On August 13, 2021 (86 FR 44594), the NRC published a direct final rule amending its regulations in part 72 of title 10 of the Code of Federal Regulations to renew, for an additional 40 years, the initial certificate and Amendment Nos. 1, 3, and 4 of the TN Americas, LLC, Standardized Advanced NUHOMS® Horizontal Modular Storage System Certificate of Compliance No. 1029. The renewal of the initial certificate and Amendment Nos. 1, 3, and 4 revise the certificate of compliance's conditions and technical specifications to address aging management activities related to the structures, systems, and components of the dry storage system to ensure that these will maintain their intended functions during the period of extended storage operations.

In the direct final rule, the NRC stated that if no significant adverse comments were received, the direct final rule would become effective on October 27, 2021. The NRC did not receive any comments on the direct final rule. Therefore, this direct final rule will become effective as scheduled.

EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2021-0013, dated January 13, 2021 (EASA AD 2021-0013) (also referred to as the MCAI), to correct an unsafe condition for all ATR-GIE Avions de Transport Régional Model ATR42-500 and ATR72-212A airplanes.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all ATR-GIE Avions de Transport Régional Model ATR42-500 and ATR72-212A airplanes. The NPRM published in the Federal Register on July 7, 2021 (86 FR 35697). The NPRM was prompted by reports indicating that Thales GPS SBAS receivers provided, under certain conditions, erroneous outputs on aircraft positions. The NPRM proposed to require replacing affected GPS SBAS receivers with new, improved receivers, as specified in EASA AD 2021-0013.

The FAA is issuing this AD to address erroneous aircraft position outputs from the GPS SBAS receivers, which could result in controlled flight into terrain, and consequent loss of control of the airplane. See the MCAI for additional background information.

The FAA received a comment from the Air Line Pilots Association, International, (ALPA) who supported the NPRM without change.

The FAA reviewed the relevant data and determined that air safety requires adopting this AD as proposed. Except for minor editorial changes, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator. Accordingly, the FAA is issuing this AD to address the unsafe condition on these products.

AD 2020-08-02, Amendment 39-21108 (85 FR 20586, April 14, 2020) (AD 2020-08-02) applies to certain Thales GPS SBAS receivers installed on airplanes (including Model ATR42-500 and ATR72-212A) and helicopters. AD 2020-08-02 requires the installation of a software update to the aircraft navigation database and insertion of a change to the applicable airplane flight manual (AFM). The FAA issued AD 2020-08-02 to address erroneous aircraft position outputs from the affected Thales GPS SBAS receivers, which could result in controlled flight into terrain and loss of the aircraft. AD 2020-08-02 corresponds to EASA AD 2019-0004, dated January 11, 2019. Upon completion of EASA AD 2021-0013 by Model ATR42-500 and ATR72-212A airplanes, all requirements of EASA AD 2019-0004 are effectively terminated for those airplanes.

EASA AD 2021-0013 describes procedures for replacing certain GPS SBAS receivers with new, improved receivers. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 15 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

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

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

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

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

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

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

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

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2020-0267, dated December 3, 2020 (EASA AD 2020-0267) (also referred to as the MCAI), to correct an unsafe condition for all Airbus SAS Model A310-203, -204, -221, -222, -304, -322, -324, and -325 airplanes.

EASA AD 2020-0267 specifies that it requires a task (limitation) related to the retraction actuator assembly sliding rod already in Airbus A310 ALS Part 4 Revision 03 that is required by EASA AD 2017-0202 (which corresponds to FAA AD 2018-18-21, Amendment 39-19400 (83 FR 47054, September 18, 2018) (AD 2018-18-21)) and that incorporation of EASA AD 2020-0267 invalidates (terminates) prior instructions for that task. This AD therefore terminates the limitations for the retraction actuator assembly sliding rod having part number D52952, D52952-1, D52952-2, or D58006, as required by paragraph (g) of AD 2018-18-21, for Model A310 series airplanes only.

This AD was prompted by a determination that new or more restrictive airworthiness limitations are necessary. The FAA is issuing this AD to address the effects of aging on airplane systems. Such effects could change system characteristics, leading to an increased potential for failure of certain life-limited parts. See the MCAI for additional background information.

EASA AD 2020-0267 describes new or more restrictive airworthiness limitations for airplane structures and safe life limits. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA is issuing this AD after determining that the unsafe condition described previously is likely to exist or develop on other products of the same type design.

This AD requires revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations, which are specified in EASA AD 2020-0267 described previously, as incorporated by reference. Any differences with EASA AD 2020-0267 are identified as exceptions in the regulatory text of this AD.

This AD requires revisions to certain operator maintenance documents to include new actions ( e.g., inspections). Compliance with these actions is required by 14 CFR 91.403(c). For airplanes that have been previously modified, altered, or repaired in the areas addressed by this AD, the operator may not be able to accomplish the actions described in the revisions. In this situation, to comply with 14 CFR 91.403(c), the operator must request approval for an alternative method of compliance (AMOC) according to paragraph (k)(1) of this AD.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, EASA AD 2020-0267 is incorporated by reference in this AD. This AD requires compliance with EASA AD 2020-0267 in its entirety through that incorporation, except for any differences identified as exceptions in the regulatory text of this AD. Using common terms that are the same as the heading of a particular section in EASA AD 2020-0267 does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in EASA AD 2020-0267. Service information required by EASA AD 2020-0267 for compliance will be available at https://www.regulations.gov by searching for and locating Docket No. FAA-2021-0789 after this AD is published.

The FAA's process of incorporating by reference MCAI ADs as the primary source of information for compliance with corresponding FAA ADs has been limited to certain MCAI ADs (primarily those with service bulletins as the primary source of information for accomplishing the actions required by the FAA AD). However, the FAA is now expanding the process to include MCAI ADs that require a change to airworthiness limitation documents, such as airworthiness limitation sections.

For these ADs that incorporate by reference an MCAI AD that changes airworthiness limitations, the FAA requirements are unchanged. Operators must revise the existing maintenance or inspection program, as applicable, to incorporate the information specified in the new airworthiness limitation document. The airworthiness limitations must be followed according to 14 CFR 91.403(c) and 91.409(e).

The previous format of the airworthiness limitation ADs included a paragraph that specified that no alternative actions ( e.g., inspections) or intervals may be used unless the actions and intervals are approved as an AMOC in accordance with the procedures specified in the AMOCs paragraph under “Additional FAA Provisions.” This new format includes a “New Provisions for Alternative Actions and Intervals” paragraph that does not specifically refer to AMOCs, but operators may still request an AMOC to use an alternative action, interval, or CDCCL.

There are currently no domestic operators of these products. Accordingly, notice and opportunity for prior public comment are unnecessary, pursuant to 5 U.S.C. 553(b)(3). In addition, for the foregoing reason, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days.

The FAA invites you to send any written relevant data, views, or arguments about this final rule. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2021-0789; Project Identifier MCAI-2020-01607-T” at the beginning of your comments. The most helpful comments reference a specific portion of the final rule, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

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

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Dan Rodina, Aerospace Engineer, Large Aircraft Section, International Validation Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3225; email dan.rodina@faa.gov. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

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

Currently, there are no affected U.S.-registered airplanes. If an affected airplane is imported and placed on the U.S. Register in the future, the FAA provides the following cost estimates to comply with this AD:

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

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

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

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

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

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

(2) Will not affect intrastate aviation in Alaska.

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

This final rule updates eleven parts of the Export Administration Regulations (EAR), parts 732, 734, 736, 738, 740, 744, 748, 750, 770, 772, and 774, such that most-recent language elsewhere in the EAR is consistent with the language in these parts. These changes are minor editorial revisions that either reflect Bureau of Industry and Security (BIS) policies that were previously published in the Federal Register and added to the EAR or reflect the modernization of procedures implemented by BIS. These revisions do not change the substance of the EAR.

In 2004, supplement no. 2 to part 732, the “Subject to the EAR?” flowchart, was revised to make it simpler and easier to read. However, the language of the supplement is not consistent with the language in other parts of the EAR, including language implemented before and after the 2004 amendment. In 1999, paragraphs (a) and (b) of § 734.5 were amended to better represent U.S. policy objectives but the 2004 update to supplement no. 2 did not capture these changes. Further, in 2009, paragraph (c) of § 734.5 was dropped from the EAR and in 2016, “transfer (in-country)” was added to the EAR in § 734.16. Elsewhere in this rule, § 734.3(a)(4) and (5) are being amended to align with § 736.2(b)(3) of the EAR; the changes to these sections also impact the flowchart in supplement no. 2 to part 732. This rule changes the “Subject to the EAR?” flowchart in supplement no. 2 of part 732 to reflect these changes. For example, the first text bubble of the supplement no longer mentions § 734.5(c) and the final text bubble simply refers readers to § 736.2(b)(3), rather than to any specific destinations.

Parts 734 and 736 were added to the EAR in 1996. Section 736.2 has been revised several times since then, updating the language regarding what constitutes a “foreign-produced direct product.” The most recent update to part 736 was in August of 2020. This rule amends § 734.3(a)(4) and (5) to reflect the terms currently used in § 736.2(b)(3) of the EAR. The definition for the term “direct product” is removed from § 734.3(a)(4), because it is being added to part 772, as detailed below.

On January 15, 2021, BIS published an interim final rule (86 FR 4865) that inadvertently removed paragraphs (B) and (C) from § 736.2(b)(7)(i). Paragraphs (B) and (C) are added back by this rule. Those paragraphs dictate which schedules of chemicals listed in supplement no. 1 to part 745 a “U.S. person” may not export without complying with specific provisions and requirements of the EAR. In addition, as the January 15 interim final rule removed the definition of “U.S. person” from § 744.6(c) of the EAR (while leaving the identical definition in § 772.1 of the EAR), BIS is making conforming changes to § 736.2(b)(7)(i)(B) and (C). Specifically, BIS is revising both paragraphs to reference § 772.1, instead of § 744.6(c), for the definition of the term “U.S. person.” Quotation marks are also added around the term “U.S. person” in both paragraphs, given it is a defined term in part 772. Quotation marks are also added around the term “direct product” in § 736.2(b) for the same reason and as detailed below.

In June of 2020, License Exception Civil End Users (CIV) was removed from the EAR. After the removal, a sample Commerce Control List entry set forth in § 738.4(b)(2) of the EAR unintentionally retained a reference to License Exception CIV. This rule rectifies this by removing the CIV reference from § 738.4(b)(2) while retaining the remainder of the sample entry.

On December 28, 2020, BIS published a final rule (85 FR 84211) adding Cyprus and Mexico to Country Group A:6. As there were issues with the amendatory instruction to that rule, this rule corrects the amendatory instruction and adds an “X” in Column “[A:6]” in Supplement No. 1 to Part 740 for “Cyprus” and “Mexico.”

In April of 2020, BIS published a rule regarding military end users (85 FR 23459). In supplement no. 2 to part 744 of the EAR, paragraph (3)(viii) inadvertently reprinted out-of-date text from Export Control Classification Number (ECCN) 3A992 when referring to ECCN 3E991 technology for those 3A992 items. This rule updates the paragraph to reflect the current text in that ECCN. This edit does not change the scope of the license requirement for items controlled under the ECCN. Quotation marks are also added around the term “direct product” in supplement no. 4 to part 744, because the term is being added to part 772 by this rule, as detailed below.

As has been the case for some time, the public may submit advisory opinion requests to BIS in a variety of ways in addition to through the mail ( e.g., the U.S. Postal Service or via a shipping and logistics delivery service). This rule revises § 748.3(c) of the EAR to include how to submit advisory opinion requests via email or through the BIS website.

Supplement no. 2 to part 748, “Unique Application and Submission Requirements,” is being clarified to reflect BIS policy regarding the letters of assurance described in paragraph (o)(3)(i), which are applicable to license applications submitted for the export of technology controlled for national security reasons to certain countries. Specifically, this clarification reflects BIS policy that license applicants must always obtain letters of assurance, which must be submitted to BIS upon request. Quotation marks are also added around the term “direct product” in supplement no. 2, because the term is being added to part 772 by this rule, as detailed below. This rule also adds in that this applies to exports, reexports, and transfers (in-country), which is currently BIS policy regarding this paragraph.

This rule amends paragraph (b)(6) “Block 6: Ultimate Consignee,” of supplement no. 3 to part 748, “Statement by Ultimate Consignee and Purchaser Content Requirements.” Prior to publication of this rule, paragraph (b)(6) indicated that an ink signature is required on the BIS-711 “Statement by Ultimate Consignee and Purchaser” form. However, following public comments, in a March 2015 final rule, BIS confirmed that electronic signatures are permissible. This rule revises paragraph (b)(6) to more accurately reflect existing text found in § 748.11 of the EAR.

Sections 750.1, 750.8, and 750.9 are being updated to reflect BIS's use of the Simplified Network Application Process—Redesign (SNAP-R) system by eliminating or rewording parts of the sections that are no longer relevant given the online nature of the system. The SNAP-R system has been in place since October of 2006 and has largely replaced the previous system that involved the submission of paper license applications, but the EAR has not been fully updated to reflect that change. Now that BIS does not mail copies of licenses to applicants with SNAP-R accounts, and almost all exporters have access to licenses electronically (via the SNAP-R system) and can therefore save and print out multiple copies of their licenses themselves, a requirement to return a revoked license or a duplicate copy of a license is, under most circumstances, unnecessary. In § 750.8, the text specific to the return of a revoked license was relevant when BIS sent validated hard copies of licenses to exporters. This rule revises § 750.8 by removing the text requiring the return of revoked or suspended licenses. The remaining text specifies that if BIS revokes or suspends a license, the licensee must retain all applicable supporting documents and records of shipments in accordance with the recording keeping provisions of part 762 of the EAR. In § 750.9, the text specific to the return of duplicate licenses was relevant when BIS sent validated hard copies of licenses to exporters. This rule revises § 750.9 regarding lost, stolen or destroyed paper licenses by removing and reserving § 750.9(a)(3) of the EAR, which required the return of either the original or duplicate paper licenses should the original paper license be found. Doing so aligns the EAR with existing BIS policies and procedures. This rule also revises § 750.1 to reflect the changes this rule makes to §§ 750.8 and 750.9 of the EAR.

Section 750.7(a) is corrected by adding a sentence that directs readers to more detailed information regarding the release of “technology” authorized by the issuance of a BIS license, which is set forth within § 734.20 of the EAR. Section 750.7(a) is also broken up into subparagraphs (1), (2), and (3) to make it easier to read.

“Release” as it is used in the context of the EAR is defined in § 734.15, which was added to the EAR in 2016. However, § 770.3(d)(1)(ii) was never updated to reflect the definition. This rule rectifies this omission by amending § 770.3(d)(1)(ii) to direct readers to the definition of a “release” in § 734.15 and by altering the language in paragraph (d)(1)(ii) such that it answers the preceding question in § 770.3(d)(1)(i) correctly given the 2016 change in the definition of “release.”

This final rule removes the definition of the term “direct product” from § 734.3(a)(4) and adds it to § 772.1. Given the changes to part 734 detailed above, the term “direct product” is better suited to appear as a defined term in part 772. This rule does not alter the definition of “direct product” or the BIS policy specific to the term.

BIS is also amending paragraph (a) of the definition of “U.S. person” in § 772.1 of the EAR to clarify that the definition applies for purposes of §§ 732.3(j), 736.2(b)(7), and 745.2(a)(1) of the EAR. This change does not alter BIS policy, but does bring the definition of “U.S. person” in line with the rest of the EAR.

This final rule corrects ECCN 0D617 to remove text that was inadvertently included from 0D606 and published as part of a revision of 0D617 on June 3, 2020 (85 FR 34306). In ECCN 0D617, this final rule removes references to 0x606 ECCNs and adds in its place text referencing the 0x617 ECCNs. This final rule also revises the Related Controls paragraph and Items paragraph (a) in the List of Items Controlled section of ECCN 0D617 to remove text that was inadvertently included from 0D606 and to add in its place the intended text from 0D617. The publication of this correction does not change existing BIS policy.

This final rule corrects a reference in the control chart for ECCN 7A611 from “§ 724.6(a)(7)” to “§ 742.6(a)(7)” in supplement no. 1 to part 774.

On August 13, 2018, the President signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which included the Export Control Reform Act of 2018 (ECRA), 50 U.S.C. Sections 4801-4852. ECRA provides the legal basis for BIS's principal authorities and serves as the authority under which BIS issues this rule.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866.

2. Notwithstanding any other provision of law, no person may be required to respond to or be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This regulation involves a collection currently approved by OMB under control number 0694-0088, Simplified Network Application Processing System. This collection includes, among other things, license applications and commodity classification, and carries a burden estimate of 29.6 minutes for a manual or electronic submission for a total burden estimate of 31,835 hours. BIS does not expect the burden hours associated with this collection to change.

3. This rule does not contain policies with federalism implications as that term is defined under Executive Order 13132.

Pursuant to Section 4821 of ECRA, this action is exempt from the Administrative Procedure Act (5 U.S.C. 553) requirements for notice of proposed rulemaking, opportunity for public participation and delay in effective date.

Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this final rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under the Administrative Procedure Act or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) are not applicable. Accordingly, no regulatory flexibility analysis is required, and none has been prepared.

Accordingly, parts 732, 734, 736, 738, 740, 744, 748, 750, 770, 772, and 774 of the Export Administration Regulations (15 CFR parts 730-774) are amended as follows:

The Bureau of Industry and Security (BIS) is amending the Export Administration Regulations (EAR) to implement the decision made at the Australia Group (AG) Virtual Implementation Meeting session held in May 2021, and subsequently adopted pursuant to the AG silence procedure (the AG silence procedure provides for the adoption of a measure, subsequent to its provisional acceptance at an AG plenary or intersessional meeting, provided that no participating country submits an objection on or before a specified date). The AG is a multilateral forum consisting of 42 participating countries and the European Union. These participants maintain export controls on a list of chemicals, biological agents, and related equipment and technology that could be used in a chemical or biological weapons program. The AG periodically reviews items on its control list to enhance the effectiveness of participating governments' national controls and to achieve greater harmonization among these controls.

This final rule amends the Commerce Control List (CCL), in Supplement No. 1 to part 774 of the EAR, to add a new ECCN 2D352 to reflect a decision made at the May 2021 Virtual Implementation Meeting session to modify the AG biological equipment list to add controls on “software” that is: (1) Designed for nucleic acid assemblers and synthesizers described on this AG Common Control List; and (2) capable of designing and building functional genetic elements from digital sequence data. Specifically, new ECCN 2D352 controls “software” designed for nucleic acid assemblers and synthesizers controlled by ECCN 2B352.j that is capable of designing and building functional genetic elements from digital sequence data.

This “software,” as controlled under new ECCN 2D352, requires a license for chemical and biological weapons (CB) reasons and anti-terrorism (AT) reasons to the destinations indicated under CB Column 2 and AT Column 1, respectively, on the Commerce Country Chart in Supplement No. 1 to part 738 of the EAR (also see the AT license requirements described in part 742 that apply to Iran, North Korea and Syria). A license also is required to certain destinations in accordance with the embargoes and other special controls described in part 746 of the EAR.

In addition, this rule amends ECCN 2E001 (which controls, inter alia, “technology” for the “development” of the nucleic acid assemblers and synthesizers described in ECCN 2B352.j) to indicate that “technology” for the “development” of “software” controlled by new ECCN 2D352 is controlled by ECCN 2E001 for CB reasons and AT reasons to the destinations indicated under CB Column 2 and AT Column 1, respectively, on the Commerce Country Chart in Supplement No. 1 to part 738 of the EAR. The CB control entry in the License Requirements table for ECCN 2E001 is amended to reflect this change. The heading of ECCN 2E001 does not need to be amended to reflect this change because the ECCN heading indicates that, with limited specified exceptions, this ECCN controls “technology” for the “development” of “software” listed under Category 2D of the CCL, which now includes new ECCN 2D352.

Consistent with the May 2021 AG decision described above, this final rule amends Section 742.2 of the EAR by revising paragraphs (a)(2)(viii) and (a)(2)(ix) to reflect the addition of ECCN 2D352 to the CCL and to indicate that “technology” for the “development” of “software” controlled by new ECCN 2D352 is controlled by ECCN 2E001. These changes were not included in a proposed rule that BIS published on November 6, 2020 (85 FR 71012), which is described in more detail, below. However, because they are merely conforming changes that cross reference the aforementioned amendments to the CCL, BIS is making the changes in this final rule.

Prior to the addition of nucleic acid assembler/synthesizer “software” to the AG biological equipment list, BIS identified this “software” as a technology to be evaluated as an emerging technology, consistent with the interagency process described in Section 1758 of the Export Control Reform Act of 2018 (ECRA) (codified at 50 U.S.C. 4817). This identification was based on a finding that this “software” is capable of being used to operate nucleic acid assemblers and synthesizers controlled under ECCN 2B352 for the purpose of generating pathogens and toxins without the need to acquire controlled genetic elements and organisms. Consequently, the absence of export controls on this “software” could be exploited for biological weapons purposes.

Consistent with the emerging and foundational technologies notice and comment requirements in Section 1758(a)(2)(C) of ECRA (50 U.S.C. 4817(a)(2)(C)), BIS published a proposed rule on November 6, 2020 (85 FR 71012) (hereinafter, “November 6 proposed rule”), to provide the public with notice and the opportunity to comment on adding new ECCN 2D352 to control “software” for the operation of nucleic acid assemblers and synthesizers described in ECCN 2B352.j that is capable of designing and building functional genetic elements from digital sequence data. The November 6 proposed rule also indicated that “technology” for the “development” of such “software” would be controlled under ECCN 2E001.

As stated above, the imposition of controls on this “software” by this final rule (under new ECCN 2D352) reflects a decision by the AG to add this “software” to its biological equipment control list. Consequently, this action by BIS also conforms with Section 1758(c) of ECRA, which specifies that “the Secretary of State, in consultation with the Secretary [of Commerce] and the Secretary of Defense, and the heads of other Federal agencies, as appropriate, shall propose that any technology identified pursuant to Section 1758(a) of ECRA be added to the list of technologies controlled by the relevant multilateral export control regimes.”

BIS received comments from four respondents in response to the publication of its November 6 proposed rule. The comments from these respondents, together with BIS's responses, are described below.

Comment: One respondent stated that BIS should not treat commodities and “software” as potential emerging technologies, because Section 1758 of ECRA, which provides the statutory standard for establishing new controls on emerging and foundational technologies, refers only to “technology,” as defined in Section 1742 of ECRA (codified at 50 U.S.C. 4801). The respondent noted that Section 1758 of ECRA makes no mention of commodities or “software,” which, together with “technology,” are included in the statutory definition of “item.” The respondent further observed that the term “item” is included in other sections of ECRA and that its absence from Section 1758 is given meaning by considering only “technology” as defined in Section 1742 of ECRA. The respondent also noted that this interpretation would be consistent with the EAR definition of “technology,” which does not include commodities or “software.” Consequently, the respondent recommended that BIS should follow this interpretation of the statute, as well as its own regulations regarding the definition of “technology,” by identifying only emerging “technology” and not related emerging commodities and “software.”

BIS response: The terms “technologies,” “emerging technologies” and “critical technologies” are used in Section 1758 of ECRA (50 U.S.C. 4817) and Section 721(a)(6) of the Defense Production Act of 1950 (DPA), as amended (50 U.S.C. 4565(a)(6)), with the latter defining “critical technologies” to mean those described in 50 U.S.C. 4565(a)(6)(A)(i) through (vi). The DPA indicates that the term “critical technologies” includes by definition emerging and foundational technologies controlled pursuant to Section 1758 of ECRA, as well as “items included on the Commerce Control List” for multilateral reasons or for surreptitious listening or regional stability reasons. As the respondent noted, the term “items” includes “commodities,” “software” and “technology.” Consequently, the term “technologies,” as used within the context of these ECRA and DPA provisions, encompasses “commodities,” “software” and “technology,” and not “technology” only ( e.g., as that term is more narrowly defined in Section 1742 of ECRA). Furthermore, note that BIS's August 27, 2020 (85 FR 52934), advance notice of proposed rulemaking on the identification and review of controls for certain foundational technologies stated that the term “technologies,” as used in Section 1758 of ECRA, includes not only “technology,” but also “commodities” and “software” as those terms are used in the EAR.

Comment: One respondent observed that the “capable of” standard does not place sufficient emphasis upon the purpose for which an item is designed. Consequently, this standard might inadvertently control technology that is not designed to produce a controlled item, even when the ability of the technology to produce the controlled item is wholly unrelated to the primary purpose of the technology. Furthermore, the respondent noted that an exporter could be unaware that a given technology is “capable of” performing a function for which the technology was not designed and for which it is not commonly used.

