking process. Table I.1 shows the individual analyses that are performed to satisfy each of the requirements within EPCA.

As detailed throughout this RFI, DOE is publishing this document seeking input and data from interested parties to aid in the development of the technical analyses on which DOE will ultimately rely to determine whether (and if so, how) to amend the standards for electric motors.

In the following sections, DOE has identified a variety of issues on which it seeks input to aid in the development of the technical and economic analyses regarding whether amended standards for electric motors may be warranted.

As an initial matter, DOE seeks comment on whether there have been sufficient technological or market changes since the most recent standards update that may justify a new rulemaking to consider more stringent standards. Specifically, DOE seeks data and information to enable the agency to determine whether DOE should propose a “no new standard” determination because a more stringent standard: (1) Would not result in a significant savings of energy; (2) is not technologically feasible; (3) is not economically justified; or (4) any combination of foregoing.

This RFI covers equipment meeting the electric motor definition codified at 10 CFR 431.12  4 and includes the different classes of electric motors that DOE currently regulates. DOE's definitions related to electric motors were most recently amended in May 2014. See 79 FR 30933 (May 29, 2014).

The term “electric motor” is broadly defined as “a machine that converts electrical power into rotational mechanical power.” 10 CFR 431.12. Currently, DOE regulates electric motors falling into the NEMA Design A, NEMA Design B, NEMA Design C, and fire pump motor categories and those electric motors that meet the criteria specified at 10 CFR 431.25(g). 10 CFR 431.25(h)-(j). Section 431.25(g) specifies that the relevant standards apply only to electric motors, including partial electric motors, that satisfy the following criteria:

NEMA Design A, B and C motors are all squirrel-cage motors. NEMA Design A and B motors are very similar, except one of the main differences between them is that NEMA Design A motors have no locked-rotor current limits whereas NEMA Design B motors are required to stay below certain maximum locked-rotor current limits specified in NEMA MG 1-2009. Otherwise, NEMA Design A and NEMA Design B motors have similar requirements for locked-rotor, pull-up, and breakdown torque and are consequently used in many of the same applications. IEC Design N motors have similar locked-rotor, pull-up, and breakdown torque requirements except that these requirements are specified in IEC 60034-12 edition 2.1 rather than in NEMA MG 1-2009.

NEMA Design C motors, on the other hand, have higher torque requirements than NEMA Design A or B motors. The difference in torque requirements restrict which applications can use which NEMA design types. As a result, NEMA Design C motors will not always be replaceable with NEMA Design A or B motors, or vice versa. IEC Design H motors have similar torque requirements except these are specified in IEC 60034-12 edition 2.1.

Fire pump electric motors are motors with special design characteristics that make them more suitable for emergency operation. Such electric motors, per the requirements of National Fire Protection (“NFPA”) standard NFPA 20, are required to be marked as complying with NEMA Design B performance standards and be capable of operating even if it overheats or may be damaged due to continued operation.

The definitions for NEMA Design A motors, NEMA Design B motors, NEMA Design C motors, fire pump electric motors, IEC Design N motor and IEC Design H motor are codified in 10 CFR 431.12.

DOE has also exempted certain categories of motors from being regulated by its standards because of the current absence of a reliable and repeatable method to accurately measure their efficiency. See 79 FR 30934, 30945; see also, 78 FR 75962, 75974, 75987-75989). The current exemptions are as follows:

In a recent test procedure notice of proposed rulemaking for small electric motors and electric motors, DOE did not propose to change the scope of the test procedure for electric motors. (84 FR 17004 (April 23, 2019)) DOE also requested comment in a test procedure RFI for electric motors published on November 2, 2017 (82 FR 50844) regarding the merits of revising the NEMA Design A, B, and C motor definitions, among others, and updating the current regulation's NEMA MG 1 references to the most recent edition of the standard, NEMA MG 1-2016. DOE notes that comments received on issues related to the scope and definitions for electric motors discussed in the April 2019 proposed test procedure rulemaking for small electric motors and electric motors will be addressed as part of that rulemaking.

In 2016, an updated version of the IEC 60034-12 was published that added new starting requirements to describe six new IEC motor designs in addition to the previously considered IEC Design N and H motors that DOE currently regulates: IEC Design NE, IEC Design HE, IEC Design NY, IEC Design NEY, IEC Design HY, and IEC Design HEY. All six additional categories are described as motors that are very similar in designs compared to the IEC Design N and H motors that DOE currently regulates, with the only differences being the locked rotor apparent power (indicated by the letter “E”), and starting configuration (star-delta starter indicated by the letter “Y”). DOE intends to review these additional IEC motor designs to determine whether these IEC designs are equivalent to the NEMA Design A, B, or C motors that DOE currently regulates.

Issue A.1  DOE requests comment on whether additional equipment definitions are necessary to clarify any potential definitional ambiguities between existing equipment class groups. DOE also seeks input on whether such equipment currently exist in the market or whether they are being planned for introduction. DOE also requests comment on opportunities to combine equipment class groups that could reduce regulatory burden.

Issue A.2  DOE requests input and comment on whether IEC Design NE, NEY, NY, HE, HEY, and HY motors are equivalent designs to NEMA Design A, B, or C motors, and if so, information and data to support such a consideration.

The market and technology assessment that DOE routinely conducts when analyzing the impacts of a potential new or amended energy conservation standard provides information about the electric motors industry that will be used in DOE's analysis throughout the rulemaking process. DOE uses qualitative and quantitative information to characterize the structure of the industry and market. DOE identifies manufacturers, estimates market shares and trends, addresses regulatory and non-regulatory initiatives intended to improve energy efficiency or reduce energy consumption, and explores the potential for efficiency improvements in the design and manufacturing of electric motors. DOE also reviews equipment literature, industry publications, and company websites. Additionally, DOE conducts interviews with manufacturers to improve its assessment of the market and available technologies for electric motors.

When evaluating and establishing energy conservation standards, DOE may divide covered equipment into equipment classes by the type of energy used, or by capacity or other performance-related features that justify a different standard. (42 U.S.C. 6316(a); 42 U.S.C. 6295(q)) In determining whether capacity or another performance-related feature justifies a different standard, DOE must consider such factors as the utility of the feature to the consumer and other factors DOE deems appropriate. ( Id. )

For electric motors, due to the large number of characteristics involved in electric motor design, DOE developed both “equipment class groups” and “equipment classes”. With respect to class groups, the current energy conservation standards specified in 10 CFR 431.25 are based on three broad equipment groupings determined according to performance-related features that provide utility to the consumer and are described in terms of motor design ( i.e. NEMA Design A and B, NEMA Design C, and Fire Pump Motors). Table II.1 lists the current three equipment class groups for electric motors.

“Design A”, “Design B” and “Design C” are NEMA-developed designations that define a motor's performance characteristics such as the locked-rotor torque, pull-up torque, breakdown torque, inrush current, and locked-rotor current. The motors within the equipment class groups in Table II.1 were further divided into equipment classes based on pole-configuration, enclosure type, and horsepower rating.

Issue B.1  DOE requests feedback on the current electric motors equipment class groups and whether changes to these individual equipment class groups and their descriptions should be made or whether certain class groups should be merged or separated. DOE also seeks feedback on whether combining certain class groups could impact product utility by eliminating any performance-related features or impact the stringency of the current energy conservation standard for this equipment. DOE also requests comment on whether it should consider separating any of the existing equipment class groups and whether such a change would impact equipment utility by eliminating any performance-related features or reduce any compliance burdens.

Issue B.2  DOE seeks information regarding any other new equipment class groups it should consider for inclusion in its analysis. Specifically, DOE requests information on the performance-related features ( e.g., input power supply, operating speed, etc.) that provide unique consumer utility and data detailing the corresponding impacts on energy use that would justify separate equipment class groups ( i.e., explanation for why the presence of these performance-related features would increase energy consumption).

In analyzing the feasibility of potential new or amended energy conservation standards, DOE uses information about existing and past technology options and prototype designs to help identify technologies that manufacturers could use to meet and/or exceed a given set of energy conservation standards under consideration. In consultation with interested parties, DOE intends to develop a list of technologies to consider in its analysis. That analysis will likely include a number of the technology options DOE previously considered during its most recent rulemaking for electric motors. A complete list of those prior options appears in Table II.2. See also 79 FR 30934, 30959.

DOE is not aware of specific techniques manufacturers use to reduce stray-load losses, which are any losses that are not attributed to I 2 R losses, core losses, or friction and windage losses, other than those already noted in Table II.2.

Issue B.3  DOE seeks information on the technologies listed in Table II.2 regarding their applicability to the current market and how these technologies may impact the efficiency of electric motors as measured according to the DOE test procedure. DOE also seeks information on how these technologies may have changed since their prior consideration during the May 2014 Final Rule analysis. Specifically, DOE seeks information on the range of efficiencies or performance characteristics that are currently available for each technology option.

Issue B.4  DOE seeks information on the technologies listed in Table II.2 regarding their market adoption, costs, and any concerns with incorporating them into products ( e.g., impacts on consumer utility, potential safety concerns, manufacturing/production/implementation issues, etc. ), particularly as to changes that may have occurred since the publication of the May 2014 Final Rule.

Issue B.5  DOE seeks comment on other technology options that it should consider for inclusion in its analysis and details regarding the extent to which these technologies may impact product features or consumer utility. DOE also seeks input regarding the cost-effectiveness of implementing these options.

The purpose of the screening analysis is to evaluate the technologies that improve equipment efficiency to determine which technologies will be eliminated from further consideration and which will be passed to the engineering analysis for further consideration.

DOE determines whether to eliminate certain technology options from further consideration based on the following criteria:

Technology options identified in the technology assessment are evaluated against these criteria using DOE analyses and inputs from interested parties ( e.g., manufacturers, trade organizations, and energy efficiency advocates). Technologies that pass through the screening analysis are referred to as “design options” in the engineering analysis. Technology options that fail to meet one or more of the four criteria are eliminated from consideration.

Additionally, DOE notes that the four screening criteria do not directly address the proprietary status of technology options. DOE only considers potential efficiency levels achieved through the use of proprietary designs in the engineering analysis if they are not part of a unique pathway to achieve that efficiency level ( i.e., if there are other non-proprietary technologies capable of achieving the same efficiency level).

Table II.3 summarizes specific examples of design options that DOE screened out in the May 2014 Final Rule, the type of loss reduced, and the applicable screening criteria.

Plastic Bonded Iron Powder (“PBIP”) is a method that can be employed to reduce core losses. PBIP uses two main ingredients: Metal powder and plastics. Combining the ingredients creates a material with low conductivity and high permeability. The metal particles are surrounded by an insulating plastic, which prevents electric current from developing in the material and helps to eliminate losses in the core due to eddy currents. Properties of PBIP can differ depending on the processing steps that are followed. If the metal particles are too closely compacted and begin to touch each other, the material will gain electrical conductivity, counteracting one of its most important features.

In the May 2014 Final Rule, DOE did not consider this technology option technologically feasible, because it had not been incorporated into a working prototype of an electric motor. 79 FR 30934, 30966. While DOE noted that a research team at Lund University in Sweden published a paper in 2007 about using PBIP in manufacturing, the same paper indicated that its study team produced inductors, transformers, and induction heating coils using PBIP, but has not yet produced a small electric motor. 5 (See chapter 4 of the May 2014 Final Rule TSD) Also, DOE was uncertain whether the PBIP material had the structural integrity to form into the necessary shape of an electric motor steel frame.

The use of amorphous metals in the rotor laminations is another method to improve the efficiency of electric motors by reducing core losses. Amorphous metal is extremely thin, has high electrical resistivity, and has little or no magnetic domain definition. Because of amorphous steel's high resistance, it exhibits a reduction in hysteresis and eddy current losses, which reduce overall losses in electric motors. However, amorphous steel is a very brittle material which makes it difficult to punch into motor laminations. In the May 2014 Final Rule, DOE did not consider this technology option technologically feasible because it had not been incorporated into a working prototype of an electric motor. 79 FR 30934, 30936. Furthermore, DOE was uncertain at the time whether amorphous metals are practicable to manufacture, install, and service, because a prototype amorphous metal electric motor had not been made.

Issue C.1  DOE requests feedback on what impact, if any, the four screening criteria described in this section would have on each of the technology options listed in Table II.2 with respect to electric motors. Similarly, DOE seeks information regarding how these same criteria would affect any other technology options not already identified in this document with respect to their potential use in electric motors.

Issue C.2  With respect to the screened-out design options listed in Table II.3, DOE seeks information on whether these options would, based on current and projected assessments regarding each of them, remain screened out under the four screening criteria described in this section. Also regarding each, what steps, if any, could be (or have already been) taken to facilitate the introduction of each method as a means to improve the energy performance of electric motors and, separately, what is the potential of each option to impact the consumer utility of an electric motor that uses it?

The engineering analysis estimates the cost-efficiency relationship of equipment at different levels of increased energy efficiency (“efficiency levels”). This relationship serves as the basis for the cost-benefit calculations for consumers, manufacturers, and the Nation. In determining the cost-efficiency relationship, DOE estimates the increase in manufacturer production cost (“MPC”) associated with increasing equipment efficiency above the baseline, up to the maximum technologically feasible (“max-tech”) efficiency level for each equipment class.

DOE historically has used the following three methodologies to generate incremental manufacturing costs and establish efficiency levels (“ELs”) for analysis: (1) The design-option approach, which provides the incremental costs of adding to a baseline model design options that will improve its efficiency; (2) the efficiency-level approach, which provides the relative costs of achieving increases in energy efficiency levels, without regard to the particular design options used to achieve such increases; and (3) the cost-assessment (or reverse engineering) approach, which provides “bottom-up” manufacturing cost assessments for achieving various levels of increased efficiency, based on detailed cost data for parts and material, labor, shipping/packaging, and investment for models that operate at particular efficiency levels.

For each equipment class, DOE selects a baseline model as a reference point against which any changes resulting from new or amended energy conservation standards can be measured. The baseline model in each equipment class represents the characteristics of common or typical equipment in that class. Typically, a baseline model is one that meets the current minimum energy conservation standards and provides basic consumer utility.

If it determines that a rulemaking is merited, consistent with this analytical approach, DOE tentatively plans to consider the current minimum energy conservation standards (which went into effect June 1, 2016) to establish baseline efficiency levels for each equipment class group. The current standards for each equipment class, which are based on nominal full load efficiency, are found at 10 CFR 431.25.

Issue D.1  DOE requests feedback (including data) on whether using the current established energy conservation standards for electric motors are appropriate baseline efficiency levels for DOE to apply to each equipment class group in evaluating whether to amend the current energy conservation standards for these products.

Issue D.2  DOE requests feedback on the appropriate baseline efficiency levels for any newly analyzed equipment class groups that are not currently in place or for the contemplated combined equipment class groups, as discussed in section II.B.1 of this document. For newly analyzed equipment class groups or equipment classes, DOE requests energy use data to develop a baseline relationship between energy use, horsepower rating, number of poles, and enclosure type.

As part of DOE's analysis, the maximum available efficiency level is the most efficient unit currently available on the market. For the May 2014 Final Rule, DOE did not directly analyze all 482 equipment classes. Rather, DOE selected and analyzed certain representative units from each equipment class group and based its overall analysis for all equipment classes with that equipment class group on those representative units. Results were then scaled to equipment classes that were not directly analyzed. The representative units from each equipment class group were determined based on the NEMA design type, horsepower rating, pole configuration and enclosure, in addition to corresponding shipment volumes, examining manufacturers' catalog data, and soliciting feedback from interested parties. For example, for equipment class group 1, which includes NEMA Design A and B motors, DOE selected only NEMA Design B motors as representative units to analyze in the engineering analysis. DOE chose NEMA Design B motors because NEMA Design B motors have slightly more stringent performance requirements—namely, their locked-rotor current has a maximum allowable level for a given rating. Consequently, NEMA Design B motors are slightly more restricted in terms of their maximum efficiency levels. By analyzing a NEMA Design B motor, DOE can ensure all designs covered in the equipment class group 1 analysis are technologically feasible. In addition, NEMA Design B units have much higher shipment volumes than NEMA Design A motors because most motor driven equipment is designed (and UL-listed) to run with NEMA Design B motors—which, as a result, is more likely to provide a broader picture of the impacts that would flow from amending the standards for electric motors. See 79 FR 30934, 30967 and chapter 5 of the technical support document (“TSD”) for that rulemaking. 6

DOE selected three representative units to analyze in equipment class group 1 (“ECG1”) and two representative units in equipment class group 2 (“ECG2”). For equipment class group 3 (“ECG3”), DOE analyzed the same equipment classes as for ECG1 because fire pump electric motors are required to meet NEMA Design B performance standards as per NFPA 20, and ECG1 includes NEMA Design B motors. The current maximum available efficiencies for the representative units for each of the three equipment class groups are included in Table II.4.

DOE defines a max-tech efficiency level to represent the theoretical maximum possible efficiency if all available design options are incorporated in a model. In applying these design options, DOE would only include those that are compatible with each other that when combined, would represent the theoretical maximum possible efficiency. In many cases, the max-tech efficiency level is not commercially available because it is not economically feasible. In the May 2014 Final Rule, depending on the equipment class group, DOE determined max-tech efficiency levels using efficiencies for physical electric motors, energy modeling, and/or subject matter expert feedback. The energy models were based on using various technology (as discussed in section II.B.2), material (low loss electrical steel and increased stator copper), and geometry changes applicable to the specific equipment class groups. While all these product configurations had not likely been tested as prototypes available in the market, all the individual design options had been incorporated in available equipment, and therefore a compatible combination of the design options used for max-tech is theoretically possible.

Issue D.3  DOE seeks input on whether it is appropriate for ECG 1 and ECG 3 to use the same representative units for purposes of the engineering analysis.

Issue D.4  DOE seeks input on whether the maximum available efficiency levels discussed in this document are appropriate and technologically feasible for potential consideration as possible energy conservation standards for the products at issue—and if not, why not. DOE also requests feedback on whether the maximum available efficiencies presented in Table II.4 are representative of all other electric motor equipment classes not directly analyzed in the May 2014 Final Rule. If the range of possible efficiencies is different for the other equipment classes not directly analyzed, what alternative approaches should DOE consider using for those equipment classes and why?

Issue D.5  DOE seeks feedback on what design options would be incorporated at a max-tech efficiency level, and the efficiencies associated with those levels. As part of this request, DOE also seeks information as to whether there are limitations on the use of certain combinations of design options.

As described at the beginning of this section, the main outputs of the engineering analysis are cost-efficiency relationships that describe the estimated increases in manufacturer production cost associated with higher-efficiency products for the analyzed equipment classes. For the May 2014 Final Rule, DOE developed the cost-efficiency relationships by estimating the efficiency improvements and costs associated with incorporating specific design options into the assumed baseline model for each analyzed equipment class.

Issue D.6  DOE requests feedback on how manufacturers would incorporate the technology options listed in Table II.2 to increase the energy efficiency of electric motors beyond the baseline. This includes information on the order in which manufacturers would incorporate the different technologies to incrementally improve the efficiencies of equipment. DOE also requests feedback on whether increasing the energy efficiency of an electric motor would lead to other design changes that would not otherwise occur—and if so, what those changes would be. DOE is also interested in information regarding any potential impact of adopting a given design option on a manufacturer's ability to incorporate additional functions or attributes in response to consumer demand.

Issue D.7  DOE also seeks input on the increase in MPC associated with incorporating each design option. Specifically, DOE is interested in whether and how the design option cost estimates used in the May 2014 Final Rule have changed since the time of that analysis. DOE also requests information on the investments needed to incorporate specific design options (and combinations of options), including, but not limited to, costs related to new or modified tooling (if any), materials, engineering and development efforts to implement each design option (including combinations of options), and manufacturing/production impacts.

Issue D.8  requests comment on whether certain design options (or combinations of options) may not be applicable to (or may be incompatible with) specific equipment class groups or equipment classes.

As described in section II.D.2 of this document, DOE analyzed five representative units in the May 2014 Final Rule. DOE developed cost-efficiency curves for each of the equipment classes that were used as the input for the downstream analyses conducted in support of that rulemaking. See chapter 5 of the May 2014 Final Rule TSD for the cost-efficiency curves developed in that rulemaking.

Issue D.9  DOE seeks feedback on whether its tentative approach of analyzing a sub-set of equipment classes is appropriate for a future electric motor energy conservation standards rulemaking. DOE seeks comment on whether its prior approach of analyzing particular equipment classes and applying those results to the remaining classes remains appropriate in principle—and if not, why not? For example, if it is necessary to individually analyze more than the five equipment classes used in the May 2014 Final Rule, please provide information on why aggregating certain equipment is not appropriate and suggestions on which additional classes that DOE should analyze. If the approach outlined in this document is not appropriate, what alternative approaches should DOE consider using as an alternative and why? If analyzing a different sub-set of electric motor classes is sufficient, which sub-sets should be analyzed, what minimum number of classes should be examined, and how should those selected classes be distributed among the 482 separate classes that DOE currently regulates?

To account for manufacturers' non-production costs and profit margin, DOE applies a non-production cost multiplier (the manufacturer markup) to the MPC. The resulting manufacturer selling price (“MSP”) is the price at which the manufacturer distributes a unit into commerce. For the May 2014 Final Rule, DOE used three manufacturer markups to account for costs that are part of each motor leaving a manufacturer's facility:

• Handling and scrap factor: 2.5 percent markup. This markup was applied to the direct material production costs of each electric motor. It accounts for the handling of material and the scrap material that cannot be used in the production of a finished electric motor.

• Factory overhead: 17.5 or 18.0 percent markup. DOE applied factory overhead to the direct material production costs, including the handling and scrap factor, and labor estimates. For aluminum rotor designs a 17.5 percent markup was used, but for all copper rotor designs, an 18.0 percent markup was used to factor in increased depreciation for the equipment.

• Non-production: 37-45 percent markup. This markup reflects costs including sales and general administrative, research and development costs, interest payments, and profit factor. DOE applied the non-production markup to the sum of the direct material production, the direct labor, the factory overhead and the product conversion costs. For the analyzed electric motors at or below 30-horsepower this markup was 37 percent and for electric motors above 30-horsepower this markup was 45 percent. This increase accounted for the extra profit margin manufacturers may receive on larger electric motors that are sold in smaller volumes.

DOE developed these estimated markups based on corporate reports and conversations with manufacturers and experts. See chapter 5 of the May 2014 Final rule TSD for further detail.

Issue D.10  DOE requests feedback on whether the manufacturer markups used in the May 2014 final rule are still appropriate for DOE to use when evaluating whether to amend its current standards. If the markups require revision, what specific revisions are needed for each? Are there additional markups that DOE should also consider—if so, which ones and why?

In generating end-user price inputs for the life-cycle cost (“LCC”) analysis and national impact analysis (“NIA”), DOE must identify distribution channels ( i.e., how the products are distributed from the manufacturer to the consumer), and estimate relative sales volumes through each channel. In the May 2014 Final Rule, DOE accounted for seven main distribution channels for electric motors and estimated their respective shares of sales volume (see Table II.5). Should sufficient information become available, DOE may consider modifying these distribution channels and respective share of sales volume.

In addition to these distribution channel markups, DOE estimated the shipping costs of the motors. More-efficient motors are often larger and heavier than less efficient motors and DOE also accounted for any increase in shipping costs due to changes in weight.

Issue E.1  DOE requests information on the existence of any distribution channels other than the seven channels that were identified in the May 2014 Final Rule and as described in section E. DOE also requests data on the fraction of sales that go through these channels and any other identified channels.

As part of the rulemaking process, DOE conducts an energy use analysis to identify how equipment is used by consumers, and thereby determine the energy savings potential of energy efficiency improvements. The energy use analysis is meant to represent the energy consumption of a given product or equipment when used in the field. In addition to the rated nominal full-load efficiency as determined by the DOE test procedure, DOE uses information related to motor annual operating hours, motor operating load, and part-load efficiency to characterize energy consumption in the field.

In the May 2014 Final Rule, DOE determined the annual energy consumption of electric motors by multiplying the power consumed by the electric motor while in operation by the annual hours of operation in various sectors and applications. The power consumed in operation was established as a function of the motor's load and of the part-load efficiency of electric motors as characterized in the engineering analysis. DOE also included a sensitivity analysis to analyze the impacts of varying nominal speeds across efficiency levels to account for the energy use impacts of having more efficient motors potentially run at slightly higher speeds. 7 DOE used data referenced in an Easton Consultants report to establish the share of electric motors by sector (commercial, industrial and agriculture). 8 For the industrial sector, DOE derived the share of each motor application, the distributions of operating hours and load using data from field surveys  9 and other sources. 10 For fire pumps, DOE assumed a uniform distribution of operating hours between 0.5 hours and up to 6 hours.

Issue F.1  DOE seeks input on data sources to help characterize the variability in annual energy consumption for electric motors. Specifically, DOE is requesting data and information (by application and sector) related to: (1) The distribution of operating hours; (2) the distribution of motor average annual loads; and (3) applicable load profiles ( i.e., percentage of annual operating hours spent at specified load points), including the distribution of those profiles.

DOE conducts the LCC and payback period (“PBP”) analysis to evaluate the economic effects of potential energy conservation standards for electric motors on individual customers. For any given efficiency level, DOE measures the PBP and the change in LCC relative to an estimated baseline level. The LCC is the total customer expense over the life of the equipment, consisting of purchase, installation, and operating costs (expenses for energy use, maintenance, and repair). Inputs to the calculation of total installed cost include the cost of the equipment—which includes MSPs, distribution channel markups, and sales taxes—and installation costs. Inputs to the calculation of operating expenses include annual energy consumption, energy prices and price projections, repair and maintenance costs, equipment lifetimes, discount rates, and the year that compliance with new and amended standards is required. In this section, DOE discusses specific inputs to the LCC and PBP analysis for which it requests comment and feedback.

In the May 2014 Final Rule, DOE reviewed motor installation cost data from RS Means Electrical Cost Data 2013 which showed a variation in installation costs by horsepower (for three-phase electric motors), but not by efficiency. Therefore, DOE assumed there was no variation in installation costs between a baseline efficiency electric motor and a higher efficiency electric motor. 79 FR 30934, 30978. DOE reviewed repair and maintenance cost data from Vaughen's Price Publishing Company, 11 which publishes an industry reference guide on motor repair and maintenance pricing. The price of replacing bearings, which is the most common maintenance practice, was found to be the same at all efficiency levels. Therefore, DOE did not consider variations in maintenance costs by efficiency levels for electric motors in its analysis. DOE accounted for the differences in repair costs of a higher efficiency motor compared to a baseline efficiency motor. 12 Based on data from Vaughen's, DOE derived a model to estimate repair costs by horsepower, enclosure and pole, for each efficiency level. As part of a potential energy conservation standards rulemaking, should one be conducted, DOE would review available motor installation, maintenance and repair cost information and update these inputs as appropriate.

Issue G.1  DOE requests feedback and data on whether installation and maintenance costs at higher efficiency levels differ in comparison to the baseline installation and maintenance costs for any of the specific technology options listed in Table II.2. To the extent that these costs differ, DOE seeks supporting data and the reasons for those differences.

Issue G.2  DOE requests information and data on the frequency of repair and repair costs by equipment class for the technology options listed in Table II.2. While DOE is interested in information regarding each of the listed technology options, DOE is also interested in whether consumers simply replace the equipment when it fails as opposed to repairing it.

The equipment lifetime is the age at which given equipment is retired from service. In the May 2014 Final Rule, DOE estimated the mechanical lifetime of electric motors in hours ( i.e., the total number of hours an electric motor operates throughout its lifetime), depending on its horsepower size and sector of application. DOE then developed Weibull distributions of mechanical lifetimes. The lifetime in years for a sampled electric motor was then calculated by dividing the sampled mechanical lifetime by the sampled annual operating hours of the electric motor.

In the May 2014 Final Rule, DOE established sector-specific motor lifetime estimates to account for differences in maintenance practices and field usage conditions. DOE consulted a subject matter expert to obtain lifetime information for the industrial sector. For the agricultural and commercial sector, DOE referred to published average lifetimes cited in previous publications. 13 See Chapter 8 of the May 2014 Final Rule TSD for further discussion of the lifetime estimate.

Issue G.3  DOE seeks data and input on the appropriate equipment lifetimes for electric motors both in years and by sector and in lifetime mechanical hours that DOE should apply when performing its analysis.

To accurately estimate the share of consumers that would be affected by a potential energy conservation standard at a particular efficiency level, DOE's LCC analysis considers the projected distribution (market shares) of equipment efficiencies in the no-new-standards case ( i.e., the case without amended or new energy conservation standards) in the compliance year.

In the May 2014 Final Rule, DOE used the number of models meeting the requirements of each efficiency level from six major manufacturers and one distributor's catalog data to develop the “no new standards” case efficiency distributions in the base year (2012). The distribution was estimated separately for each equipment class group and horsepower range. Beyond 2012, for NEMA Design A and B motors, DOE assumed the efficiency distributions varied over time based on historical data  14 for the market penetration of more efficient motors. For other equipment class groups, DOE did not find sufficient data to develop efficiency trends for them—and as a result, DOE kept the base case efficiency distributions in the compliance year equal to 2012 levels.

Issue G.4 DOE seeks data and input on the appropriate efficiency distribution in the no-new standards case for electric motors.

DOE develops shipments forecasts of electric motors to calculate the national impacts of potential amended energy conservation standards on energy consumption, net present value (“NPV”), and future manufacturer cash flows. DOE shipments projections are based on available historical data broken out by equipment class, horsepower, and efficiency. Current sales estimates allow for a more accurate model that captures recent trends in the market.

In the May 2014 Final Rule, DOE's shipments projection assumed that electric motor sales are driven by machinery production growth for equipment, including motors. DOE estimated that growth rates for total motor shipments correlate to growth rates in fixed investment in equipment and structures including motors, as provided by the U.S. Bureau of Economic Analysis. 15 The base year market distributions were maintained over the 30-year analysis period. See Chapter 9 of the 2014 May Final Rule TSD for further discussion of the prior shipments analysis. DOE may consider using a similar approach if it undertakes an energy conservation standards rulemaking.

Issue H.1  DOE requests 2019 annual sales data (or the most recent year available) — i.e., number of shipments—for electric motors by equipment class. If disaggregated data of annual sales are not available at the equipment class level, DOE requests more aggregated data of annual sales at the equipment class group level.

Issue H.2  DOE requests 2019 data (or the most recent year available) on the fraction of sales in the industrial, agriculture, and commercial sectors for electric motors by equipment class group.

Issue H.3  DOE requests information on the rate at which annual sales ( i.e., number of shipments) of electric motors is expected to change in the next 5-10 years. If possible, DOE requests this information by equipment class. If disaggregated data of annual sales are not available at the equipment class level, DOE requests more aggregated data of annual sales at the equipment class group level.

Issue H.4  DOE requests data and information on any trends in the motor market that could be used to forecast expected trends in market share by efficiency levels for each equipment class. If disaggregated data are not available at the equipment class level, DOE requests aggregated data at the equipment class group level.

The purpose of the manufacturer impact analysis (“MIA”) is to estimate the financial impact of amended energy conservation standards on manufacturers of electric motors, and to evaluate the potential impact of such standards on direct employment and manufacturing capacity. The MIA includes both quantitative and qualitative aspects. The quantitative part of the MIA primarily relies on the Government Regulatory Impact Model (“GRIM”), an industry cash-flow model adapted for electric motors included in this analysis, with the key output of industry net present value (“INPV”). The qualitative part of the MIA addresses the potential impacts of energy conservation standards on direct employment and manufacturing capacity, as well as factors such as product characteristics, impacts on particular subgroups of firms, industry competition, and important market and product trends.

As part of the MIA, DOE intends to analyze impacts of amended energy conservation standards on subgroups of manufacturers of the covered equipment, including small business manufacturers. DOE uses the Small Business Administration's (“SBA”) small business size standards to determine whether manufacturers qualify as small businesses, which are listed by the applicable North American Industry Classification System (“NAICS”) code. 16 Manufacturing of consumer electric motors is classified under NAICS 335312, “Motor and Generator Manufacturing” and the SBA sets a threshold of 1,250 employees or less for a domestic entity to be considered as a small business. This employee threshold includes all employees in a business' parent company and any other subsidiaries.

One aspect of assessing manufacturer burden involves examining the cumulative impact of multiple DOE standards and the product-specific regulatory actions of other Federal agencies that affect the manufacturers of a covered product or equipment. While any one regulation may not impose a significant burden on manufacturers, the combined effects of several existing or impending regulations may have serious consequences for some manufacturers, groups of manufacturers, or an entire industry. Assessing the impact of a single regulation may overlook this cumulative regulatory burden. In addition to energy conservation standards, other regulations can significantly affect manufacturers' financial operations. Multiple regulations affecting the same manufacturer can strain profits and lead companies to abandon product lines or markets with lower expected future returns than competing products. For these reasons, DOE conducts an analysis of cumulative regulatory burden as part of its rulemakings pertaining to appliance efficiency.

Issue I.1  To the extent feasible, DOE seeks the names and contact information of any domestic or foreign-based manufacturers that distribute electric motors in the United States.

Issue I.2  DOE identified small businesses as a subgroup of manufacturers that could be disproportionally impacted by amended energy conservation standards. DOE requests the names and contact information of small business manufacturers, as defined by the SBA's size threshold, of electric motors that distribute equipment in the United States. In addition, DOE requests comment on any other manufacturer subgroups that could be disproportionally impacted by amended energy conservation standards. DOE requests feedback on any potential approaches that could be considered to address adverse impacts on manufacturers, including small businesses.

Issue I.3  DOE requests information regarding the cumulative regulatory burden impacts on manufacturers of electric motors associated with (1) other DOE standards applying to different products that these manufacturers may also make and (2) product-specific regulatory actions of other Federal agencies. DOE also requests comment on its methodology for evaluating cumulative regulatory burden and whether there are any flexibilities it can (and should) consider that would reduce this burden while remaining consistent with the requirements of EPCA.

In the field of economics, a market failure is a situation in which the market outcome does not maximize societal welfare. Such an outcome would result in unrealized potential welfare. DOE welcomes comment on any aspect of market failures, especially those in the context of amended energy conservation standards for electric motors.

DOE published an RFI on the emerging smart technology appliance and equipment market. 83 FR 46886 (Sept. 17, 2018). In that RFI, DOE sought information to better understand market trends and issues in the emerging market for appliances and commercial equipment that incorporate smart technology. DOE's intent in issuing the RFI was to ensure that DOE did not inadvertently impede such innovation in fulfilling its statutory obligations in setting efficiency standards for covered products and equipment. DOE seeks comments, data and information on the issues presented in the RFI as they may be applicable to energy conservation standards for electric motors.

Additionally, DOE welcomes comments on other issues relevant to the conduct of this rulemaking that may not specifically be identified in this document. In particular, DOE notes that under Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” Executive Branch agencies such as DOE are directed to manage the costs associated with the imposition of expenditures required to comply with Federal regulations. See 82 FR 9339 (Feb. 3, 2017). Consistent with that Executive Order, DOE encourages the public to provide input on measures DOE could take to lower the cost of its energy conservation standards rulemakings, recordkeeping and reporting requirements, and compliance and certification requirements applicable to electric motors while remaining consistent with the requirements of EPCA.

DOE invites all interested parties to submit in writing by the date specified previously in the DATES section of this document, comments and information on matters addressed in this document and on other matters relevant to DOE's consideration of amended energy conservations standards for electric motors. After the close of the comment period, DOE will review the public comments received and may begin collecting data and conducting the analyses discussed in this document.

Submitting comments via http://www.regulations.gov. The http://www.regulations.gov web page requires you to provide your name and contact information. Your contact information will be viewable to DOE Building Technologies Office staff only. Your contact information will not be publicly viewable except for your first and last names, organization name (if any), and submitter representative name (if any). If your comment is not processed properly because of technical difficulties, DOE will use this information to contact you. If DOE cannot read your comment due to technical difficulties and cannot contact you for clarification, DOE may not be able to consider your comment.

However, your contact information will be publicly viewable if you include it in the comment or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments.

Do not submit to http://www.regulations.gov information for which disclosure is restricted by statute, such as trade secrets and commercial or financial information (hereinafter referred to as Confidential Business Information (“CBI”)). Comments submitted through http://www.regulations.gov cannot be claimed as CBI. Comments received through the website will waive any CBI claims for the information submitted. For information on submitting CBI, see the Confidential Business Information section.

DOE processes submissions made through http://www.regulations.gov before posting. Normally, comments will be posted within a few days of being submitted. However, if large volumes of comments are being processed simultaneously, your comment may not be viewable for up to several weeks. Please keep the comment tracking number that www.regulations.gov provides after you have successfully uploaded your comment.

Submitting comments via email, hand delivery/courier, or postal mail. Comments and documents submitted via email, hand delivery/courier, or postal mail also will be posted to http://www.regulations.gov. If you do not want your personal contact information to be publicly viewable, do not include it in your comment or any accompanying documents. Instead, provide your contact information on a cover letter. Include your first and last names, email address, telephone number, and optional mailing address. The cover letter will not be publicly viewable as long as it does not include any comments.

Include contact information each time you submit comments, data, documents, and other information to DOE. If you submit via postal mail or hand delivery/courier, please provide all items on a CD, if feasible. It is not necessary to submit printed copies. No telefacsimiles (faxes) will be accepted.

Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are not secured, written in English and free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author.

Campaign form letters. Please submit campaign form letters by the originating organization in batches of between 50 to 500 form letters per PDF or as one form letter with a list of supporters' names compiled into one or more PDFs. This reduces comment processing and posting time.

Confidential Business Information. According to 10 CFR 1004.11, any person submitting information that he or she believes to be confidential and exempt by law from public disclosure should submit via email, postal mail, or hand delivery/courier two well-marked copies: One copy of the document marked confidential including all the information believed to be confidential, and one copy of the document marked “non-confidential” with the information believed to be confidential deleted. Submit these documents via email or on a CD, if feasible. DOE will make its own determination about the confidential status of the information and treat it according to its determination.

It is DOE's policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure).

DOE considers public participation to be a very important part of the process for developing energy conservation standards. DOE actively encourages the participation and interaction of the public during the comment period in each stage of the rulemaking process. Interactions with and between members of the public provide a balanced discussion of the issues and assist DOE in the rulemaking process.

Anyone who wishes to be added to the DOE mailing list to receive future notices and information about this process or would like to request a public meeting should contact Appliance and Equipment Standards Program staff at (202) 287-1445 or via email at ApplianceStandardsQuestions@ee.doe.gov.

This document of the Department of Energy was signed on March 10, 2020, by Alexander N. Fitzsimmons, Deputy Assistant Secretary for Energy Efficiency, Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register.

On February 21, 2020, the Bureau issued an SNPRM proposing to amend Regulation F, 12 CFR part 1006, to prescribe Federal rules governing the activities of debt collectors, as that term is defined in the FDCPA. The SNPRM was published in the Federal Register on March 3, 2020. 1 The SNPRM proposed to require debt collectors to make certain disclosures when collecting time-barred debts.

The SNPRM provided a 60-day public comment period that was set to close on May 4, 2020. In light of the challenges posed by the COVID-19 pandemic, and in response to requests from stakeholders to give interested parties more time to conduct outreach to relevant constituencies and to properly address the many questions presented in the SNPRM, the Bureau extended the comment period until June 5, 2020. 2 Since extending the comment period, the Bureau has received requests from a consumer advocacy group, a debt collection trade association, and three State Attorneys General to extend the comment period for an additional 60- day period. These stakeholders state that the COVID-19 pandemic continues to make it difficult to respond to the SNPRM thoroughly. The Bureau agrees that the pandemic makes it difficult to respond to the SNPRM thoroughly and to determine when stakeholders will be able to do so. To ensure that stakeholders have the time they need to provide such responses, the Bureau concludes that an extension of the SNPRM comment period to August 4, 2020, is appropriate. This extension should allow interested parties more time to prepare responses to the SNPRM without delaying the rulemaking on this topic. The SNPRM comment period will now close on August 4, 2020.

The Director of the Bureau, having reviewed and approved this document, is delegating the authority to electronically sign this document to Laura Galban, a Bureau Federal Register Liaison, for purposes of publication in the Federal Register .