BIS response: The consensus of the interagency process followed in accordance with Section 4817 of ECRA was that emerging technology controls should apply to “software” designed for nucleic acid assemblers and synthesizers controlled by 2B352.j that is “capable of” designing and building functional genetic elements from digital sequence data. The scope of this control is also consistent with the decision made at the AG's May 2021 Virtual Implementation Meeting session to add this “software” to its “Control List of Dual-Use Biological Equipment and Related Technology and Software.” If the controls on this “software” applied only to “software” “designed” or “specially designed” for the purpose of generating pathogens and toxins without the need to acquire controlled genetic elements and organisms, the scope of the controls would have been far too narrow. Consequently, there would have been a significantly increased risk that certain “software” not captured by narrower controls could have been exploited for biological weapons purposes.

Comment: One respondent stated that the “software” controls proposed to be implemented in new ECCN 2D352, and all future emerging and foundational technology controls, should be implemented multilaterally, rather than unilaterally. The respondent noted that a multilateral approach to export controls would increase their effectiveness and minimize their impact on U.S. industry. Specifically, multilateral export controls are preferable to unilateral controls, because the former typically place U.S. industry on a more level playing field versus producers/suppliers in other countries.

BIS response: This final rule imposes controls on “software” designed for nucleic acid assemblers and synthesizers controlled by 2B352.j to reflect the decision made at the AG's May 2021 Virtual Implementation Meeting session to add such “software” to its “Control List of Dual-Use Biological Equipment and Related Technology and Software.” This action by BIS is in accordance with Section 4817(c) of ECRA, which specifies that “the Secretary of State, in consultation with the Secretary [of Commerce] and the Secretary of Defense, and the heads of other Federal agencies, as appropriate, shall propose that any technology identified pursuant to Section 4817(a) of ECRA be added to the list of technologies controlled by the relevant multilateral export control regimes.”

Comment: One respondent recommended that BIS issue emerging and foundational technology controls as proposed rules and closely follow ECRA's statutory requirements and guidance. This would provide industry with the opportunity to provide formal comments to government officials so that the latter could address industry's questions and concerns. The respondent further noted that such consultations are critical to the effectiveness of regulations in achieving national security goals, without placing undue or unintended burdens on U.S. exports.

BIS response: Consistent with the emerging and foundational technologies notice and comment requirements in Section 4817(a)(2)(C) of ECRA, BIS published a proposed rule on November 6, 2020 (85 FR 71012), to provide the public with notice and the opportunity to comment on adding a new ECCN 2D352 to control “software” for the operation of nucleic acid assemblers and synthesizers described in ECCN 2B352.j that is capable of designing and building functional genetic elements from digital sequence data. As indicated above, BIS received comments from four respondents in response to the publication of its November 6 proposed rule. These comments are addressed by BIS in the preamble of this final rule.

Comment: One respondent expressed concern that the acquisition of the nucleic acid assembler and synthesizer “software” proposed for control under new ECCN 2D352 by BIS's November 6 proposed rule could be used to generate pathogens and toxins without the need to directly acquire controlled genetic elements and organisms. This respondent indicated that “the capabilities of this “software” lower the bar for acquisition of controlled genetic elements and so represent an increase in the risk of proliferation of biological weapons-related technology.” According to this respondent, automated benchtop synthesis devices could allow unskilled individuals to create DNA sequences that might be used to produce a biological weapon. This respondent also expressed a growing concern about the potential for active circumvention of “software” for the operation of nucleic acid assemblers and synthesizers. For example, “software” for operating benchtop nucleic acid synthesis devices could be written to incorporate biosecurity screening onboard the device. Consequently, if such “software” were easily acquired ( e.g., in the absence of export controls), these devices could be hacked to circumvent biosecurity screening, thereby enabling covert synthesis of otherwise controlled genetic elements. For this reason, these devices (and, in certain instances, their components and operating “software”) should be subject to export controls. In this regard, the respondent indicated a preference for multilateral export controls ( e.g., the adoption of export controls by the Australia Group).

BIS Response: The views expressed by this respondent support, and expand upon, the rationale provided by BIS (both in its November 6 proposed rule and in this final rule) for the imposition of controls on this nucleic acid assembler/synthesizer “software” under new ECCN 2D352. In addition, as noted in response to other comments described in this final rule, the controls on this “software” reflect the decision made at the AG's May 2021 Virtual Implementation Meeting session and, consequently, are being imposed multilaterally by all AG participating countries (including the United States).

Comment: One respondent expressed concern that the establishment by BIS of more restrictive controls on “software” for the operation of certain automated nucleic acid assemblers and synthesizers could damage trade and collaboration in this field with certain U.S. allies and thereby decrease the United States' global competitiveness in this field. Consequently, this respondent stated that any controls that are placed on such “software” should not impair the ability of the United States and its allies to trade in intermediate goods or to collaborate on R&D, both of which are crucial to maintaining their shared advantages vis-à-vis other foreign competitors. In this regard, the respondent noted that the methods for manipulating, growing, recovering, concentrating, stabilizing, and testing biological materials for use in weapons employ many of the same materials and equipment used to produce vaccines, pharmaceuticals, and a wide variety of food products.

BIS response: As indicated above, new ECCN 2D352 controls “software” designed for nucleic acid assemblers and synthesizers controlled by 2B352.j, consistent with the decision made at the AG's May 2021 Virtual Implementation Meeting session to add such “software” to its “Control List of Dual-Use Biological Equipment and Related Technology and Software.” This “software,” as controlled under new ECCN 2D352, requires a license for CB reasons and AT reasons to the destinations indicated under CB Column 2 and AT Column 1, respectively, on the Commerce Country Chart in Supplement No. 1 to part 738 of the EAR. Consequently, this “software” generally does not require a license for export, reexport or transfer (in-country) to destinations located in AG-participating countries. That being the case, the controls that apply to this “software” under new ECCN 2D352 should not impair the ability of the United States to trade in intermediate goods with most of its allies or to collaborate on R&D with such countries.

Comment: One respondent asserted that the nucleic acid assembler and synthesizer “software” proposed for control under new ECCN 2D352 by BIS's November 6 proposed rule is currently subject to the controls described in Category XIV (m) of the United States Munitions List (USML) (22 CFR 121.1), as well as the controls described in USML Category XIV(f)(8). Specifically, this respondent stated that such “software” involves technical data directly related to the defense articles enumerated in paragraphs (a) through (l) and (n) of USML Category XIV and that, as such, it is subject to the export licensing jurisdiction of the Directorate of Defense Trade Controls, U.S. Department of State, under the International Traffic in Arms Regulations (ITAR) (22 CFR parts 120-130). Furthermore, the respondent asserted that such “software” is also restricted per USML Category XIV(f)(8)(ii) and (f)(8)(iii), which apply to any part, component, accessory, attachment, equipment, or system that is either manufactured using classified production data or being developed using classified information.

BIS Response: The “software” that this final rule controls under new ECCN 2D352 on the CCL is dual-use “software” that, as noted above, was added to the AG “Control List of Dual-Use Biological Equipment and Related Technology and Software” following a decision made at the AG's May 2021 Virtual Implementation Meeting session. As indicated in its title, all of the items included on this AG common control list are dual-use items—not military items. Consequently, the respondent is mistaken in claiming that such “software” is restricted per USML Category XIV(f)(8)(ii) and (f)(8)(iii), which apply to any part, component, accessory, attachment, equipment, or system that is either manufactured using classified production data or being developed using classified information. New ECCN 2D352 does not control “software” that was manufactured, or is in the process of being developed, using classified information subject to control under the ITAR or the regulations of any other U.S. Government agency.

Shipments of items removed from eligibility for export, reexport or transfer (in-country) under a license exception or without a license ( i.e., under the designator “NLR”) as a result of this regulatory action that were on dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier to a port of export, on October 5, 2021, pursuant to actual orders for export, reexport or transfer (in-country) to a foreign destination, may proceed to that destination under the previously applicable license exception or without a license (NLR) so long as they are exported, reexported or transferred (in-country) before December 6, 2021. Any such items not actually exported, reexported or transferred (in-country) before midnight, on December 6, 2021, require a license in accordance with this regulation.

“Deemed” exports of “technology” and “source code” removed from eligibility for export under a license exception or without a license (under the designator “NLR”) as a result of this regulatory action may continue to be made under the previously available license exception or without a license (NLR) before December 6, 2021. Beginning at midnight on December 6, 2021, such “technology” and “source code” may no longer be released, without a license, to a foreign national subject to the “deemed” export controls in the EAR when a license would be required to the home country of the foreign national in accordance with this regulation.

The Export Control Reform Act of 2018 (ECRA), as amended, codified at 50 U.S.C. 4801-4852, serves as the authority under which BIS issues this rule.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including: Potential economic, environmental, public health and safety effects; distributive impacts; and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits and of reducing costs, harmonizing rules, and promoting flexibility. This rule has been designated a “significant regulatory action,” although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, this rule has been reviewed by the Office of Management and Budget.

2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This rule contains the following collections of information subject to the requirements of the PRA. These collections have been approved by OMB under control numbers 0694-0088 (Simplified Network Application Processing System) and 0694-0096 (Five Year Records Retention Period). The approved information collection under OMB control number 0694-0088 includes license applications, among other things, and carries a burden estimate of 29.6 minutes per manual or electronic submission for a total burden estimate of 31,833 hours. The approved information collection under OMB control number 0694-0096 includes recordkeeping requirements and carries a burden estimate of less than 1 minute per response for a total burden estimate of 248 hours.

Although this final rule makes important changes to the EAR for items controlled for chemical/biological (CB) reasons, BIS has determined that the overall increase in costs and burdens due to this rule will be minimal. Specifically, BIS expects the burden hours associated with these collections will increase, slightly, by 7 hours and 39 minutes ( i.e., 15 applications × 30.6 minutes per response) for a total estimated cost increase of $230 ( i.e., 7 hours and 39 minutes × $30 per hour). The $30 per hour cost estimate for OMB control number 0694-0088 is consistent with the salary data for export compliance specialists currently available through glassdoor.com ( glassdoor.com estimates that an export compliance specialist makes $55,280 annually, which computes to roughly $26.58 per hour). This increase is not expected to exceed the existing estimates currently associated with OMB control numbers 0694-0088 and 0694-0096.

Written comments and recommendations for the information collections referenced above should be sent within 30 days of the publication of this final rule to: www.reginfo.gov/public/do/PRAMain. Find these particular information collections by selecting “Currently under 30-day Review—Open for Public Comments” or by using the search function.

3. This rule does not contain policies with Federalism implications as that term is defined in Executive Order 13132.

4. As stated in the preamble of this final rule, the amendments contained in this rule reflect a decision made at the Australia Group (AG) Virtual Implementation Meeting session held in May 2021, and later adopted pursuant to the AG's silence procedure. Therefore, pursuant to Section 1762 of the Export Control Reform Act of 2018 (ECRA) (50 U.S.C. Sec. 4821), this action is exempt from the Administrative Procedure Act (APA) (5 U.S.C. 553) requirements for notice of proposed rulemaking, opportunity for public participation and delay in effective date.

Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this final rule by the APA or any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) (5 U.S.C. 601 et seq. ), are not applicable.

Consistent with the emerging and foundational technologies notice and comment requirements in Section 1758(a)(2)(C) of ECRA (50 U.S.C. 4817(a)(2)(C)), BIS published a proposed rule on November 6, 2020 (85 FR 71012), to provide the public with notice and the opportunity to comment on its proposal to add a new ECCN 2D352 to the Commerce Control List (CCL), for the purpose of controlling “software” for certain nucleic acid synthesizers and assemblers for chemical/biological (CB) reasons. In addition, consistent with the Regulatory Flexibility Act, BIS prepared an initial regulatory flexibility analysis (IRFA) of the impact that the proposed rule, if adopted, would have on small businesses. The IRFA prepared by BIS requested comments on the analyses and conclusions contained therein, including the overall conclusion that the amendments in BIS's November 6 proposed rule would not have a significant economic impact on a substantial number of small entities.

BIS received comments from four respondents on its November 6 proposed rule—these comments and BIS's responses are summarized in the preamble of this final rule. BIS did not receive any comments in response to the analyses and conclusions contained in the IRFA for its November 6 proposed rule. Accordingly, no regulatory flexibility analysis is required for this final rule, and none has been prepared.

For the reasons stated in the preamble, parts 742 and 774 of the Export Administration Regulations (15 CFR parts 730-774) are amended as follows:

The Horseracing Integrity & Safety Act, 1 enacted on December 27, 2020, directs the Federal Trade Commission to oversee the activities of a private, self-regulatory organization called the Horseracing Integrity and Safety Authority.

Section 4(a) of the Act, 15 U.S.C. 3053(a), requires the Authority to submit to the Commission, in accordance with such rules as the Commission may prescribe under Section 553 of Title 5, United States Code, any proposed rule, or proposed modification to a rule, of the Authority relating to: (1) The bylaws of the Authority; (2) a list of permitted and prohibited medications, substances, and methods, including allowable limits of permitted medications, substances, and methods; (3) laboratory standards for accreditation and protocols; (4) standards for racing surface quality maintenance; (5) racetrack safety standards and protocols; (6) a program for injury and fatality data analysis; (7) a program of research and education on safety, performance, and anti-doping and medication control; (8) a description of safety, performance, and anti-doping and medication control rule violations applicable to covered horses and covered persons; (9) a schedule of civil sanctions for violations; (10) a process or procedures for disciplinary hearings; and (11) a formula or methodology for determining the assessments described in 15 U.S.C. 3052(f).

Accordingly, the Commission is adding a new subpart S to part 1 of its Rules of Practice, to provide procedures for the Authority to file its proposed rules and proposed modifications to existing rules with the Commission for review.

Section 1.140 defines relevant terms used in the proposed regulations. Each definition is based on a corresponding definition contained in Section 2 of the Act, 15 U.S.C. 3051, except as otherwise noted below.

The definition of “HISA Guidance” derives from Section 5(g)(1) of the Act, 15 U.S.C. 3054(g)(1), which states the Authority may issue guidance that “sets forth an interpretation of an existing rule, standard, or procedure of the Authority” or a “policy or practice with respect to the administration or enforcement of such an existing rule, standard, or procedure” and “relates solely to the administration of the Authority; or any other matter, as specified by the Commission, by rule, consistent with the public interest and the purposes of this subsection [15 U.S.C. 3054(g)(1)].” The Commission is adopting this definition and adding that HISA Guidance does not have the force of law, to distinguish HISA Guidance from a proposed modification to a rule.

The Act does not contain definitions for “proposed rule” or “proposed modification.” However, because these terms are used frequently throughout the regulations, the Commission is defining them for clarity. “Proposed rule” is defined as any rule proposed by the Authority pursuant to the Act. “Proposed rule modification” or “modification” is defined as any proposed modification to a rule, proposed rule change, or any interpretation or statement of policy or practice relating to an existing rule of the Authority that is not HISA Guidance and would have the force of law if approved as a final rule. A proposed modification is distinguished from HISA Guidance in that a modification would have the force of law if approved and must therefore be approved by the Commission pursuant to Section 4(b)(2) of the Act, 15 U.S.C. 3053(b)(2). HISA Guidance need not be approved by the Commission but takes effect upon submission to the Commission pursuant to Section 5(g)(3) of the Act, 15 U.S.C. 3054(g)(3).

The Act requires the Authority to submit proposed rules or proposed rule modifications on certain subjects to the Commission for approval. These subjects are set forth in Section 4(a) of the Act, 15 U.S.C. 3053(a), which states the Authority must submit to the Commission, in accordance with such rules as the Commission may prescribe under Section 553 of Title 5, any proposed rule, or proposed modification to a rule, of the Authority relating to: (1) The bylaws of the Authority; (2) a list of permitted and prohibited medications, substances, and methods, including allowable limits of permitted medications, substances, and methods; (3) laboratory standards for accreditation and protocols; (4) standards for racing surface quality maintenance; (5) racetrack safety standards and protocols; (6) a program for injury and fatality data analysis; (7) a program of research and education on safety, performance, and anti-doping and medication control; (8) a description of safety, performance, and anti-doping and medication control rule violations applicable to covered horses and covered persons; (9) a schedule of civil sanctions for violations; (10) a process or procedures for disciplinary hearings; and (11) a formula or methodology for determining assessments described in 15 U.S.C. 3052(f). The Commission is adopting this language in its regulations.

The Commission is also adding a provision that the Authority must submit “any other proposed rule or modification the Act requires the Authority to submit to the Commission for approval.” For instance, the Act requires the Authority to submit rules regarding modifications to baseline anti-doping standards (15 U.S.C. 3055(g)(3)(b)) and modifications to racetrack safety rules (15 U.S.C. 3056(c)(2)(B)(ii)). Section 5(c)(2) of the Act, 15 U.S.C. 3054(c)(2), requires the Authority to submit to the Commission for approval any rules and procedures under Section 5(c)(1)(A) of the Act, 15 U.S.C. 3054(c)(1)(A), authorizing access to offices, racetrack facilities, other places of business, books, records, and personal property of covered persons used in the care, treatment, training, and racing of covered horses; authorizing the issuance and enforcement of subpoenas and subpoenas duces tecum; and authorizing other investigatory powers of the nature and scope exercised by State racing commissions before the program effective date. Such proposed rules and modifications must also be submitted to the Commission for approval.

The Act requires the Commission to evaluate the Authority's proposed rules and modifications to determine whether they are consistent with the Act and the applicable rules approved by the Commission. See 15 U.S.C. 3053(c)(2). To avoid delays in the rule review process, the Commission is requiring the Authority to submit the information necessary for it to evaluate the proposed rule or modification promptly and efficiently. Section 1.142 is designed to elicit the information the Commission needs to determine whether the proposed rule or modification is consistent with the Act and the rules and regulations issued thereunder.

For a submission to qualify as a proposed rule or proposed modification to a rule under Section 4(a) of the Act, 15 U.S.C. 3053(a), the Authority must submit a complete draft of the Federal Register document for its proposed or modified rule, which includes the text of the rule and a statement of the purpose of, and statutory basis for, the proposed rule or modification. The Commission's intention is to require the Authority to provide an explanation of its rules that will allow both the Commission and the public to understand the nature and purpose of its proposed rules or modifications—the reasons for adopting the proposed rule or modification; any problems the proposed rule or modification is intended to address and how the proposed rule or modification will resolve those problems; and how the proposed rule or modification will affect covered persons, covered horses, and covered horseraces.

The Commission is also requiring the Authority to explain the statutory basis for its proposed rules or modifications. To evaluate a proposed rule or modification, the Commission must be able to understand why the Authority believes its proposed rule or modification is consistent with the Act and the applicable rules approved by the Commission. Evaluation of a proposed rule or modification will also be aided by the Authority's description of any reasonable alternatives it considered and the reasons it selected the proposed rule or modification over the alternatives.

The Act does not give the Authority broad discretion in developing rules. It sets forth guardrails, in the form of baseline standards for anti-doping and medication control (15 U.S.C. 3055(g)(2)(A)), racetrack safety standards which the Authority must consider (15 U.S.C. 3056(a)(2)), guidelines for determining funding and calculating costs (15 U.S.C. 3052(f)(1)(C)(ii)), a specific formula for the assessment and collection of fees (15 U.S.C. 3052(f)(3)(C)), who must register with the Authority and the conditions of registration (15 U.S.C. 3054(d)), guidelines for establishing rule violations (15 U.S.C. 3057(a)(2)), requisite elements of the Authority's results management and disciplinary program (15 U.S.C. 3057(c)(2)), guidelines for establishing civil sanctions (15 U.S.C. 3057(d)(2)), and more. Accordingly, the Authority must explain why its proposed rule or modification is consistent with any standards in the Act and the rules approved by the Commission. Because the requisite considerations for anti-doping and racetrack safety are the most prescriptive, this section specifically addresses those standards and factors. The less prescriptive standards and factors must also be addressed, and the Commission provides for this in a less prescriptive rule, as discussed below.

When proposing a rule or modification to the horseracing anti-doping and medication control program, the Authority must explain how it considered the factors in Section 6 of the Act, 15 U.S.C. 3055, including the unique characteristics of a breed of horse made subject to the Act by election of a State racing commission or breed governing organization for such horse pursuant to Section 5( l ) of the Act, 15 U.S.C. 3054( l ), as required by Section 6(a)(2) of the Act, 15 U.S.C. 3055(a)(2). The Authority must explain how it considered the factors in Section 6(b) of the Act, 15 U.S.C. 3055(b), namely that: (1) Covered horses should compete only when they are free from the influence of medications, other foreign substances, and methods that affect their performance; (2) covered horses that are injured or unsound should not train or participate in covered races, and the use of medications, other foreign substances, and treatment methods that mask or deaden pain in order to allow injured or unsound horses to train or race should be prohibited; (3) rules, standards, procedures, and protocols regulating medication and treatment methods for covered horses and covered races should be uniform and uniformly administered nationally; (4) to the extent consistent with chapter 57A of title 15, consideration should be given to international anti-doping and medication control standards of the International Federation of Horseracing Authorities and the Principles of Veterinary Medical Ethics of the American Veterinary Medical Association; (5) the administration of medications and treatment methods to covered horses should be based on an examination and diagnosis that identifies an issue requiring treatment for which the medication or method represents an appropriate component of treatment; (6) the amount of therapeutic medication a covered horse receives should be the minimum necessary to address the diagnosed health concerns identified during the examination and diagnostic process; and (7) the welfare of covered horses, the integrity of the sport, and the confidence of the betting public require full disclosure to regulatory authorities regarding the administration of medications and treatments to covered horses.

In addition, Section 6(g)(2)(A) of the Act, 15 U.S.C. 3055(g)(2)(A), provides that certain baseline anti-doping and medication control rules must constitute the initial rules of the horseracing anti-doping and medication control program and, except as exempted pursuant to Section 6(e) and (f) of the Act, 15 U.S.C. 3055(e) and (f), remain in effect at all times after the program effective date. Such baseline anti-doping and medication control rules include: (1) The lists of permitted and prohibited substances (including drugs, medications, and naturally occurring substances and synthetically occurring substances) in effect for the International Federation of Horseracing Authorities, including the International Federation of Horseracing Authorities International Screening Limits for urine, dated May 2019, and the International Federation of Horseracing Authorities International Screening Limits for plasma, dated May 2019; (2) the World Anti-Doping Agency International Standard for Laboratories (version 10.0), dated November 12, 2019; (3) the Association of Racing Commissioners International out-of-competition testing standards, Model Rules of Racing (version 9.2); and (4) the Association of Racing Commissioners International penalty and multiple medication violation rules, Model Rules of Racing (version 6.2). In the case of a conflict among the rules, Section 6(g)(2)(B) of the Act, 15 U.S.C. 3055(g)(2)(B), provides that the most stringent rule shall apply. Accordingly, the Commission is requiring the Authority to state whether a proposed rule adopts the baseline standards identified in Section 6(g)(2)(A) of the Act, 15 U.S.C. 3055(g)(2)(A). If there is a conflict in any baseline standards identified in Section 6(g)(2)(A) of the Act, 15 U.S.C. 3055(g)(2)(A), the Authority must identify the conflict and state whether the standard it adopted is the most stringent standard. Under Section 6(g)(3)(C) of the Act, 15 U.S.C. 3055(g)(3)(C), “[t]he Authority shall not approve any proposed modification that renders an anti-doping and medication control rule less stringent than the baseline anti-doping and medication control rules . . . without the approval of the anti-doping and medication control enforcement agency.” Thus, for a proposed rule modification, the Authority must explain whether the modification renders an anti-doping and medication control rule less stringent than the baseline anti-doping and medication control rules described in Section 6(g)(2)(A) of the Act, 15 U.S.C. 3055(g)(2)(A), and state whether the anti-doping and medication control enforcement agency has approved of the change.