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.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to remove AD 2017-14-05, Amendment 39-18949 (82 FR 31899, July 11, 2017) (“AD 2017-14-05”) and add a new AD. AD 2017-14-05 applies to Airbus Helicopters Model SA330J helicopters with certain serial-numbered LH and RH hydraulic pumps part number (P/N) FR65WEO2005-175A installed. EASA, which is the Technical Agent for the Member States of the European Union, had issued EASA Emergency AD No. 2016-0264-E, dated December 22, 2016 (EASA AD 2016-0264-E), which prompted AD 2017-14-05. EASA had advised of reports of broken screws (bolts) that attach the cover of the hydraulic pump. Subsequent investigation identified a batch of screws that have intrinsic embrittlement and reduced mechanical properties because hydrogen was introduced into this batch of screws during production. Accordingly, AD 2017-14-05 requires replacing the RH hydraulic pump within 15 hours time-in-service (TIS) and prohibits the installation of an affected hydraulic pump on any helicopter. The actions of AD 2017-14-05 are intended to prevent failure of a hydraulic pump cover attachment bolt, which could result in loss of fluid from the hydraulic pump, loss of the hydraulic system, and subsequent loss of control of the helicopter.

AD 2017-14-05 requires shorter-term requirements that did not allow enough time to provide notice and opportunity for prior public comment. The NPRM was issued to add a longer-term requirement that allowed enough time to provide notice and opportunity for prior public comment. The NPRM published in the Federal Register on October 21, 2019 (84 FR 56152), and proposed to require replacing an affected RH hydraulic pump within 15 hours TIS from July 26, 2017 (the effective date of AD 2017-14-05), replacing an affected LH hydraulic pump within 110 hours TIS, and also proposed to prohibit installing an affected hydraulic pump on any helicopter.

Since the FAA issued the NPRM, it was determined that the NPRM addressed only helicopters with affected hydraulic pumps installed on both the LH and RH sides. However, the FAA intended to include helicopters that have only one affected hydraulic pump installed on either the LH or RH side as well. This SNPRM expands the applicability to include helicopters that have an affected hydraulic pump on one or both sides and changes the proposed requirements to address helicopters with an affected hydraulic pump installed on only one side. Further, the nomenclature of “screw” has been corrected to “bolt” in this SNPRM.

Additionally, since the FAA issued the NPRM, the website address for Airbus Helicopters has changed.

After the NPRM was published, the FAA received comments from two commenters. However, the comments addressed neither the proposed actions nor the determination of the cost to the public. Therefore, the FAA has made no changes based on these comments.

The FAA is proposing this SNPRM after evaluating all known relevant information and determining that an unsafe condition is likely to exist or develop on other helicopters of these same type designs. Certain changes described above expand the scope of the original NPRM. As a result, the FAA has determined that it is necessary to reopen the comment period to provide additional opportunity for the public to comment on this SNPRM.

The FAA reviewed Airbus Helicopters Emergency Alert Service Bulletin No. SA330-29.12, Revision 0, dated December 22, 2016, which specifies removing Nexter Mechanics hydraulic pumps P/N FR65WEO2005-175A with certain serial numbers (S/Ns). If both the RH and LH hydraulic pumps have an affected P/N and S/N, the service information specifies replacing the RH hydraulic pump before further flight and the LH hydraulic pump within 110 flying hours or 6 months. If only one hydraulic pump has an affected P/N and S/N, the service information specifies replacing it within 110 flying hours or 6 months. The service information also specifies that, for 6 months after receipt of the service information, an affected hydraulic pump must be “returned to conformity” by complying with Nexter Mechanics Alert Service Bulletin No. NM/INGE/16-140, Revision 0, dated December 22, 2016, before installation.

For helicopters with an affected hydraulic pump installed on both the LH and RH sides, this SNPRM would require replacing the RH hydraulic pump within 15 hours TIS from July 26, 2017 (the effective date of AD 2017-14-05) and replacing the LH hydraulic pump within 110 hours TIS. For helicopters with an affected hydraulic pump installed on either the LH or RH side, this SNPRM would require replacing the affected hydraulic pump within 110 hours TIS. This SNPRM would also prohibit installation of an affected hydraulic pump on any helicopter.

The FAA estimates that this proposed AD would affect 24 helicopters of U.S. Registry. Labor costs are estimated at $85 per work-hour. Based on these numbers, the FAA estimates that operators may incur the following costs in order to comply with this proposed AD.

Replacing a hydraulic pump would take about 2 work-hours and parts would cost about $2,500 for an estimated cost of $2,670 per hydraulic pump.

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

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

The FAA has determined that this 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 above, 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:

I. Background A. The Statute

On August 13, 2018, the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), Subtitle A of Title XVII of Public Law 115-232, 132 Stat. 2173, was enacted. FIRRMA amends section 721 (section 721) of the Defense Production Act of 1950, as amended (DPA), which delineates the authorities and jurisdiction of the Committee on Foreign Investment in the United States (CFIUS or the Committee). Executive Order 13456, 73 FR 4677 (Jan. 23, 2008), directs the Secretary of the Treasury to issue regulations implementing section 721. This proposed rule is being issued pursuant to that authority.

FIRRMA maintains the Committee's jurisdiction over any transaction which could result in foreign control of any U.S. business, and broadens the authorities of the President and CFIUS under section 721 to review and take action to address national security concerns arising from certain non-controlling investments and real estate transactions involving foreign persons. FIRRMA also modernizes CFIUS's processes to better enable timely and effective reviews of transactions falling under its jurisdiction, including by introducing the concept of a declaration—an abbreviated notification on which the Committee must take action under a 30-day assessment period—as an alternative to a voluntary notice, which had been the traditional means of filing a transaction with CFIUS.

FIRRMA also continues the largely voluntary nature of the CFIUS process with respect to most transactions. However, notifying CFIUS of a transaction is mandatory in some circumstances. Specifically, FIRRMA authorizes CFIUS to mandate through regulations the submission of a declaration for covered transactions involving certain U.S. businesses that produce, design, test, manufacture, fabricate, or develop one or more critical technologies. Implementation of that authority is the primary subject of this proposed rule. FIRRMA also requires declarations for certain covered transactions where a foreign government has a “substantial interest” in a foreign person that will acquire a substantial interest in certain types of U.S. businesses. This proposed rule makes clarifying amendments with respect to the definition of substantial interest. In both cases of mandatory declarations, parties have the option of filing a notice rather than submitting a declaration if they so choose.

As background, on October 11, 2018, the Treasury Department published an interim rule that implemented—on a temporary basis as a pilot program—a declaration requirement for certain foreign investment transactions involving U.S. businesses with certain activities involving one or more critical technologies (Pilot Program Interim Rule). 83 FR 51322. Specifically, the Pilot Program Interim Rule made effective and implemented on November 10, 2018, a part of the Committee's jurisdiction over certain non-controlling investments, and established mandatory declarations for certain non-controlling investments in, and certain transactions that could result in control by a foreign person of, U.S. businesses that produce, design, test, manufacture, fabricate, or develop one or more critical technologies in connection with any of 27 industries identified by reference to the North American Industry Classification System (NAICS). The Pilot Program Interim Rule provided for a public comment period, and a number of comments were received. Additional comments on the scope of this mandatory declaration pilot program were received in connection with the notice of proposed rulemaking published on September 24, 2019, proposing amendments to 31 CFR part 800 to implement provisions of FIRRMA more broadly. 84 FR 50174. On January 17, 2020, the Treasury Department published a final rule at 85 FR 3112 (Part 800 Rule) amending 31 CFR part 800 to implement provisions of FIRRMA, and the final rule took effect on February 13, 2020. With respect to the mandatory declarations for critical technology transactions, the Part 800 Rule largely incorporates the scope of the Pilot Program Interim Rule, which is based on whether a transaction involves certain U.S. businesses with specified activities involving critical technologies and a nexus to industries identified by NAICS codes. In response to public comments, and as described in more detail in the preamble to the Part 800 Rule, certain modifications were made in the Part 800 Rule. In particular, the Part 800 Rule exempts from the critical technology transaction declaration requirement (but not CFIUS jurisdiction) certain transactions involving excepted investors (as defined in the Part 800 Rule); entities subject to an agreement to mitigate foreign ownership, control, or influence pursuant to the National Industrial Security Program regulations; certain encryption technologies; and certain investment funds managed exclusively by, and ultimately controlled by, U.S. nationals. The Pilot Program Interim Rule continues to apply only to transactions falling within the scope of that rule and for which specified actions were taken on or after its effective date and prior to the effective date of the Part 800 Rule ( i.e., from November 10, 2018, through February 12, 2020, as described in 31 CFR 801.103). The scope of mandatory declarations for critical technology transactions in the Part 800 Rule will continue to apply until this rulemaking is finalized.

In further consideration of public comments submitted on the prior rulemakings discussed above, and as informed by the Committee's experience assessing mandatory declarations for certain transactions involving critical technologies for over a year, as well as other national security considerations, this proposed rule modifies the scope of the mandatory declaration provision for certain transactions involving critical technologies. Consistent with CFIUS processes generally, the proposed rule reflects extensive consultation with CFIUS member agencies and the conclusion that a provision continuing the implementation of mandatory declarations for transactions involving critical technologies furthers the protection of national security.

The proposed rule revises the declaration requirement for certain critical technology transactions so that it is based on whether certain U.S. government authorizations would be required to export, re-export, transfer (in country), or retransfer the critical technology or technologies produced, designed, tested, manufactured, fabricated, or developed by the U.S. business to certain transaction parties and foreign persons in the ownership chain. The proposed rule removes the NAICS code criteria and the list of NAICS codes at appendix B to the Part 800 Rule. In focusing on export control requirements for the critical technologies, the proposed rule leverages the national security foundations of the established export control regimes, which require licensing or authorization in certain cases based on an analysis of the particular item and end user, and the particular foreign country for export, re-export, transfer (in country), or retransfer. To accomplish this, the proposed rule amends § 800.104 (applicability rule) and § 800.401 (mandatory declarations) and introduces two new definitions: “U.S. regulatory authorization” and “voting interest for purposes of critical technology mandatory declarations.”

The proposed rule does not modify the definition of “critical technologies,” which is defined by FIRRMA, and implemented at § 800.215 of the Part 800 Rule. This proposed rule instead prescribes the types of transactions subject to mandatory declarations based on whether certain types of regulatory licenses or authorizations would be required for export and related activities involving the specific critical technology of the U.S. business. More broadly, consistent with FIRRMA and the Export Control Reform Act of 2018 (ECRA), CFIUS will continue its role in the process to identify emerging and foundational technologies as set forth in section 1758(a) of ECRA.

The proposed rule also makes clarifying amendments to paragraphs (b) and (c) of the definition of substantial interest at § 800.244 of the Part 800 Rule, which establishes how to determine the percentage interest held indirectly by one entity in another for purposes of that term. In particular, the proposed rule clarifies that paragraph (b) applies only where a general partner, managing member, or equivalent primarily directs, controls, or coordinates the activities of the entity. It also removes the word “voting” before “interest” wherever it appears in paragraph (c) so that the calculation rule clearly applies to the calculation of “voting interests” as described in paragraph (a) and “interests” as described in paragraph (b) of that section.

The proposed rule retains paragraph (c) to this section regarding the applicability period for transactions subject to the Pilot Program Interim Rule. The proposed rule adds paragraph (d) to clarify the applicability period of the provisions in the Part 800 Rule in light of the changes proposed in this rule. In particular, paragraph (d) limits the mandatory declaration provision in the Part 800 Rule to certain transactions involving critical technologies and for which specified actions ( e.g., execution of a binding written agreement) took place between the Part 800 Rule's effectiveness (February 13, 2020) and the effective date of the rule finalizing this proposed rule. Additionally, the proposed rule adds paragraph (e) setting forth the effective date for the proposed amendments and the new defined terms discussed in this rule, which date will be determined by the time the final rule is published.

For the avoidance of doubt, the result of the applicability rule with the proposed modification will be as follows. The Pilot Program Interim Rule will continue to apply to transactions for which specified actions occurred on or after November 10, 2018, and prior to February 13, 2020, as specified in the regulations at 31 CFR 801.103. The existing critical technology mandatory declaration provision based on NAICS codes and published in the Part 800 Rule will apply to transactions for which specified actions occurred from February 13, 2020, until the effective date of the rule finalizing this proposed rule, as specified in the proposed rule at § 800.104(d). The modifications to the critical technology mandatory declaration provision discussed in this proposed rule would apply—once finalized—starting on the effective date of the final rule, except for certain transactions for which specified actions occurred prior to the effective date of the final rule.

The proposed rule makes clarifying amendments to § 800.244(b) and (c) and sets forth two new defined terms to be added to subpart B of part 800 as discussed below.

With respect to the definition of substantial interest, the proposed rule adds language to § 800.244(b) to clarify that it applies only where the general partner, managing member, or equivalent primarily directs, controls, or coordinates the activities of the entity. It also removes three instances of the word “voting” from § 800.244(c) in order to clarify that paragraph (c) applies not only to § 800.244(a) but also to § 800.244(b).

The proposed rule introduces the term and a definition of “U.S. regulatory authorization” to specify the types of regulatory licenses or authorizations that are required under the four main U.S. export control regimes, which if applicable in the context of a particular transaction described under the proposed rule, would trigger a mandatory declaration. With respect to the International Traffic in Arms Regulations (ITAR) administered by the Department of State, this includes licenses and other approvals ( e.g., approved technical assistance agreements or manufacturing license agreements) required by the Directorate of Defense Trade Controls for defense articles or defense services on the United States Munitions List. With respect to the Export Administration Regulations (EAR) administered by the Department of Commerce, this includes licenses required for certain items on the Commerce Control List as identified in the Part 800 Rule at § 800.215(b). With respect to the regulations administered by the Department of Energy at 10 CFR part 810, this includes specific or general authorizations required under such regulations, except the general authorization at 10 CFR 810.6(a) for the export of certain controlled nuclear technology to specified countries or entities. Finally, with respect to the regulations administered by the Nuclear Regulatory Commission at 10 CFR part 110, this includes any specific license required under such regulations.

The proposed rule introduces the term and provides a definition of “voting interest for purposes of critical technology mandatory declarations.” This term is used in the proposed language at § 800.401(c)(1)(v) to specify which persons in the ownership chain of foreign persons described in paragraphs (c)(1)(i) to (iv) of that section should be analyzed for export licenses and authorization purposes in determining whether a particular transaction could trigger a mandatory declaration. In seeking to set clear criteria with respect to the foreign persons that need to be analyzed under this provision, the definition establishes a threshold of a 25 percent voting interest, direct or indirect. For entities whose activities are primarily directed, controlled, or coordinated by or on behalf of a general partner, managing member, or equivalent, the applicable threshold is a 25 percent interest in an entity's general partner, managing member, or equivalent. For purposes of determining the percentage of interest held indirectly by one person in another, the rule establishes that any interest of a parent entity in a subsidiary entity will be deemed to be a 100 percent interest. This approach to determining the percentage of interest is consistent with the proposed amendments to the definition of substantial interest at § 800.244(c), discussed above. Finally, the proposed rule specifies when the ownership interests of separate foreign persons will be aggregated for the purposes of § 800.256.

The proposed rule modifies § 800.401(c), (e)(6) and (j), and also removes appendix B to the Part 800 Rule, to re-scope the mandatory declarations for transactions involving U.S. businesses with critical technologies. Thus, transaction parties would no longer need to consider whether the U.S. business produces, designs, tests, manufactures, fabricates, or develops a critical technology utilized in connection with the U.S. business' activity in, or designed by the U.S. business for use in, one or more industries identified by reference to NAICS codes. Instead, mandatory declarations apply only to the extent that the critical technologies that the U.S. business produces, designs, tests, manufactures, fabricates, or develops would require a U.S. regulatory authorization to export, re-export, transfer (in-country), or retransfer to the foreign persons involved in the transaction or certain foreign persons in the ownership chain as specified in § 800.401(c)(1)(i)-(v).

The proposed language at § 800.401(c)(2) further clarifies the analysis required under § 800.401(c)(1). In particular, it makes clear that, except for certain EAR license exceptions specified at § 800.401(e)(6), which are discussed below, a U.S. regulatory authorization is considered to be required even though a license exception or exemption may be available under the EAR or ITAR, respectively. It also specifies how to analyze a foreign investor's nationality for purposes of this provision. Finally, in cases where the applicable U.S. regulatory authorization is tied to the “end user” status of the person receiving the critical technology, the proposed language at § 800.401(c)(2)(iii) specifies that for purposes of this analysis, the foreign person(s) specified in § 800.401(c)(1)(i)-(v) should be considered the end user(s).

The proposed rule retains the exceptions in the Part 800 Rule at § 800.401(e)(1) to (5) and revises the exception at paragraph (e)(6). In particular, the proposed rule modifies the description of the EAR license exception for encryption commodities, software, and technology (ENC) to specify that only subpart (b) of EAR license exception ENC is relevant for purposes of the paragraph (e)(6) exception to mandatory declarations for critical technology transactions. The scope of that exception is narrowed in the proposed rule in order to provide clarity regarding the applicability of certain subparts of that exception in the context of mandatory declarations. It also adds two more license exceptions under the EAR to paragraph (e)(6): Technology and software-unrestricted (TSU) and certain elements of strategic trade authorization (STA). Note, however, that for any of the aforementioned license exceptions to relieve the declaration requirement with respect to a foreign person, such foreign person must in fact be eligible to utilize the license exception (including based on end user status, if relevant). These EAR license exceptions were selected for inclusion at paragraph (e)(6) based on national security considerations. CFIUS also notes that the restrictions on the use of all license exceptions found in 15 CFR 740.2 would apply and must also be considered.

The proposed rule also updates the examples at § 800.401(j) to reflect the aforementioned revisions to § 800.401(c). No changes were made to § 800.403 regarding procedures for declarations or to § 800.404 regarding contents of declarations. Finally, for the avoidance of doubt, pursuant to FIRRMA, the mandatory declaration provision at § 800.401(c) applies only to critical technology businesses under § 800.248(a), not to businesses that are TID U.S. businesses solely under § 800.248(b) or (c).

These regulations are not subject to the general requirements of Executive Order 12866, which covers review of regulations by the Office of Information and Regulatory Affairs in the Office of Management and Budget (OMB), because they relate to a foreign affairs function of the United States, pursuant to section 3(d)(2) of that order. In addition, these regulations are not subject to review under section 6(b) of Executive Order 12866 pursuant to section 7(c) of the April 11, 2018, Memorandum of Agreement between the Treasury Department and OMB, which states that CFIUS regulations are not subject to OMB's standard centralized review process under Executive Order 12866.

The collection of information contained in this notice of proposed rulemaking has previously been submitted to OMB for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d), PRA), and approved under OMB Control Number 1505-0121. Under the PRA, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid OMB control number.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq., RFA) generally requires an agency to prepare a regulatory flexibility analysis unless the agency certifies that the rule will not, once implemented, have a significant economic impact on a substantial number of small entities. The RFA applies whenever an agency is required to publish a general notice of proposed rulemaking under section 553(b) of the Administrative Procedure Act (5 U.S.C. 553, APA), or any other law. As set forth below, because regulations issued pursuant to the DPA, such as these regulations, are not subject to the APA or another law requiring the publication of a general notice of proposed rulemaking, the RFA does not apply.

The proposed rule implements section 721 of the DPA. Section 709(a) of the DPA provides that the regulations issued under it are not subject to the rulemaking requirements of the APA. Section 709(b)(1) instead provides that any regulation issued under the DPA be published in the Federal Register and opportunity for public comment be provided for not less than 30 days. Section 709(b)(3) of the DPA also provides that all comments received during the public comment period be considered and the publication of the final regulation contain written responses to such comments. Consistent with the plain text of the DPA, legislative history confirms that Congress intended that regulations under the DPA be exempt from the notice and comment provisions of the APA and instead provided that the agency include a statement that interested parties were consulted in the formulation of the final regulation. See H.R. Conf. Rep. No. 102-1028, at 42 (1992) and H.R. Rep. No. 102-208 pt. 1, at 28 (1991). The limited public participation procedures described in the DPA do not require a general notice of proposed rulemaking as set forth in the RFA. Further, the mechanisms for publication and public participation are sufficiently different to distinguish the DPA procedures from a rule that requires a general notice of proposed rulemaking. In providing the President with expanded authority to suspend or prohibit the acquisition, merger, or takeover of, or certain other investments in, a U.S. business by a foreign person if such a transaction would threaten to impair the national security of the United States, Congress could not have contemplated that regulations implementing such authority would be subject to RFA analysis. For these reasons, the RFA does not apply to these regulations.