Section 7 of the Act, 15 U.S.C. 3056, requires the Authority to consider certain factors when developing the racetrack safety program. Accordingly, when proposing a rule or modification to any rule regarding its racetrack safety program, the Authority must explain how the proposed rule or modification meets the requirements in Section 7(b) of the Act, 15 U.S.C. 3056(b), which provides that the horseracing safety program must include the following: (1) A set of training and racing safety standards and protocols taking into account regional differences and the character of differing racing facilities; (2) a uniform set of training and racing safety standards and protocols consistent with the humane treatment of covered horses, which may include lists of permitted and prohibited practices or methods (such as crop use); (3) a racing surface quality maintenance system that takes into account regional differences and the character of differing racing facilities (which may include requirements for track surface design and consistency and established standard operating procedures related to track surface, monitoring, and maintenance, such as standardized seasonal assessment, daily tracking, and measurement); (4) a uniform set of track safety standards and protocols, that may include rules governing oversight and movement of covered horses and human and equine injury reporting and prevention; (5) programs for injury and fatality data analysis, that may include pre- and post-training and race inspections, use of a veterinarian's list, and concussion protocols; (6) the undertaking of investigations at racetrack and non-racetrack facilities related to safety violations; (7) procedures for investigating, charging, and adjudicating violations and for the enforcement of civil sanctions for violations; (8) a schedule of civil sanctions for violations; (9) disciplinary hearings, which may include binding arbitration, civil sanctions, and research; (10) management of violation results; (11) programs relating to safety and performance research and education; and (12) an evaluation and accreditation program that ensures racetracks in the United States meet the standards described in the elements of the Horseracing Safety Program.

The Authority must also consider the safety standards in Section 7(a)(2) of the Act, 15 U.S.C. 3056(a)(2), which provide that in the development of the horseracing safety program for covered horses, covered persons, and covered horseraces, the Authority and the Commission must take into consideration existing safety standards, including the National Thoroughbred Racing Association Safety and Integrity Alliance Code of Standards, the International Federation of Horseracing Authority's International Agreement on Breeding, Racing, and Wagering, and the British Horseracing Authority's Equine Health and Welfare program. The Commission is therefore requiring the Authority to explain how it considered and whether it adopted any of the standards in Section 7(a)(2) of the Act,15 U.S.C. 3056(a)(2). If any horseracing safety standards in Section 7(a)(2) of the Act, 15 U.S.C. 3056(a)(2), were considered but not adopted or were modified, the Authority must explain why it decided not to adopt or why it decided to modify such standard.

The Commission is incorporating the specific anti-doping and racetrack safety standards into this section because they are the most prescriptive and extensive, but this should not be read as an invitation to dispense with the less-prescriptive guardrails set forth in the Act. To the extent the Act requires the Authority to consider any factors or standards not specifically referenced in this section, the Authority must explain whether and how it considered those factors when proposing a rule or modification. For instance, when proposing a civil sanctions rule or modification pursuant to Section 8(d)(1) of the Act, 15 U.S.C. 3057(d)(1), the Authority must explain how the rule or modification meets the requirements of Section 8(d)(2) of the Act, 15 U.S.C. 3057(d)(2).

The Commission is requiring the Authority to submit any pertinent factual information it relied on in developing its proposed rule or modification. More specifically, the Authority's submission to the Commission must include a copy of existing standards used as a reference for the development of a proposed rule or modification and any scientific data, studies, or analysis underlying the development of the proposed rule or modification. The Commission anticipates receiving, for instance, a copy of the lists of permitted and prohibited substances in effect for the International Federation of Horseracing Authorities, including the International Federation of Horseracing Authorities International Screening Limits for urine, dated May 2019, and any other rules and standards referenced in Section 6(g)(2)(A) of the Act, 15 U.S.C. 3055(g)(2)(A) when the Authority's baseline rules for anti-doping are submitted. For organizational purposes, supporting documentation must be attached as exhibits, and each exhibit must clearly identify the proposed rule or modification it supports.

To enable the Commission to quickly and easily identify the substance of a proposed rule modification, the Commission is requiring the Authority to provide a redline document of the existing rule, marked with the proposed changes.

Section 4(c)(1) of the Act, 15 U.S.C. 3053(c)(1) provides for a 60-day timeframe between the Commission's publication of the Authority's proposed rule or modification in the Federal Register for public comment and the date the Commission must approve or disapprove the Authority's proposed rule or modification. To ensure it has sufficient time for review, the Commission is requiring the Authority to provide the information it needs to evaluate the Authority's proposed rule or modification at least 90 days in advance of the date the Authority proposes having its proposed rule or modification published in the Federal Register for public comment. This will give the Commission additional time to evaluate the Authority's proposed rule or modification. It should be noted this 90-day timeframe serves as a minimum, not a maximum, timeframe. The Secretary may shorten the timeframe if the Authority demonstrates that a shorter timeframe is necessary to meet statutory deadlines.

The Authority must provide an adequate basis for the Commission's review of its rules. The Commission seeks to understand the Authority's analysis of the information it relied on to determine whether a proposed rule or modification was warranted and if so, what provisions the rule should contain. To this end, the information required under this section must be sufficiently detailed and contain sufficient analysis to support a Commission finding that a proposed rule or modification satisfies the statutory requirements. A mere assertion or conclusory statement that a proposed rule or modification is consistent with the requirements of the Act, for instance, is insufficient. If the Authority fails to describe and justify the proposed rule or modification in the manner described in this section, or fails to submit the information required by this section, the Commission may not have sufficient information to make an affirmative finding that the proposed rule or modification is consistent with the Act and the applicable rules approved by the Commission.

Section 4(d)(2) of the Act, 15 U.S.C. 3053(d)(2), provides the “Commission shall publish in the Federal Register any [ ] proposed rule, standard, or procedure and provide an opportunity for public comment.” However, the Act gives the Commission only a total of 60 days after publication to approve or disapprove a proposed rule or modification once it has been published in the Federal Register . Given that the Commission and the Authority will need time to review comments, the Act functionally provides for a much more limited comment period of approximately 30 days or less. To ensure the public has an adequate opportunity to review and understand the Authority's rules, ask questions, and provide comments, the Commission is encouraging the Authority to make its proposed rules publicly available and solicit public comments in advance of providing any submissions to the Commission. To avoid delays in Commission approval of its rules, the Authority should not wait until its proposed rule is published in the Federal Register to solicit its own public comments.

In a March 21, 2021 letter  2 to the Acting Chairwoman, Rebecca Kelly Slaughter, the Act's sponsors stated “[t]he relationship between the [Commission] and the Authority is closely modeled on the enduring and effective relationship between the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA), a private self-regulatory organization.” As part of its own rulemaking process, the FINRA Board of Governors may authorize the publication of its own Regulatory Notice soliciting comments on a rule proposal prior to its submission to the SEC. 3 If FINRA decides to issue a Regulatory Notice soliciting public comment on a proposal, the comment period typically is open for one to two months. 4 All comments become part of FINRA's “official record” of the rule proposal, and since December 1, 2003, FINRA has posted all comment letters on its website. 5 Depending on the comments received in response to the Regulatory Notice and any changes made to the proposal, FINRA staff will either return to the FINRA Board with a revised proposal or will file the rule proposal with the SEC for notice and comment. 6 Soliciting comments, as FINRA does, in advance of submitting any proposed rules or modifications to the Commission would benefit both the Authority, the regulated community, and the Commission. It would provide transparency and enable the Authority to resolve any issues with its rules prior to their submission to the Commission.

If public comments are solicited, the Commission is requiring the Authority to attach, as an exhibit to its submission under § 1.142, a copy of the comments. The Commission encourages the Authority to make such comments publicly available on its own website. In addition, the Authority's draft Federal Register document must include a summary of the substance of all comments received and the Authority's written response to all significant issues raised in such comments. This advance resolution of comments will greatly facilitate the process of review of any proposed rules or modifications the Authority submits to the Commission.

This section provides guidance for the Authority when submitting documents to the Secretary of the Commission.

All rule submissions made pursuant to § 1.142 and 15 U.S.C. 3053(a), rate increases which must be reported to the Commission under 15 U.S.C. 3052(f)(1)(C)(iv), or HISA Guidance which must be submitted to the Commission under 15 U.S.C. 3054(g)(2), must be emailed to the Secretary of the Commission at electronicfilings@ftc.gov. The subject line of the email must state: “HISA Rule Submission,” “HISA Rate Increase Submission,” or “HISA Guidance Submission” as applicable. This will enable the Secretary to easily identify submissions from the Authority and route them to the appropriate office.

To facilitate Commission review, documents must be organized and sent in a format that will facilitate the submission of documents to the Office of the Federal Register. Except for supporting documentation submitted pursuant to § 1.142(b) (existing standards used as a reference for the development of the proposed rule or modification, and scientific data, studies, or analysis underlying the development of the proposed rule or modification) and copies of public comments submitted pursuant to § 1.142(f), all documents submitted to the Secretary must be in a word processing format. This will enable the Commission to more easily make modifications to Federal Register documents, provide feedback on rule text, and draft orders. For organizational purposes, the Commission is requiring submissions with more than one attachment to contain a table of contents in the body of the email with a brief description of each item. The Authority must also provide the contact information for a person on the staff of the Authority responsible for responding to questions from the Commission. To facilitate submissions to the Office of the Federal Register, the Commission is requiring that the Authority's draft Federal Register documents follow the relevant format and editorial requirements for regulatory documents in the Office of Federal Register 's Document Drafting Handbook, 1 CFR parts 18, 21, and 22. Specifically, draft Federal Register documents must contain proper preamble captions and content; state the purpose of, and basis for, the proposed rule or modification; set forth regulatory text, headings, and authority citations; use correct numbering, structure, and amendatory language; and conform to style and formatting established by the Office of the Federal Register and Government Publishing Office (see, specifically, section 2.17 (proposed rules) of the Office of the Federal Register's Document Drafting Handbook).

If a document filed with the Secretary contains confidential information, the Secretary must be so informed, and a request for confidential treatment must be submitted in accordance with 16 CFR 4.9. Filings submitted electronically on or before 5:30 p.m. Eastern Time, on a business day, will be deemed filed on that business day, and all filings submitted after 5:30 p.m. Eastern Time, will be deemed filed on the next business day. This section also provides the Secretary of the Commission may reject a document for filing that fails to comply with the Commission's rules for filing in this section or § 1.142. Finally, if the conditions in this section and § 1.142 have been satisfied, the Commission will publish the proposed rules or modifications in the Federal Register for public comment.

Section 4(c)(1) of the Act, 15 U.S.C. 3053(c)(1) provides, “Not later than 60 days after the date on which a proposed rule or modification is published in the Federal Register , the Commission shall approve or disapprove the proposed rule or modification.” In addition, Section 4(c)(2) of the Act, 15 U.S.C. 3053(c)(2), provides “[t]he Commission shall approve a proposed rule or modification if the Commission finds that the proposed rule or modification is consistent with [ ] this chapter; and [ ] applicable rules approved by the Commission.” Accordingly, § 1.144 provides the Commission will approve or disapprove a proposed rule or modification by issuing an order within 60 days of the date the proposed rule or modification was published in the Federal Register for public comment. The Commission will approve a proposed rule or modification if it finds such proposed rule or modification is consistent with the Act and the applicable rules approved by the Commission. Further, a proposed rule or modification will not take effect unless it has been approved by the Commission.

Because these rule revisions relate solely to agency procedure and practice, publication for notice and comment is not required under the Administrative Procedure Act. 5 U.S.C. 553(b). 7

For the reasons set forth in the preamble, the Federal Trade Commission amends title 16, chapter I, subchapter A of the Code of Federal Regulations as follows:

This rule establishes new regulations implementing the medical device De Novo classification process under the FD&C Act, which provides a pathway for certain new types of devices to obtain marketing authorization as class I or class II devices, rather than remaining automatically designated as a class III device, which would require premarket approval under the postamendments device classification section of the FD&C Act.

The De Novo classification process is intended to provide an efficient pathway to ensure the most appropriate classification of a device consistent with the protection of the public health and the statutory scheme for device regulation. When FDA classifies a device type as class I or II via the De Novo classification process, other manufacturers do not necessarily have to submit a De Novo request or premarket approval application (PMA) to legally market a device of the same type. Instead, manufacturers can use the less burdensome pathway of premarket notification (510(k)), when applicable, to legally market their device, because the device that was the subject of the original De Novo request can serve as a predicate device for a substantial equivalence determination.

This rule establishes procedures and criteria for the submission and withdrawal of a De Novo request. It also establishes procedures and criteria for FDA to accept, review, grant, and/or decline a De Novo request. While several comments object to sections or subsections of the proposed rule, almost all comments voice support for the objective of the proposed rule: To establish regulations implementing the De Novo classification process. The rule provides that:

• A person may submit a De Novo request after submitting a 510(k) and receiving a not substantially equivalent (NSE) determination.

• A person may also submit a De Novo request without first submitting a 510(k), if the person determines that there is no legally marketed device upon which to base a determination of substantial equivalence (SE).

• FDA will classify devices according to the classification criteria in the FD&C Act. FDA classifies devices into class I (general controls) if there is information showing that the general controls of the FD&C Act are sufficient to reasonably assure safety and effectiveness; into class II (special controls) if general controls, by themselves, are insufficient to provide reasonable assurance of safety and effectiveness, but there is sufficient information to establish special controls to provide such assurance; and into class III (premarket approval) if there is insufficient information to support classifying a device into class I or class II and the device is a life-sustaining or life-supporting device or is for a use which is of substantial importance in preventing impairment of human health or presents a potential unreasonable risk of illness or injury.

• Devices will be classified by FDA by written order.

• A De Novo request includes administrative information, regulatory history, device description, classification summary information, benefits and risks of device use, and performance data to demonstrate reasonable assurance of safety and effectiveness.

• FDA may refuse to accept a De Novo request that is ineligible or that is not sufficiently complete to permit a substantive review.

• After a De Novo request is accepted, FDA will begin a substantive review of the De Novo request that may result in either FDA requesting additional information, issuing an order granting the request, or declining the De Novo request.

• FDA may decline a De Novo request if, among other things, the device is ineligible or insufficient information is provided to support De Novo classification.

The rule also describes our practices for the conditions under which the confidentiality of a De Novo file is maintained.

This rule is being issued under the device definition provision of the FD&C Act, the combination products provision of the FD&C Act, the device classification section of the FD&C Act, the De Novo classification section of the FD&C Act, the general rulemaking section of the FD&C Act, and the inspection section of the FD&C Act.

The final rule clarifies the De Novo classification process for certain medical devices to obtain marketing authorization as class I or class II devices, rather than remaining automatically designated as class III devices under the FD&C Act. A more transparent De Novo classification process could improve the efficiency of obtaining marketing authorization for certain novel medical devices. The medical device industry will incur one-time costs to read and understand this rule. Over 10 years, the annualized cost estimates a 7 percent discount rate range from $0.01 million to $0.17 million, with a primary estimate of $0.09 million. The annualized costs over 10 years at a 3 percent discount rate range from $0.1 million to $0.15 million, with a primary estimate of $0.08 million.

In the Federal Register on December 7, 2018 (83 FR 63127), FDA issued a proposed rule entitled “Medical Device De Novo Classification Process” and requested comments on the proposed rule by March 7, 2019. This rule establishes procedures and criteria for the submission and withdrawal of a De Novo request. It also establishes procedures and criteria for FDA to accept, review, grant, and/or decline a De Novo request.

FDA received comments on the proposed rule from several entities, including medical device associations; industry, medical and healthcare professional associations; public health advocacy groups; law firms; and individuals. While several comments object to sections or subsections of the proposed rule, almost all comments voice support for the objective of the proposed rule: To establish regulations implementing the De Novo classification process. Comments raise concerns or request clarification regarding several issues, including:

• De Novo request information disclosure,

• facility inspections,

• devices that collect protected health information,

• training of FDA reviewers,

• the definitions,

• the De Novo request format,

• the De Novo request content,

• the criteria for accepting a De Novo request,

• the criteria for declining a De Novo request,

• the availability of the De Novo classification process for combination products, and

• the information needed to support FDA's determination to grant a De Novo classification request.

FDA considered all comments received on the proposed rule and made changes, primarily for clarity and accuracy and to reduce burden in meeting regulatory requirements. On its own initiative, FDA is renumbering the sections to make them easier for De Novo requesters and the public to research and use. On its own initiative, FDA is also making minor technical changes to make the regulatory history, withdrawal, nonclinical studies, and classification summary provisions clearer. FDA also changed the word “guidance” to “guidelines” in the definition of Class II at § 860.3 (21 CFR 860.3) on its own initiative for consistency with the language used in section 513(a)(1)(B) of the FD&C Act (21 U.S.C. 360c (a)(1)(B)) and with § 860.123 (21 CFR 860.123) in the final rule. Finally, on its own initiative, FDA is adding requests for information regarding the class in which a device has been classified or the requirements applicable to a device under the FD&C Act that are submitted in accordance with section 513(g) of the FD&C Act, to the regulatory history information required to be included in a De Novo request under proposed § 860.234(a)(3) (21 CFR 860.234(a)(3)) (see § 860.220(a)(3) in the final rule). In the preamble of the proposed rule, FDA described section 513(g) requests for information as one of the submissions it was proposing to require requesters to identify as part of the regulatory history section of a De Novo request (see 83 FR 63127 at 63132). However, a reference to section 513(g) of the FD&C Act was inadvertently omitted from the proposed regulatory text included in the proposed rule. The changes from the proposed rule include the following revisions, additions, and removals.

• Renumber the proposed De Novo section numbers as follows:

• Revise the De Novo request confidentiality provision (§ 860.5(g)) to clarify that after an order granting a De Novo request is issued, data and information in the De Novo file that are not exempt from release under the Freedom of Information Act (FOIA) (5 U.S.C. 552) are immediately available for public disclosure; and to replace certain references to “De Novo request” with “De Novo file.”

• Revise the De Novo format requirements as follows:

○ Remove the requirement to cite the volume number in the table of contents if the De Novo request consists of only one volume,

○ remove the requirement to provide a fax number when submitting a De Novo request, and

○ clarify that the De Novo request must be submitted as a single version in electronic format.

• Revise the De Novo content requirements as follows:

○ Add section 513(g) requests for information to the regulatory history requirement in proposed § 860.234(a)(3) (see § 860.220(a)(3)) and change the term “use” to “device” in the regulatory history requirement so the text more accurately refers to an application for “humanitarian device exemption”.

○ Revise the order of the proposed requirements for the content of a De Novo request in proposed § 860.234(a)(9) through (11) (see § 860.220(a)(9) through (11) in the final rule).

○ Revise § 860.220(a)(7) and (a)(9) (this final rule renumbers proposed § 860.234(a)(7) as § 860.220(a)(7)) to clarify that the information required is that known to or that reasonably should be known to the requester.

○ Remove “laboratory” to clarify § 860.220(a)(13)(i) and (a)(15)(i) (this final rule renumbers proposed § 860.234(a)(13)(i) and (a)(15)(i) to § 860.220(a)(13)(i) and (a)(15)(i)) requires a summary of each nonclinical study.

○ Move the phrase, “as appropriate,” in § 860.220(a)(15)(i) to clarify that not all of the identified nonclinical studies may be applicable to the subject device.

○ Revise § 860.220(a)(15)(i) to clarify that a De Novo requester must include a protocol and complete test report for each nonclinical study.

○ Revise § 860.220(a)(15)(i) to clarify that a De Novo request must only include a statement regarding compliance with good laboratory practice (GLP) requirements in part 58 (21 CFR part 58) for nonclinical studies that are subject to part 58.

• Revise the provisions for withdrawal of a De Novo request to make minor technical changes.

• Revise the provisions for granting a De Novo request to specify that FDA will publish a notice of the classification order in the Federal Register within 30 days after granting the request.

• Revise the provisions for declining of a De Novo request to clarify that FDA will decline a De Novo request by written order and moves the grounds for which FDA may decline a De Novo request from § 860.260(b) into § 860.260(c).

The FD&C Act establishes a comprehensive system for the regulation of medical devices intended for human use. Among the provisions that provide authority for this final rule are sections 201(h), 503(g), 513(a) and (f), 701(a), and 704 of the FD&C Act (21 U.S.C. 321(h), 353(g), 360c(a) and (f), 371(a), and 374). This final rule establishes regulations to implement the De Novo classification process created by section 207 of FDAMA (Pub. L. 105-115) and amended by section 607 of FDASIA (Pub. L. 112-144) and section 3101 of the Cures Act (Pub. L. 114-255).

We received several sets of comments on the proposed rule by the close of the comment period, each containing one or more comments on one or more issues. We received comments from medical device associations, industry, medical and healthcare professional associations, public health advocacy groups, law firms, and individuals. We describe and respond to comments in sections V.B through V.K. We have numbered each comment to help distinguish between different comments. We have grouped similar comments together under the same number, and, in some cases, we have separated different issues discussed in the same comment and designated them as distinct comments for purposes of our responses. The number assigned to each comment or comment topic is purely for organizational purposes and does not signify the comment's value or importance or the order in which comments were received.

Several comments made general remarks supporting the proposed rule without focusing on a particular proposed provision. Almost all comments supported the objective of the proposed rule: To establish regulations implementing the De Novo classification process. Several comments also requested that FDA make changes without focusing on a particular provision of the proposed rule. In the following paragraphs, we discuss and respond to such general comments.

(Comment 1) A commenter states that FDA should retain patient safety as its number one priority and integrate cybersecurity into the De Novo request process, and that science should support any decisions.

(Response 1) FDA agrees with this comment. As part of the cybersecurity review for premarket submissions for devices that contain software (including firmware) or programmable logic as well as software that is a medical device, FDA recommends that medical device manufacturers assess the impact of threats and vulnerabilities on device functionality and end users/patients as part of the cybersecurity review (Ref. 1).

(Comment 2) A commenter requests FDA to adopt an abbreviated procedure and a reduced user fee for De Novo requests when the requester believes that its device meets the criteria for classification in class I under section 513(a)(1)(A)(ii) of the FD&C Act, because the commenter believes that it would help provide more timely access to low-risk devices and conserve valuable FDA premarket review resources without compromising public health protection.

(Response 2) We do not agree that the procedure proposed by the commenter would be more efficient than the procedures described in FDA's proposed rule. The De Novo classification process provides a pathway for certain devices to obtain marketing authorization as class I or class II devices, rather than remaining automatically designated as class III under section 513(f)(1) of the FD&C Act. FDA makes the determination that a device is class I or class II under section 513(f)(2) of the FD&C Act using the criteria in section 513(a) of the FD&C Act. The process proposed by the commenter would require an abbreviated submission with only some of the information FDA proposed to require in a De Novo request when the requester believes that its device meets the criteria for classification as a class I device. The proposed process would also add a step to the Agency's review process for such devices by requiring FDA to determine within 15 days of receiving the request either that the device meets the criteria for classification into class I or that additional information is required to make the classification determination.

The FD&C Act provides 120 days for review of a De Novo request, regardless of the ultimate classification determination. In FDA's experience, 15 days is not a workable timeframe for the Agency to complete a substantive review of a submission for a new device type to determine that the device meets the criteria for classification into class I. Further, the commenter's suggested abbreviated initial submission omits information that is important for FDA's classification determinations, such as information on probable risks to health associated with use of the device. Therefore, under the commenter's proposed process, FDA would usually, if not always, need to require additional information within 15 days. In § 860.220(a) of this final rule, FDA has identified the required contents of a De Novo request taking into account the Agency's experience with the types of information needed to make a determination on a De Novo request. If a requester believes that some of the required information is not applicable to its device, the requester may submit a justification for omitting that information pursuant to § 860.220(c).

We also note that the proposed process does not appear to provide for any FDA action other than requesting additional information or classifying the device. Section 513(f)(2) of the FD&C Act provides for FDA to decline a De Novo request.

With respect to the user fees applicable to a De Novo request, the Medical Device User Fee Amendments of 2017 amended the FD&C Act to authorize FDA to collect user fees for certain premarket submissions received on or after October 1, 2017, including De Novo requests (see section 738 of the FD&C Act (21 U.S.C. 379j)). The fees are set by statute (section 738(a)(2)(A)(xi) of the FD&C Act) and therefore any changes to such fees are outside the scope of this rulemaking.

(Comment 3) A commenter concerned about the design of a remote monitoring system containing software states that as part of the De Novo request, a manufacturer should provide information on whether the device collects protected health information (PHI). The same commenter requests that the Health and Human Services' Office for Civil Rights should complete a review prior to the De Novo request being granted by FDA. A commenter states that a PHI pre-approval plan should be reviewed with the impact and patient experience included in the overall De Novo request grant.

(Response 3) Standards for the use and disclosure of protected health information by certain entities are set forth in regulations implementing the Health Insurance Portability and Accountability Act of 1996 (HIPAA) (Pub. L. 101-191), which are outside the scope of this rulemaking. To demonstrate a reasonable assurance of safety and effectiveness for software devices, documentation related to the requirements of the quality system regulation (QSR) (21 CFR part 820) is often a necessary part of the premarket submission. See also “Guidance for the Content of Premarket Submissions for Software Contained in Medical Devices” (Ref. 2). As part of QSR design controls, a manufacturer must “establish and maintain procedures for validating the device design,” which “shall include software validation and risk analysis, where appropriate.” (§ 820.30(g)). As part of the software validation and risk analysis required by § 820.30(g), software device manufacturers may need to establish a cybersecurity vulnerability and management approach, where appropriate. Such cybersecurity design controls help to ensure device security, including protection of health information.