Regardless of whether the RFA applies, available data does not suggest that the proposed rule, if implemented, will have a significant economic impact on a substantial number of small entities. For purposes of the RFA, a “small entity” is (1) a proprietary firm meeting the size standards of the Small Business Administration (SBA); (2) a nonprofit organization that is not dominant in its field; or (3) a small government jurisdiction with a population of less than 50,000. 5 U.S.C. 601(3)-(6). This proposed rule would affect certain U.S. businesses that have particular activities involving critical technologies and that receive foreign investment (direct or indirect) of the type described in the proposed rule. These U.S. businesses could be found across a range of industries. Accordingly, because SBA size standards are designated by industry, and not all U.S. businesses that constitute small entities within a particular industry will be affected, it is difficult to apply the SBA size standards to determine how many small entities will be affected by this proposed rule. Additionally, some of these U.S. businesses are already subject to a declaration requirement when they receive foreign investment (direct or indirect) under the existing Part 800 Rule.

The Treasury Department considered the data on new foreign direct investment in the United States that is collected annually by the Bureau of Economic Analysis (BEA) within the Department of Commerce through its Survey of New Foreign Direct Investment in the United States (Form BE-13). While these data are self-reported, and include only direct investments in U.S. businesses in which the foreign person acquires at least 10 percent of the voting shares (and consequently, do not capture investments below 10 percent, which may nevertheless be covered transactions), they nonetheless provide relevant information on a category of U.S. businesses that receive foreign investment, some of which may be covered by the proposed rule.

According to the BEA, in 2018, the most current year for which data is available, foreign persons obtained at least a 10 percent voting share in 832 U.S. businesses. See U.S. Bureau of Economic Analysis, “Number of Investments Initiated in 2018, Distribution of Planned Total Expenditures, Size by Type of Investment,” available at https://apps.bea.gov/international/xls/Table15-14-15-16-17-18.xls (last visited May 6, 2020). The BEA reports only the general size of the investment transaction, not the type of the U.S. business involved, nor whether the U.S. business is considered a “small business” by the SBA. The smallest foreign investment transactions that the BEA reports are those with a dollar value below $50,000,000. While not all U.S. businesses receiving a foreign investment of less than $50,000,000 are considered “small” for the purposes of the RFA, many might be, and the number of U.S. businesses receiving foreign investments of less than $50,000,000 is the best available information to estimate the number of transactions involving small U.S. businesses that might be subject to CFIUS's jurisdiction and affected by the proposed rule.

Of the above mentioned 832 U.S. businesses receiving foreign investment in 2018, 576 were involved in transactions valued at less than $50,000,000. Although this figure is under inclusive because it does not capture all transactions that could be subject to a filing requirement pursuant to the proposed rule, it also is over inclusive because it is not limited to any particular type of U.S. business. The Treasury Department believes the figure of 576 is the best estimate based on the available data of the number of small U.S. businesses that may be impacted by this proposed rule, although the Treasury Department recognizes the limitations of this estimate.

Even if a substantial number of small entities were affected, the economic impact of the proposed rule on small U.S. businesses will not be significant. First, a portion of the U.S. businesses affected by the proposed rule are already subject to the existing declaration requirement under the Part 800 Rule. Second, the proposed rule replaces the analysis and nexus to NAICS codes with an analysis of export control authorization requirements. U.S. businesses with critical technologies are already aware, or should be aware, of the application of export controls to their items and regularly analyze export authorization requirements particularly when considering a foreign investment. The process of completing the declaration form under the proposed rule is no different from the existing Part 800 Rule. Accordingly, the proposed revisions to the Part 800 rule are not expected to change the general burden hour estimate for analyzing a transaction and preparing a declaration.

For the reasons stated above, the Secretary of the Treasury certifies that the proposed rule, if implemented, will not have a “significant economic impact on a substantial number of small entities.” 5 U.S.C. 605(b). Nevertheless, the Treasury Department is interested in any comments on how the proposed rule would affect small entities.

For the reasons set forth in the preamble, the Treasury Department proposes to amend part 800 of title 31 of the Code of Federal Regulations, to read as follows:

This is a summary of the Commission's Notice of Proposed Rulemaking (Notice) in WC Docket No. 20-71, adopted March 31, 2020 and released April 1, 2020. The full text of this document is available for public inspection during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street SW, Room CY-A257, Washington, DC 20554. It is available on the Commission's website at https://docs.fcc.gov/public/attachments/FCC-20-40A1.pdf.

1. Twenty-five years ago, consumers made most of their telephone calls from their home phones, their work phones or public payphones—and, in almost all cases, the local telephone company provided the local telephone service. Most of those companies (known as incumbent local exchange carriers) faced little to no competition as a result of state-granted monopolies. It therefore made sense for the Commission to impose pricing regulation and tariffing obligations on the portion of local telephone service used to originate and terminate interstate long-distance calls and for states to impose similar obligations on the intrastate portion of such service. Doing so protected consumers from the monopoly power of the incumbent local exchange carrier and ensured that rates were just and reasonable as required by the Communications Act, 47 U.S.C. 201(b).

2. Today, the communications marketplace is dramatically different. As a result of the Telecommunications Act of 1996, local telephone markets are open to competition. And consumers and businesses continue to rapidly migrate away from traditional telephone service provided by incumbent local exchange carriers to a multitude of voice service options offered by providers of interconnected VoIP service, mobile and fixed wireless services, and over-the-top voice applications. In light of the sweeping changes in the competitive landscape for voice services, many states have begun to deregulate the intrastate portion of local telephone service provided by incumbent local exchange carriers.

3. And yet, the Commission continues to regulate the various end-user charges associated with interstate access service offered by incumbent local exchange carriers—“Telephone Access Charges” for short. In addition to remaining subject to federal price regulation and complicated federal tariffing requirements, these Telephone Access Charges are difficult to understand, and the opaque way they are sometimes described on telephone bills reduces consumers' ability to compare the cost of different voice service offerings.

4. Significant marketplace and regulatory changes over the past two-plus decades call into question whether ex ante price regulation and tariffing of Telephone Access Charges remain in the public interest. Consistent with the Commission's commitment to eliminate outdated and unnecessary regulations and to encourage efficient competition, this Notice proposes to deregulate and detariff these charges, which represent the last handful of interstate end-user charges that remain subject to regulation. In the interest of enabling consumers to easily compare voice service offerings by different providers, the Commission also proposes to prohibit all carriers from separately listing Telephone Access Charges on customers' bills. Doing so should help ensure that a voice service provider's advertised price is closer to the total price that appears on its customers' bills.

5. Section 203 of the Communications Act of 1934, 47 U.S.C. 203, as amended (the Act), requires that common carriers file tariffs or “schedules showing all charges for itself and its connecting carriers for interstate and foreign wire or radio communication between the different points on its own system, and between points on its own system and points on the system of its connecting carriers or points on the system of any other carrier . . . and showing the classifications, practices, and regulations affecting such charges.” Commission rules currently include five tariffed Telephone Access Charges: the Subscriber Line Charge, the Access Recovery Charge, the Presubscribed Interexchange Carrier Charge, the Line Port Charge, and the Special Access Surcharge, 47 CFR 51.915(e), 51.917(e), 69.115, 69.152, 69.153, 69.157.

6. The Subscriber Line Charge. The Subscriber Line Charge was the product of the Commission's decision in 1983 to establish a formal system of tariffed charges governing intercarrier compensation. That system originally required long-distance companies (known as interexchange carriers) to pay local exchange carriers for originating and terminating long-distance calls. Those intercarrier charges did not, however, recover the entire cost of the local loop—the connection between an end user and its local exchange carrier. Instead, the Commission created the Subscriber Line Charge as the mechanism through which local exchange carriers recover a portion of the costs of their local loops through a flat per-line fee assessed on end users. The Commission adopted a flat per-line fee because the local exchange carrier's cost of providing the local loop is not traffic-sensitive. In other words, the costs of providing the local loop do not vary with the amount of traffic carried over the loop. The Commission found that requiring carriers to recover non-traffic sensitive costs through flat fees would ensure that rates were “just and reasonable” as required by the Act. Recovering the entire cost of the loop from end users, however, raised the concern that customers in high-cost areas would see a sudden increase in rates. The Commission therefore capped Subscriber Line Charges and required carriers to recover the remaining common line costs through a per-minute Carrier Common Line charge assessed on interexchange carriers. For price cap local exchange carriers, there are three categories of caps on the Subscriber Line Charge: A primary residential or single-line business cap, a non-primary residential cap, and a multi-line business cap, 47 CFR 69.152. For rate-of-return local exchange carriers, there are two such categories: a residential or single-line business cap and a multi-line business cap, 47 CFR 69.104.

7. In 1996, the Commission began reform of interstate access charges to align the access rate structure more closely with the manner in which costs are incurred. At the same time, the Commission developed a federal high-cost universal service support mechanism to make explicit subsidies that had been implicitly included in interstate access service charges. As part of that order and subsequent reforms, the Commission increased the Subscriber Line Charge caps for price cap carriers as follows:

• $6.50 for primary residential and single-line business lines;

• $7.00 for non-primary residential lines; and

• $9.20 per line for multi-line business lines.

47 CFR 69.152(d), (e), (k). The Commission then amended the interstate access charge system for rate-of-return carriers, increasing the Subscriber Line Charge caps to the levels established for price cap carriers.

8. The Commission does not regulate the end-user charges of competitive local exchange carriers because it has found that competitive local exchange carriers generally lack market power in the provision of telecommunications service. Thus, competitive local exchange carriers are free to build into their end-user rates for voice service any charge, including an amount equivalent to the incumbent local exchange carriers' Subscriber Line Charge, subject only to the general requirement that their rates be just and reasonable, 47 U.S.C. 201(b).

9. The Access Recovery Charge. The Commission created the Access Recovery Charge in 2011 as part of new rules requiring local exchange carriers to reduce, over a period of years, many of their switched access charges assessed on interexchange carriers, with the ultimate goal of transitioning intercarrier compensation to a bill-and-keep regime. The Commission adopted a transitional recovery mechanism to mitigate the impact of reduced intercarrier compensation revenues on incumbent local exchange carriers and to facilitate continued investment in broadband-capable infrastructure. The Commission defined a portion of the revenues that incumbent local exchange carriers lost due to reduced access charges as “Eligible Recovery” and allowed eligible carriers to use a combination of a new limited end-user charge—known as the Access Recovery Charge—and universal service support (known as CAF Intercarrier Compensation or CAF ICC) to recover their Eligible Recovery.

10. Incumbent local exchange carriers may assess an Access Recovery Charge on customers in the form of a monthly fixed charge. To ensure that any increases to the Access Recovery Charge would not adversely impact service affordability, the Commission limited annual increases of the Access Recovery Charge to $0.50 per month for residential and single-line businesses and $1.00 per month for multiline businesses. In addition, residential and single-line business Access Recovery Charges cannot exceed $2.50 per line per month for price cap carriers and $3.00 per line per month for rate-of-return carriers. Access Recovery Charges for multi-line businesses are capped at $5.00 per line per month for price cap carriers and $6.00 per line per month for rate-of-return carriers. In addition, the multi-line business Access Recovery Charge plus the Subscriber Line Charge may not exceed $12.20 per line per month, 47 CFR 51.915(e), 51.917(e).

11. The Commission adopted these caps to fairly balance recovery across all end users, to protect customers from carriers imposing excessive Access Recovery Charges, and to ensure that the total rates that multi-line businesses pay for Subscriber Line Charge and Access Recovery Charge line items remain just and reasonable. The Access Recovery Charge is tariffed separately from the Subscriber Line Charge but may be combined with the Subscriber Line Charge on bills to customers.

12. Carriers that choose not to impose the maximum Access Recovery Charge on their end users must still impute the full Access Recovery Charge revenue they are permitted to collect for purposes of calculating CAF ICC support. In addition, rate-of-return carriers offering consumer broadband-only lines must impute an Access Recovery Charge amount equal to the amount that would have been assessed on a voice or voice-data line in calculating CAF ICC support.

13. In the USF/ICC Transformation Order, the Commission established a sunset date for price cap carriers' CAF ICC Support. Specifically, as of July 1, 2019, a price cap carrier unable to recover its entire Eligible Recovery through Access Recovery Charges was no longer permitted to recover the remainder of its eligible support through CAF ICC support 47 CFR 51.915(f)(5). Price cap carriers can continue to calculate their Eligible Recovery, pursuant to the Commission's rules, and to assess Access Recovery Charges on their end users to recover as much of their Eligible Recovery as they can, subject to the caps on the Access Recovery Charge. There is no sunset date for rate-of-return carriers' CAF ICC support.

14. The Presubscribed Interexchange Carrier Charge. Price cap carriers may assess a monthly flat-rate charge on the presubscribed interexchange carrier—the long-distance carrier to which the calls are routed by default—of a multi-line business subscriber. Created in 1997, the charge recovers a portion of the common line costs not recovered by the Subscriber Line Charge. The Presubscribed Interexchange Carrier Charge is capped and has largely been phased out. When a multi-line business customer does not presubscribe to a long-distance carrier, the Commission's rules allow the price cap carrier to assess the Presubscribed Interexchange Carrier Charge on the end-user customer directly, 47 CFR 69.153.

15. The Line Port Charge. A local switch consists of (1) an analog or digital switching system, and (2) line and trunk cards. Line ports connect subscriber lines to the switch in the local exchange carrier's central office. The costs associated with line ports include the line card, protector, and main distribution frame. The Line Port Charge is a monthly end-user charge that recovers costs associated with digital lines, such as integrated services digital network (ISDN) line ports, to the extent those port costs exceed the costs for a line port used for basic, analog service, 47 CFR 69.130, 69.157. The Line Port Charge was established for price cap carriers in 1997 and for rate-of-return carriers in 2001.

16. The Special Access Surcharge. Established in 1983, the $25 per month Special Access Surcharge is assessed on trunks that could “leak” traffic into the public switched network in order to address the problem of a “leaky private branch exchange (PBX), 47 CFR 69.5(c), 69.115.” The “leaky PBX” problem can arise where large end users that employ multiple PBXs in multiple locations lease private lines to connect their various PBXs. Although these lines were intended to permit employees of large business end users to communicate between locations without incurring access charges, some large end users permitted long-distance calls to leak from the PBX into the local public network, where they were terminated without incurring access charges. The assessed amount currently constitutes only a de minimis portion of revenues for most carriers.

17. The Reasonable Comparability Benchmark. Section 254(b) of the Act, 47 U.S.C. 254(b)(3), provides that “[c]onsumers in all regions of the Nation . . . should have access to telecommunications and information services . . . that are available at rates that are reasonably comparable to rates charged for similar services in urban areas.” Consistent with this principle, the Commission requires certain carriers receiving high cost universal service support, known as Eligible Telecommunications Carriers, to “offer voice telephony as a standalone service throughout their designated service area . . . at rates that are reasonably comparable to urban rates” as a “condition of receiving support,” 47 CFR 54.201. Rates for voice services are “reasonably comparable” to urban rates when they are within two standard deviations of the “national average urban rate for voice service,” 47 CFR 54.313(a)(2). The Wireline Competition Bureau publishes an updated reasonable comparability benchmark annually.

18. Telephone Access Charges Used To Calculate Universal Service Fund (USF) Support. Revenues from some Telephone Access Charges are used in the computation of USF support for rate-of-return carriers. Specifically, the Subscriber Line Charge, Line Port Charge, and Special Access Surcharge revenues are subtracted from a carrier's common line revenue requirement to determine the amount of Connect America Fund Broadband Loop Support (CAF BLS) a carrier is entitled to receive, 47 CFR 54.901. The Access Recovery Charge is subtracted from the Eligible Recovery to determine the amount of CAFICC support a rate-of-return carrier is entitled to receive.

19. CAF BLS support is the successor to Interstate Common Line Support, which was created by the Commission in 2001 to allow rate-of-return carriers to recover from the USF any shortfall between their allowed Subscriber Line Charge and their allowed common line revenue requirement. If a rate-of-return carrier charged a Subscriber Line Charge that was less than the full amount it was permitted to charge, the carrier had to impute the maximum allowed Subscriber Line Charge in calculating its Interstate Common Line Support. In 2016, the Commission revised its Interstate Common Line Support rules to include support for consumer broadband-only loops and renamed it CAF BLS, but the relationship between the Subscriber Line Charge, common line expenses, and the support mechanism remains the same.

20. In 2011, the Commission adopted a Residential Rate Ceiling of $30 per month ( i.e., the total rate for basic local telephone phone service, including any additional charges, that a customer actually pays each month) to ensure that local telephone service remains affordable and set at reasonable levels. The Commission's rules currently prohibit an incumbent local exchange carrier from assessing an Access Recovery Charge on residential customers that would cause the carrier's total charges to exceed the Residential Rate Ceiling, 47 CFR 51.915(b)(11)-(12). A rate-of-return carrier can, however, recover through CAF ICC, the amount of Eligible Recovery that it is not permitted to recover through its Access Recovery Charges due to the Residential Rate Ceiling.

21. Role of Telephone Access Charges in USF Contributions. Section 254(d) of the Act, 47 U.S.C. 254(d), specifies that “[e]very telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the . . . mechanisms established by the Commission to preserve and advance universal service,” and that “[a]ny other provider of interstate telecommunications may be required to contribute to the preservation and advancement of universal service if the public interest so requires.” Pursuant to that provision, the Commission requires all “[e]ntities that provide interstate telecommunications to the public, or to such classes of users as to be effectively available to the public, for a fee,” to contribute to the federal USF based on their interstate and international end-user telecommunications revenues. The Commission requires interconnected Voice over internet Protocol (VoIP) service providers to contribute as a means of ensuring a level playing field among direct competitors, 47 CFR 54.706, 54.708.

22. Contributions to the Fund are based upon a percentage of contributors' interstate and international end-user telecommunications revenues. This percentage is called the contribution factor. The Commission calculates the quarterly contribution factor based on the ratio of total projected quarterly costs of the universal service support mechanisms to contributors' total projected quarterly collected end-user interstate and international telecommunications revenues, net of projected contributions, 47 CFR 54.709(a)(2). Telephone Access Charges are assessable revenue for federal USF contribution purposes, 47 CFR 54.709(a)(2).

23. As discussed, the Commission does not regulate how competitive local exchange carriers recover their costs of providing interstate access service from their end-user customers. To the extent that a competitive local exchange carrier chooses to assess a separate interstate end-user access charge on its customers, it is required to report such revenues for USF contribution purposes in a manner that is consistent with its supporting books of account and records.

24. For providers of voice services that are not able to easily determine the jurisdictional nature of their traffic, the Commission created different USF contribution safe harbors for different types of providers. Wireless providers, for example, are considered in compliance with the Commission's USF contributions requirements if they treat 37.1% of their telecommunications revenue as assessable for purposes of determining their federal USF contributions. Interconnected VoIP service providers are considered to be in compliance with the Commission's USF contributions requirements if they treat 64.9% of their total revenue as assessable for purposes of determining their federal USF contributions.

25. The Commission has long sought to make telephone bills more understandable for consumers. Indeed, the Commission currently has two open rulemaking proceedings in which the Commission is considering, among other things, whether government-mandated charges should be separate from other charges on customers' telephone bills, and whether to apply the Commission's truth-in-billing rules to interconnected VoIP services.

26. In order to assist consumers in understanding their phone bills, the Commission has posted on its website consumer education material explaining the various charges consumers are likely to find on such bills. As described in the Commission's consumer education materials, a typical phone bill includes a “base” charge for local service; line items for local, state, and federal taxes; additional charges to pay for 911 services, federal USF, and Local Number Portability Administration; the Subscriber Line Charge; and various other charges.

27. The Commission has held that the prohibition on carriers engaging in unjust and unreasonable practices in section 201(b) of the Act, 47 U.S.C. 201(b) prohibits carriers from including misleading information on telephone bills, but does not require all carriers to use the same descriptions for the various types of charges found on telephone bills. Recognizing that there are “many ways to convey important information to consumers in a clear and accurate manner” the Commission has declined to prescribe specific descriptions for charges typically found on telephone bills. As a result, carriers use different descriptions for these charges.