(Comment 4) A comment recommends FDA provide additional training for FDA reviewers on De Novo classification to assist FDA reviewers in more thoroughly understanding the devices and how to review De Novo requests with the broader view of assessing the nature of the devices and their value to the patient.

(Response 4) FDA currently provides training to FDA staff on the De Novo classification process. With the publication of this final rule, FDA intends to update its current training to be reflective of the requirements of the final rule. FDA also understands that patient input can be an important consideration during FDA's review of a De Novo request, as reflected in our guidance for industry and FDA Staff, “Factors to Consider When Making Benefit-Risk Determinations in Medical Device Premarket Approval and De Novo Classifications” (Ref. 3) and “Patient Preference Information—Voluntary Submission, Review in Premarket Approval Applications, Humanitarian Device Exemption Applications, and De Novo Requests, and Inclusion in Decision Summaries and Device Labeling” (Ref. 4).

(Comment 5) A commenter proposes that unless required by the FD&C Act or the device is of high public health importance, FDA defer the identification of special controls for devices being granted De Novo classification until after the De Novo request is granted and FDA can make a general assessment of all class II devices. The same commenter also requests that FDA prioritize the identification of special controls for all class II devices.

(Response 5) Because special controls are necessary to assure the safety and effectiveness of class II devices, FDA does not agree with the commenter's proposal. FDA believes it is important to identify the appropriate special controls for class II devices at the time FDA grants the De Novo request. The granting of the De Novo request does several things: It allows the device to be marketed immediately, creates a classification regulation for devices of the type, and permits the device to serve as a predicate device (section 513(f)(2)(B) of the FD&C Act) (Ref. 5). Because these consequences flow from the grant of a De Novo request, and because special controls are necessary to reasonably assure the safety and effectiveness of a class II device, FDA will continue to identify special controls at the time that it grants a De Novo classification request.

The request that FDA prioritize the identification of special controls for all class II devices is outside the scope of this rulemaking.

(Comment 6) A comment recommends that medical device applicants be encouraged to perform and/or review studies that address the effect of the device on patient function, because the commenter states that, for all populations, the ability to function at work, at home, and with family is an important outcome.

(Response 6) Where relevant to the intended use of a device, FDA currently would take patient function into account in evaluating the safety and effectiveness of the device. As part of its initiative for patients to engage with FDA, FDA has incorporated patient perspectives into the total product life cycle, including in the premarket evaluation of devices (Refs. 4 and 6).

(Comment 7) A comment objects to the placement of all the De Novo request regulatory requirements in part 860 and suggests that the Center for Devices and Radiological Health (CDRH) separate requirements for the information needed to classify a device type from requirements for the information needed to authorize a specific low to moderate risk device for marketing by placing the latter in a separate regulation for “Premarket Approval of Novel Class I and II Medical Devices.”

(Response 7) FDA disagrees with this comment. The De Novo classification provisions will be housed in part 860 of the CFR with the other device classification subparts. We recognize that, because the De Novo classification process includes a pathway to obtain marketing authorization for a specific device, placement of the De Novo classification regulations may not be as straightforward as the other classification regulations. FDA believes that part 860 is the most appropriate fit.

(Comment 8) A comment asserts that some devices, especially implantable devices, are inappropriately classified as class II instead of class III because these devices are “potentially life-saving or life-threatening.” The comment further indicates that the De Novo pathway should not replace the PMA pathway for implanted devices that are not eligible for 510(k) clearance and recommends that FDA document whether the increase in De Novo grants over the past few years indicates a movement from 510(k) clearance of devices to De Novo or from PMA review to the less stringent De Novo pathway before finalizing the proposed rule.

(Response 8) Altering the statutory standards for device classification and marketing authorization is outside the scope of this rulemaking. FDA classifies devices according to the statutory criteria set forth in section 513(a)(1) of the FD&C Act. Therefore, if FDA determines that general and special controls are sufficient to provide a reasonable assurance of safety and effectiveness for a potentially life-supporting device, FDA must classify that device into class II (see section 513(a)(1)(B) of the FD&C Act). Congress added section 513(f)(2) of the FD&C Act as part of FDAMA to limit unnecessary expenditure of FDA and industry resources that could occur if devices for which general controls or general and special controls provide a reasonable assurance of safety and effectiveness were subject to premarket approval under section 515 of the FD&C Act (21 U.S.C. 360e). As enacted by FDAMA, to submit a De Novo request, a device first had to be found NSE to legally marketed predicate devices through a 510(k). Section 513(f)(2) of the FD&C Act was modified by section 607 of FDASIA, which created an alternative mechanism for submitting a De Novo request that does not require that a device be reviewed first under a 510(k) and found NSE prior to submission of a De Novo request. If a person believes their device is appropriate for classification into class I or class II and determines, based on currently available information, there is no legally marketed predicate device, they may submit a De Novo request without a preceding 510(k) and NSE.

(Comment 9) A comment objects to making De Novo devices immediately available as a predicate device because the commenter suggests that it puts patient safety at risk and does not reward innovation. The commenter proposes a “safe harbor” of several years where the De Novo device cannot be used as a predicate.

(Response 9) FDA disagrees with this comment. Section 513(f)(2) of the FD&C Act provides that any device classified through the De Novo pathway “shall be a predicate device for determining substantial equivalence” and does not impose a waiting period for such devices to be used as predicates.

(Comment 10) A comment requests FDA to revise § 860.1 to limit the use of advisory committees to cases of high-risk, life-supporting, or life-sustaining devices, or to classification panels because the commenter states that referring a De Novo request to an advisory committee should be unusual, as the devices that are the subject of such requests generally present low to moderate risk.

(Response 10) We disagree with this proposed revision. This comment is directed specifically to the De Novo classification process, and § 860.1 applies to both premarket and postmarket classifications and reclassifications. In addition, we do not agree that the only time we should seek advice from an advisory committee is in cases of high-risk, life-supporting, or life-sustaining devices, or in a classification panel; FDA may refer a matter to an advisory committee because it chooses to do so at its own discretion (see our guidance “Procedures for Meetings of the Medical Devices Advisory Committee” (Ref. 7).) For example, the Agency may present a matter before an advisory committee if the matter is of significant public interest or there is additional or special expertise provided by the panel that could assist FDA in its decision making.

(Comment 11) A comment asks FDA to revise the De Novo “Purpose and applicability” provision (the final rule renumbers the proposed § 860.201(b) as § 860.200(b)) to clarify that a De Novo request may also be submitted for a group of related devices because a commenter states that, in some cases, more than one related device should be submitted for De Novo classification.

(Response 11) FDA disagrees with this comment. Generally, it is not appropriate to bundle multiple devices in a single De Novo request. For example, FDA would not grant a De Novo request that would require FDA to create more than one classification regulation. If an applicant feels that they have a situation where it makes logical sense to bundle multiple devices into one De Novo request, it would be advisable to discuss proactively with FDA in advance of submission of the De Novo request.

(Comment 12) A comment requests that FDA revise the De Novo file confidentiality provision in § 860.5(g) so that it follows the approach for PMAs concerning confidentiality because the commenter asserts requesters are entitled to maintain confidentiality for information submitted to FDA through the De Novo process even if some information relating to the De Novo request has been disclosed publicly. Another comment requests that FDA revise the provision regarding disclosure of the existence of a De Novo request before an order granting the request is issued to clarify that such disclosure is governed by the trade secrets and confidential commercial information provisions in § 20.61 (21 CFR 20.61). A different comment questions why CDRH could not disclose the existence of a De Novo request and the date of its acceptance for review or the date it was refused.

(Response 12) FDA is making minor revisions to refer to the “De Novo file” instead of the “De Novo request” in four places in § 860.5(g) for consistency with the language used in § 860.5(g)(1) and to align with similar language used in 21 CFR 814.9 regarding confidentiality of information in a PMA file. FDA otherwise disagrees with the comments requesting revision of the proposed De Novo request confidentiality requirements. The provisions in § 860.5(g)(2) and (3) provide that, before an order granting the De Novo request is issued, FDA may not publicly disclose the existence of or data and information contained in a De Novo file, unless such information has already been publicly disclosed or acknowledged by the De Novo requester. Therefore, if a requester publicly acknowledges only the date and existence of a De Novo request submission, that acknowledgment would not, by itself, make underlying data and information in the De Novo file publicly available for disclosure under § 860.5(g). Further, the requester cannot have confidentiality concerns about information it has already publicly disclosed. This approach is concordant with FDA's general public information regulations at § 20.61 and § 20.81 (21 CFR 20.81). Under § 20.61, information submitted to FDA that qualifies as trade secret or confidential commercial information is generally exempt from public disclosure, but § 20.81 provides that records otherwise exempt from disclosure are available for public disclosure to the extent that they “contain data or information that have previously been disclosed in a lawful manner to any member of the public, other than an employee or consultant or pursuant to other commercial arrangements with appropriate safeguards for secrecy.”

Regarding why FDA will not disclose the existence of a De Novo request that has not been publicly disclosed or acknowledged, disclosing the existence of the De Novo request would disclose the requester's intent to market the device. Consistent with FDA's approach in other premarket programs, we generally consider an applicant's intent to market a device to be confidential commercial information where the applicant has kept that intent confidential. This approach is supported by the Supreme Court's recent decision in Food Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 2356, 2363 (2019).

(Comment 13) Some comments requested more clarity on how and when data and information may be disclosed by FDA, and some comments suggested that the data and information disclosed after FDA issues an order granting a De Novo request should only be available following a FOIA request. A commenter also recommended changes to clarify that the requester would have an opportunity to review and redact trade secret information before the release of any data and information in the De Novo request. Another commenter recommended that CDRH draft and post on its website a summary of the information submitted to support FDA's classification determination and require De Novo requesters to prepare summaries of data and information submitted to support the safety and effectiveness of the specific device that could be posted in FDA's De Novo database to align with public disclosure of 510(k) and PMA summaries.

(Response 13) As discussed in response to the previous comment, prior to sending an order granting the De Novo request to the De Novo requester, FDA will not disclose the data or information contained in the De Novo file, unless the De Novo requester has publicly disclosed or acknowledged such information (§ 860.5(g)(3)). To provide more clarity and to help ensure that information exempt from release is appropriately protected, we are revising § 860.5(g)(4) to make clear that after FDA sends an order granting the De Novo request to the De Novo requester, FDA may immediately disclose any safety and effectiveness information and any other information in the De Novo file that is not exempt from release under FOIA.

FDA disagrees with the comments requesting FDA to limit the release of data and information contained in a granted De Novo request to situations in which the Agency has received a FOIA request for that information. FDA proactively discloses information of interest to the public on a regular basis. For example, granting a De Novo request allows marketing of the particular device that is the subject of the request, creates a classification regulation for devices of this type, and permits the device to serve as a predicate device (section 513(f)(2) of the FD&C Act; Ref. 5). FDA believes that information regarding granted De Novo requests and summaries of safety and effectiveness information that formed the basis of FDA's granting decisions should be publicly posted without waiting to receive a FOIA request for that information. With respect to affording requesters an opportunity to review and redact records that may contain trade secret information before they are disclosed, FDA will follow its existing pre-disclosure notification requirements in § 20.61.

Since 2010, FDA has posted on its website classification orders and redacted decision summary documents for devices classified through the De Novo classification process. This approach is analogous to our current approach for other marketing authorization pathways: summaries of safety and effectiveness information that formed the basis of FDA's decisions are posted on FDA's website for PMA approvals, available at https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfPMA/pma.cfm ; and for 510(k) clearances, 510(k) summaries are available at https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfPMN/pmn.cfm. We believe the comment suggesting that FDA require a De Novo requester to prepare a summary of safety and effectiveness information for public posting to align with PMA and 510(k) procedures confuses the requirement for a PMA to include a summary that allows the reader to gain a general understanding of the data and information in the application (§ 814.20 (21 CFR 814.20(b)(3))) with the publicly posted detailed summary of safety and effectiveness data (SSED) on which an approval or denial decision is based for a PMA. Although some PMA applicants may submit draft SSEDs, the final SSEDs posted online are FDA documents. The De Novo decision summary is intended to present an objective and balanced summary of the scientific evidence that served as the basis for the decision to grant a De Novo request. Because the Agency already prepares such documents and determines what information supports its decision to grant the De Novo request, FDA is not revising the final rule to require requesters to prepare a similar summary, as this commenter requests. We believe the information that the commenter indicates would be of interest to healthcare providers and patients is already made publicly available through FDA's current approach.

(Comment 14) A comment supported facility inspection prior to granting or declining a De Novo request because the commenter states that it is essential for safety in the case of novel medical devices. Several comments wanted to delete either all of subsection § 860.240(c) (this final rule renumbers proposed § 860.256(c) as § 860.240(c)) or paragraph § 860.240(c)(2) (this final rule renumbers proposed § 860.256(c)(2) as § 860.240(c)(2)) or revise subsection § 860.240(c) because the commenters state these provisions are unduly burdensome or that FDA lacks statutory authority to require facility inspections to assess implementation of the QSR (part 820).

(Response 14) Several comments objected to proposed § 860.256(c) (this final rule renumbers proposed § 860.256(c) as § 860.240(c)), which relates to the inspection of relevant facilities prior to granting or declining a De Novo request and argued that the FD&C Act does not give FDA this inspection authority. FDA disagrees with the comments, and, as described below, is finalizing the provision with clarifying changes. The inspection would be done only in the two circumstances specified in the regulation. Based on past experience, inspections in these circumstances should arise with a small percentage of De Novo requests.

As explained in the proposed rule preamble, an inspection prior to its De Novo decision is used to help FDA determine whether clinical or nonclinical data were collected in a manner that ensures the data accurately represents the risks and benefits of the device, in accordance with section 513(a)(1)(C) of the FD&C Act. FDA has been conducting such inspections when data integrity and quality concerns arise during its review of a De Novo request, and information from these inspections has been critically important to the Agency's De Novo determination. For example, based on review of the clinical data provided in the De Novo request, FDA may determine that the results of a clinical investigation are clinically or physiologically improbable. An inspection may be conducted to verify the integrity of the data.

In another example, FDA may receive a whistleblower complaint alleging misconduct at one or more clinical investigational sites, and the results from the clinical investigation are used to support a De Novo request. Our assessment of the subject device is dependent on the veracity of the complaint. FDA inspections of one or more investigational sites to assess the veracity of the complaint would help determine whether evidence submitted in support of the De Novo request ( e.g., data from a particular site) needs to be excluded from FDA's consideration.

For certain devices with critical and/or novel manufacturing processes that may impact the safety and effectiveness of the device, FDA also believes that an inspection may be necessary for FDA to determine whether general controls, including the QSR (part 820) for devices and current good manufacturing practices (21 CFR part 4, subpart A) for combination products, are adequate to provide a reasonable assurance of safety and effectiveness of the device, or whether special controls to mitigate risks must be developed. Such inspections are not for the purpose of reviewing for compliance with the QSR. Rather, the purpose of such an inspection is to gather information on critical and/or novel manufacturing processes, the methods and procedures used, and such additional information as may be necessary to assess the safety and effectiveness of a drug or biologic constituent part of a combination product. Such information will help classify the device type by providing an understanding of critical and/or novel manufacturing processes to determine if the device type is of low to moderate risk, to determine if general controls and special controls can effectively mitigate the probable risks to health, and to determine if the product specifications can reasonably be met. In some circumstances, this information can only be obtained by an inspection—and not any other means, such as through review of standard operating procedures—because it requires a detailed understanding of how manufacturers, in practice, carry out complex and/or safety critical processes, methods, or procedures. In these situations, the information obtained from an inspection would be necessary for FDA to make a De Novo determination.

For example, FDA may receive a De Novo request for a permanent implant with a coating that contains the same active ingredient that is in a new drug application (NDA) approved drug product. The combination product is intended to reduce the risk of surgical site infections. The safety and effectiveness of the combination product is linked to the ability of the manufacturer to ensure consistent levels of drug coating and drug release batch-to-batch. Probable risks associated with inconsistent coating or inconsistent drug release may include local/systemic toxicity, reproductive/genotoxicity, antibiotic resistance, and infection. An inspection would help assess the sampling methodology and laboratory controls used by the manufacturer to ensure consistent levels of drug coating and drug release batch-to-batch. Such information would be critical to FDA in its De Novo determination because assessment of the sampling methodology and laboratory controls at the manufacturing facility would aid in FDA's determination that the product has consistent levels of drug coating and drug release batch-to-batch. This information would enable FDA to determine whether the proposed special controls are sufficient to reasonably assure safety and effectiveness or if additional controls are needed.

In another example, FDA may receive a De Novo request for a device that is provided sterile using a novel sterilization method for which there is little or no published information and limited or no history of FDA evaluation of sterilization development and/or validation data. Probable risks associated with inadequate sterilization may include risk of infection or contamination. An inspection of the facility where the device is sterilized would be critical to determining if special controls regarding sterilization validation are sufficient to mitigate the device's probable risks, verify that the novel sterilization method can feasibly be carried out, and determine if additional controls are needed to mitigate the risks associated with inadequate sterilization to reasonably assure the device's safety.

One commenter objected to inspections used to assess whether QSRs are adequate to ensure that critical and/or novel manufacturing processes that may impact the safety and effectiveness of the device are controlled on the grounds that such inspections require either a warrant or specific statutory authorization under the Constitution. Section 704(a)(1) of the FD&C Act grants FDA authority to enter and inspect “any factory, warehouse, or establishment in which food, drugs, or devices are manufactured, processed, packed, or held for the introduction into interstate commerce or after such introduction.” 21 U.S.C. 374. In addition, FDA intends to undertake inspections only in limited circumstances when the inspection is to help determine whether to grant a De Novo request from a firm and determine whether the proposed special controls are sufficient to reasonably assure safety and effectiveness or if additional controls are needed under section 513(f)(2) of the FD&C Act.

(Comment 15) A comment proposed several changes to the “Supplemental data sheet” definition because not all implanted devices are class III, and another comment recommended changes to Form FDA 3429 (General Device Classification Questionnaire).

(Response 15) These comments are moot because, in a separate rulemaking (see 83 FR 64443 at 64454 through 64456, December 17, 2018, effective March 18, 2019), the definitions for the terms “Supplemental data sheet” and “Classification questionnaire” were removed from § 860.3 and the prior requirements to provide Form FDA 3427 (Supplemental Data Sheet) and Form FDA 3429 (General Device Classification Questionnaire) were removed from §§ 860.84 and 860.123.

(Comment 16) A comment requests that FDA keep the individual paragraph designations in the definitions section (§ 860.3) because the commenter states it is helpful to industry to be able to cite a specific term by paragraph designation.

(Response 16) FDA disagrees with this comment. FDA believes it would be easier for industry to locate definitions listed alphabetically. FDA has taken a similar approach in its labeling and unique device identification regulations (see 21 CFR 801.3 and 830.3). FDA further believes that it is not difficult to cite to alphabetical definitions within § 860.3.

(Comment 17) A comment asks FDA to revise the proposed De Novo request format requirements to clarify that the application can be a single version in electronic format, conforming it to FDA's proposed rule, “Medical Device Submissions: Amending Premarket Regulations That Require Multiple Copies and Specify Paper Copies To Be Allowed in Electronic Format” (83 FR 46444, September 13, 2018).

(Response 17) FDA agrees that a De Novo request may be submitted as a single version in electronic format, which is currently eCopy and, in the future, may be a different electronic format. De Novo requests currently must be submitted as a single eCopy, in accordance with section 745A(b)(1) of the FD&C Act (21 U.S.C. 379k-1(b)(1)) and FDA's guidance, “eCopy Program for Medical Device Submissions,” issued April 27, 2020 (Ref. 8). Section 745A(b)(3) of the FD&C Act requires the presubmission and submission types enumerated in section 745A(b)(1) (including De Novo requests), any supplements to such presubmissions or submissions for devices, and any appeals of action taken with respect to such presubmissions or submissions, including devices under the Public Health Service Act, to be submitted solely in electronic format as specified by FDA in guidance. Once FDA issues guidance under section 745A(b)(3) of the FD&C Act, the Agency can require De Novo request submissions in electronic formats other than eCopy. We are revising paragraph § 860.210(a) (this final rule renumbers proposed § 860.223(a) as § 860.210(a)) to require submission of a De Novo request as a single version in electronic format).

(Comment 18) A commenter states it is overly prescriptive to require a specific format for a De Novo request.

(Response 18) We do not agree that the format FDA is requiring is overly prescriptive. Section 860.210 (this final rule renumbers proposed § 860.223 as § 860.210), the format section, requires that the De Novo request be signed by the requester or an authorized representative, be designated as a “De Novo request,” and be written or translated into English. FDA believes it is easier for FDA reviewers to find required information if the De Novo request information is provided in a specific format, thereby facilitating more efficient review and processing of the request.

(Comment 19) Because a De Novo request may contain only one volume, a comment asks FDA to revise the De Novo request format paragraph to qualify that the table of contents of a De Novo request reference a volume number only if the De Novo request contains more than one volume.

(Response 19) FDA agrees that it is unnecessary to cite the volume if the De Novo request does not contain more than one volume. We are revising paragraph § 860.220(a)(1) (this final rule renumbers proposed § 860.234(a)(1) as § 860.220(a)(1)) accordingly.

(Comment 20) Some comments request FDA to revise the “Device description” provision at § 860.220(a)(6)(ii) ((this final rule renumbers proposed § 860.234(a)(6)(ii) as § 860.220(a)(6)(ii)) because the commenters state some of the terminology is more typically used to describe drugs than devices. The commenters suggest that “component” is more applicable to devices than “ingredient,” and that some components may not be “functional” but may still be important to a De Novo classification decision. A commenter states the term “principal components” is appropriate because it signals that the submitter should identify the device's primary components but need not identify every component. Another commenter similarly suggests the term “major components” would be appropriate.

(Response 20) FDA disagrees that ingredient is an atypical term for a device. For example, in vitro diagnostic device labels generally are required to include the quantity, proportion, or concentration of each reactive ingredient for a reagent (21 CFR 809.10(a)(3)).

In addition, FDA does not agree with requiring only a device's principal or major components to be described in a De Novo request. FDA is requesting identification of all functional components or ingredients that comprise the subject device or combination product so that FDA has sufficient understanding of the device to evaluate whether general controls or general and special controls are sufficient to provide reasonable assurance of safety and effectiveness. We would consider any component of the device relating to how the device operates be a functional component. It was not our intent to limit the identification of the components or ingredients of the device or combination product. To that end, we disagree with the commenters' proposed edits to require identification of only major or principal components.

(Comment 21) Comments on the summary of studies (this final rule renumbers proposed § 860.234(a)(13)(ii) as § 860.220(a)(13)(ii)), the technical sections (this final rule renumbers proposed § 860.234(a)(15)(i) and (iii) as § 860.220(a)(15)(i) and (iii)), and the bibliography (this final rule renumbers proposed § 860.234(a)(16)(i) as § 860.220(a)(16)(i)) that are part of the required content of a De Novo request ask that FDA limit the required information to that “necessary to determine the classification of the device.” The commenter states that it is necessary to clarify that data unrelated to classification of the device ( e.g., for other indications) do not need to be submitted and that the focus of the application is to determine the classification of the device.

(Response 21) FDA does not agree with these comments and does not believe the requested clarifications are necessary. Under the FD&C Act, FDA determines the classification of a device that is the subject of a De Novo request (section 513(f)(2) of the FD&C Act). The requirements for the content of a De Novo request reflect the information that, in FDA's experience, generally is necessary to determine if general or general and special controls are sufficient to provide a reasonable assurance of safety and effectiveness of the device that is the subject of the De Novo request. To the extent the requester believes that certain required content for a De Novo request is not applicable to its device, the requester has the option under § 860.220(c) (this final rule renumbers proposed § 860.234(c) to § 860.220(c)) to omit that information and submit a statement that specifies the omitted information and justifies the omission. FDA will notify the requester if it does not accept the justification.

Further, § 860.220(a)(15) (this final rule renumbers proposed § 860.234(a)(15) as § 860.220(a)(15)) already specifies that the required technical sections must include data and information “in sufficient detail to permit FDA to determine whether to grant or decline the De Novo request.” Therefore, we believe it is already clear the information required in the technical sections under § 860.220(a)(15)(i) and (iii) (the final rule renumbers proposed § 860.234(a)(15)(i) and (iii) as § 860.220(a)(15)(i) and (iii)) and the related summary of studies under § 860.220(a)(13) (the final rule renumbers proposed § 860.234(a)(13) as § 860.220(a)(13)) is information focused on FDA's classification determination. In addition, the bibliography of published reports required under § 860.220(a)(16)(i) (the final rule renumbers proposed § 860.234(a)(16)(i) as § 860.220(a)(16)(i)) is limited to reports “that concern the safety or effectiveness of the device.” Published reports concerning the safety or effectiveness of the device that is the subject of the De Novo request would be useful to FDA's evaluation of the request.

(Comment 22) Some comments object that FDA's proposed requirements for the data and information submitted in a De Novo request are overly broad or potentially confusing. One commenter supports requirements for a thorough review of existing data but requests that the requirement to submit ” `all' available data . . . should be clarified to indicate that which is reasonably attainable by” the De Novo requester. Other commenters request that FDA change the phrase “known or reasonably known” in certain provisions of § 860.220(a) (this final rule renumbers proposed § 860.234(a) to § 860.220(a)) to “known or reasonably available to” the requester. These commenters indicate that the “known or reasonably known” standard does not clarify to whom the required information is known or reasonably known. A commenter also indicates that the proposed language could lead FDA reviewers to decide a De Novo requester is “hiding something” if the submission lacks information known to the reviewer but not the requester. Another commenter states that use of the term “reasonably available” instead would “impl[y] that the sponsor must engage in reasonable effort to obtain the relevant information.”

(Response 22) FDA did not include provisions in the proposed rule using the phrase “all available data” as one comment suggests, but we believe limiting all of the required information for a De Novo request to that “reasonably attainable by” the requester is inappropriate. In some cases, for example, a requester may know of studies or reports concerning the safety or effectiveness of the device but be unable to obtain them for some reason ( e.g., the requester must pay to gain access to a registry containing the relevant data). In these cases, it is still useful to provide to FDA the information about such studies or reports that is known or reasonably should be known to the requester, even if complete information about or copies of such studies or reports is unavailable to the requester. For example, FDA may have a greater ability to access a publication with more complete information.

In response to these comments, FDA is revising § 860.220(a)(7) and (9) (this final rule renumbers proposed § 860.234(a)(7) as § 860.220(a)(7) and renumbers § 860.234(a)(11) as § 860.220(a)(9)) to clarify that the information required is that known to or that reasonably should be known to the requester. The intent of requiring a De Novo request to include information that is known or reasonably known to the requester is to ensure that the requester engages in a reasonable effort to provide relevant information and does not omit information important to FDA's determination to grant or decline the De Novo request because of a failure to conduct reasonable searches for such information. As explained in the proposed rule, for example, the summary of known or reasonably known probable risks to health associated with the use of the device required in the De Novo request under § 860.220(a)(9) “should be based on the best available information at the time of submission of the De Novo request.” (83 FR 63127 at 63133) These requirements help ensure that FDA's evaluation of a De Novo request is based on complete and quality information and minimize review staff's need to request additional information. We believe the term “should reasonably be known” appropriately captures the intent of these requirements.

(Comment 23) A comment requests that FDA provide more flexibility in the standard for valid scientific evidence for De Novo devices as a way to address lower risk devices, rather than requiring only less-detailed summary information for some components of a complete De Novo request.

(Response 23) FDA disagrees with the comment. As in other device classification processes, FDA relies upon valid scientific evidence in determining the safety and effectiveness of a device that is the subject of a De Novo request (§ 860.260(e) (this final rule renumbers proposed § 860.289(d) as § 860.260(e)). This is unchanged by the requirement to provide summaries of certain information as part of a De Novo request. In addition, the required content of a De Novo request must include, in addition to such summaries, technical sections containing nonclinical study results, software information and testing, and clinical investigation results with sufficient detail to allow FDA to make a determination on the De Novo request.

Regarding the commenter's request for “flexibility” in the standard for valid scientific evidence, FDA does not believe any change is necessary. FDA's regulatory definition of valid scientific evidence already makes clear that “[t]he evidence required may vary according to the characteristics of the device, its conditions of use, the existence and adequacy of warnings and other restrictions, and the extent of experience with its use” (§ 860.7(c)(2)). FDA has also issued guidance explaining its approach to making benefit-risk determinations in the context of De Novo requests, which is a flexible, patient-centric approach tailored to the type and intended use of the device. See our guidances “Factors to Consider When Making Benefit-Risk Determinations in Medical Device Premarket Approval and De Novo Classifications” (Ref. 3) and “Consideration of Uncertainty in Making Benefit-Risk Determinations in Medical Device Premarket Approvals, De Novo Classifications, and Humanitarian Device Exemptions” (Ref. 9).

(Comment 24) A commenter states FDA should focus on device design to improve device safety. The same commenter asserts that all premarket applications (PMA, 510(k), and De Novo requests) should include a design and development plan, design input, output, design reviews, verification, validation, transfer, and all design changes.

(Response 24) FDA agrees that device design is important to device safety. Manufacturers are already required under part 820 (QSR) to focus on device design (§ 820.30, Design controls). Additionally, FDA may require additional verification or validation information for specific design features or inspect relevant facilities, where appropriate (§ 860.240, this final rule renumbers proposed § 860.256 as § 860.240).

(Comment 25) Because a commenter notes that “manufacturer” is used elsewhere in the proposed rule and because some commenters state that many companies no longer use Fax machines, the comments request that FDA revise the “Administrative information” provision of the De Novo request content section to add a reference to “manufacturer,” in addition to owners and operators, and to remove the reference to Fax machines from § 860.220(a)(2) (this final rule renumbers proposed § 860.234(a)(2) as § 860.220(a)(2)).

(Response 25) FDA agrees to remove the reference to Fax machines and is revising paragraph § 860.220(a)(2) (this final rule renumbers proposed § 860.234(a)(2) as § 860.220(a)(2)) accordingly. However, we do not agree that it is necessary to add a reference to “manufacturer” in this provision. In the final rule, § 860.220(a)(2) requires that the De Novo request include the establishment registration number of the owner or operator submitting the De Novo request, if applicable, because certain “owners or operators,” as defined in 21 CFR 807.3(f), are the entities required to register and submit listing information under 21 CFR part 807. Use of the terms “owner” and “operator” in § 860.220(a)(2) does not mean that a device manufacturer is unable to submit a De Novo request. The registration and listing requirements apply to owners or operators of establishments who are “engaged in the manufacture, preparation, propagation, compounding, assembly, or processing of a device intended for human use,” unless they are exempt under 510(g) of the FD&C Act or FDA regulations (see 21 CFR 807.20).

(Comment 26) A comment requests FDA revise the indications for use paragraph (§ 860.220(a)(5), this final rule renumbers the proposed § 860.234(a)(5) as § 860.220(a)(5)) in the De Novo request content section to include references to intended use and the meaning of that term for the purpose of determining substantial equivalence because intended use will be relevant to 510(k) submissions made after FDA grants a De Novo request. The commenter also suggests the revisions would align more closely with the PMA requirements in § 814.20(b)(3).

(Response 26) FDA does not agree with this comment and believes that the indications for use requirement is aligned with § 814.20(b)(3)(i) and the definitions in Appendix D of FDA's guidance, “The 510(k) Program: Evaluating Substantial Equivalence in Premarket Notifications [510(k)]” (Ref. 10).

(Comment 27) A few commenters state it is unnecessary and places a potentially unrealistic burden on the De Novo requester to provide a “complete” device description; the comments request FDA require a “device description.”

(Response 27) FDA disagrees with these comments and is retaining the word “complete” in § 860.220(a)(6) (this final rule renumbers the proposed § 860.234(a)(6) as § 860.220(a)(6)). The word “complete” is appropriate in this context and not overly burdensome. FDA does not expect an excessively detailed description of the device, but there must be sufficient detail to describe the aspects of the device that could affect safety or effectiveness. A complete device description is necessary for FDA to classify a device.

(Comment 28) Comments on the requirement to describe alternative practices (§ 860.220(a)(7), this final rule renumbers proposed § 860.234(a)(7) as § 860.220(a)(7)) either support the requirement as facilitating classification and improving transparency, or request revisions to reduce the burden of describing known or reasonably known alternative practices and procedures. The comments suggest revising the provision to instead ask for a summary related to the standard of care for a disease or condition for which the device is indicated as it bears on the device's proposed classification or assessment of probable benefits and risks.

(Response 28) FDA disagrees with the comments to limit the description of alternative practices. We do not believe this requirement requires extensive unnecessary efforts, as some of the commenters suggest. As explained in the proposed rule, this requirement is intended to capture alternative biologic, device, or drug practices or procedures. An understanding of available alternative practices or procedures that are used to diagnose, treat, prevent, cure, or mitigate the disease or condition for which the device is intended or that similarly affect the structure or function of the body is one of the factors FDA considers in its benefit-risk assessments to determine the appropriate classification for a device. For example, for a device indicated to treat a rare condition for which there are no alternative treatments, FDA may accept greater uncertainty in the evidence regarding the device's probable benefits and probable risks. Furthermore, FDA does not agree with the assumption that a standard of care exists for all diseases or conditions for which a device is intended.

(Comment 29) Comments request that FDA rearrange the order of the provisions in proposed § 860.234(a)(9) through (11) (this final rule renumbers proposed § 860.234(a)(9) as § 860.220(a)(11) and this final rule renumbers proposed § 860.234(a)(11) as § 860.220(a)(9)). Commenters suggest that the risks and mitigations form the basis for the classification recommendation and accordingly request that the Summary of risks and mitigations provision (proposed § 860.234(a)(11) precede the Classification recommendation provision (proposed § 860.234(a)(9)). Commenters further suggest that the Proposed special controls provision (proposed § 860.234(a)(10)) should immediately follow the Summary of risks and mitigations provision to demonstrate whether specific mitigations are general and/or special controls.

(Response 29) The order in proposed § 860.234(a)(9) through (11) follows the order in which section 513(f)(2)(A)(v) of the FD&C Act discusses corresponding items. However, we believe the commenters' proposed changes make sense. Accordingly, we are revising the order of the paragraphs as follows:

• § 860.220(a)(9) Summary of risks and mitigations ;

• § 860.220(a)(10) Proposed special controls; and

• § 860.220(a)(11) Classification recommendation.

(Comment 30) A comment supports the requirement for a summary of known or reasonably known probable risks, while another comment suggests that the De Novo request include both a summary and a discussion of the probable risks and mitigations identified through a formal risk analysis.

(Response 30) FDA agrees with the comment supporting the requirement for a De Novo request to include a summary of known or reasonably known probable risks, but FDA believes that requiring both a summary and a discussion of these probable risks and proposed mitigations is unnecessary. The De Novo request will be required to summarize probable risks to health associated with use of the device that are known or should reasonably be known to the requester and the proposed mitigations. For each mitigation measure that involves specific performance testing or labeling, the request must reference the associated section or pages of the supporting information, such as supporting protocols and/or testing data. FDA believes such information is sufficient to assist the Agency in identifying the probable risks to health and in evaluating the proposed risk mitigation measures to determine whether general controls or general and special controls can provide reasonable assurance of safety and effectiveness. Furthermore, FDA requires a related discussion demonstrating that the probable benefit to health outweighs the probable risks of the De Novo device in § 860.220(a)(14) (this final rule renumbers the proposed § 860.234(a)(14) as § 860.220(a)(14)).

(Comment 31) A comment requests that FDA revise the standards paragraph to clarify that De Novo requesters are not required to declare conformity to standards referenced in the De Novo request.

(Response 31) The standards paragraph at § 860.220(a)(12) (this final rule renumbers the proposed § 860.234(a)(12) as § 860.220(a)(12)) does not require that De Novo requesters submit a declaration of conformity to the referenced standard, so the requested clarification is not necessary. See our guidance, “Appropriate Use of Voluntary Consensus Standards in Premarket Submissions for Medical Devices” (Ref. 11) for additional information on how to use consensus standards in premarket submissions, including information for those choosing to rely on a consensus standard in a declaration of conformity to meet a premarket submission requirement.

(Comment 32) A commenter states that the bibliography of all published reports concerning the safety or effectiveness of the device not submitted under the technical sections of the De Novo request (§ 860.220(a)(16)(i), this final rule renumbers proposed § 860.234(a)(16)(i) as § 860.220(a)(16)(i)) and the identification, discussion, and analysis of any other data, information, or report relevant to an evaluation of the safety and effectiveness of the device (§ 860.220(a)(16)(ii), this final rule renumbers proposed § 860.234(a)(16)(ii) as § 860.220(a)(16)(ii)) should be provided to FDA for consideration.

(Response 32) FDA agrees with the comment and believes that providing a bibliography of all published reports concerning the safety or effectiveness of the device not submitted under the technical sections of the De Novo request, as required by § 860.220(a)(16)(i), and the information on other data, information, or reports relevant to an evaluation of the safety and effectiveness of the device required under § 860.220(a)(16)(ii) will be useful to FDA's assessment of safety and effectiveness.

(Comment 33) A comment opposed authorizing implanted medical devices for marketing through the De Novo pathway without long-term controlled clinical trials because the commenter states patients deserve long-term safety and effectiveness data. A comment further recommends FDA require information about changes to the research protocol and statistical methodology in the summary of studies submitted in the De Novo request because the commenter states the information is important for evaluating the quality of the study.

(Response 33) FDA disagrees that long-term controlled clinical trials must be required across all implanted medical devices. In reviewing a De Novo classification request, studies other than long-term controlled clinical trials may also constitute valid scientific evidence that FDA can rely upon in making a benefit-risk determination for an implanted device, as discussed in our guidance “Factors to Consider When Making Benefit-Risk Determinations in Medical Device Premarket Approval and De Novo Classifications” (Ref. 3). “Valid scientific evidence” is defined in section 513(a)(3) of the FD&C Act and § 860.7(c)(2). Valid scientific evidence, as discussed in § 860.7(c)(2), includes “partially controlled studies, studies and objective trials without matched controls, well-documented case histories conducted by qualified experts, and reports of significant human experience with a marketed device.” FDA does not believe long-term, controlled clinical studies are necessary to demonstrate that general controls or general and special controls will provide a reasonable assurance of safety and effectiveness for all implantable devices reviewed through the De Novo pathway. For example, some devices are intended to be implanted for a relatively short period of time ( e.g., 30 days) and then removed from the body; longer term clinical data therefore may not be needed to assess the safety and effectiveness of these devices when used as intended.

Requiring these studies for all implantable devices is also inconsistent with FDA's least burdensome approach to medical device regulation, which is intended to eliminate unnecessary burdens that may delay the marketing of beneficial new products, while maintaining the statutory requirements for marketing authorization. As discussed in FDA's guidance, “The Least Burdensome Provisions: Concept and Principles” (Ref. 12), FDA typically follows a stepwise analytical process when requesting additional information to make a decision on a marketing submission to ensure the information requested reflects the least burdensome approach. FDA typically requests clinical data when analytical or nonclinical bench performance testing data, or nonclinical animal  1 and/or biocompatibility studies are insufficient, or available scientific methods are not acceptable, e.g., the scientific methods are deemed unacceptable because they are not clinically validated or are not supported by a valid scientific rationale.

We do not believe any changes are necessary to address the comment's request that FDA require information about changes to the research protocol and statistical methodology. In addition to the summary of studies required under § 860.220(a)(13) (this final rule renumbers proposed § 860.234(a)(13) as § 860.220(a)(13)), the technical sections of the De Novo request must include, among other things, protocols, investigation design, results of statistical analyses, and any other appropriate information, for each clinical investigation used to support the De Novo request (§ 860.220(a)(15), this final rule renumbers proposed § 860.234(a)(15) as § 860.220(a)(15)). Therefore, the required contents of the technical section would already capture information regarding significant changes made to the protocol or to the statistical methodology that would be important for evaluating the results of the study.

(Comment 34) A few comments propose revisions to the human subject study summaries provision at § 860.220(a)(13)(ii) (this final rule renumbers proposed § 860.234(a)(13)(ii) as § 860.220(a)(13)(ii)) to require that this section of the De Novo request include a summary of “any clinical data” known by or reasonably available to the requester submitted in the De Novo request instead of a summary of “each clinical investigation” submitted in the De Novo request. The commenters suggest that the language in the proposed rule appeared to assume that the requester's only source of clinical data would be clinical investigations that the requester initiated and note that there may be other sources of clinical data, such as studies described in literature or conducted by others, or in marketing data from other countries. They also recommend limiting the information about such clinical data required in the summary to that “known or reasonably available” to the requester because it would clarify that when complete data are not available, they are not required.

(Response 34) FDA agrees that sources of clinical data other than clinical investigations initiated by the requester may be available to the requester; however, we do not agree that the proposed requirement for the De Novo request to include a summary of studies limits the types of clinical data that may be submitted in a De Novo request. Under § 860.220(a)(13), (this final rule renumbers proposed § 860.234(a)(13) as § 860.220(a)(13)), the De Novo request must include an abstract of any information or report described in the De Novo request under § 860.220(a)(16)(ii) (this final rule renumbers proposed § 860.234(a)(16)(ii) as § 860.220(a)(16)(ii)) and a summary of the results of technical data submitted under § 860.220(a)(15) (this final rule renumbers proposed § 860.234(a)(15) as § 860.220(a)(15)). The information required under § 860.220(a)(16)(ii) includes “information derived from investigations other than those in the request and from commercial marketing experience.” Therefore, clinical data derived from other sources, such as marketing experience in other countries, are among the types of data that would be summarized under § 860.220(a)(13). The particular paragraph of § 860.220(a)(13) that the commenters suggest revising sets forth additional information that summaries must discuss for those clinical investigations involving human subjects that are submitted in the De Novo request.

FDA also disagrees that it is necessary to limit the information required under § 860.220(a)(13)(ii) (this final rule renumbers proposed § 860.234(a)(13)(ii) as § 860.220(a)(13)(ii)) to that known or reasonably available to the requester. The requester should be able to provide the information required under § 860.220(a)(13)(ii) for clinical investigations submitted in the technical sections in support of the De Novo request. To the extent certain elements required for the summary of such clinical investigations are not included in the De Novo request because they are not reasonably available to the requester, the requester should address why they are not available. Therefore, we are not revising § 860.220(a)(13)(ii) in response to these comments.

(Comment 35) A comment requests FDA to qualify the requirement for a De Novo request to provide a discussion demonstrating that the data and information in the request constitute valid scientific evidence, with the phrase, “if applicable,” because a De Novo request for a low-risk device may present de minimis valid scientific evidence.

(Response 35) FDA disagrees with this comment. As part of the De Novo classification process, FDA must determine that the device is of low to moderate risk (21 U.S.C. 360c(f)(2)(A)(iv)). FDA relies upon valid scientific evidence in determining the safety and effectiveness of a device for purposes of classification, as explained in our response to Comment 23. Therefore, adding the phrase “if applicable” as the commenter suggests would not be appropriate.

As discussed in FDA's guidance, “Factors to Consider When Making Benefit-Risk Determinations Medical Device Premarket Approval and De Novo Classifications” (Ref. 3), FDA assesses the benefits and risks of a device that is the subject of a De Novo request to determine if general or general and special controls are sufficient to provide reasonable assurance of safety and effectiveness (see § 860.7(d)(1) and (e)(1)). While low-risk devices may not need to show as substantial a benefit to patients to have a favorable benefit-risk profile, FDA's classification determination must still be based on valid scientific evidence.

(Comment 36) A comment requests FDA to clarify that, where relevant, requirements for data and information in the technical sections in § 860.220(a)(15) (this final rule renumbers proposed § 860.234(a)(15) as § 860.220(a)(15)) may be satisfied by cross-referencing data and information submitted in satisfaction of the summary of studies provision (§ 860.220(a)(13), this final rule renumbers proposed § 860.234(a)(13) as § 860.220(a)(13)) to avoid requiring a requester to repeat information provided earlier in the De Novo request. A comment also requests that FDA remove the list of specific items that must be included in the summary of each clinical investigation under § 860.220(a)(13)(ii) (this final rule renumbers proposed § 860.234(a)(13)(ii) as § 860.220(a)(13)(ii)) because the commenter asserts it is unnecessarily restrictive and repetitive to require this information in the summary when the same information is also required in the technical sections of the De Novo request under § 860.220(a)(15)(iii) (this final rule renumbers proposed § 860.234(a)(15)(iii) as § 860.220(a)(15)(iii)).

(Response 36) FDA does not agree with this comment. The summary of technical data required under § 860.220(a)(13) is intended to be analogous to an executive summary of each study used to support the De Novo request and would typically include less information than that submitted in the technical sections. The information required in the technical sections (§ 860.220(a)(15)) is the more detailed and complete information regarding each study. While it may be appropriate to cross reference the information from the summary section (§ 860.220(a)(13)), FDA does not believe cross referencing the information in the summary required under § 860.220(a)(13) would be sufficient to provide all of the required technical information to support marketing authorization. Because the summary information required for clinical investigations submitted in the De Novo request may include information other than the specific items listed in § 860.220(a)(13)(ii) and because it is intended to be a higher level summary of the data in the technical sections, we do not believe the required summary is unnecessarily restrictive or repetitive.

(Comment 37) A few comments ask FDA to revise the nonclinical testing paragraph (§ 860.220(a)(15)(i), this final rule renumbers proposed (§ 860.234(a)(15)(i) as (§ 860.220(a)(15)(i)) by moving the “as appropriate” qualifier forward in the sentence.

(Response 37) FDA agrees that moving the words “as appropriate” forward in the sentence would clarify the requirement. We are revising paragraph § 860.220(a)(15)(i) accordingly.

(Comment 38) A few comments ask FDA to revise the requirements for a summary of studies and the technical sections in a De Novo request to clarify that a statement regarding compliance with part 58 is only necessary for studies that are required to comply with part 58 because the commenters state that many nonclinical studies are outside the scope of part 58 if they do not involve the use of animals or other test systems.

(Response 38) FDA agrees that some nonclinical studies that may be submitted to support a De Novo request, such as certain electromagnetic compatibility testing, are not subject to part 58. In response to these comments, FDA is revising § 860.220(a)(15)(i) (this final rule renumbers proposed § 860.234(a)(15)(i) as § 860.220(a)(15)(i)) to clarify that a statement of compliance with part 58 (or a brief statement of the reason for noncompliance) is required only for nonclinical studies subject to part 58.

(Comment 39) A comment asks FDA to revise the requirements for submitting results of clinical investigations involving human subjects (§ 860.220(a)(15)(iii), this final rule renumbers proposed § 860.234(a)(15)(iii) as § 860.220(a)(15)(iii)) to clarify that clinical investigations are not required in all cases to support the De Novo classification decision. Comments also requested revisions to this provision to clarify that some clinical investigations submitted in the De Novo request may be ongoing ( e.g., clinical investigations that are ongoing but for which all subjects have reached the primary endpoint). These comments also ask FDA to revise the proposed regulatory text to refer to “records” instead of copies of individual subject report forms because the commenters assert that many clinical investigations are carried out with validated electronic data capture systems and individual human subject forms are not used.

(Response 39) FDA agrees that clinical evidence may not always be required in a De Novo request to support a determination that general controls or general and special controls provide a reasonable assurance of safety and effectiveness of the device and device type. However, we believe no clarification is needed regarding whether a clinical investigation involving human subjects is required because that determination will be specific to the De Novo request. If the requester believes that information regarding clinical investigations required under § 860.220(a)(15)(iii) (this final rule renumbers proposed § 860.234(a)(15)(iii) as § 860.220(a)(15)(iii)), or other information required under § 860.220(a)(15)(i) (this final rule renumbers proposed § 860.234(a)(15)(i) as § 860.220(a)(15)(i)), is not applicable to its device, then the requester may include a justification for omitting that information from the De Novo request in accordance with § 860.220(c) (this final rule renumbers proposed § 860.234(c) as § 860.220(c)). If De Novo requesters have questions about the process for submission and review of a De Novo request for their device, we recommend that they consult FDA's guidance, “De Novo Classification Process (Evaluation of Automatic Class III Designation)” (Ref. 5) and request a meeting with FDA through the Q-submission program. Meetings between the requester and FDA allow for an open discussion and exchange of technical, scientific, and regulatory information that can help build a common understanding of FDA's initial expectations regarding clinical studies and nonclinical studies related to the De Novo request (Ref. 13).

FDA recognizes that some De Novo requests include results from clinical investigations that remain ongoing, such as a study that has a pre-specified interim analysis of safety or effectiveness data. However, FDA believes the regulatory text in § 860.220(a)(15)(iii) would already permit inclusion of such results and does not believe a revision to the regulatory text is necessary.