28. For example, different carriers' bills describe the Subscriber Line Charges as “FCC-Approved Customer Line Charge,” “FCC Subscriber Line Charge,” “Customer Subscriber Line Charge,” “Easy Access Dialing Fee,” and “Federal Line Fee.” What is more, although the Commission has directed carriers to list the Subscriber Line Charge as a line-item charge on customers' telephone bills, it also specified in 2011 that the Access Recovery Charge may be combined in a single line item with the Subscriber Line Charge on the bill. As a result, some phone bills may have a single line item combining the two charges and other phone bills may break them out separately.

29. The Telecommunications Act of 1996 was adopted to “promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers,” 47 U.S.C. 151. In implementing this legislation, the Commission noted the pro-competitive, deregulatory goals of the Act and its directive to remove “statutory and regulatory impediments to competition.”

30. Consistent with these objectives, the 1996 Act granted the Commission authority to forbear from statutory provisions and regulations that are no longer “current and necessary in light of changes in the industry.” More specifically, under section 10 of the Act, 47 U.S.C. 160, the Commission is required to forbear from any statutory provision or regulation if it determines that: (1) Enforcement of the provision or regulation is not necessary to ensure that the telecommunications carrier's charges, practices, classifications, or regulations are just, reasonable, and not unjustly or unreasonably discriminatory; (2) enforcement of the provision or regulation is not necessary to protect consumers; and (3) forbearance from applying such provision or regulation is consistent with the public interest.

31. Over the last two decades, the Commission has repeatedly relied on its section 10 authority to forbear from applying section 203's tariffing requirements when competitive developments made such requirements unnecessary and even counterproductive. Shortly after Congress enacted section 10, the Commission forbore from section 203 tariffing requirements for domestic long-distance services provided by non-dominant carriers. The Commission found that market forces would generally ensure that the rates, practices, and classifications of nondominant interexchange carriers for interstate, domestic, interexchange services are just and reasonable and not unjustly or unreasonably discriminatory. The Commission also found that tariff filings by non-dominant interexchange carriers for long distance services were not necessary to protect consumers. Instead, the Commission found that market forces, the section 208 complaint process, and the Commission's ability to reimpose tariff requirements, if necessary, were sufficient to protect consumers. The Commission further found that detariffing of non-dominant domestic long distance services was in the public interest because it would further the pro-competitive, deregulatory objectives of the 1996 Act by fostering increased competition in the market for interstate, domestic, interexchange telecommunications services.

32. Beginning in 2007, the Commission granted forbearance from dominant carrier regulation, including tariffing and price regulation, to a number of price cap incumbent local exchange carriers for their newer packet-based broadband services. In the case of AT&T, for example, the Commission found that a number of entities provided, or were ready to provide, broadband services in competition with AT&T's broadband services. Given the level of competition, the Commission concluded that dominant carrier tariffing and pricing regulation was not necessary to ensure that AT&T's rates and practices for those services remained just, reasonable, and not unjustly or unreasonably discriminatory. The Commission found that, under these circumstances, the benefits of tariffing requirements to ensuring just, reasonable, and nondiscriminatory charges and practices, were negligible. The Commission explained that continuing to apply dominant carrier tariff regulation was not in the public interest because it would create market inefficiencies, inhibit carriers from responding quickly to rivals' new offerings, and impose other unnecessary costs.

33. More recently, in the 2017 Price Cap BDS Order, the Commission found, among other things, that competition was sufficiently pervasive to justify granting all price cap carriers forbearance from tariffing of their packet-based business data services and time division multiplexing (TDM)-based business data services above a DS3 bandwidth level. The Commission also adopted a competitive market test to determine where there was sufficient competitive pressure on lower speed (DS3 and below) TDM-based end user channel termination services to justify forbearance from tariffing requirements for those services, 47 CFR 69.803(a), 69.807(a). The Commission found that application of section 203's tariffing requirements was not necessary because competition and remaining statutory and regulatory requirements were sufficient to ensure “just and reasonable rates, terms, and conditions” that are not “unjustly or unreasonably discriminatory.” The Commission further found that by ensuring regulatory parity and promoting competition and broadband deployment, detariffing these services met the requirements of section 10(a)(3). On partial remand of the Price Cap BDS Order, the Commission similarly found that competition for lower speed TDM transport business data services in price cap areas was sufficiently widespread to justify granting price cap carriers forbearance from tariffing these services.

34. In 2018, the Commission relied on its section 10 forbearance authority to detariff certain business data services provided by rate-of-return carriers receiving fixed or model-based universal service support. In the Rate-of-Return BDS Order, the Commission adopted a voluntary path by which rate-of-return carriers that receive fixed or model-based universal service support could elect to transition their business data service offerings to incentive regulation, 47 CFR 61.50(b). As part of this framework, the Commission granted electing carriers forbearance from section 203 tariffing requirements for packet-based and higher capacity (above DS3) TDM-based business data services. The Commission also detariffed electing carriers' lower capacity (DS3 and below) TDM-based business data services in rate-of-return study areas deemed competitive. The Commission found that forbearance from tariffing these services “will promote competition, reduce compliance costs, increase investment and innovation, and facilitate the technology transitions.” Therefore, application of section 203 was not necessary, and forbearance was in the public interest consistent with sections 10(a) and 10(b).

35. Thus, both the statute and longstanding Commission precedent make clear that the Commission can and should forbear from the tariffing requirements of section 203 when there is sufficient competition for a service such that tariffing is not necessary to protect a carrier's customers nor to promote the public interest.

36. In this Notice, the Commission proposes to eliminate ex ante pricing regulation of all Telephone Access Charges. In addition, the Commission proposes to require incumbent local exchange carriers and competitive local exchange carriers to detariff all such charges. The Commission proposes a nationwide approach based on its review of data demonstrating widespread availability of competitive alternatives for voice services and on other factors that appear to make such regulation and tariffing unnecessary and contrary to the public interest. The Commission seeks comment on this proposal and invites commenters to offer alternative proposals. Further, while the Commission believes those identified charges—the Subscriber Line Charge (also called the End User Common Line charge), Access Recovery Charge, Presubscribed Interexchange Carrier Charge, Line Port Charge, and Special Access Surcharge—are the appropriate focus of its proposals here, the Commission seeks comment on whether there are any other interstate end-user charges for which the Commission should adopt the reforms being considered as part of this proceeding. The Commission also seeks comment on the data it uses and on its analysis of those data and invite commenters to offer additional data and their own analyses.

37. Consistent with the goal of simplifying carriers' advertised rates and customers' bills, the Commission also proposes to prohibit carriers from billing customers for Telephone Access Charges through separate line items on their bills. Given that some Telephone Access Charges are used to calculate contributions to the USF and other federal programs, as well as high-cost support, the Commission also proposes ways to provide certainty in calculating such contributions and support to ensure stability in funding following pricing deregulation and detariffing of Telephone Access Charges. Finally, the Commission seeks comment on its legal authority to adopt these rule changes and on the costs and benefits of its proposals.

38. The primary objective of ex ante pricing regulation and tariffing is to ensure that prices are just and reasonable as required by the Act. While such ex ante regulation and tariffing may have been necessary when the incumbent local exchange carriers were dominant suppliers, that no longer appears to be the case. Today, competition for voice services is widespread and the Commission expects it to be more effective than regulation in ensuring that incumbent local exchange carriers' rates for voice services are just and reasonable. The Commission is also concerned that the costs of regulating and tariffing Telephone Access Charges are likely to exceed the benefits, because they impose costs on carriers and hinder carriers' ability to quickly adapt to changing market conditions.

39. The Commission proposes to find that widespread competition among voice services makes ex ante pricing regulation and tariffing of Telephone Access Charges unnecessary to ensure just and reasonable rates or to otherwise protect customers. The Commission seeks comment on its proposal. As the Commission has explained in prior deregulatory decisions, “ `competition is the most effective means of ensuring that . . . charges, practices, classifications, and regulations . . . are just and reasonable, and not unreasonably discriminatory.' ” When markets become competitive, pricing regulations are not only unnecessary, they are counterproductive.

40. Over the last several decades, local exchange carriers have been quickly losing subscribers while mobile and interconnected VoIP providers have continued gaining subscribers. The Commission's annual Voice Telephone Services Reports show, for example, that from December 2008 to December 2018, the share of total voice subscribers served by incumbent local exchange carriers decreased from 27.9% to only 7.4%. During this same period, the share of total voice subscriptions for interconnected VoIP service providers unaffiliated with an incumbent local exchange carrier more than doubled, from 4.9% to 11.7%. Moreover, in the same period, mobile voice subscriptions increased from 61.7% to 75.9%, and as of the end of 2018, 57.1% of households purchased only wireless voice service.

41. The Commission's data also demonstrate that competitive voice service offerings are available nationwide. More than 99.9% of populated census blocks have one or more facilities-based providers of mobile voice services unaffiliated with an incumbent local exchange carrier deployed in the block. Further, 80.6% of populated census blocks have one or more unaffiliated facilities-based providers of fixed broadband at speeds of 10/1 Mbps or greater deployed in the block. Those fixed broadband technologies include xDSL, fiber, terrestrial fixed wireless, and cable modem, and allow providers to offer voice services and allow customers to use over-the-top VoIP service providers. The Commission believes that the presence of competition in voice services imposes material pricing pressure on incumbent local exchange carriers, rendering ex ante pricing regulation and tariffing of Telephone Access Charges unnecessary to ensure just and reasonable rates. The Commission seeks comment on these data, and on its analysis. The Commission also invites commenters to offer other data sources the Commission should use to examine the extent of competition for voice services.

42. For purposes of these analyses, the Commission defines a “populated census block” as any non-water census block with at least one occupied or unoccupied housing unit according to its 2018 “Staff Block Estimates,” available at https://www.fcc.gov/reports-research/data/staff-block-estimates. The Commission counts wireless voice and fixed broadband service providers affiliated with incumbent local exchange carriers as “unaffiliated,” but only outside of the incumbent local exchange carriers' respective study areas. Data on census blocks with mobile voice deployment are publicly available on the Commission website at https://www.fcc.gov/mobile-deployment-form-477-data (select “Dec. 2018” from the “Actual Area Methodology” column). Lists of carriers and affiliates are available at https://www.fcc.gov/general/form-477-filers-state-0 and https://www.fcc.gov/document/fcc-proposes-detariffing-access-charges-simplifying-consumer-bills. Study area data and data regarding the affiliations of incumbent local exchange carriers and wireless voice providers are also available on the Commission website at https://www.fcc.gov/economics-analytics/industry-analysis-division/study-area-boundary-data (use “Census Block—Study Area Cross Reference (ZIP) (Oct 2016)”) and https://www.fcc.gov/general/fcc-form-477-additional-data (use “Form 477 Filers by State (12/08-current)”).

43. Further, this analysis relies on data regarding fixed broadband instead of fixed voice or interconnected VoIP because data regarding fixed broadband is reported at the more granular census-block level. For purposes of this analysis, the Commission limits its consideration of fixed broadband to unaffiliated providers offering service with speeds of at least 10/1 Mbps, which ensures that the broadband deployment measured here represents the availability of next-generation voice services such as interconnected VoIP service. Data on census blocks with fixed broadband deployment are publicly available on the Commission website at https://www.fcc.gov/general/broadband-deployment-data-fcc-form-477 (select “Data as of December 31, 2018”).

44. The Commission's proposal to eliminate ex ante pricing regulation and tariffing of Telephone Access Charges is supported by the fact that the prices charged by incumbent local exchange carriers in many of the areas that are least likely to have robust competition are subject to other regulatory constraints. Generally, competition in voice services is least likely to exist in rural areas and other high-cost areas. These areas are usually served by carriers that receive federal high-cost USF support. To receive such support, a carrier must be designated as an Eligible Telecommunications Carrier either by a state or by the Commission, 47 CFR 54.201, 54.214(e), 54.254(e). To ensure that customers in all areas of the nation have access to affordable voice service, consistent with the principles set forth by Congress, the Commission requires that Eligible Telecommunications Carriers offer supported services—including voice telephony services—at rates that are reasonably comparable to urban rates throughout their designated service areas, unless they can offer a reasonable justification for charging higher rates.

45. This requirement constrains the prices that carriers can charge for voice services in high-cost areas of the country. Currently, the Commission's Office of Economics and Analytics conducts an annual Urban Rate Survey to determine what constitutes a reasonable comparability benchmark for residential voice services. A voice rate is deemed to be compliant with the Commission's rules if it falls within two standard deviations of the national average of the Urban Rate Survey, 47 CFR 54.313(a)(2). Therefore, Eligible Telecommunications Carriers are presumed to be in compliance with the Commission's rules if they charge no more than the reasonable comparability benchmark. This benchmark helps constrain incumbent local exchange carriers' pricing, even in high-cost areas where robust competition is least likely to occur.

46. The Commission recognizes that a small percentage of consumers do not have competitive options, but its preliminary analysis is that such consumers live in high-cost areas that are currently served by an Eligible Telecommunications Carrier subject to the reasonable comparability benchmark. What is more, the Commission expects that the overwhelming number of census blocks with competitive options will help constrain prices in the very few census blocks that do not have competitive options through unaffiliated mobile voice or broadband services. As the United States Court of Appeals for the District of Columbia Circuit has observed, “[c]onsumers in areas with fewer than two providers may also reap the benefits of competition; a provider in this area `will tend to treat customers that do not have a competitive choice as if they do' because competitive pressures elsewhere `often have spillover effects across a given corporation.'” The Commission seeks comment on this preliminary analysis and these expectations.

47. Furthermore, the Commission expects that the benefits to the vast majority of customers from its removal of ex ante pricing regulation and detariffing of Telephone Access Charges outweigh the potential risk that a small number of consumers without competitive options for voice services may pay higher rates if the Commission deregulates and detariffs Telephone Access Charges. In reaching its forbearance decisions, the Commission has long recognized that unnecessary tariffing requirements may impede carriers' flexibility to react to competition and may harm customers in some circumstances. For example, tariffing requirements can inhibit carriers' ability to offer innovative integrated services designed to meet changing market conditions. In addition, a customer may be adversely affected when a carrier unilaterally changes a rate by filing a tariff revision (so long as the revision is not found to be unjust, unreasonable, or unlawful under the Act) because, pursuant to the “filed rate doctrine,” a filed tariff rate, term, or condition controls over a rate, term, or condition set in a non-tariffed carrier-customer contract. Detariffing, on the other hand, can help customers obtain service arrangements that are specifically tailored to their individual needs. Furthermore, detariffing will allow consumers to avail themselves of the protections provided by state consumer protection and contract laws—protections not available to consumers under the filed-rate doctrine.

48. Indeed, the Commission has found that the high costs of regulation likely outweigh the benefits, even in less-than-fully-competitive markets, particularly where regulatory costs are imposed on only one class of competitors. In light of the evidence of widespread competition for voice services, the Commission invites comment on whether, and to what extent, the costs of continued regulation of Telephone Access Charges imposed on incumbent local exchange carriers outweigh the benefits of such regulation. The Commission invites commenters to quantify both the costs and the benefits of its proposal and of any alternative approaches to the removal of ex ante pricing regulation and detariffing of Telephone Access Charges.

49. Finally, the growing number of states that have adopted rate flexibility for the intrastate portion of local telephone services supports the conclusion that in many states deregulating and detariffing Telephone Access Charges will not affect the overall rate customers pay for telephone service. That's because carriers that have pricing flexibility for the intrastate portion of their local voice services can adjust the intrastate portion of their local rates to price their local voice services at market rates notwithstanding existing limits on the interstate portion of those charges. As a result, federal deregulation and detariffing of Telephone Access Charges should not result in any material change in the total rates customers pay for voice service in these states. Thus, the Commission proposes to find that ex ante pricing regulation and tariffing of Telephone Access Charges in such states imposes costs, but likely does not yield any benefits. The Commission seeks comment on its theory of the impact of states' adoption of pricing flexibility for retail rates.

50. The Commission invites commenters to provide it with information about the status and impact of state telephone rate deregulation generally. According to one report, as of 2016, at least 41 states had “significantly reduced or eliminated oversight of wireline telecommunications” through legislation or public utility commission action. In several states, state utility commissions no longer have authority to regulate telecommunications services and their prices. California, for example, eliminated pricing regulation for all local exchange services that do not receive state high-cost support, while Tennessee permits incumbent carriers to elect to operate free from the jurisdiction of the state public utility commission, with certain exceptions.

51. Further, a growing number of states have adopted retail rate flexibility for the intrastate portion of local voice services justified, at least in part, by the presence of competitive options. For example, the California Public Utilities Commission found that incumbent local exchange carriers “lack the market power to sustain prices above the levels that a competitive market would produce” because of wireless, cable, and VoIP service entrants into the marketplace. Still other states such as Washington and Minnesota have deregulated rates on a service-area or exchange-area basis for services subject to “effective competition” or for exchanges satisfying competitive market criteria.

52. In sum, while states are trending toward pricing flexibility for the intrastate portion of local telephone rates, there appears to be considerable variation among states and among areas within states. The Commission seeks comment on that variation and its impact on its proposal, if any. Parties are invited to provide more updated data on intrastate rate regulation and rate flexibility for the intrastate portion of local telephone rates. The Commission seeks comment on whether the varied nature of state regulation of local telephone rates supports or detracts from its proposal to eliminate ex ante pricing regulation and tariffing of Telephone Access Charges nationally.

53. The Commission also seeks comment on whether there are any factors that would either support or call into question its proposal to eliminate ex ante pricing regulation and mandatorily detariff Telephone Access Charges across the country.

54. Competitive Local Exchange Carriers. Some competitive local exchange carriers have chosen to tariff some Telephone Access Charges. By definition, such carriers are subject to competition and already have pricing flexibility. In the interest of parity, the Commission proposes to require competitive local exchange carriers to detariff, on a nationwide basis, all Telephone Access Charges. Competitive local exchange carriers face competition from wireless providers and other competitive wireline providers and must also compete with incumbent local exchange carriers. The Commission sees no justification for allowing competitive local exchange carriers to tariff Telephone Access Charges if incumbent local exchange carriers are prohibited from doing so. The Commission seeks comment on its proposal to require mandatory detariffing of competitive local exchange carriers' Telephone Access Charges.

55. Detariffing Other Federal Charges. In addition to Telephone Access Charges, there are other charges related to federal programs that many carriers currently include in their interstate tariffs, e.g., pass-throughs for contributions to the USF. The Commission seeks comment on mandatorily detariffing these charges. Such charges are subject to regulatory requirements and its Truth-in-Billing rules will continue to govern if and how these charges can be passed through to end users. Accordingly, the Commission expects that detariffing these charges will bring the benefits of reduced regulatory requirements while creating little risk of abuse. The Commission seeks comment on this expectation and any other issues that it should consider in deciding whether to detariff all interstate retail charges. The Commission invites commenters to identify these charges and to comment on the costs and benefits of mandatorily detariffing them.

56. The Commission invites commenters to offer alternative approaches to determining where and under what circumstances the Commission should eliminate ex ante pricing regulation and require detariffing of Telephone Access Charges. For example, should the Commission take a more case-by-case approach and find that rate regulation is unnecessary only in locations where at least one of the following conditions is met: (1) In an incumbent local exchange carrier's study area, where there is at least one unaffiliated voice provider available in 75% of the populated census blocks; (2) in areas where the Eligible Telecommunications Carrier is subject to the reasonable comparability benchmark; or (3) in states where intrastate rates have been deregulated?

57. Under this alternative, the Commission would remove ex ante pricing regulation and require detariffing of Telephone Access Charges in study areas where there is at least one unaffiliated provider of voice services in 75% of the inhabited census blocks. In the Price Cap BDS Order, the Commission found that one competitor within a census block is sufficient to help constrain prices of business data services offered by an incumbent local exchange carrier. Do commenters believe that one voice competitor in 75% of the inhabited census blocks of a study area is sufficient to help constrain prices for voice services offered by an incumbent local exchange carrier? In the alternative, would competition in a lower percentage of inhabited census blocks in a study area be sufficient to help constrain prices for local voice services? The Commission invites commenters to offer alternatives, explain the bases for the alternatives they offer, and identify supporting data.