We also recognize that some comments raise a concern that individual subject forms are not used in many clinical investigations. While the commenters do not object to providing individual subject information for those subjects who died during a clinical investigation or who did not complete the investigation, the commenters suggest that the term “records” would better reflect electronic source data instead of the term “copies of such forms.” We agree with the comments that data capture and collection methods used in clinical investigations have evolved over time. FDA has published guidance, “Use of Electronic Health Record Data in Clinical Investigations,” addressing data capture in clinical investigations that do not use paper case report forms (Ref. 14). FDA interprets the term “individual subject form,” as used in this rule, to include the different electronic or paper formats used to capture individual subject data. Therefore, we do not believe that using the term “record” is necessary.

(Comment 40) A comment asks FDA to require that the technical sections of a De Novo request include a protocol and a report for all clinical investigations and laboratory studies to make the requirements for the technical sections more consistent and less confusing.

(Response 40) We agree that additional clarity regarding technical sections requirements for nonclinical studies would be helpful. Protocols and complete test reports generally are necessary to provide sufficient detail regarding the results of a nonclinical study to permit FDA to determine whether to grant or decline the De Novo request. However, we are revising § 860.220(a)(15)(i) (this final rule renumbers proposed § 860.234(a)(15)(i) as § 860.220(a)(15)(i)) to state expressly that these materials must be provided for each nonclinical study submitted in the technical sections of the request. FDA's guidance, “Recommended Content and Format of Non-Clinical Bench Performance Testing Information in Premarket Submissions” (Ref. 15) discusses the information that should typically be included in test protocols and complete test reports for nonclinical bench performance testing provided in a premarket submission. We note that in cases where a requester is appropriately declaring conformity with a voluntary consensus standard that FDA has recognized pursuant to section 514(c) of the FD&C Act (21 U.S.C. 360d(c)) to meet applicable requirements, it may not be necessary to submit complete test reports with respect to those requirements. In these cases, the requester may submit a statement of omission for this information in the De Novo request in accordance with § 860.220(c). However, consistent with section 514(c)(3)(B) of the FD&C Act, FDA may request, at any time, the data or information relied on by a person to make a declaration of conformity with respect to a recognized standard. See FDA's guidance “Appropriate Use of Voluntary Consensus Standards in Premarket Submissions for Medical Devices” (Ref. 11) for more information regarding use of declarations of conformity in premarket submissions.

FDA disagrees with modifying § 860.220(a)(15)(iii) to specifically require submission of a clinical investigation report. This provision already describes the supporting information required regarding the results of each clinical investigation, and in our experience, there can be significant variability in the types of information included in “reports” prepared for clinical investigations. If some or all of the information required under § 860.220(a)(15)(iii) is included in a separate clinical investigation report, the requester may include the report in its De Novo request to satisfy those requirements.

(Comment 41) A comment asks FDA to revise the “other information” provision (§ 860.220(a)(16), this final rule renumbers proposed § 860.234(a)(16) as § 860.220(a)(16)) to limit the information required in the bibliography of all published reports not submitted under the technical sections of the De Novo request (§ 860.220(a)(15), this final rule renumbers proposed § 860.234(a)(15) as § 860.220(a)(15)) to those “necessary to support the safety or effectiveness of the device” because the commenter asserts such reports should be limited to those needed to establish the device's proposed classification, its probable risk, and its probable benefit.

(Response 41) We do not agree with limiting the bibliography required under § 860.220(a)(16) to that information necessary to support the device's safety or effectiveness. Paragraph § 860.220(a)(16)(i) (this final rule renumbers proposed § 860.234(a)(16)(i) as § 860.220(a)(16)(i)) requires that the requester submit a bibliography of all adverse or supportive published reports, other than those submitted in greater detail in the technical sections of the De Novo request, that are known to or should reasonably be known to the requester and that concern the safety and effectiveness of the device. The commenter's proposed revision would eliminate the requirement to include adverse published reports that may call into question the safety or effectiveness of the device at issue. However, such adverse reports may be important to FDA's assessment of the probable benefits and risks of the device and affect the Agency's classification determination.

(Comment 42) A comment supports the requirement to provide a sample of the device, if requested by FDA (§ 860.220(a)(17), this final rule renumbers proposed § 860.234(a)(17) as § 860.220(a)(17)) because it improves transparency. Other comments request that FDA eliminate the language indicating that the Agency may “test” one or more of the devices because FDA has traditionally relied on testing by the manufacturer. Another commenter indicated that while providing samples may be appropriate for a high-risk device likely to be reviewed in a PMA, it is unclear that samples are necessary for devices reviewed through the De Novo pathway.

(Response 42) FDA disagrees with the comments that suggest limiting the sample requirement and agrees with the comment that the request for samples improves transparency. In many cases, FDA relies on descriptions of a device and testing performed by manufacturers to evaluate safety and effectiveness. However, there are some situations in which FDA would request a sample of a device reviewed through the De Novo pathway because FDA needs to see or test the device to understand the device and determine if general or general and special controls are sufficient to reasonably assure safety and effectiveness of the device and device type. Examples of the situations where a device sample may be requested by FDA for examination or testing include devices intended for use by a lay person that previously have been marketed for use by a physician or other experienced healthcare professional, and devices with novel, complex designs that are difficult to assess solely through written description and/or engineering drawings.

(Comment 43) A comment supports the proposed requirement that a De Novo request include “[l]abels, labeling, and advertisements sufficient to describe the device, its intended use, and the directions for its use” (§ 860.220(a)(18), this final rule renumbers proposed § 860.234(a)(18) as § 860.220(a)(18)) because this requirement improves transparency. Other commenters propose limiting the requirement to not include advertisements because the commenters state advertisements are outside the scope of a class I and class II device review.

(Response 43) FDA agrees that the requirement to submit labels, labeling, and advertisements improves transparency. FDA disagrees that review of advertisements is outside the scope of De Novo request review. Under the proposed provision, only labels, labeling, and advertisements “sufficient to describe the device, its intended use, and the directions for its use” are required, and such information is necessary to determine the device's intended use and its safety and effectiveness for the purposes of classification. See, e.g., § 860.7(b)(2).

(Comment 44) A comment supports the requirement for a requester to provide a list of any required information that is omitted from the De Novo request and a justification for any omission because the commenter states it would ensure completeness of the applicant's research and pre-application evaluations.

(Response 44) FDA agrees that it is beneficial for the requester to provide a statement identifying and justifying the omission of any information required under § 860.220(a) (this final rule renumbers proposed § 860.234(a) as § 860.220(a)) and is finalizing the requirement to provide such a statement in § 860.220(c) (this final rule renumbers proposed § 860.234(c) as § 860.220(c)). However, we wish to clarify that the omissions statement is not required to be in the format of a list, as the comment suggests.

(Comment 45) A comment requests FDA to revise the requirements for incorporation of information in FDA files by reference (§ 860.220(b), this final rule renumbers proposed § 860.234(b) as § 860.220(b)) to permit the requester to file a general authorization allowing another person to submit additional pertinent information. According to the commenter, this would allow De Novo requesters to avoid the need for case-by-case authorization.

(Response 45) FDA disagrees with this comment and believes the commenter misunderstands the circumstances in which FDA requires an authorization. The provision in § 860.220(b) addresses situations in which a De Novo request references information in FDA's files that was submitted by someone other than the requester. For FDA to consider that information as part of the De Novo request, we require a written authorization from the person originally submitting that information to FDA that authorizes the use of the information in the De Novo request. Because the authorizer determines the scope of the authorization, it can be as broad or as limited as the authorizer wants the authorization to be. The comment seems to suggest that the requester should be able to provide authorization for the De Novo request to reference information in FDA's files submitted by others, but the submitters of the data are the ones in a position to authorize references to it.

(Comment 46) A few comments request FDA to revise the requirement to update a pending De Novo request with new information from ongoing or completed studies that may reasonably affect an evaluation of the safety and effectiveness of the device as it becomes available (§ 860.220(d), this final rule renumbers proposed § 860.234(d) as § 860.220(d)) because the commenters assert FDA should allow time for data aggregation and assessment. The comments suggest that FDA should require such information as agreed upon with the De Novo requester or as specified in a protocol.

(Response 46) FDA disagrees with these comments. The comments assume incorrectly that for each ongoing or completed nonclinical and/or clinical study, there exists a protocol that has timeframes for reporting new safety and effectiveness information to FDA or an agreement specifying when new safety and effectiveness information must be submitted to update a pending De Novo request. FDA is also concerned that specifying a set time period for updating the De Novo request would be problematic because the importance of the data required to be reported may vary. For example, FDA would be particularly interested in receiving quickly information that concerns the death of a human subject. Updating a De Novo request in accordance with pre-set periods in a protocol or agreement could also result in FDA making a decision on a De Novo request without key, available safety and effectiveness information. For example, an unplanned review of the safety data could have implications on the statistical validity of a study.

(Comment 47) A comment states the requirements in § 860.230 (this final rule renumbers proposed § 860.245 as § 860.230)) should be moved to FDA's guidance, “Acceptance Review for De Novo Classification Requests” (FDA draft guidance published October 30, 2017). Another comment recommends finalizing FDA's guidance, “Acceptance Review for De Novo Classification Requests,” concurrently with finalizing the rule.

(Response 47) FDA disagrees with this comment because FDA's requirements are based on its statutes and regulations. FDA guidance provides non-binding recommendations. Regulations are necessary because they allow the Agency to enforce the requirements therein. For this reason, we decline to remove the accepting a De Novo request requirements, including those in § 860.230, from this regulation.

FDA's “Acceptance Review for De Novo Classification Requests” guidance was finalized on September 9, 2019 (84 FR 47310) (Ref. 16), so the comment requesting concurrent publication is moot.

(Comment 48) A comment requests FDA to clarify that references to “15 days” signify calendar days because it will enhance De Novo requester planning.

(Response 48) FDA declines to clarify in the codified but confirms that it interprets “15 days” to mean “15 calendar days.” This interpretation is consistent with FDA's final guidance entitled, “Acceptance Review for De Novo Classification Requests” (Ref. 16), which explains that the 15 days are calendar days. It is also consistent with our interpretation of “days” as used in analogous regulations for PMAs and 510(k)s.

(Comment 49) A comment objects to developing a new lexicon for De Novo requests ( i.e., grant or decline) and asks FDA to use the term “approval” because the commenter asserts that CDRH approves both “De Novo devices” and “PMA devices” for marketing based on a determination that they are safe and effective for their intended use.

(Response 49) We disagree with this comment. The term “decline” is language from section 513(f)(2) of the FD&C Act, and FDA believes the term “grant” is appropriate, given that section 513(f)(2) of the FD&C Act addresses a “request for classification.” In addition, FDA does not make identical determinations when approving a PMA or granting a De Novo request. The statutory standards for approval of a PMA include a showing of reasonable assurance that the device is safe and effective (see section 515(d) of the FD&C Act). FDA will grant a De Novo request and classify the device as either class I or class II when the request demonstrates that general controls or general and special controls are adequate to provide reasonable assurance of safety and effectiveness (see section 513(a) and (f)(2) of the FD&C Act).

(Comment 50) To be consistent with section 513(f)(2)(C) of the FD&C Act, a few comments requested that FDA revise the provision regarding publication in the Federal Register of the notice announcing the classification of the device to state that the publication will occur within 30 days of granting the request.

(Response 50) FDA agrees to revise § 860.260(a)(2) (this final rule renumbers proposed § 860.289(a)(2) as § 860.260(a)(2)) to reflect the statutory timeframe for publishing a notice in the Federal Register announcing the classification of a device under section 513(f)(2)(C) of the FD&C Act. We are revising § 860.260(a)(2) accordingly to add the phrase “within 30 days after the issuance of an order granting the De Novo request.” We note that the classification of a device, including any special controls, is effective on the date the order letter is issued granting the De Novo request. Once the De Novo request is granted, the device may serve as a predicate device to which another device can claim substantial equivalence. FDA places copies of such orders on its website.

(Comment 51) A comment on the proposed provisions for declining a De Novo request notes that stating FDA “may issue written notice” declining a request suggests there is an alternative to issuing a written notice and asks FDA to describe the alternative.

(Response 51) FDA intended to outline the grounds for which FDA may decline a De Novo request in proposed § 860.289(b) (this final rule renumbers proposed § 860.289(b) as § 860.260(c) and moves the grounds for which FDA may decline a De Novo request into § 860.260(c)). FDA explained in the preamble to the proposed rule that it was proposing to “decline a De Novo request by issuing a written order to the requester” (83 FR 63127 at 63137). However, FDA is revising paragraph § 860.260(b) and (c) accordingly to clarify this point.

(Comment 52) A comment asks FDA to delete the entire paragraph § 860.260(c) (this final rule renumbers proposed § 860.289(b) as § 860.260(c) and moves the grounds for which FDA may decline a De Novo request into § 860.260(c)) on declining a De Novo request because the commenter states the paragraph exceeds the appropriate bases for denial of a De Novo request, which the commenter identifies as the device is inappropriate for classification into class I or class II, or there is a legally marketed predicate device.

(Response 52) FDA disagrees with this comment. Section 860.260(c)) (this final rule renumbers proposed § 860.289(b) as § 860.260(b) and moves the grounds for which FDA may decline a De Novo request into § 860.260(c)) explains FDA's interpretation and implementation of the statutory grounds for declining a De Novo request, which does not rely upon only section 513(f)(2)(A)(iv) of the FD&C Act. For example, if a product is not a device within the meaning of section 201(h) of the FD&C Act or a combination product as defined at § 3.2(e) (21 CFR 3.2(e)), then FDA may decline to grant the De Novo request.

As noted in the proposed rule (83 FR 63127 at 63137), FDA generally intends to decline a De Novo request for a combination product that does not have a device primary mode of action—(see § 3.2(m)). However, a De Novo request may be appropriate, for example, for the device constituent part of such a combination product if the constituent parts of the combination product are to be distributed separately (see § 3.2(e)(3) through (4)), and the other constituent part (drug or biological product) of the combination product is to be marketed under its own, separate application ( i.e., abbreviated new drug application, NDA, or biologics license application).

(Comment 53) A few comments request that FDA delete the entire paragraph on declining a De Novo request because the device labeling does not comply with parts 801 and 809 (21 CFR parts 801 and 809) because the commenters state it is outside the scope of the De Novo classification process to deny classification based on the device's labeling.

(Response 53) FDA disagrees with these comments. Parts 801 and 809 are general controls, and whether the device complies with general controls is necessary to determine whether it is of low to moderate risk for the purposes of classification. FDA may decline a De Novo request if it determines that the device submitted is not of low to moderate risk, or that general controls would be inadequate to control the risk and special controls to mitigate the risks cannot be developed. Whether the device's labeling complies with the requirements in parts 801 and 809 is necessary to determine which regulatory controls are appropriate for the new device type class. The device's labeling compliance with parts 801 and 809 is also necessary to determine the device's safety and effectiveness for the purposes of classification.

(Comment 54) A comment requests FDA to revise the basis for declining a De Novo request set forth in § 860.260(c)(8) (this final rule renumbers proposed § 860.289(b)(8) as § 860.260(c)(8)) to specify that a request may only be declined when certain nonclinical studies within the scope of part 58 are not conducted in compliance with those regulations. The commenter asserts that many nonclinical studies are outside the scope of part 58.

(Response 54) FDA agrees that a De Novo request may include nonclinical studies that are not subject to part 58, as we explained in Response 38. FDA would not decline a De Novo request on the basis that a nonclinical study failed to comply with part 58, if that study did not fall within the scope of studies that are subject to part 58. However, FDA is revising § 860.260(c)(8) to make this clearer.

(Comment 55) A comment requests that FDA revise the paragraph on declining a De Novo request (§ 860.260(c)(10)(i), this final rule renumbers proposed § 860.289(b)(10)(i) as § 860.260(c)(10)(i)) because the commenter states that failure to follow a protocol is not, per se, a reason to decline a De Novo request.

(Response 55) FDA disagrees with the commenter's suggestion to revise the provision on declining a De Novo request so that it does not include failure to follow a protocol. The failure to follow a protocol may cause the resulting data to be incomplete, invalid, or otherwise unreliable, and may be a sufficient reason to decline a De Novo request. Protocols typically discuss the objectives, design, methodology, and organization of a clinical or nonclinical study. Significant deviations from a study protocol may lead to a study that, as conducted, does not produce valid scientific evidence. Alternatively, data from a study that was terminated early may not provide sufficient information to support a reasonable assurance of safety or effectiveness.

(Comment 56) A comment objects to the placement of the paragraph on determining safety and effectiveness as one of the last paragraphs in subpart D because the commenter states FDA should do both a classification determination and a determination of the device's safety and effectiveness.

(Response 56) FDA does not agree with the comment's premise that the location of the paragraph in subpart D is an indication of the paragraph's importance. The FD&C Act provides that the De Novo process is both a classification and a marketing authorization grant for the particular device (section 513(f)(2) of the FD&C Act). The classification determination and “determination of safety and effectiveness” are necessary to make a determination regarding the device which is the subject of the De Novo request.

(Comment 57) A comment requests that FDA clarify that for the summary of risk and mitigations and the risk-benefit discussion required to be submitted in the De Novo request, the summary and the risk-benefit discussion should describe the incremental risk and benefits posed by a combination product because the commenter states the content requirements should reflect that the De Novo classification process is available for combination products.

(Response 57) FDA believes that inclusion of this language is unnecessary as we consider section 503(g)(3) of the FD&C Act to be clear regarding its applicability to combination products that include an approved constituent part as defined in section 503(g)(3) of the FD&C Act. In addition, the statute is clear that these considerations apply to such combination products submitted under sections 515, 510(k), and 513(f)(2) of the FD&C Act. We do not believe inclusion of this language is necessary to provide further clarity beyond what is stated in the statute. Combination products have distinct premarket review and approvability considerations arising from combining a drug, device, and/or biological product, which retain their regulatory identities when they become constituent parts of combination products. Combination products are also a separate legal category of medical products, distinct from biological products, devices, and drugs. General principles of premarket review and regulation for combination products include application of a risk-based approach and coordination among Centers for their review and regulation. Review of combination products in a De Novo classification request would consider safety and effectiveness questions relating to the combination product as a whole, each constituent part, interactions between them, and user/patient interaction with the product.

(Comment 58) A comment asks FDA to clarify that while a De Novo request may be appropriate for the device constituent part of a combination product where the constituent parts of the combination product are distributed separately ( e.g., § 3.2(e)(3) through (4)), and the non-device (drug or biologic) constituent part is to be marketed under its own, separate application, the non-device constituent part must be appropriately labeled for use with the device constituent part ( i.e., approved at doses, concentrations, routes of administration, indications, and adequate instructions for use). The commenter notes that if the non-device constituent part is not appropriately labeled for use with the device constituent part, then FDA would cause the non-device constituent party to be adulterated or misbranded.

(Response 58) FDA does not agree that clarification is necessary. Per § 3.2(e), the labeling of the constituent parts of such “cross-labeled” combination products specify use only with the other approved individually specified constituent part(s), which are required to achieve the intended use, indication, or effect. The labeling for the combination product is comprised of the labeling for each constituent part.

(Comment 59) A comment requests that FDA consider “co-packaged” combination products (per § 3.2(e)(2)) that have a device primary mode of action as eligible for the De Novo classification process.

(Response 59) Regarding inclusion of co-packaged combination products as defined in § 3.2(e)(2) that have a device primary mode of action, FDA does not believe further clarification is warranted in the codified because § 860.260 (this final rule renumbers proposed § 860.289 as § 860.260) explains that we are using the definition of combination products in § 3.2(e)(1) through (4). Co-packaged combination products as defined in § 3.2(e)(2) that have a device primary mode of action are part of this definition and eligible for the De Novo classification process.

This final rule will become effective 90 days after the date of publication in the Federal Register .

We have examined the impacts of the final rule under Executive Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 13563 direct us to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). We believe that this final rule is a significant regulatory action as defined by Executive Order 12866.

The Regulatory Flexibility Act requires us to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because small entities affected by this final rule would incur very low one-time costs to read and understand the rule, we certify that the final rule will not have a significant economic impact on a substantial number of small entities.

The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires us to prepare a written statement, which includes an assessment of anticipated costs and benefits, before issuing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $158 million, using the most current (2020) Implicit Price Deflator for the Gross Domestic Product. This final rule would not result in an expenditure in any year that meets or exceeds this amount.

The final rule will clarify the De Novo classification process for certain medical devices to obtain marketing authorization as class I or class II devices, rather than remaining automatically designated as class III devices under the FD&C Act. In addition, the final rule will clarify and create a more efficient De Novo classification process by specifying: (1) What medical devices are eligible for the De Novo classification process; (2) what information manufacturers must provide in De Novo requests; and (3) how to organize this information. By clarifying and making the process more efficient, the final rule could reduce the time and costs associated with reviewing De Novo requests. Moreover, the final rule will allow us to refuse to accept inappropriate and deficient De Novo requests and require us to protect the confidentiality of certain data and information submitted with a request until we issue an order granting the request.

Industry will incur costs to read and understand this final rule. We estimate that the annualized costs over 10 years would range from $0.01 million to $0.17 million at a 7 percent discount rate, with a primary estimate of $0.09 million. We estimate that the annualized costs over 10 years at a 3 percent discount rate would range from $0.01 million to $0.15 million, with a primary estimate of $0.08 million.

We have developed a comprehensive Economic Analysis of Impacts that assesses the impacts of the final rule. The full analysis of economic impacts is available in the docket for this final rule (Ref. 20) and at https://www.fda.gov/about-fda/reports/economic-impact-analyses-fda-regulations.

We have determined under 21 CFR 25.34(b) and (f) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This final rule contains information collection provisions that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3521). The title, description, and respondent description of the information collection provisions are shown in the following paragraphs with an estimate of the annual reporting burden. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing each collection of information.

Title: Medical Device De Novo Classification Process (OMB Control Number 0910-0844)—Revision.

Description: This final rule implements the medical device De Novo classification process under section 513(f)(2) of the FD&C Act, which provides a pathway for certain new types of devices to obtain marketing authorization as class I or class II devices, rather than remaining automatically designated as a class III device, which would require premarket approval under the postamendments device classification section of the FD&C Act (section 513(f)(1)).

On October 30, 2017, FDA issued a final guidance (De Novo Program guidance) (Ref. 5) to provide recommendations on the process for the submission and review of a De Novo request. The information collections associated with the guidance are approved under OMB control number 0910-0844. We provide below a revised burden estimate for the De Novo classification process as described in this final rule.

Section 860.200 (this final rule renumbers proposed § 860.201 as § 860.200) explains the purpose of the De Novo Classification regulations and provides the applicability of a De Novo request submission. Sections 860.210 and 860.220 (this final rule renumbers proposed § 860.223 and § 860.234 as § 860.210 and § 860.220) describe the format and content, respectively, of a De Novo request. Section 860.230 (this final rule renumbers proposed § 860.245 as § 860.230) describes the conditions under which FDA may refuse to accept a De Novo request. Section 860.240(b) (this final rule renumbers proposed § 860.256(b) as § 860.240(b)) provides for supplemental, amendatory, or additional information for a pending De Novo request. Section 860.250(a)(4) (this final rule renumbers proposed § 860.267(a)(4) as § 860.250(a)(4)) provides that a requester may submit a written notice to FDA that the De Novo request has been withdrawn.

Description of Respondents: Respondents to the information collection are medical device manufacturers seeking to market medical device products that have been automatically designated as class III under section 513(f)(1) of the FD&C Act.

The information collection request (ICR) previously approved for the De Novo classification process (OMB control number 0910-0844), includes separate information collections (ICs) for De Novo requests submitted under section 513(f)(2)(i) of the FD&C Act (estimated 100-hour burden per response) and those submitted under section 513(f)(2)(ii) (estimated 180-hour burden per response), with burden estimates further separated by those sent to CDRH and those sent to the Center for Biologics Evaluation and Research.

For administrative efficiency, in this ICR revision, we are consolidating the separate ICs for requests submitted under section 513(f)(2)(i) or (ii) of the FD&C Act into a single IC for all De Novo requests submitted to FDA. Therefore, this final rule simply provides a burden estimate for all De Novo requests without distinguishing between those submitted under 513(f)(2)(i) or (ii) of the FD&C Act. This estimate includes estimated burdens associated with the initial request (purpose and applicability in § 860.200), format and content (§ 860.210 and § 860.220), supplements and amendments (§ 860.240(b)), and time to ensure that all the format and content requirements are met before submission (§ 860.230). Based on our recent experience with the De Novo Program, FDA estimates that the average burden per response for a De Novo request is 182 hours. Additionally, we adjusted the estimated number of respondents based on updated data.