58. Under this alternative, the Commission would remove ex ante pricing regulation and require detariffing of Telephone Access Charges at the study-area level because doing so on a census-block basis is not administratively feasible. As the Commission has explained, “census blocks or census tracts are too numerous to effectively administer” and “could lead to a patchwork of different regulations that vary from census block-to-census block.” Study areas, however, “are more administratively feasible because there are a limited number” and the Commission and industry have substantial experience administering rules on a study area basis. Price deregulation and detariffing on the study-area level is likewise sufficiently granular to protect customers across the study area because it is reasonable to assume that incumbent local exchange carriers charge uniform prices across study areas. Further, customers in rural areas of study areas will benefit from both competition in urban areas, as competitive pressures “often have spillover effects across a given corporation,” and from the Commission's prohibitions against unjust and discriminatory rates. The Commission seeks comment on these parameters, data, and assumptions, including whether the Commission should evaluate competition using a competitive market test, as it has previously done.

59. Under this alternative, the Commission would also eliminate ex ante pricing regulation and require detariffing of Telephone Access Charges in areas where there is a designated Eligible Telecommunications Carrier subject to the reasonable comparability requirement. Do commenters agree that the reasonable comparability requirement sufficiently constrains retail rates for voice services by ensuring that Eligible Telecommunications Carriers do not charge rates that significantly exceed the rates that apply in competitive urban markets? If so, does it follow that ex ante pricing regulation and tariffing are not necessary in areas where there is an Eligible Telecommunications Carrier subject to the reasonable comparability requirement? Commenters asserting that pricing regulations and interstate tariffs are nonetheless necessary to constrain Eligible Telecommunications Carriers' Telephone Access Charges should explain why the reasonable comparability requirement is not sufficient to ensure that Eligible Telecommunications Carriers' rates are just and reasonable. Should the Commission instead deregulate and detariff Telephone Access Charges based on a combination of competition and reasonable comparability requirements in an area? For example, should the Commission do so if competition does not hit the 75% threshold discussed above, but the reasonable comparability requirement holds in areas without competition?

60. If the Commission eliminates ex ante pricing regulation and require detariffing of Telephone Access Charges based on a carrier's obligation to comply with the reasonable comparability requirement, would a new benchmark for business customers be necessary to constrain retail rates charged to business customers? There is currently no benchmarking process for retail rates charged to business customers. The Commission recognizes that business customers may purchase very different voice services depending on a variety of factors and that many businesses purchase voice services pursuant to negotiated contracts. The Commission seeks comment on whether a comparability benchmark for business customers is necessary given their ability to negotiate contract rates, especially when voice services are often bundled with other services. Does the current benchmark for residential customers constrain prices for business customers? Could a benchmarking process be developed for retail business rates? If a benchmarking process for retail business rates could be developed, would such development be unduly complex and burdensome given the differences among voice services purchased by business customers?

61. Under this alternative, the Commission would also eliminate ex ante pricing regulation and require detariffing of Telephone Access Charges for incumbent local exchange carriers in study areas where states have deregulated the rates charged for the intrastate portion of local voice services. The Commission would do so given that a carrier's current ability to adjust its end-user rates due to state deregulation means that federal deregulation and detariffing of Telephone Access Charges will not result in increased prices for voice services. Should the Commission generate and maintain a list of areas where there is state retail rate pricing flexibility? Should the Commission have carriers self-certify whether the intrastate portion of local voice services are no longer subject to state price controls and use those certifications as the basis for a list? If the Commission does elect to maintain a list of states that have deregulated the rates charged for the intrastate portion of local voice services, should the Commission update that list periodically—every three years, for example—to ensure that it accurately reflects state regulation of retail rates. How would the Commission make the list available to the public? Should the Commission direct the Wireline Competition Bureau to issue a Public Notice updating the list every few years? If a state were to re-implement rate regulation of the intrastate portion of local voice services, what effect should that have on the Commission's price deregulation and detariffing of Telephone Access Charges?

62. The Commission invites comment on this alternative approach and the costs and benefits of such an approach. Assuming that competition and the reasonable comparability requirements impose sufficient pricing constraints on carriers subject to them, and that federal price regulation does not have any practical effect in areas where states offer pricing flexibility, are there any other reasons to impose federal tariffing and pricing regulations with respect to Telephone Access Charges? The Commission invites commenters to identify any such reasons and the relative benefits and costs of leaving ex ante pricing regulation and tariffing in place as compared to its alternative proposal to deregulate and detariff the Telephone Access Charges.

63. The Commission also seeks comment on other alternative proposals, along with the data and assumptions supporting any alternative. For instance, should the Commission consider permissive detariffing of Telephone Access Charges for some categories of carriers, such as rate-of-return carriers, as suggested by NTCA? What considerations, if any, would support a different approach for such carriers? How would permissive detariffing for some carriers and mandatory detariffing for others affect the overall policy goals of this proceeding? Are there other alternatives the Commission should consider for some categories of carriers? Commenters supporting an alternative approach should also address the costs and benefits of such an approach.

64. Consistent with its ongoing efforts to simplify consumers' telephone bills, the Commission also proposes to modify its truth-in-billing rules, 47 CFR 64.2400-64.2401, to explicitly prohibit carriers from assessing any separate Telephone Access Charges, such as Subscriber Line Charges and Access Recovery Charges, on customers' bills after those charges are deregulated and detariffed. The Commission seeks comments on this proposal. The Commission also invites suggestions for how to minimize any customer confusion regarding telephone bills during the transition to price deregulation and detariffing of Telephone Access Charges.

65. The Commission remains concerned that telephone bills are too complicated and difficult to read and understand. For example, the terms used by carriers to describe Subscriber Line Charges, such as “FCC-Approved Customer Line Charge,” “FCC Subscriber Line Charge,” and “Federal Line Fee,” are meaningless to most consumers. They may also lead consumers to mistakenly believe that the government mandates the amount of Subscriber Line Charges or other Telephone Access Charges.

66. Prohibiting carriers from using separate, obscurely worded line items to bill for the interstate portion of local telephone services should make it easier for customers to understand their bills and to compare rates between different providers. As a result, greater transparency can improve the effectiveness of competition. Studies of pricing transparency in other industries have shown that increased price transparency reduces prices paid by consumers. For example, the advent of the internet, which enabled consumers to make better price comparisons, appears to have reduced the prices for life insurance policies by about 8% to 15%. Evidence that price transparency can benefit consumers has been found in markets for many other products as well, including prescription drugs, eye exams and eyeglasses, gasoline, automobiles and securities. The Commission would expect that bringing advertised rates for voice services closer to what consumers actually pay would yield similar price reductions. Moreover, Telephone Access Charges are vestiges of legacy telephone networks when most local exchange carriers were subject to comprehensive cost-based regulatory regimes and operated in a substantially different telecommunications marketplace. The Commission does not think that these charges should have a place on consumers' phone bills once those charges are deregulated and detariffed. The Commission invites comment on that reasoning.

67. Assuming that its proposal results in greater price transparency, how could the Commission estimate the benefits that such increased transparency would bring? Should the Commission expect price declines similar to those observed in other industries when consumers were better able to compare prices? If not, is there other evidence or are there other approaches the Commission should consider to evaluate the benefits of greater transparency provided by its proposal? Are there factors that the Commission's proposal fails to address that should be addressed in its final rules? Are there are other changes that should be made to the Commission's truth-in-billing rules to effectuate the changes proposed here?

68. The Commission recognizes that some states may authorize carriers to collect charges for the intrastate portion of local voice services from their customers using billing descriptions similar to the Telephone Access Charges. Are there state requirements that would prohibit carriers from completely eliminating separate line-item charges from their bills? If so, how should the Commission address those requirements to carry out its policy of minimizing consumer confusion? Are there other issues related to the billing of intrastate charges of which the Commission should be aware? For example, how are such charges listed on customers' bills? In those states where carriers do not have pricing flexibility with respect to the intrastate portions of their local telephone service, how will continuing state regulation of those intrastate rates affect the Commission's proposal to prohibit carriers from assessing any separate Telephone Access Charges on customers' bills? For example, if a carrier is precluded by state regulations from changing its local service rates, what steps does the Commission need to take to ensure that a carrier has flexibility to charge its customers for the interstate component of the service currently collected through Telephone Access Charges?

69. Are there states that authorize or require carriers to assess separate intrastate end-user charges? If so, the Commission asks that commenters provide specific examples. To the extent such state laws or regulations exist, should the Commission require carriers to make it clear that the listed charges are not federally authorized? Do carriers combine Telephone Access Charges and intrastate end-user charges into a single line item? If so, how do they identify and describe that charge on the bill? To the extent that some carriers may be prohibited by state law from combining charges for the intrastate and interstate portions of their local telephone service on customers' bills, should the Commission require such carriers to charge for the interstate portions of that service in a certain manner or using uniform nomenclature? If so, the Commission seeks comment on the specifics of such an approach. In the alternative, where state laws or regulations prohibit carriers from combining charges for the intrastate and interstate portions of their local telephone service on customers' bills, should the Commission consider preempting such laws and regulations on the basis that it would be impossible to comply both with those laws and the rules proposed in this proceeding and that such regulations conflict with the regulatory objectives of this proceeding?

70. Finally, the Commission also seeks comment on any consumer education initiatives the Commission or providers should undertake to help consumers understand any billing changes that may result from its proposed changes.

71. The Commission proposes ways to address issues related to the Universal Service Fund's and other federal programs' historic reliance on Telephone Access Charges in certain circumstances. Addressing these issues at the outset will ensure that the rural carriers that rely on such federal funds will have the certainty they need to continue investing in the deployment of next-generation networks and services in rural America.

72. Connect America Fund Broadband Loop Support. The Commission proposes several modifications to its rules for calculating CAF BLS to address the detariffing of Telephone Access Charges—modifications that the Commission does not expect will materially change the amount of funds made available for carriers relying on this mechanism to continue to serve their service areas.

73. The Commission first proposes to require that legacy rate-of-return carriers that use costs to determine CAF BLS support use $6.50 for residential and single-line business lines and $9.20 for multi-line business lines (the maximum Subscriber Line Charge amounts) to calculate their CAF BLS going forward. By using these fixed amounts rather than a tariffed rate, the Commission ensures that carriers will continue to be able to calculate CAF BLS. The Commission expects that this approach will have minimal effect on the CAF BLS legacy rate-of-return carriers receive since most, if not all, of those carriers are currently charging the maximum Subscriber Line Charges allowed under its rules. Are there any legacy rate-of-return carriers that would be adversely affected by the Commission's proposal? If so, should the Commission require each of those carriers to identify the highest end-user charge that it could have assessed on the day preceding the day that it detariffs its Telephone Access Charges and use that amount to calculate its CAF BLS going forward?

74. The Commission also seeks comment on how to account for other Telephone Access Charges affecting the calculation of CAF BLS that will be detariffed. The Commission proposes to delete any requirement to offset Special Access Surcharges from CAF BLS. As a result, a carrier receiving CAF BLS will not have to reflect any revenues for this charge in determining revenues for purposes of calculating CAF BLS. Given the minimal amount of Special Access Surcharge revenues being collected, the Commission expects making this change will have a negligible impact on CAF BLS. Additionally, the Commission proposes to require carriers to use the rates they are charging for line ports as of the effective date of an order adopting these reforms. This recognizes that carriers assess individual Line Port Charges differently. The Commission seeks comment on these proposals. Alternatively, should the Commission develop a uniform rate for each type of line port that is currently tariffed and, if so, how should such a rate be determined? Would a weighted average of the currently tariffed monthly rates in the National Exchange Carrier Association tariff be a reasonable approach? Or should the Commission eliminate the requirement to take into account Line Port Charges when calculating CAF BLS? Or instead should the Commission impute the aggregate Line Port Charges of each carrier on the effective date of an order adopting these reforms to said carrier for purposes of calculating CAF BLS?

75. The Commission expects that these proposed approaches would limit any adverse effects on the CAF BLS program and also minimize the administrative and other burdens on legacy rate-of-return carriers, most of which are small entities. The Commission invites parties to comment on this expectation. Are there alternative approaches the Commission should consider to account for these revenues when calculating their CAF BLS after these charges have been detariffed? Are there any other Telephone Access Charges that would affect CAF BLS calculations? The Commission also asks parties to comment on whether there should be any particular relationship between how end-user rates are treated in connection with determining CAF BLS and on how they are treated in determining the revenues that may be assessed for universal service contribution purposes.

76. The Commission invites parties to suggest other approaches that would minimize the effects of its proposals on CAF BLS. Parties should identify and quantify the costs and benefits that would result from any alternative proposals. The Commission invites parties to address the extent to which (if at all) the Commission should change the rules governing participation in the National Exchange Carrier Association tariffing and pooling processes to reflect the detariffing of Telephone Access Charges. Finally, if the Commission adopts its proposal to detariff and deregulate the pricing of Telephone Access Charges, in order to effectuate that proposal, are there any changes that the Commission should adopt to other Commission rules, including its rules relating to the functions of the National Exchange Carrier Association or the USF administration responsibilities handled by the Universal Service Administrative Company?

77. Connect America Fund Intercarrier Compensation. The Commission next seeks comment on how to ensure that detariffing of the Access Recovery Charge does not unreasonably affect the amount of funds that rate-of-return carriers are eligible to receive from CAF ICC. The CAF ICC support that a rate-of-return carrier receives is reduced by the Access Recovery Charge that the carrier is permitted to charge and by an imputed amount based on the Access Recovery Charge that the carrier could have charged on voice or voice-data lines if such charges could be assessed on Consumer Broadband Only Loop lines. Thus, eliminating the Access Recovery Charge affects the calculation of CAF ICC support.

78. The Commission proposes to require rate-of-return carriers to calculate CAF ICC using the maximum Access Recovery Charge that could have been assessed on the day preceding the detariffing of that charge. This approach is administratively simple and would eliminate any uncertainty about how to account for the Access Recovery Charge in calculating CAF ICC. The Commission invites parties to comment on this approach, noting in particular the potential effects of this approach. Alternatively, should the Commission eliminate the ongoing imputation of Access Recovery Charges for such carriers and instead reduce their Eligible Recovery each year by the aggregate Access Recovery Charge revenue they were actually receiving on the effective date of any order adopting reforms? This would eliminate the need to true up Access Recovery Charge revenues along with providing some administrative efficiencies.

79. The Commission invites parties to suggest other approaches for addressing potential effects of detariffing Access Recovery Charges on CAF ICC. Parties should identify potential issues and quantify the costs and benefits that would result from any alternative proposals.

80. Contributions to the Universal Service Fund and Other Federal Programs. Every telecommunications carrier that provides interstate telecommunications services has an obligation to contribute, on an equitable and nondiscriminatory basis, to the federal Universal Service Fund, as well as several other programs. Although the Commission has not codified any rules for how contributors should allocate revenues between the interstate and intrastate jurisdictions for contributions purposes, many incumbent local exchange carriers (and some competitive local exchange carriers) have relied on the tariffing of Telephone Access Charges at the federal level as their means of determining their interstate and international revenues for contributions purposes. These revenues are reported on FCC Form 499-A and are used for purposes of determining their contributions to the USF, the Interstate Telecommunications Relay Service Fund, Local Number Portability Administration, and North American Numbering Plan Administration. To help ensure continued stability of the USF and other federal programs, the Commission seeks comment on two alternative proposals for allocating interstate and intrastate revenues for voice services in light of its proposed elimination of ex ante pricing regulation and detariffing of Telephone Access Charges.

81. First, the Commission seeks comment on adopting an interstate safe harbor of 25% for local voice services provided by local exchange carriers, with the option for such carriers to file individualized traffic studies to establish a different allocation. As used here, “local voice services revenue” includes revenues from local exchange service and revenues related to detariffed Telephone Access Charges. Local voice services revenue does not include revenues associated with bundled toll services. The Commission proposes a 25% safe harbor because these revenues largely reflect common line recovery and 25% of common line costs have historically been allocated to the interstate jurisdiction, 47 CFR 36.2(b)(3)(iv).

82. Such an approach would be consistent with the existing approach for other voice service providers and types of services. Specifically, the Commission's current rules provide a safe harbor for assessing contributions for mobile wireless service providers and interconnected VoIP providers. The Commission has set an interstate safe harbor of 37.1% for wireless operators and 64.9% for interconnected VoIP providers. In adopting the 37.1% safe harbor, the Commission reasoned that this would ensure that mobile wireless service providers' obligations are on par with carriers offering similar services that must report actual interstate end-user telecommunications revenue. For interconnected VoIP services, the Commission established 64.9% as the safe harbor, which was the percentage of interstate revenues reported to the Commission by wireline toll providers.

83. As with other contributions safe harbors, the Commission proposes to allow a local exchange carrier to use traffic studies to determine its contributions base, rather than avail itself of the proposed safe harbor. Pursuant to the criteria contained in Form 499-A, traffic studies, among other things: (1) “may use statistical sampling to estimate the proportion of minutes that are interstate and international”; (2) must account for all interstate or international charges as “100 percent interstate or international”; (3) must be designed to use sampling techniques to produce a margin of error of no more than 1% with a confidence level of 95%; and (4) should explain the methods and estimation methods employed and why the study results in an unbiased estimate. If a local exchange carrier elects to use a traffic study to determine its interstate and international revenues for universal service contribution purposes, it would be required to submit the traffic studies for review. The Commission's current rules require affiliated entities to make a single election, for all of the affiliates each quarter, as to whether to use a traffic study or to use the safe harbor adopted for that category of services. The Commission proposes applying the same study area and election requirement to local exchange carriers.

84. The Commission invites parties to comment on this proposal and, in particular, on the costs and benefits of the proposal. Is 25% a reasonable percentage of local voice services revenue to use as a safe harbor for assessing federal USF contributions? Could the introduction of this safe harbor and/or the Commission's proposal to allow carriers to submit a traffic study materially change the amount of contributions obtained from local voice services? If so, are there other alternatives that will better estimate the contributions base? Will the Commission's proposed approach ensure that all carriers make an equitable USF contribution? Are there other factors that the Commission should consider in establishing a safe harbor? The Commission invites parties experienced with the use of other safe harbors to provide information that will help inform its decision-making with respect to a proposed safe harbor as a proxy for the contributions carriers currently make based on their actual Telephone Access Charges. The Commission invites parties to address whether the use of a traffic study to estimate interstate and international revenues will result in a contributions base that will provide comparable support to that provided by the safe harbor and is equitable among contributors. Are there alternative approaches that would produce better estimates? Are there other methods for determining the percentage of interstate and international traffic that should be used?

85. Second, the Commission sought comment in 2012 on adopting bright-line rules for the allocation of interstate and intrastate revenues for broad categories of services. In light of the other proposals the Commission makes today, the Commission now seeks comment on taking that proposed approach for all end-user voice services currently tariffed at the federal level—those offered by incumbent local exchange carriers as well as those offered by competitive local exchange carriers. The Commission's analysis in 2012 showed that the allocation of interstate and intrastate e revenues remained consistent over time (between 20% and 30% of total revenues for non-toll services were interstate and international and around 70% for toll services). The Commission invites comment on whether that allocation has continued to remain consistent. The Commission also seeks comment on all aspects of adopting bright-line rules for the allocation of interstate and intrastate revenue for such voice services, such as whether the Commission would need to set different fixed allocators for different categories of voice services (and whether that would create any competitive distortions in the marketplace or increase compliance burdens), what that allocator should be (the Commission specifically sought comment on a 20% interstate allocator, but the Commission now seeks comment on whether it should be higher such as 25%, 30%, or even 50%), how much weight to give the traffic studies filed by some reporting entities (considering the apparent differences in methodology the Commission observed in 2012), and whether the Commission would need to create some form of opt-out based on actual revenue receipts (for example, for a local voice service not connected to the interstate public switched telephone network). Would such an approach reduce the administrative costs of compliance, ease oversight, reduce gamesmanship, and ensure a steady stream of contributions are available for the USF going forward?

86. The Commission's goal is to help ensure that carriers properly attribute revenues to the interstate jurisdiction and prevent carriers from avoiding contributions altogether by allocating all their revenues to the intrastate jurisdiction. This sort of gamesmanship could destabilize the contribution base used to fund universal service and other programs. The Commission invites comment on the extent to which each proposal would ensure that local exchange carriers would continue to contribute on an equitable and non-discriminatory basis.

87. Are there alternative approaches the Commission could take to ensure that local exchange carriers that currently assess Telephone Access Charges continue to comply with their obligations to contribute to the federal USF? Parties proposing other alternatives for determining assessable revenues should present data to support their proposals. They should explain how their proposed alternative would minimize the effects on the contributions base and reduce administrative burdens compared to the safe harbor approach the Commission proposes here. Parties should also identify any changes that are necessary to Form 499-A or 499-Q and the associated instructions to reflect changes made in response to this Notice.

88. To allow affected carriers sufficient time to amend their tariffs and billing systems, the Commission proposes a transition that would permit carriers to detariff Telephone Access Charges with a July 1 effective date, consistent with the effective date of the annual access charge tariff filing, 47 CFR 69.3, following the effective date of the Order in this proceeding, and would require carriers to detariff these charges no later than the second annual tariff filing date following the effective date of such order. Carriers would be required to remove Telephone Access Charges from relevant portions of their interstate tariffs on one of these two annual access tariff filing dates, at the option of the carrier. Carriers would not be permitted to detariff these charges on dates other than the annual tariff filing dates specified by Commission. These dates will facilitate the transition process for incumbent local exchange carriers who use computerized programs to determine their Eligible Recovery and, for rate-of-return carriers, their CAF ICC. Finally, it will avoid placing large administrative costs on the National Exchange Carrier Association if member carriers were to elect to detariff at varying times during the year. Once the transition ends, no affected carrier would be permitted to include these charges in its interstate tariffs.

89. The Commission seeks comment on whether the proposed transition period provides carriers adequate time to amend their tariffs. The Commission also seeks comment on how to minimize consumer confusion during that transition. Should the Commission consider a different transition period for different classes of carriers, because its proposed actions may affect different classes of carriers differently? For instance, should the Commission apply the proposed transition to incumbent local exchange carriers, because the Commission currently regulates their Telephone Access Charges, but prescribe a shorter transition for competitive local exchange carriers, which have unregulated end-user charges? Would small carriers require more time for the transition? Would the changes proposed here affect existing contractual arrangements and, if so, would the proposed transition allow carriers adequate time to meet or amend those contractual arrangements? Should the Commission consider a different transition for carriers depending on how they may be affected by changes to universal service calculations? The Commission seeks comment on the specific costs associated with the transition, and how they could be reduced, especially for small carriers.

90. Finally, the Commission seeks comment on whether the proposed transition provides enough time to address changes to customer billing. Because the Commission proposes to prohibit affected carriers from separately listing any Telephone Access Charges on customer bills, carriers would need to make conforming changes to their billing systems and to customers' bills. The Commission seeks comment on whether the proposed transition period would provide carriers adequate time to modify their billing systems and customer bills, and to provide any necessary notices to their customers.

91. Section 201(b) Authority. The Commission intends to rely on section 201(b) of the Act to eliminate ex ante price regulation of Telephone Access Charges where such regulation is no longer necessary. Section 201(b) of the Act specifies that “[a]ll charges, practices, classifications, and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is declared to be unlawful.” It also allows the Commission to “prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this chapter.” This authority necessarily includes the authority to opt not to regulate—or to deregulate—carriers' interstate rates if such regulation is no longer necessary and thus, deregulation is in the public interest. Even if the Commission eliminates its current pricing regulations, any violations of the reasonableness and nondiscrimination requirements of sections 201 and 202 of the Act, 47 U.S.C. 201-202, could be addressed through the complaint process under section 208 of the Act, 47 U.S.C. 208. The Commission seeks comment on these conclusions.

92. The Commission also intends to use its authority under section 201(b) of the Act to prohibit carriers from including separate line items for any Telephone Access Charges, such as Subscriber Line Charges and Access Recovery Charges, on customers' bills. The Commission seeks comment on the nature and scope of its authority to adopt these proposals. The Commission has traditionally relied on its section 201(b) authority to adopt its truth-in-billing rules. Are there other statutory provisions that would support the Commission's proposal to prohibit the assessment of these separate Telephone Access Charges? Are there any potential legal impediments that the Commission need to address? In the First Truth-in-Billing Order, for example, the Commission determined that commercial speech that is misleading is not entitled to the protections of the First Amendment and may be prohibited.

93. Forbearance Authority. The Commission intends to rely on its authority under section 10 of the Act to forbear from section 203 of the Act, 47 U.S.C. 203, and any associated regulations, to the extent necessary to detariff Telephone Access Charges on a mandatory basis. The Commission also intends to use its forbearance authority as an alternate basis for eliminating ex ante price regulation where it is no longer necessary or in the public interest. Under section 10 of the Act, the Commission can forbear, on its own motion, from applying any regulation or provision of the Act in any or some of a carrier's (or class of carriers') geographic markets if the Commission determines that the following three forbearance criteria are met: “(1) enforcement of such regulation or provision is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory; (2) enforcement of such regulation or provision is not necessary for the protection of consumers; and (3) forbearance from applying such provision or regulation is consistent with the public interest.” The Commission has previously relied on its forbearance authority to detariff and deregulate interstate services. The Commission seeks comment on whether the forbearance criteria are met with respect to both mandatory detariffing and price deregulation of Telephone Access Charges in each of the circumstances and conditions described herein.

94. Statutory Authority to Support Universal Service and Other Federal Programs. The Commission intends to use its authority under section 254 of the Act, 47 U.S.C. 254(d), to make any changes necessary to ensure that the Commission minimizes any adverse impact of its proposed reforms on universal service contributions and support. Section 254(d) requires telecommunications carriers that provide interstate telecommunications services to “contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms established by the Commission to preserve and advance universal service.” Section 254(d) also provides the Commission's authority to require other providers of interstate telecommunications “to contribute to the preservation and advancement of universal service if the public interest so requires.” Section 254(e) specifies that only Eligible Telecommunications Carriers designated under section 214(e) of the Act shall be eligible to receive universal service support, and that “such support should be explicit and sufficient to achieve the purposes” of section 254 of the Act. Together, these statutory provisions provide the Commission authority to revise its rules consistent with these requirements and adopt the proposals relating to universal service. The Commission invites comment on this use of the Commission's section 254 authority.

95. Similarly, the Commission intends to use its authority under sections 225, 251 and 715 of the Act, 47 U.S.C. 225, 251(e)(2), 616, to make any changes necessary to ensure that the Commission minimizes any adverse impact of its proposed reforms on the TRS Fund, Local Number Portability Administration, and North America Numbering Plan Administration. Sections 225 and 715 provide the Commission authority to prescribe contributions to TRS from “all subscribers for every telecommunications service” and from interconnected and non-interconnected VoIP service providers. Section 251(e)(2) provides that the “cost of establishing telecommunications numbering administration arrangements and number portability shall be borne by all telecommunications carriers on a competitively neutral basis as determined by the Commission.” The Commission seeks comment on its authority under sections 225, 251 and 715 of the Act to minimize any adverse impacts of its proposed reforms on these programs.

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

97. As required by the Regulatory Flexibility Act, 5 U.S.C. 603, the Commission has prepared an Initial Regulatory Flexibility Analysis of the possible significant economic impact on a substantial number of small entities of the proposals addressed in this Notice of Proposed Rulemaking. The Initial Regulatory Flexibility Analysis is set forth in Appendix B of the Notice and below. Written public comments are requested on the Initial Regulatory Flexibility Analysis. These comments must be filed in accordance with the same filing deadlines for comments on the Notice, and they should have a separate and distinct heading designating them as responses to the Initial Regulatory Flexibility Analysis. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, will send a copy of this Notice, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration, in accordance with the Regulatory Flexibility Act.

98. Need for, and Objectives of, the Proposed Rules. Despite dramatic changes in the competitive landscape for voice services in the past twenty-five years, the Commission continues to regulate the Telephone Access Charges imposed by incumbent local exchange carriers. The Notice suggests that continued regulation and tariffing of Telephone Access Charges is no longer necessary or in the public interest. Consistent with the Commission's commitment to eliminate outdated and unnecessary regulations and to encourage efficient competition, the Commission proposes to deregulate and detariff these charges nationwide, or in the alternative, in certain areas where specific criteria indicate that rate regulation is unnecessary. The Commission also seeks comment on mandatorily detariffing other charges related to federal programs that many carriers currently include in their interstate tariffs.

99. In the interest of enabling consumers to easily compare voice service offerings by different providers, the Commission also proposes to modify its truth-in-billing rules to explicitly prohibit carriers from assessing any separate Telephone Access Charges, such as Subscriber Line Charges and Access Recovery Charges, on customers' bills when those charges are deregulated and detariffed. Prohibiting carriers from using separate, obscurely worded line items to bill for the interstate portion of local telephone services should make it easier for customers to understand their bills and to compare rates between different providers. Doing so should help ensure that a provider's advertised price is closer to the total price that appears on its customers' bills.

100. The Commission proposes several modifications to its rules for calculating Connect America Fund Broadband Loop Support (CAF BLS) and CAF Intercarrier Compensation (CAF ICC) to address the detariffing of Telephone Access Charges—modifications that the Commission does not expect will materially change the amount of funds made available for carriers relying on this mechanism to continue to serve their service areas. Given that some Telephone Access Charges are used to calculate contributions to the Universal Service Fund (USF) and other federal programs, as well as high-cost support, the Commission also proposes ways to provide certainty in calculating such contributions and support to ensure stability in funding following pricing deregulation and detariffing of Telephone Access Charges. Addressing these issues at the outset will ensure that the rural carriers that rely on such federal funds will have the certainty they need to continue investing in the deployment of next-generation networks and services in rural America. The Notice seeks comment on these proposals.

101. Legal Basis. The legal basis for any action that may be taken pursuant to the Notice is contained in sections 1, 4(i), 10, 201-203, 214, 225, 251, 254, 303(r), and 715 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 160, 201-203, 214, 225, 251, 254, 303(r), 616, and sections 1.1 and 1.412 of the Commission's rules, 47 CFR 1.1 and 1.412.

102. Description and Estimate of the Number of Small Entities to Which the Proposed Rules Will Apply. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the proposed rule revisions, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction,” 5 U.S.C. 601(3)-(6). In addition, the term “small business” has the same meaning as the term “small-business concern” under the Small Business Act. A “small-business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.

103. Small Businesses, Small Organizations, Small Governmental Jurisdictions. The Commission's actions, over time, may affect small entities that are not easily categorized at present. The Commission therefore describes, at the outset, three broad groups of small entities that could be directly affected herein. First, while there are industry specific size standards for small businesses that are used in the regulatory flexibility analysis, according to data from the SBA's Office of Advocacy, in general a small business is an independent business having fewer than 500 employees. These types of small businesses represent 99.9% of all businesses in the United States, which translates to 30.7 million businesses.

104. Next, the type of small entity described as a “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field,” 5 U.S.C. 610(4). The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000 or less to delineate its annual electronic filing requirements for small exempt organizations. Nationwide, for tax year 2018, there were approximately 571,709 small exempt organizations in the U.S. reporting revenues of $50,000 or less according to the registration and tax data for exempt organizations available from the IRS.

105. Finally, the small entity described as a “small governmental jurisdiction” is defined generally as “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand,” 5 U.S.C. 601(5). U.S. Census Bureau data from the 2017 Census of Governments, 13 U.S.C. 161, indicate that there were 90,075 local governmental jurisdictions consisting of general purpose governments and special purpose governments in the United States. Of this number there were 36,931 general purpose governments (county, municipal and town or township) with populations of less than 50,000 and 12,040 special purpose governments—independent school districts with enrollment populations of less than 50,000. Accordingly, based on the 2017 U.S. Census of Governments data, the Commission estimates that at least 48,971 entities fall into the category of “small governmental jurisdictions.”

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

107. Local Exchange Carriers (LECs). Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to local exchange services. The closest applicable NAICS Code category is Wired Telecommunications Carriers. Under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees. U.S. Census Bureau data for 2012 show that there were 3,117 firms that operated for the entire year. Of that total, 3,083 operated with fewer than 1,000 employees. Thus under this category and the associated size standard, the Commission estimates that the majority of local exchange carriers are small entities.

108. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The closest applicable NAICS Code category is Wired Telecommunications Carriers. Under the applicable SBA size standard, such a business is small if it has 1,500 or fewer employees. U.S. Census Bureau data for 2012 indicate that 3,117 firms operated the entire year. Of this total, 3,083 operated with fewer than 1,000 employees. Consequently, the Commission estimates that most providers of incumbent local exchange service are small businesses that may be affected by its actions. According to Commission data, one thousand three hundred and seven (1,307) Incumbent Local Exchange Carriers reported that they were incumbent local exchange service providers. Of this total, an estimated 1,006 have 1,500 or fewer employees. Thus, using the SBA's size standard the majority of incumbent LECs can be considered small entities.

109. Competitive Local Exchange Carriers (Competitive LECs), Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate NAICS Code category is Wired Telecommunications Carriers, as defined above. Under that size standard, such a business is small if it has 1,500 or fewer employees, 13 CFR 121.201. U.S. Census data for 2012 indicate that 3,117 firms operated during that year. Of that number, 3,083 operated with fewer than 1,000 employees. Based on this data, the Commission concludes that the majority of Competitive LECS, CAPs, Shared-Tenant Service Providers, and Other Local Service Providers, are small entities. According to Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive local exchange services or competitive access provider services. Of these 1,442 carriers, an estimated 1,256 have 1,500 or fewer employees. In addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or fewer employees. Also, 72 carriers have reported that they are Other Local Service Providers. Of this total, 70 have 1,500 or fewer employees. Consequently, based on internally researched FCC data, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are small entities.

110. Interexchange Carriers (IXCs). Neither the Commission nor the SBA has developed a small business size standard specifically for Interexchange Carriers. The closest applicable NAICS Code category is Wired Telecommunications Carriers. The applicable size standard under SBA rules is that such a business is small if it has 1,500 or fewer employees, 13 CFR 120.201. U.S. Census Bureau data for 2012 indicate that 3,117 firms operated for the entire year. Of that number, 3,083 operated with fewer than 1,000 employees. According to internally developed Commission data, 359 companies reported that their primary telecommunications service activity was the provision of interexchange services. Of this total, an estimated 317 have 1,500 or fewer employees. Consequently, the Commission estimates that the majority of interexchange service providers are small entities.

111. Local Resellers. The SBA has developed a small business size standard for the category of Telecommunications Resellers. The Telecommunications Resellers industry comprises establishments engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households. Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. Mobile virtual network operators (MVNOs) are included in this industry. Under that size standard, such a business is small if it has 1,500 or fewer employees, 13 CFR 121.201. Census data for 2012 show that 1,341 firms provided resale services during that year. Of that number, all operated with fewer than 1,000 employees. Thus, under this category and the associated small business size standard, the majority of these resellers can be considered small entities.

112. Internet Service Providers (Broadband). Broadband internet service providers include wired ( e.g., cable, DSL) and VoIP service providers using their own operated wired telecommunications infrastructure fall in the category of Wired Telecommunication Carriers. The U.S. Census Bureau defines this industry as “establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired communications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution, and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry,” 13 CFR 120.201. The SBA has developed a small business size standard for Wired Telecommunications Carriers, which consists of all such companies having 1,500 or fewer employees, 13 CFR 120.201. U.S. Census Bureau data for 2012 show that there were 3,117 firms that operated that year. Of this total, 3,083 operated with fewer than 1,000 employees. Thus, under this size standard, the majority of firms in this industry can be considered small.

113. Cable Companies and Systems (Rate Regulation). The Commission has developed its own small business size standards for the purpose of cable rate regulation. Under the Commission's rules, a “small cable company” is one serving 400,000 or fewer subscribers nationwide, 47 CFR 76.901(e). Industry data indicate that there are currently 4,600 active cable systems in the United States. Of this total, all but eleven cable operators nationwide are small under the 400,000-subscriber size standard. In addition, under the Commission's rate regulation rules, a “small system” is a cable system serving 15,000 or fewer subscribers, 47 CFR 76.901(c). Current Commission records show 4,600 cable systems nationwide. Of this total, 3,900 cable systems have fewer than 15,000 subscribers, and 700 systems have 15,000 or more subscribers, based on the same records. Thus, under this standard as well, the Commission estimates that most cable systems are small entities.

114. All Other Telecommunications. The “All Other Telecommunications” category is comprised of establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing internet services or voice over internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry. The SBA has developed a small business size standard for All Other Telecommunications, which consists of all such firms with annual receipts of $35 million or less, 13 CFR 121.201. For this category, U.S. Census Bureau data for 2012 show that there were 1,442 firms that operated for the entire year. Of those firms, a total of 1,400 had annual receipts less than $25 million and 15 firms had annual receipts of $25 million to $49,999,999. Thus, the Commission estimates that the majority of “All Other Telecommunications” firms potentially affected by its action can be considered small.

115. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities. The Commission proposes to detariff and deregulate all Telephone Access Charges nationwide, or in the alternative, in areas where specific criteria indicate that rate regulation is unnecessary. The affected carriers will need to file amendments to their tariffs with the Commission in order to detariff their Telephone Access Charges within the proposed transition period. The Commission also seeks comment on mandatory detariffing of other charges related to federal programs that many carriers currently include in their interstate tariffs. Because the Commission also proposes to prohibit carriers from including Telephone Access Charges as separate line items on customer bills, affected carriers will need to make changes to existing billing formats and may need to educate their customers. Carriers will likely modify their in-house recordkeeping to reflect the changes. The Commission proposes a transition to facilitate the detariffing of Telephone Access Charges to address potential administrative burdens.

116. The Commission seeks to ensure certainty in calculating contributions to the USF, the interstate Telecommunications Relay Service Fund, Local Number Portability Administration, and the North American Numbering Plan Administration. The Commission proposes to adopt a safe harbor for incumbent and competitive local exchange carriers to use as a proxy for the contributions carriers currently make based on their actual Telephone Access Charges. The Commission proposes to treat 25% of a carrier's local voice services revenue as assessable revenue subject to contribution obligations. Alternatively, a carrier that does not want to rely on the safe harbor would have the option of providing a traffic study demonstrating the actual percentage of its local voice traffic that is interstate and international in nature and using that percentage to determine its contributions base. The Commission also seeks comment on adopting bright-line rules for the allocation of interstate and intrastate revenues for all voice services—those offered by local exchange carriers, as well as those offered by other voice service operators. The Commission seeks comment on alternative approaches and on whether the proposed approach will ensure that all carriers make equitable contributions. The rules could potentially affect recordkeeping and reporting requirements.

117. The Commission also proposes to amend its rules to provide certainty in the amount of CAF BLS and CAF ICC support rate-of-return carriers receive following the deregulation and detariffing of Telephone Access Charges. The Commission seeks comment on proposals to establish fixed levels for future inputs to the CAF BLS and CAF ICC calculations, as well as seeking alternatives to the proposals. The rules could affect recordkeeping and reporting requirements.

118. Steps Taken to Minimize the Significant Economic Impact on Small Entities and Significant Alternatives Considered. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rules for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities, 5 U.S.C. 603(c)(1)-(4). The Commission expects to consider all of these factors when the Commission receives substantive comment from the public and potentially affected entities.

119. The Notice seeks comment on a proposal to deregulate and mandatorily detariff Telephone Access Charges nationwide, or in the alternative, in certain areas where specific criteria indicate that rate regulation is unnecessary. The Commission invites comment on whether, and to what extent, the costs of continued regulation of Telephone Access Charges imposed on incumbent local exchange carriers outweigh the benefits of such regulation. The Commission invites commenters to quantify both the costs and the benefits of its proposal and of any alternative approaches to detariffing and deregulating the pricing of Telephone Access Charges. The Commission also seeks comment on detariffing charges related to contributions to the federal USF that many carriers currently include in their interstate tariffs and seek comment on the costs and benefits of mandatorily detariffing these charges.

120. The Notice also seeks comment on a proposal to prohibit all carriers from separately listing Telephone Access Charges on customers' bills. The Commission seeks comment on how much time carriers would need to modify their existing billing systems to comply with its proposed rule changes and how the Commission could minimize burdens, particularly for smaller carriers. As an initial proposal, the Commission proposes a transition that would permit carriers two opportunities, one year apart, to detariff Telephone Access Charges at the same time as the annual access tariff filing, thereby eliminating the need for any additional tariff filings. The Commission expects that these options will allow even the small entities adequate time to amend their tariffs and meet most, if not all, existing contractual arrangements.

121. The Notice also proposes to amend the Commission's rules to provide certainty in the amount of CAF BLS and CAF ICC support rate-of-return carriers receive following the deregulation and detariffing of Telephone Access Charges. The Commission seeks comment on proposals to establish fixed levels for future inputs to the CAF BLS and CAF ICC calculations, as well as seeking alternatives to the proposals.