The estimated burden for § 860.230 includes 2 hours per response for manufacturers to review their De Novo request for compliance with the acceptance criteria listed in § 860.230 to determine if it is complete and to complete the checklists recommended in the guidance “Acceptance Review for De Novo Classification Requests” (Ref.16). The information collections contained in the guidance, including 2 hours for review of the De Novo request for completeness and the checklists, were approved by OMB since publication of the proposed rule.

We estimate that the average burden per response for written notice of withdrawal of a De Novo request, as described in § 860.250(a)(4), is 10 minutes (0.17 hours). The burden table in the proposed rule erroneously listed 10 hours, rather than 10 minutes, for the average burden per response. We have corrected the error. The average burden per response is based on estimates by FDA administrative and technical staff who are familiar with the requirements for submission of a De Novo request (and related materials), have consulted and advised manufacturers on submissions, and have reviewed the documentation submitted. We expect that we will receive approximately five notices of withdrawal per year. There is no change to the currently approved burden estimate for withdrawal of a De Novo request.

These adjustments resulted in a 1,647-hour increase to the previously approved total burden estimate.

We received several comments related to the proposed rule. Descriptions of the comments on the proposed rule and FDA's responses are provided in section V of this final rule. Comments and responses related to the provisions that underlie the information collection are described in the following sections: section V.B, regarding general comments; section V.D, De Novo request information disclosure; section V.F, regarding definitions; section V.G, regarding De Novo request format; section V.H, regarding De Novo request content; section V.I, regarding criteria for accepting a De Novo request; section V.J, regarding criteria for granting or declining a De Novo request; and section V.K, regarding availability of the De Novo classification process for combination products. We have not made changes to the estimated burden as a result of the comments.

The estimate of the annual reporting burden provided in the proposed rule included printing and shipping for the complete paper submission and eCopy. Under § 860.210 of the final rule, each De Novo request must be provided as a single version in electronic format. Therefore, we have adjusted the operating and maintenance cost in the final rule to include the cost of the eCopy and shipping of the eCopy.

The cost per eCopy (CDs, DVDs, and flash drives) ranges from $0.25 to $2.50 per eCopy. All forms of eCopy media cost roughly $0.22 to ship. We estimate the average cost per eCopy, plus shipping, for a De Novo request or a request for withdrawal to be $1.30 per submission.

The annual cost estimate for De Novo requests is $88 (68 submissions × $1.30) (rounded). The annual cost estimate for requests for withdrawal is $7 (5 requests × $1.30) (rounded). Therefore, we estimate the total annual operating and maintenance costs of this information collection to be $95. This is a decrease of $7,188 to the currently approved total annual operating and maintenance cost estimate.

This final rule also refers to previously approved collections of information. These collections of information are subject to review by OMB under the PRA. The collections of information in the guidance entitled “De Novo Classification Process (Evaluation of Automatic Class III Designation)” (Ref. 5) have been approved under OMB control number 0910-0844; the collections of information in the guidance entitled “Requests for Feedback and Meetings for Medical Device Submissions: The Q-Submission Program—Guidance for Industry and Food and Drug Administration Staff” (Ref. 13) have been approved under OMB control number 0910-0756; the collections of information in the guidances entitled “Guidance for Industry and Food and Drug Administration Staff—User Fees for 513(g) Requests for Information” (Ref. 17) and “FDA and Industry Procedures for Section 513(g) Requests for Information under the Federal Food, Drug, and Cosmetic Act—Guidance for Industry and Food and Drug Administration Staff” (Ref. 18) have been approved under OMB control number 0910-0705; and the collections of information in the guidance entitled “Emergency Use Authorization of Medical Products and Related Authorities” (Ref. 19) have been approved under OMB control number 0910-0595. The collections of information in Title 21 of the Code of Federal Regulations (CFR) are approved under the following OMB control numbers: part 3 under 0910-0523; parts 50 and 56 under 0910-0130; part 54 under 0910-0396; part 58 under 0910-0119; parts 801 and 809 under 0910-0485; part 807, subpart E, under 0910-0120; part 812 under 0910-0078; part 814, subparts A through E under 0910-0231; part 814, subpart H under 0910-0332; part 820 under 0910-0073; part 860, subpart C under 0910-0138.

The information collection provisions in this final rule have been submitted to OMB for review as required by section 3507(d) of the Paperwork Reduction Act of 1995.

Before the effective date of this final rule, FDA will publish a notice in the Federal Register announcing OMB's decision to approve, modify, or disapprove the information collection provisions in this final rule. An Agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

We have analyzed this final rule in accordance with the principles set forth in Executive Order 13132. We have determined that the rule does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, we conclude that the rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required.

We have analyzed this rule in accordance with the principles set forth in Executive Order 13175. We have determined that the rule does not contain policies that would have a substantial direct effect on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. Accordingly, we conclude that the rule does not contain policies that have tribal implications as defined in the Executive Order and, consequently, a tribal summary impact statement is not required.

The following references are on display in the Dockets Management Staff (see ADDRESSES ) and are available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; they are also available electronically at https://www.regulations.gov. FDA has verified the website addresses, as of the date this document publishes in the Federal Register , but websites are subject to change over time.

Therefore, under the Federal Food, Drug, and Cosmetic Act, and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 860 is amended as follows:

On April 13, 1968, at 33 FR 5765, the Federal Mediation and Conciliation Service (FMCS) published a final rule entitled “Outside employment, business activities, and interests.” This final rule implemented ethics regulations concerning outside activities.

On August 7, 1992, at 57 FR 35042, the Office of Government Ethics (OGE) published a rule “Supplemental Agency Regulations” requiring Federal agencies creating supplemental ethics regulations to submit such regulations to OGE for concurrence and joint issuance within title 5 of the Code of Federal Regulations.

In accordance with 5 CFR 2635.105, FMCS is working jointly with OGE to develop new supplemental agency regulations to be published by OGE within title 5 of the Code of Federal Regulations. Therefore, FMCS is issuing this final rule, which rescinds the current rule on outside employment, business activities, and interests within title 29 of the Code of Federal Regulations.

FMCS has determined that this rule is suitable for final rulemaking. The revisions to FMCS' policies and requirements surrounding outside activities are purely internal matters of agency management, as well as the agency's procedure, and practice. Accordingly, FMCS is not required to engage in a notice and comment process to issue this rule under the Administrative Procedures Act, See U.S.C. 553(a)(2), 553(b)(A). Furthermore, because this rule is procedural rather than substantive, the normal requirement of 5 U.S.C. 553(d) that a rule not be effective until at least 30 days after publication in the Federal Register is inapplicable. FMCS also finds good cause to provide an immediate effective date for this rule because it imposes no obligations on parties outside the Federal Government and therefore no advance notice is required to enable employers or other private parties to come into compliance.

For the reasons discussed in the preamble, and under the authority 29 U.S.C. 172 of Taft Harley Act of 1947, and 5 U.S.C. 7301, FMCS amends 29 CFR chapter XII as follows:

On August 23, 2021, the Coast Guard published a final rule titled “Drawbridge Operation Regulation; New Jersey Intracoastal Waterway, Point Pleasant, NJ” (86 FR 46966). This final rule amended 33 CFR 117.733. However, amendatory instruction number 2.c. incorrectly redesignated seven paragraphs into only six paragraphs.

Accordingly, 33 CFR part 117 is corrected by making the following correcting amendments:

This is a summary of the Commission's document, Auction 111 Procedures Public Notice, in AU Docket No. 21-284; DA 21-1176, released on September 21, 2021. The complete text of this document, including attachments and any related document, is available on the Commission's website at http://www.fcc.gov/auction/111 or by using the search function for on the Commission's Electronic Comment Filing System (ECFS) web page at www.fcc.gov/ecfs. Alternative formats are available to persons with disabilities by sending an email to FCC504@fcc.gov or by calling the Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

1. By the Auction 111 Procedures Public Notice, the Office of Economics and Analytics (OEA) and the Media Bureau (MB) establish the procedures to be used for Auction 111, a closed auction of construction permits for new or modified low power television (LPTV) stations and TV translator stations (collectively referred to as LPTV/translator stations). Auction 111 is a closed auction; only those parties listed in Attachment A to the Auction 111 Procedures Public Notice are eligible to file applications to participate in Auction 111 and to complete the remaining steps to become qualified to bid.

2. Auction 111 will resolve groups of pending mutually exclusive (MX) engineering proposals for up to 17 new or modified LPTV/translator station construction permits. The MX groups and engineering proposals listed in Attachment A to the Auction 111 Procedures Public Notice consist of applications for new LPTV/translator stations, or major changes to existing stations, that were accepted on a first-come, first-served basis ( i.e., rolling one-day windows), pursuant to 47 CFR 74.787(a)(3) and displacement relief applications filed pursuant to a special filing window for eligible LPTV/translator stations displaced by the broadcast television spectrum incentive auction (Auction 1000). Any LPTV/translator station applications for new facilities, major changes to existing facilities, or displacement relief that are mutually exclusive with one another must be resolved via the Commission's part 1 and part 73 competitive bidding rules.

3. In 2009, MB began accepting applications for new rural digital LPTV/translator stations on a limited basis and then later froze those filings. All but one of the MX groups listed in Attachment A to the Auction 111 Procedures Public Notice consist of applications for new or modified rural digital LPTV/translator stations that were submitted on the first day that MB began accepting such applications. The remaining MX group listed in Attachment A to the Auction 111 Procedures Public Notice consists of two displacement relief applications filed pursuant to a special displacement application filing window opened in 2018 by the Incentive Auction Task Force and MB for eligible licensees and permittees of LPTV/translator stations displaced by Auction 1000.

4. In order to facilitate resolution of pending mutually exclusive LPTV/translator station applications before initiating competitive bidding procedures, and given the passage of time since the applications were filed, MB announced that it would withhold action on certain MX applications for new or modified LPTV/translator stations, including each application listed in Attachment A to the Auction 111 Procedures Public Notice, from June 1, 2020 to July 31, 2020, in order to provide applicants with an opportunity to resolve mutual exclusivity through settlement or technical modification of their engineering proposals. MB advised each applicant that, absent resolution of its mutual exclusivity, its application would be subject to the Commission's competitive bidding procedures.

5. On July 9, 2021, OEA and MB released the Auction 111 Comment Public Notice, 86 FR 37972, July 19, 2021, seeking comment on competitive bidding procedures to be used in Auction 111 to resolve the applications that remained MX after this settlement period. OEA and MB received no comments in response to the Auction 111 Comment Public Notice. In the Auction 111 Procedures Public Notice, OEA and MB resolved all open issues raised in the Auction 111 Comment Public Notice. Auction 111 will proceed pursuant to the procedures described in the Auction 111 Procedures Public Notice.

6. Other Commission rules and decisions provide the underlying authority for the procedures OEA and MB adopted for Auction 111. Among other things, prospective applicants should familiarize themselves with the Commission's general competitive bidding rules, including recent amendments and clarifications thereto, as well as Commission decisions regarding competitive bidding procedures, application requirements, and obligations of Commission licensees. Applicants should also familiarize themselves with the Commission's rules relating to the LPTV and TV translator services, as well as Commission orders concerning competitive bidding for broadcast construction permits. Applicants must also be thoroughly familiar with the procedures, terms and conditions contained in the Auction 111 Procedures Public Notice and any future public notices that may be released in this proceeding or that relate to the construction permits being offered in Auction 111 or the LPTV/translator services.

7. The terms contained in the Commission's rules, relevant orders, and public notices are not negotiable. The Commission may amend or supplement the information contained in its public notices at any time and will issue public notices to convey any new or supplemental information to applicants. Pursuant to the Commission's rules, OEA and MB also retain the authority to implement further procedures during the course of this auction. It is the responsibility of all applicants to remain current with all Commission rules and with all public notices pertaining to Auction 111.

8. Attachment A to the Auction 111 Procedures Public Notice lists the pending applications for LPTV/translator station construction permits that will be assigned through Auction 111 unless the applicants resolve their mutual exclusivity by entering into settlement agreements or making minor amendments to their pending applications before the deadline for filing an application to participate in the auction (FCC Form 175), referred to as a short-form application. Only the LPTV/translator station applicants listed in Attachment A to the Auction 111 Procedures Public Notice are eligible to file a short-form application for Auction 111. An applicant listed in Attachment A to the Auction 111 Procedures Public Notice may become qualified to bid in Auction 111 only if it complies with the auction filing, qualification, and payment requirements described in the Auction 111 Procedures Public Notice, and otherwise complies with applicable rules, policies, and procedures. Each listed applicant may become a qualified bidder only for those construction permits specified for that applicant in Attachment A to the Auction 111 Procedures Public Notice. As noted in the Auction 111 Comment Public Notice, each of the engineering proposals within each MX group are directly mutually exclusive with one another; therefore, no more than one construction permit will be awarded through Auction 111 for each MX group identified in Attachment A to the Auction 111 Procedures Public Notice.

9. A copy of the Auction 111 Procedures Public Notice has been sent by email and overnight delivery to the contact address listed on each LPTV/translator station application listed in Attachment A of the Auction 111 Procedures Public Notice. Future public notices in this proceeding may be provided directly to each applicant listed in Attachment A at this contact address as well. Each applicant is obligated to maintain the accuracy of this information pursuant to 47 CFR 1.65. Each party that is eligible to file a short-form application in Auction 111 should make sure that the contact address provided in its LPTV/translator station application is accurate and is a location capable of accepting packages. After the deadline for filing short-form applications (FCC Form 175) to participate in Auction 111, Auction 111-related materials will be sent to auction applicants at the contact addresses in their short-form applications. These addresses should also be locations that are capable of accepting packages that require signatures.

10. Section 73.3572(b) of the Commission's rules prohibits the transfer or assignment of an application for a new LPTV/translator station construction permit. Any change in ownership to an applicant for a new LPTV/translator station construction permit listed in Attachment A to the Auction 111 Procedures Public Notice that has resulted in a change in control of the applicant, or a situation where the original party or parties to the application do not retain more than 50 percent ownership interest in the application as originally filed, is considered a major amendment to the application and will result in the application being considered newly filed. If the LPTV/translator station application is considered newly-filed, the applicant will not be eligible to file a short-form application for Auction 111 and its pending application will be dismissed.

11. In accordance with the Commission's rules, the LPTV/translator station applicants listed in Attachment A to the Auction 111 Procedures Public Notice may withdraw or make minor amendments to their pending LPTV/translator station applications or enter into legal or engineering settlement agreements until 6:00 p.m. ET on November 9, 2021, the deadline for filing short-form applications in Auction 111. As mentioned in the Auction 111 Comment Public Notice, if such actions (1) are submitted prior to the short-form application filing deadline, (2) are fully in accordance with the Communications Act of 1934, as amended (the Act) and the Commission's rules, as determined by Commission staff, and (3) completely resolve the mutual exclusivity, then the subject MX group will be removed from Auction 111 and the remaining engineering proposal(s) will be processed under standard licensing procedures. Additional details regarding making filings to resolve mutual exclusivity prior to the short-form application filing deadline are provided below.

12. Shortly after the short-form application filing deadline, OEA and MB will release a public notice identifying the remaining mutually exclusive applications that will be resolved through competitive bidding in Auction 111. As provided in 47 CFR 73.5002(d), these mutually exclusive applicants will then be given one final limited opportunity to resolve mutual exclusivity by the filing of technical amendments, dismissal requests, and requests for approval of universal settlements. Due to the prohibited communications rule, which starts at the short-form application filing deadline, applicants in Auction 111 will not be able to communicate with each other for the purpose of resolving conflicts outside of this limited settlement period. As noted in the Auction 111 Comment Public Notice, under the Commission's established precedent, once two or more short-form applications are accepted for an MX group, mutual exclusivity exists for the relevant construction permit for auction purposes. Unless the mutual exclusivity is resolved during this limited settlement opportunity, an applicant in Auction 111 cannot obtain a construction permit without placing a bid, even if no other auction applicant for that particular construction permit becomes qualified to bid or in fact places a bid.

13. The parties listed in Attachment A to the Auction 111 Procedures Public Notice may avoid resolving their mutual exclusivity through competitive bidding by instead resolving their mutual exclusivity, prior to the short-form application filing deadline, by means of requests to dismiss the pending LPTV/translator station applications, unilateral engineering amendments to such applications, legal settlement, or engineering settlement. Any unilateral amendments or amendments pursuant to a settlement agreement made to the pending LPTV/translator station applications must be minor, as defined by the applicable rules, and must not create new mutual exclusivities or application conflicts. Any legal or engineering settlement agreements must be filed with the Commission for approval and must include the documentation required by 47 CFR 73.3525. All amendments to pending applications and any requests for approval of settlement agreements, as well as accompanying documentation, must be submitted by filing an amended FCC Form 2100—Schedule C in the Media Bureau's Licensing and Management System (LMS) by 6:00 p.m. ET on November 9, 2021. OEA and MB encourage the parties listed in Attachment A to the Auction 111 Procedures Public Notice that are interested in resolving their mutual exclusivity to initiate and complete negotiations, and make any necessary filings, well ahead of the short-form application filing deadline. Applicants, however, should avoid both entering into a settlement agreement for a construction permit prior to the short-form application deadline and filing a short-form application covering that same construction permit. Such a situation could raise issues with regard to the applicant's compliance with the prohibited communications rule.

14. As mentioned above, if a unilateral engineering amendment or legal or engineering settlement (1) is submitted for approval in accordance with the procedures described above by 6:00 p.m. ET on November 9, 2021, (2) is fully in accordance with the Act and the Commission's rules, as determined by Commission staff, and (3) completely resolves the mutual exclusivity, then the subject MX group will be removed from Auction 111 and the remaining engineering proposal(s) will be processed under standard licensing procedures. If no such filing is made, and therefore the engineering proposals in an MX group remain mutually exclusive as of the short-form application filing deadline, then each applicant in that MX group must timely file a short-form application in order to avoid dismissal of its pending LPTV/translator station application. Specifically, MB will dismiss the mutually exclusive long-form application of any party eligible to participate in Auction 111 that fails to submit a short-form application. Accordingly, if only one member of an MX group submits a short-form application, and thus all other long-form applications in that MX group are dismissed, that short-form application is not mutually exclusive for auction purposes and the relevant construction permit will not be included in Auction 111. In that case, the engineering proposal of the party that submitted a short-form application will be treated as a singleton and processed under standard licensing procedures. OEA and MB note that, if an applicant forgoes filing a short-form application pursuant to an agreement with mutually exclusive applicants, such settlement agreement must be submitted to MB for approval. If a party to a settlement agreement files a short-form application, that settlement agreement may need to be disclosed in its short-form application pursuant to 47 CFR 1.2105(a)(2)(viii) or may be a prohibited joint bidding agreement pursuant to 47 CFR 1.2105(a)(2)(ix).

15. A short-form application, or FCC Form 175, provides information that the Commission uses to determine whether the applicant has the legal, technical, and financial qualifications to participate in a Commission auction for licenses or permits. The short-form application is the first part of the Commission's two-phased auction application process. In the first phase, a party seeking to participate in Auction 111 must file a short-form application in which it certifies, under penalty of perjury, that it is qualified to participate. Eligibility to participate in Auction 111 is determined based on an applicant's short-form application and certifications and on the applicant's upfront payment. After bidding closes, in the second phase of the process, each winning bidder in Auction 111 must file an amendment to its pending long-form application listed in Attachment A to the Auction 111 Procedures Public Notice for each permit it wins in the auction.

16. A party seeking to participate in Auction 111 must file an FCC Form 175 electronically via the Auction Application System prior to 6:00 p.m. ET on November 9, 2021, following the procedures prescribed in the FCC Form 175 Instructions. If an applicant claims eligibility for a bidding credit, then the information provided in its FCC Form 175 will be used to determine whether the applicant is eligible for the claimed bidding credit. The Auction 111 Procedures Public Notice describes more fully the information disclosures and certifications required in the short-form application. An applicant that files an FCC Form 175 for Auction 111 will be subject to the Commission's rule prohibiting certain communications. An applicant is subject to the prohibition beginning at the deadline for filing short-form applications—6:00 p.m. ET on November 9, 2021.

17. An Auction 111 applicant bears full responsibility for submitting an accurate, complete, and timely short- form application. Pursuant to the Commission's competitive bidding rules, you must make a series of certifications under penalty of perjury on your FCC Form 175 related to the information provided in your application and your participation in the auction, and you must confirm that you are legally, technically, financially, and otherwise qualified to hold a license. If you fail to make the required certifications in your FCC Form 175 by the filing deadline, then your application will be deemed unacceptable for filing and cannot be corrected after the filing deadline.

18. Submitting an FCC Form 175 (and any amendments thereto) constitutes a representation by the certifying official that you are an authorized representative of the applicant with authority to bind the applicant, that you have read the form's instructions and certifications, and that the contents of the application, its certifications, and any attachments are true and correct. Submitting a false certification to the Commission may result in penalties, including monetary forfeitures, license forfeitures, ineligibility to participate in future auctions, and/or criminal prosecution.

19. Applicants are cautioned that requests for confidential treatment of required information submitted in FCC Form 175 will not be routinely granted because this information bears on each applicant's qualifications. The Commission generally has held that it may publicly release confidential business information where the party has put that information at issue in a Commission proceeding or where the Commission has identified a compelling public interest in disclosing the information. In this regard, the Commission specifically has held that information submitted in support of receiving bidding credits in auction proceedings should be made available to the public.

20. No individual or entity may file more than one short-form application or have a controlling interest in more than one short-form application. If a party submits multiple short-form applications for an auction, then only one application may form the basis for that party to become qualified to bid in that auction.

21. Similarly, and consistent with the Commission's general prohibition on joint bidding agreements, a party generally is permitted to participate in a Commission auction only through a single bidding entity. Accordingly, the filing of applications in Auction 111 by multiple entities controlled by the same individual or set of individuals generally will not be permitted. This restriction applies across all applications, without regard to the construction permits selected. As noted by the Commission in adopting the prohibition on applications by commonly controlled entities, this rule, in conjunction with the prohibition against joint bidding agreements, protects the competitiveness of the Commission's auctions.

22. Additional details regarding certain information required to be submitted in the FCC Form 175 are provided in the Auction 111 Procedures Public Notice. You should also consult the Commission's rules to ensure that all required information is included in your short-form application. To the extent the information in the Auction 111 Procedures Public Notice does not address your specific operating structure, or if you need additional information or guidance concerning the described disclosure requirements, you should review the educational materials for Auction 111 (see the Education section of the Auction 111 website at www.fcc.gov/auction/111 ) and use the contact information provided in the Auction 111 Procedures Public Notice to consult with Commission staff to better understand the information you must submit in your short-form application.

23. An applicant must designate at least one authorized bidder, and no more than three, in its FCC Form 175. The Commission's rules prohibit an individual from serving as an authorized bidder for more than one auction applicant or being listed as an authorized bidder in more than one FCC Form 175 application.

24. Only those parties listed in Attachment A to the Auction 111 Procedures Public Notice are eligible to submit short-form applications and only with regard to the construction permit(s) covered by the party's pending, long-form application(s) listed in Attachment A to the Auction 111 Procedures Public Notice. For each eligible party, the Auction Application System will only display on your FCC Form 175 the construction permits for which you are eligible to apply to bid. You must, however, affirmatively select on your FCC Form 175 the construction permit(s) on which you want to bid. You should carefully review and verify your construction permit selections before the deadline for submitting your FCC Form 175, because permit selections cannot be changed after the initial auction application filing deadline. The FCC auction bidding system will not accept bids on construction permits that were not selected on the bidder's FCC Form 175.

25. An applicant must provide in its FCC Form 175 a brief description of, and identify each party to, any partnerships, joint ventures, consortia or agreements, arrangements, or understandings of any kind relating to the LPTV/TV translator station construction permits being auctioned, including any agreements that address or communicate directly or indirectly bids (including specific prices), bidding strategies (including the specific licenses on which to bid or not to bid), or the post-auction market structure, to which the applicant, or any party that controls or is controlled by the applicant, is a party. In most circumstances, if a party filing a short-form application has entered into a settlement agreement regarding a construction permit listed in Attachment A to the Auction 111 Procedures Public Notice, regardless of whether the party has selected that construction permit on its short-form application or not, that settlement agreement should be identified and briefly described in its FCC Form 175. In connection with the agreement disclosure requirement, the applicant must certify under penalty of perjury in its FCC Form 175 that it has described, and identified each party to, any such agreements, arrangements, or understandings to which it (or any party that controls it or that it controls) is a party. If, after the FCC Form 175 filing deadline, an auction applicant enters into any agreement relating to the licenses being auctioned, then it is subject to these same disclosure obligations. Each applicant must maintain the accuracy and completeness of the information in its pending auction application.

26. For purposes of making the required agreement disclosures on the FCC Form 175, if parties agree in principle on all material terms prior to the application filing deadline, then each party to the agreement that is submitting an auction application must provide a brief description of, and identify the other party or parties to, the agreement on its respective FCC Form 175, even if the agreement has not been reduced to writing. Parties that have not agreed in principle by the FCC Form 175 filing deadline should not describe, or include the names of parties to, the discussions on their applications.

27. The Commission's rules generally prohibit joint bidding and other arrangements involving auction applicants (including any party that controls or is controlled by such applicants). For purposes of the prohibition, a joint bidding arrangement includes any arrangement relating to the construction permits being auctioned that addresses or communicates, directly or indirectly, bidding at the auction, bidding strategies, including arrangements regarding price or the specific construction permits on which to bid, and any such arrangement relating to the post-auction market structure. The general prohibition on joint bidding arrangements excludes certain agreements, including those that are solely operational in nature, as defined in 47 CFR 1.2105(a)(2)(ix)(A)-(C).

28. To implement the prohibition on joint bidding arrangements, the Commission's rules require each applicant to certify in its short-form application that it has disclosed any arrangements or understandings of any kind relating to the licenses being auctioned to which it (or any party that controls or is controlled by it) is a party. The applicant must also certify that it (or any party that controls or is controlled by it) has not entered and will not enter into any arrangement or understanding of any kind relating directly or indirectly to bidding at auction with, among others, any other applicant.

29. Although the Commission's rules do not prohibit auction applicants from communicating about matters that are within the scope of an excepted agreement that has been disclosed in an FCC Form 175, the Commission reminds applicants that certain discussions or exchanges could nonetheless touch upon impermissible subject matters, and that compliance with the Commission's rules will not insulate a party from enforcement of the antitrust laws.

30. Applicants should bear in mind that a winning bidder will be required to disclose in its post-auction amendment to its pending long-form application the specific terms, conditions, and parties involved in any agreement relating to the licenses being auctioned into which it had entered prior to the time bidding was completed. This applies to any settlement agreement, joint venture, partnership, or other agreement, arrangement, or understanding of any kind entered into relating to the competitive bidding process, including any agreements relating to the permits being auctioned that address or communicate directly or indirectly bids (including specific prices), bidding strategies (including the specific permits on which to bid or not to bid), or the post-auction market structure, to which the applicant, or any party that controls or is controlled by the applicant, is a party.

31. Each applicant must comply with the ownership disclosure requirements and provide information required by 47 CFR 1.2105 and 1.2112. Specifically, in completing FCC Form 175, an applicant must fully disclose information regarding the real party or parties-in-interest in the applicant or application and the ownership structure of the applicant, including both direct and indirect ownership interests of 10% or more, as prescribed in 47 CFR 1.2105 and 1.2112. These interest holders may differ from the types of attributable interest holders that are required to be reported by broadcast applicants under part 73 of the Commission's rules in conjunction with licensing and assignment and transfer of facilities or reporting of ownership information, such as insulated interest holders and holders of non-voting stock/equity in the applicant. Each applicant is responsible for ensuring that information submitted in its short-form application is complete and accurate.

32. In certain circumstances, an applicant may have previously filed an FCC Form 602 ownership disclosure information report or filed an auction application for a previous auction in which ownership information was disclosed. The most current ownership information contained in any FCC Form 602 or previous auction application on file with the Commission that used the same FCC Registration Number (FRN) the applicant is using to submit its FCC Form 175 will automatically be pre-filled into certain ownership sections on the applicant's FCC Form 175, if such information is in an electronic format compatible with FCC Form 175. Each applicant must carefully review any ownership information automatically entered into its FCC Form 175, including any ownership attachments, to confirm that all information supplied on FCC Form 175 is complete and accurate as of the application filing deadline. Any information that needs to be corrected or updated must be changed directly in FCC Form 175.

33. Section 310 of the Act requires the Commission to review foreign investment in radio station licenses and imposes specific restrictions on who may hold certain types of radio licenses. In completing FCC Form 175, an applicant is required to disclose information concerning foreign ownership of the applicant. If an applicant has foreign ownership interests in excess of the applicable limit or benchmark set forth in 47 U.S.C. 310(b), then it may seek to participate in Auction 111 only if it has filed a petition for declaratory ruling with the Media Bureau prior to the FCC Form 175 filing deadline. An applicant must certify in its FCC Form 175 that, as of the deadline for filing its application to participate in the auction, the applicant either is in compliance with the foreign ownership provisions of 47 U.S.C. 310 or has filed a petition for declaratory ruling requesting Commission approval to exceed the applicable foreign ownership limit or benchmark in 47 U.S.C. 310(b) that is pending before, or has been granted by, the Commission.

34. The rules prohibiting certain communications set forth in 47 CFR 1.2105(c) and 73.5002(d) and (e) apply to each applicant that files an FCC Form 175 in Auction 111. Section 1.2105(c)(1) of the Commission's rules provides that, subject to specified exceptions, after the deadline for filing a short-form application, all applicants are prohibited from cooperating or collaborating with respect to, communicating with or disclosing, to each other in any manner the substance of their own, or each other's, or any other applicant's bids or bidding strategies (including post-auction market structure), or discussing or negotiating settlement agreements, until after the down payment deadline.

35. An applicant for purposes of this rule includes the officers and directors of the applicant, all controlling interests in the entity submitting the FCC Form 175, as well as all holders of interests amounting to 10% or more of that entity. A party that submits an application becomes an applicant under the rule at the short-form application filing deadline, and that status does not change based on later developments, including failure to become a qualified bidder.

36. The prohibition in 47 CFR 1.2105(c) on certain communications begins at an auction's short-form application filing deadline and ends at the auction's down payment deadline after the auction closes, which will be announced in a future public notice.

37. After the short-form application filing deadline, OEA and MB will announce a limited settlement period of no more than two weeks during which this prohibition may be partially suspended for the purpose of resolving mutual exclusivity through settlements. Outside of this limited settlement period, and until this limited settlement period is announced, the prohibition on certain communications remains in effect.

38. Section 1.2105(c) of the Commission's rules prohibits certain communications between auction applicants, regardless of whether the applicants seek permits in the same geographic area or market. The rule also prohibits any joint bidding arrangement, including arrangements relating to the permits being auctioned that address or communicate, directly or indirectly, bidding at the auction, bidding strategies, including arrangements regarding price or the specific permits on which to bid, and any such arrangements relating to the post-auction market structure. The rule allows for limited exceptions for communications within the scope of any arrangement consistent with the exclusion from the Commission's rule prohibiting joint bidding, provided such arrangement is disclosed on the applicant's auction application. An applicant may communicate pursuant to any pre-existing agreements, arrangements, or understandings relating to the licenses being auctioned that are solely operational or that provide for the transfer or assignment of licenses, provided that such agreements, arrangements, or understandings are disclosed on its application and do not both relate to the permits at auction and address or communicate bids (including amounts), bidding strategies, or the particular permits or licenses on which to bid or the post-auction market structure.

39. In addition to express statements of bids and bidding strategies, the prohibition against communicating in any manner includes public disclosures as well as private communications and indirect or implicit communications. Consequently, an applicant must take care to determine whether its auction-related communications may reach another applicant.

40. Parties subject to 47 CFR 1.2105(c) should take special care in circumstances where their officers, directors, and employees may receive information directly or indirectly relating to any applicant's bids or bidding strategies. Such information may be deemed to have been received by the applicant under certain circumstances. For example, Commission staff have determined that, where an individual serves as an officer or director for two or more applicants, the bids and bidding strategies of one applicant are presumed to be conveyed to the other applicant through the shared officer or director, which creates an apparent violation of the rule.

41. Subject to the limited exceptions described above, 47 CFR 1.2105(c)(1) prohibits applicants from discussing or negotiating settlement agreements and from communicating with specified other parties only with respect to their own, or each other's, or any other applicant's bids or bidding strategies. Moreover, a communication conveying bids or bidding strategies (including post-auction market structure) must also relate to the licenses being auctioned in order to be covered by the prohibition. Thus, the prohibition is limited in scope and does not apply to all communications between or among the specified parties. The Commission consistently has made clear that application of the rule prohibiting communications has never required total suspension of essential ongoing business. Entities subject to the prohibition may negotiate agreements, other than settlement agreements, during the prohibition period, provided that the communications involved do not relate to both: (1) The licenses or permits being auctioned and (2) bids or bidding strategies or post-auction market structure.

42. Accordingly, business discussions and negotiations that are unrelated to settlement agreements for the construction permits in Auction 111 or bidding in Auction 111 and that do not convey information about the bids or bidding strategies of an applicant, including the post-auction market structure, are not prohibited by the rule. Moreover, not all auction-related information is covered by the prohibition. For example, communicating merely whether a party has or has not applied to participate in Auction 111 will not violate the rule. In contrast, communicating, among other things, how a party will participate, including whether or not a party plans to submit an upfront payment and the upfront payment amount, specific bid amounts, and/or whether or not the party is placing bids, would convey bids or bidding strategies and would be prohibited.

43. While 47 CFR 1.2105(c) does not prohibit business discussions and negotiations among auction applicants that are unrelated to the auction, each applicant must remain vigilant not to communicate, directly or indirectly, information that affects, or could affect, bids or bidding strategies. Certain discussions might touch upon subject matters that could convey price or geographic information related to bidding strategies. Such subject areas include, but are not limited to, management, sales, local marketing agreements, and other transactional agreements.

44. OEA and MB caution applicants that bids or bidding strategies may be communicated outside of situations that involve one party subject to the prohibition communicating privately and directly with another such party. For example, the Commission has warned that prohibited communications concerning bids and bidding strategies may include communications regarding capital calls or requests for additional funds in support of bids or bidding strategies to the extent such communications convey information concerning the bids and bidding strategies directly or indirectly. Moreover, the Commission found a violation of the rule against prohibited communications when an applicant used the Commission's bidding system to disclose its bidding strategy in a manner that explicitly invited other auction participants to cooperate and collaborate in specific markets, and it has placed auction participants on notice that the use of its bidding system to disclose market information to competitors will not be tolerated and will subject bidders to sanctions.

45. Likewise, when completing a short-form application, each applicant should avoid any statements or disclosures that may violate 47 CFR 1.2105(c). Applicants also should be mindful that communicating non-public application or bidding information publicly or privately to another applicant may violate 47 CFR 1.2105(c) even though that information subsequently may be made public during later periods of the application or bidding processes.

46. Section 1.2105(c) does not prohibit an applicant from communicating bids or bidding strategies to a third party, such as a consultant or consulting firm, counsel, or lender. The applicant should take appropriate steps, however, to ensure that any third party it employs for advice pertaining to its bids or bidding strategies does not become a conduit for prohibited communications to other specified parties, as that would violate the rule. For example, an applicant might require a third party, such as a lender, to sign a non-disclosure agreement before the applicant communicates any information regarding bids or bidding strategy to the third party. Within third-party firms, separate individual employees, such as attorneys or auction consultants, may advise individual applicants on bids or bidding strategies, as long as such firms implement firewalls and other compliance procedures that prevent such individuals from communicating the bids or bidding strategies of one applicant to other individuals representing separate applicants. Although firewalls and/or other procedures should be used, their existence is not an absolute defense to liability if a violation of the rule has occurred.

47. As the Commission has noted in other broadcast auctions, in the case of an individual, the objective precautionary measure of a firewall is not available. As a result, an individual that is privy to bids or bidding information of more than one applicant presents a greater risk of becoming a conduit for a prohibited communication. Whether a prohibited communication has taken place in a given case will depend on all the facts pertaining to the case, including who possessed what information, what information was conveyed to whom, and the course of bidding in the auction.

48. Applicants may discuss the short-form application or bids for specific permits with the counsel, consultant, or expert of their choice before the short-form application deadline. Furthermore, the same third-party individual could continue to give advice to multiple applicants regarding their applications after the short-form application deadline, provided that no information pertaining to bids or bidding strategies is conveyed to that individual from any of the applicants the individual advises. No person may serve as an authorized bidder for more than one applicant in Auction 111.

49. Applicants also should use caution in their dealings with other parties, such as members of the press, financial analysts, or others who might become conduits for the communication of prohibited bidding information. For example, even though communicating that it has applied to participate in this auction will not violate the rule, an applicant's statement to the press that it intends to stop bidding in an auction could give rise to a finding of a violation of 47 CFR 1.2105. Similarly, an FCC Form 175 applicant's public statement of intent not to place bids during bidding in Auction 111 could also violate the rule.

50. By electronically submitting its FCC Form 175, each applicant in Auction 111 certifies its compliance with 47 CFR 1.2105(c) and 73.5002(d). The mere filing of a certifying statement as part of an application, however, will not outweigh specific evidence that a prohibited communication has occurred, nor will it preclude the initiation of an investigation when warranted. Any applicant found to have violated these communication prohibitions may be subject to sanctions.

51. Section 1.2105(c)(4) requires that any applicant that makes or receives a communication that appears to violate 47 CFR 1.2105(c) must report such communication in writing to the Commission immediately, and in no case later than five business days after the communication occurs. Each applicant's obligation to report any such communication continues beyond the five-day period after the communication is made, even if the report is not made within the five-day period.

52. A party reporting any information or communication pursuant to 47 CFR 1.65, 1.2105(a)(2), or 1.2105(c)(4) must take care to ensure that any report of a prohibited communication does not itself give rise to a violation of 47 CFR 1.2105(c). For example, reporting a prohibited communication through ECFS or another Commission filing system that allows public access to filed materials could violate the rule by communicating prohibited information to other parties covered by the rule.

53. An applicant must file only a single report concerning a prohibited communication and must file that report with the Commission personnel expressly charged with administering the Commission's auctions. This rule is designed to minimize the risk of inadvertent dissemination of information in such reports. Any reports required by 47 CFR 1.2105(c) must be filed consistent with the instructions set forth in the Auction 111 Procedures Public Notice. For Auction 111, such reports must be filed with the Chief of the Auctions Division, OEA, by the most expeditious means available. Any such report should be submitted by email to the Auctions Division Chief at the following email address: auction111@fcc.gov. If you choose instead to submit a report in hard copy, contact Auctions Division staff at auction111@fcc.gov or (202) 418-0660 for guidance.

54. Given the potential competitive sensitivity of information in such a report, a party seeking to report a prohibited communication should consider submitting its report with a request that the report or portions of the submission be withheld from public inspection by following the procedures specified in 47 CFR 0.459. Such parties should coordinate with the Auctions Division staff about the procedures for submitting reports of prohibited communications.

55. Each applicant that is a winning bidder will be required to provide, as part of its amendment to its long-form application, any agreement or arrangement relating to the competitive bidding process that it has entered into and a summary of the specific terms, conditions, and parties involved in that agreement. Such agreements must have been entered into prior to the filing deadline for short-form applications. This disclosure requirement applies to any settlement agreement, bidding consortia, joint venture, partnership, or agreement, understanding, or other arrangement entered into relating to the competitive bidding process, including any agreement relating to the post-auction market structure. Failure to comply with the Commission's rules can result in enforcement action.

56. Regardless of compliance with the Commission's rules, applicants remain subject to the antitrust laws, which are designed to prevent anticompetitive behavior in the marketplace. Compliance with the disclosure requirements of 47 CFR 1.2105(c)(4) will not insulate a party from enforcement of the antitrust laws. For instance, a violation of the antitrust laws could arise out of actions taking place well before any party submits a short-form application. The Commission has cited a number of examples of potentially anticompetitive actions that would be prohibited under antitrust laws: For example, actual or potential competitors may not agree to divide territories in order to minimize competition, regardless of whether they split a market in which they both do business, or whether they merely reserve one market for one and another market for the other.

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

58. To promote the objectives of 47 U.S.C. 309(j) and further its long-standing commitment to the diversification of broadcast facility ownership, the Commission provides a tiered new entrant bidding credit for broadcast auction applicants with no, or very few, other media interests.

59. Applicants that qualify for the new entrant bidding credit are eligible for a bidding credit in this auction that represents the amount by which a bidder's winning bid is discounted. Eligibility for the new entrant bidding credit must be specified in an applicant's short-form application, which establishes that applicant's maximum bidding credit eligibility for Auction 111. The size of a new entrant bidding credit depends on the number of ownership interests in other media of mass communications that are attributable to the bidder-entity and its attributable interest-holders. A 35% bidding credit will be given to a winning bidder if it, and/or any individual or entity with an attributable interest in the winning bidder, has no attributable interest in any other media of mass communications, as defined in 47 CFR 73.5008. A 25% bidding credit will be given to a winning bidder if it, and/or any individual or entity with an attributable interest in the winning bidder, has an attributable interest in no more than three mass media facilities, as defined in 47 CFR 73.5008. No bidding credit will be given if any of the commonly owned mass media facilities serve the same area as the broadcast permit proposed in the auction, as defined in 47 CFR 73.5007(b), or if the winning bidder, and/or any individual or entity with an attributable interest in the winning bidder, has attributable interests in more than three mass media facilities.

60. Bidding credits are not cumulative; qualifying applicants receive either the 25% or the 35% bidding credit, but not both.

61. The interests of the applicant, and of any individuals or entities with an attributable interest in the applicant, in other media of mass communications are considered when determining an applicant's eligibility for the new entrant bidding credit. Attributable interests are defined in 47 CFR 73.3555 and note 2 of that section. In Auction 111, the bidder's attributable interests, and thus, its maximum new entrant bidding credit eligibility, are determined as of the short-form application filing deadline. An applicant intending to divest a media interest or make any other ownership change, such as resignation of positional interests (officer or director) in order to avoid attribution for purposes of qualifying for the new entrant bidding credit, must have consummated such divestment transactions, or have completed such ownership changes, by no later than the FCC Form 175 filing deadline. However events occurring after the short-form application filing deadline, such as the acquisition of attributable interests in media of mass communications, may cause diminishment or loss of the bidding credit and, must be reported immediately.

62. Under broadcast attribution rules, those entities or individuals with an attributable interest in a bidder include: (1) All officers and directors of a corporate bidder; (2) any owner of 5% or more of the voting stock of a corporate bidder; (3) all general partners and limited partners of a partnership bidder, unless the limited partners are sufficiently insulated; and (4) all members of a limited liability company, unless sufficiently insulated.

63. In cases where an applicant's spouse or close family member holds other media interests, such interests are not automatically attributable to the bidder. The Commission decides attribution issues in this context based on certain factors traditionally considered relevant.

64. The eligibility standards for the new entrant bidding credit include attribution of the media interests held by very substantial investors in, or creditors of, an applicant claiming new entrant status. Specifically, the attributable mass media interests held by an individual or entity with an equity and/or debt interest in an applicant shall be attributed to that bidder for purposes of determining its eligibility for the new entrant bidding credit, if the equity and debt interests, in the aggregate, exceed 33% of the total asset value of the applicant, even if such an interest is non-voting.

65. The equity/debt plus (EDP) attribution standard was relaxed to allow for higher investment opportunities in entities meeting the definition of eligible entities, as defined in Note 2(i) of 47 CFR 73.3555. The Commission will allow the holder of an equity or debt interest in the applicant to exceed the above-noted 33% threshold without triggering attribution provided (1) the combined equity and debt in the “eligible entity” is less than 50%; or (2) the total debt in the “eligible entity” does not exceed 80% of the asset value, and the interest holder does not hold any equity interest, option, or promise to acquire an equity interest in the “eligible entity” or any related entity.

66. Generally, media interests will be attributable for purposes of the new entrant bidding credit to the same extent that such other media interests are considered attributable for purposes of the broadcast multiple ownership rules. Attributable interests held by a winning bidder in existing low power television, television translator or FM translator facilities, however, will not be counted among the applicant's other mass media interests in determining its eligibility for a new entrant bidding credit. A medium of mass communications is defined in 47 CFR 73.5008(b). Full service noncommercial educational stations, on both reserved and non-reserved channels, are included among “media of mass communications” as defined in 47 CFR 73.5008(b).

67. In addition to the ownership information required pursuant to 47 CFR 1.2105 and 1.2112, applicants seeking a new entrant bidding credit are required to establish on their short-form applications that they satisfy the eligibility requirements to qualify for the bidding credit. In those cases, a certification under penalty of perjury must be provided in completing the short-form application. An applicant claiming that it qualifies for a 35% new entrant bidding credit must certify that neither it nor any of its attributable interest holders has any attributable interests in any other media of mass communications. An applicant claiming that it qualifies for a 25% new entrant bidding credit must certify that neither it nor any of its attributable interest holders has any attributable interests in more than three media of mass communications, and must identify and describe such media of mass communications.

68. Applicants should note that unjust enrichment provisions apply to a winning bidder that utilizes a bidding credit and subsequently seeks to assign or transfer control of its license or construction permit to an entity not qualifying for the same level of bidding credit.

69. Pursuant to the rules governing competitive bidding, each applicant must make certifications regarding whether it is a current or former defaulter or delinquent. A current defaulter or delinquent is not eligible to participate in Auction 111, but a former defaulter or delinquent may participate so long as it is otherwise qualified and makes an upfront payment that is 50% more than would otherwise be necessary. Accordingly, each applicant must certify under penalty of perjury on its FCC Form 175 that it, its affiliates, its controlling interests, and the affiliates of its controlling interests are not in default on any payment for a Commission construction permit or license (including down payments) and that it is not delinquent on any non-tax debt owed to any Federal agency. Additionally, an applicant must certify under penalty of perjury whether it (along with its controlling interests) has ever been in default on any payment for a Commission construction permit or license (including down payments) or has ever been delinquent on any non-tax debt owed to any Federal agency, subject to the exclusions described below. For purposes of making these certifications, the term “controlling interest” is defined in 47 CFR 1.2105(a)(4)(i).

70. Under the Commission's rule regarding applications by former defaulters, an applicant is considered a “former defaulter” or a “former delinquent” when, as of the FCC Form 175 deadline, the applicant or any of its controlling interests has defaulted on any Commission construction permit or license or has been delinquent on any non-tax debt owed to any Federal agency, but has since remedied all such defaults and cured all of the outstanding non-tax delinquencies. For purposes of the certification under 47 CFR 1.2105(a)(2)(xii), the applicant may exclude from consideration any cured default on a Commission construction permit or license or cured delinquency on a non-tax debt owed to a Federal agency for which any of the following criteria are met: (1) The notice of the final payment deadline or delinquency was received more than seven years before the FCC Form 175 filing deadline, (2) the default or delinquency amounted to less than $100,000, (3) the default or delinquency was paid within two quarters ( i.e., six months) after receiving the notice of the final payment deadline or delinquency, or (4) the default or delinquency was the subject of a legal or arbitration proceeding and was cured upon resolution of the proceeding. With respect to the first exclusion, notice to a debtor may include notice of a final payment deadline or notice of delinquency and may be express or implied depending on the origin of any Federal non-tax debt giving rise to a default or delinquency. Additionally, for the third exclusion, the date of receipt of the notice of a final default deadline or delinquency by the intended party or debtor will be used for purposes of verifying receipt of notice.

71. In addition to the Auction 111 Procedures Public Notice, applicants should review previous guidance on default and delinquency disclosure requirements in the context of the auction short-form application process. Applicants may consult with Auctions Division staff if they have any questions about default and delinquency disclosure requirements.

72. The Commission considers outstanding debts owed to the United States Government, in any amount, to be a serious matter. The Commission adopted rules, including a provision referred to as the red light rule, that implement its obligations under the Debt Collection Improvement Act of 1996, which governs the collection of debts owed to the United States. Under the red light rule, applications and other requests for benefits filed by parties that have outstanding debts owed to the Commission will not be processed. When adopting that rule, the Commission explicitly declared, however, that its competitive bidding rules are not affected by the red-light rule. As a consequence, the Commission's adoption of the red light rule does not alter the applicability of any of its competitive bidding rules, including the provisions and certifications of 47 CFR 1.2105 and 1.2106, with regard to current and former defaults or delinquencies.

73. The Commission's Red Light Display System, which provides information regarding debts currently owed to the Commission, may not be determinative of an auction applicant's ability to comply with the default and delinquency disclosure requirements of 47 CFR 1.2105. Thus, while the red light rule ultimately may prevent the processing of amendments to long-form applications by auction winners, an auction applicant's lack of current red light status is not necessarily determinative of its eligibility to participate in an auction (or whether it may be subject to an increased upfront payment obligation). Moreover, any long-form applications amended after the close of bidding will be reviewed for compliance with the Commission's red light rule, and such review may result in the dismissal of a winning bidder's long-form application. Each applicant should carefully review all records and other available Federal agency databases and