122. To provide certainty in calculating USF contributions and support to ensure stability in funding following the deregulation and detariffing of Telephone Access Charges, the Commission proposes to adopt a safe harbor for incumbent and competitive local exchange carriers to use to determine their assessable revenue from the interstate access portion of local service for purposes of determining their contribution obligations, but to permit carriers to submit traffic studies if they do not want to rely on the safe harbor. The Notice seeks comment on this proposal and a few different alternative approaches. The Commission also seeks comment on adopting bright-line rules for the allocation of interstate and intrastate revenues for all voice services and seek comment on all aspects of adopting bright-line rules for the allocation of interstate and intrastate revenue for all voice services.

123. The Commission expects to consider the economic impact on small entities, as identified in comments filed in response to the Notice and this IRFA, in reaching its final conclusions and promulgating rules in this proceeding. The proposals and questions laid out in the Notice were designed to ensure the Commission has a complete understanding of the benefits and potential burdens associated with the different actions and methods.

124. Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rules. None.

125. The proceeding that this Notice of Proposed Rulemaking initiates 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).

126. 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 section 1.1206(b) of the Commission's rules. Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

127. Accordingly, it is ordered that, pursuant to the authority contained in sections 1, 4(i), 10, 201-203, 214, 225, 251, 254, 303(r), and 715 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 160, 201-203, 214, 225, 251, 254, 303(r), 616, and sections 1.1 and 1.412 of the Commission's rules, 47 CFR 1.1, 1.412, this Notice of Proposed Rulemaking is adopted , effective thirty (30) days after publication of a summary thereof in the Federal Register .

128. It is further ordered that, pursuant to applicable procedures set forth in sections 1.415 and 1.419 of the Commission's Rules, 47 CFR 1.415, 1.419, interested parties may file comments on this Notice of Proposed Rulemaking on or before 45 days after publication of a summary of this Notice of Proposed Rulemaking in the Federal Register and reply comments on or before 75 days after publication of a summary of this Notice of Proposed Rulemaking in the Federal Register .

129. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR parts 51, 54, 61, and 69 as follows:

The revisions and additions read as follows:

This is a summary of the Commission's Notice of Proposed Rulemaking, FCC 20-55, adopted on April 22, 2020 and released on April 23, 2020. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street SW, Room CY-A257, Washington, DC 20554. The full text of this document will also be available via ECFS at http://apps.fcc.gov/ecfs. Documents will be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat. Alternative formats are available for people with disabilities (braille, large print, electronic files, audio format), by sending an email to fcc504@fcc.gov or calling the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

1. In the Notice of Proposed Rulemaking ( NPRM ), the Commission proposes to expand its video description regulations by phasing them in for an additional 10 designated market areas (DMAs) each year for four years, beginning on January 1, 2021. The Twenty-First Century Communications and Video Accessibility Act of 2010 (CVAA) directed the Commission to submit a report to Congress on October 8, 2019, assessing certain aspects of video description. The CVAA also provides that as of October 8, 2020, “based upon the findings, conclusions, and recommendations” contained in that report, the Commission has the authority to phase in the video description regulations for up to an additional 10 DMAs each year, if it determines that the costs of implementing the video description regulations to program owners, providers, and distributors in those additional markets are reasonable. 1 Through this NPRM, the Commission invites comment on its proposal to phase in its video description regulations for an additional 10 DMAs each year for four years, including comments on whether the costs of such an expansion would be reasonable. 2 This proposed expansion would help ensure that a greater number of individuals who are blind or visually impaired can be connected, informed, and entertained by television programming.

2. In addition, we propose to modernize the terminology in part 79 of the Commission's regulations to use the term “audio description” rather than “video description.” While the CVAA uses the term “video description,” there appears to be wide support among consumer organizations and industry for the proposed change. The Commission invites comment on this proposal.

3. Video description  3 makes video programming  4 more accessible to individuals who are blind or visually impaired through “[t]he insertion of audio narrated descriptions of a television program's key visual elements into natural pauses between the program's dialogue.”  5 Video description is typically provided through the use of a secondary audio stream, which allows the consumer to choose whether to hear the narration by switching from the main program audio to the secondary audio. As required by section 202 of the CVAA, the Commission adopted rules in 2011 requiring certain television broadcast stations and multichannel video programming distributors (MVPDs) to provide video description for a portion of the video programming that they offer to consumers on television.

4. The current video description rules require commercial television broadcast stations that are affiliated with one of the top four commercial television broadcast networks (ABC, CBS, Fox, and NBC) and are located in the top 60 television markets to provide 50 hours of video-described programming per calendar quarter during prime time or on children's programming, 6 as well as an additional 37.5 hours of video-described programming per calendar quarter at any time between 6 a.m. and midnight. 7 In addition, MVPD systems that serve 50,000 or more subscribers must provide 50 hours of video description per calendar quarter during prime time or on children's programming, as well as an additional 37.5 hours of video description per calendar quarter at any time between 6 a.m. and midnight, on each of the top five national nonbroadcast networks that they carry on those systems. 8 The top five nonbroadcast networks currently subject to the video description requirements are USA Network, HGTV, TBS, Discovery, and History. 9

5. The CVAA required the Commission to submit two reports to Congress related to video description. In the First Report, submitted to Congress in June 2014, the Bureau found that “[t]he availability of video description on television programming has provided substantial benefits for individuals who are blind or visually impaired, and the industry appears to have largely complied with their responsibilities under the Commission's 2011 rules.” The Bureau also found, however, that “consumers report the need for increased availability of and easier access to video-described programming, both on television and online.”

6. The CVAA required the Commission's Second Report to assess, among other topics, “the potential costs to program owners, providers, and distributors in [DMAs] outside of the top 60 of creating [video-described] programming” and “the need for additional described programming in [DMAs] outside the top 60.” The Bureau submitted the Second Report to Congress in October 2019. This report found that consumers who are blind or visually impaired derive significant benefits from the use of video description and, while it observed that there has been significant progress in the types and amount of video-described programming available over the past five years, it also noted that consumers would benefit from additional described programming. The Bureau observed that the record “indicates that consumers seek expansion of the video description requirements to DMAs outside the top 60, and it provides no basis for concluding that consumers would benefit less from video description in those markets than in other areas.”

7. As to the information regarding the costs to program owners, providers, and distributors of creating video-described content, the Bureau reported in the Second Report that the maximum cost of creating video-described programming remains consistent with the Commission's 2017 estimate of $4,202.50 per hour, while the cost of described pre-recorded programming can be as low as $1,000 per hour. The Bureau also noted that, according to one industry commenter, “costs should be manageable for network affiliates that receive programming via a network feed and simply pass through any video description.”  10 This commenter further claimed that some stations “could be forced `to devote a substantial portion of their limited resources to compliance' ” and some might “face significant expenditures, such as the purchase of additional equipment, to facilitate video description.”  11 The Second Report also noted a consumer commenter's claim that “passing through [an] audio stream that is already included on national broadcast network programming should not be burdensome, regardless of market, because the emergency information rules already require the use of the secondary audio stream.”  12 In its summary, the Bureau stated that commenters did not offer “detailed or conclusive information” as to the costs of such an expansion or a station's ability to bear those costs. It thus deferred issuing a determination regarding whether any costs associated with the expansion would be reasonable, explaining that, “[s]hould the Commission seek to expand the video description requirements to DMAs outside the top 60, it will need to utilize the information contained in this Second Report, and any further information available to it at the time, to determine that `the costs of implementing the video description regulations to program owners, providers, and distributors in those additional markets are reasonable.' ”  13

8. Expanding the Number of Markets Subject to Video Description Requirements. We propose to phase in the video description requirements for an additional 10 DMAs each year for four years, beginning on January 1, 2021, and we invite comment on this proposal. As indicated in the Second Report, consumers seek expansion of the video description requirements to additional DMAs, and we believe our proposal will provide significant benefits to consumers who are blind or visually impaired and are located in DMAs 61 through 100. As stated, the CVAA provides the Commission with authority for this phase-in, “based upon the findings, conclusions, and recommendations contained in the [Second Report],” “(I) if the costs of implementing the video description regulations to program owners, providers, and distributors in those additional markets are reasonable, as determined by the Commission; and (II) except that the Commission may grant waivers to entities in specific [DMAs] where it deems appropriate.” We propose that any further expansion beyond DMA 100 would be undertaken only following a future determination of the reasonableness of the associated costs.

9. We tentatively conclude that the costs of implementing the video description regulations in markets 61 through 100 are reasonable. The Second Report indicates that the costs of adding description to television programming have held steady since 2017. Costs thus remain at a level the Commission has previously considered “minimal,” relative to total programming expenses and network revenues, when it increased the required number of hours for described programming for commercial broadcast television stations affiliated with ABC, CBS, Fox, or NBC that are located in the top 60 television markets. Similarly, the record in the Second Report reflects that, for purposes of DMAs outside the top 60, “costs should be manageable for network affiliates that receive programming via a network feed and simply pass through any video description.”  14 We seek comment on this tentative conclusion.

10. We note that covered broadcasters are currently required to have the necessary equipment and infrastructure to deliver a secondary audio stream in order to provide timely, audible emergency information to consumers who are blind or visually impaired, without exception for technical capability or market size. Since video description is also provided via the secondary audio stream, we assume that broadcasters capable of compliance with the emergency information requirement also have the technical capability to comply with the video description requirements. We believe this supports our tentative conclusion that the costs of expanding the video description requirements to DMAs 61 through 100 would be “reasonable.” We seek comment on our analysis. The record gathered for the Second Report was not conclusive on other technical costs of providing video description, such as whether expenditures for any additional equipment might be necessary. Accordingly, we seek comment on this issue.

11. Further, we expect that the costs to program owners, providers, and distributors of providing video description in markets 61 through 100 are reasonable, and we invite comment on whether that is correct. Specifically, we invite comment on the costs of creating video-described programming for network affiliates in markets 61 through 100. 15 We note that the First Report concluded that the costs of complying with the video description requirements were consistent with industry's expectations at the time the rules were adopted and had not impeded industry's ability to comply, and the record for the Second Report did not alter that conclusion. We believe that the costs of providing video description in DMAs 61 through 100 are similar if not the same as the costs of providing video description in DMAs that are already subject to the requirements. For example, network affiliated stations outside of the top 60 DMAs currently provide a substantial amount of video-described programming due to their pass-through obligation. Thus, this mitigates the costs associated with the proposed rule expansion. The record for the Second Report indicates that “compliance costs should be manageable for” network affiliated broadcasters that “typically receive programming via a network feed, and pass through the audio of any video described programming on their [secondary audio] channels, including some stations in markets below the top 60 that do so voluntarily.”  16 We seek information on how the differing costs faced by network affiliates that receive programming via a network feed as compared to other network affiliates should impact our analysis. Are there any network affiliates in any DMA that do not receive programming via a network feed?  17 We assume that network affiliated stations in markets 61 through 100 would be able to satisfy the video description requirements entirely by using the programming they receive via a network feed. Is this assumption correct or would they incur costs to describe additional programming in order to meet the requirements? Are there differing costs incurred by stations owned by large station group owners as compared to smaller station group owners or single stations? Commenters should provide specific data on the costs that program owners, providers, and distributors would face if the Commission were to expand the video description requirements to an additional 10 DMAs each year, until all DMAs up to market 100 are covered. Would program owners and providers, as well as broadcast stations in DMAs 61 through 100, face additional costs as a result of the proposed expansion? If so, commenters should specify the nature and amount of those costs. Should we account for the current coronavirus pandemic in evaluating the reasonableness of costs of expanding video description requirements to markets 61 through 100, and if so, how?

12. In addition to information about costs, we also seek comment on the benefits of expanding the video description requirements to DMAs 61 through 100, including whether these benefits would outweigh any of the costs referenced above. In the Second Report, the Bureau described the record on this topic, which indicated that some video-described programming is available outside the top 60 DMAs but that consumers desire even more of such programming. It is indisputable that video description enhances the accessibility of video programming to consumers who are blind or visually impaired. Would expanding the video description requirements to DMAs 61 through 100 substantially increase the availability of video description to consumers in these areas, therefore providing a significant benefit to such consumers? Commenters should provide specific data on the amount of video-described programming currently available in DMAs 61 through 100, as compared to the amount that would be available if the Commission were to expand the video description requirements to such DMAs. We also invite commenters to specify the benefits that consumers in the DMAs at issue would derive from the proposed expansion. 18

13. If the Commission determines that the costs of implementing the video description regulations to program owners, providers, and distributors in DMAs 61 through 100 are “reasonable,” we invite comment on the compliance deadline for the expansion of the video description requirements. While the CVAA provides us with authority to expand the video description regulations to an additional 10 DMAs per year beginning on October 8, 2020, we propose to expand the requirements to DMAs 61 through 70 as of January 1, 2021, to provide entities with sufficient time for compliance. We propose that these expansions would continue with an additional 10 DMAs per year, until the requirements are expanded to DMAs 91 through 100 on January 1, 2024. In 2023, the Commission will determine whether to continue expanding to an additional 10 DMAs per year, with any further expansion to be undertaken only following a future determination of the reasonableness of the associated costs. We invite comment on these proposals. Would stations within the first DMAs subject to the expansion (DMAs 61 through 70) have a sufficient amount of time to comply, or should we provide more time for the first compliance deadline?  19 We do not expect there to be any need to provide more time for any station in a DMA outside the first group subject to the expansion because stations in other DMAs will be fully aware of the applicable compliance deadlines well in advance. Should the current coronavirus pandemic affect our decision regarding the compliance deadline, and if so, how?

14. We propose that any extension of the rules to additional DMAs should be based on an updated Nielsen determination, as the Commission did when previously expanding the application of the rules from the top 25 to the top 60 markets, and we invite comment on this proposal. The video description rules currently apply to stations “licensed to a community located in the top 60 DMAs, as determined by The Nielsen Company as of January 1, 2015.” If we utilize updated Nielsen figures, should the updated figures apply to determine the top 60 markets? What should be the compliance deadline for stations in a DMA that was not in the top 60 markets as of January 1, 2015, but is within the top 60 markets as of January 1, 2020? We believe that using updated Nielsen data would facilitate the roll out of video description obligations to more television households more efficiently.

15. If the Commission expands the video description rules to additional DMAs, we propose that section 79.3(d) of the Commission's rules will govern any petitions for exemption due to economic burden. The video description rules permit covered entities to petition the Commission for a full or partial exemption from the requirements upon a showing that the requirements are economically burdensome. 20 The CVAA also provides that if an expansion of the video description rules to additional DMAs occurs, “the Commission may grant waivers to entities in specific [DMAs] where it deems appropriate.” Section 1.3 governs waivers of the Commission's rules generally. We tentatively conclude that §§ 79.3(d) and 1.3 provide a sufficient mechanism for entities seeking relief from any expansion of the video description rules to additional DMAs, and we invite comment on this conclusion.

16. Finally, we seek comment on whether there are any other issues with respect to our proposal to extend the video description rules to additional DMAs of which we should be aware.

17. Modernizing Terminology. Additionally, we propose to make a non-substantive amendment to the rules to substitute the term “audio description” for the term “video description” for purposes of part 79. Because the Commission's definition of video description already references both terms, our proposed modernization of terminology should not change the substance of any regulations. As early as 2011, in response to the Commission's Notice of Proposed Rulemaking, consumer and industry groups proposed using the term “audio description” instead of “video description.” Although the Commission previously sought comment on this proposal in its 2016 Notice of Proposed Rulemaking, the Commission has not yet resolved the matter. Recently, the Disability Advisory Committee (DAC) recommended that “the Commission, as soon as practicable, use the term `audio description' to refer to described video programs when discussing or listing audio described programming.” The DAC points out that the term “audio description” is used by most federal agencies, and explains that consistency in terminology will help consumers and video providers avoid confusion. Indeed, our search to date has not revealed any other federal agency that uses the term “video description.” We are concerned that the use of inconsistent terms may cause confusion for consumers and industry. We recognize that terminology can become obsolete and, historically, agencies have made non-substantive modifications to regulations to reflect the newer terminology, even if the pertinent statute itself may not have been amended. We therefore seek to refresh the record on our proposal to revise our rules to reflect the newer and more commonly used terminology. Because the current definition in the Commission's rules treats the terms “video description” and “audio description” as synonymous, we propose to retain the statutory term “video description” in the definition while using the more commonly understood term “audio description” elsewhere in the rule. We invite comment on this proposal. We find that the Commission has authority to adopt update its terminology as proposed as part of its “continuing authority” to regulate video description. Updating the terminology does not implicate any limitation contained in the statute, nor does it make any substantive change to the rules. We invite comment on this analysis.

18. Technical Update to the Rules. Finally, we propose to make a non-substantive edit to the video description rules, to delete the outdated references in section 79.3(b)(1) and (4) to the compliance deadlines of July 1, 2015 and July 1, 2018, which have passed. We invite comment on this proposal.

19. Initial Regulatory Flexibility Analysis. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) concerning the possible significant economic impact on small entities by the policies and rules proposed in the Notice of Proposed Rulemaking ( NPRM ). Written public comments are requested on the IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments indicated on the first page of the FNPRM. The Commission will send a copy of the NPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In summary, the NPRM: (1) Proposes to expand the video description regulations by phasing them in for an additional 10 DMAs each year for four years, beginning on January 1, 2021; (2) proposes to modernize the terminology in part 79 of the Commission's regulations to use the term “audio description” rather than “video description”; and (3) proposes to make a non-substantive edit to the video description rules, to delete outdated references to compliance deadlines that have passed. The proposed action is authorized pursuant to the Twenty-First Century Communications and Video Accessibility Act of 2010, Public Law 111-260, 124 Stat. 2751, and section 713 of the Communications Act of 1934, as amended, 47 U.S.C. 613. The types of small entities that may be affected by the proposals contained in the FNPRM fall within the following categories: Television Broadcasting, Wired Telecommunications Carriers, Cable and Other Subscription Programming, Cable Television Distribution Services, Cable Companies and Systems (Rate Regulation Standard), Cable System Operators (Telecommunications Act Standard), and Direct Broadcast Satellite (DBS) Service.

20. The projected reporting, recordkeeping, and other compliance requirements are: (1) Phasing in the existing video description requirements for an additional 10 DMAs each year, beginning on January 1, 2021 and continuing until January 1, 2024, with the extension based on an updated Nielsen determination; and (2) providing that section 79.3(d) of the Commission's rules will govern any petitions for exemption due to economic burden, with section 1.3 of the Commission's rules governing waivers of the Commission's rules generally. The Commission's proposal to update the term “video description” to “audio description” is a non-substantive change that will not cause any new or revised reporting, recordkeeping, or other compliance requirements that would be applicable to small entities. The same is true of its proposal to make a non-substantive edit to the video description rules to delete the outdated references in section 79.3(b)(1) and (4) to the compliance deadlines of July 1, 2015 and July 1, 2018, which have passed. There is no overlap with other regulations or laws. The extension to DMAs 61 through 100 would have a limited impact on small entities. The NPRM focuses on engaging in a cost-benefit analysis to determine the effects the expansion would have. Comments on the NPRM will help us determine whether the benefits of the expansion would indeed outweigh any costs. The Commission has attempted to minimize the impact of the rules on small entities, and it invites comment on alternative approaches.

21. Paperwork Reduction Act. This document contains proposed new or revised 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 104-13 (44 U.S.C. 3501-3520). In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”

22. Ex Parte Rules—Permit-But-Disclose. The proceeding this Notice initiates shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. 21 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.

23. Filing Requirements—Comments and Replies. 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.

All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701.

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

• Effective March 19, 2020, and until further notice, the Commission no longer accepts any hand or messenger delivered filings. This is a temporary measure taken to help protect the health and safety of individuals, and to mitigate the transmission of COVID-19. See FCC Announces Closure of FCC Headquarters Open Window and Change in Hand-Delivery Policy, Public Notice, DA 20-304 (March 19, 2020), https://www.fcc.gov/document/fcc-closes-headquarters-open-window-and-changes-hand-delivery-policy.

• During the time the Commission's building is closed to the general public and until further notice, if more than one docket or rulemaking number appears in the caption of a proceeding, paper filers need not submit two additional copies for each additional docket or rulemaking number; an original and one copy are sufficient.

24. The proposed action is authorized pursuant to the Twenty-First Century Communications and Video Accessibility Act of 2010, Public Law 111-260, 124 Stat. 2751, and the authority contained in Section 713 of the Communications Act of 1934, as amended, 47 U.S.C. 613.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 79 as follows: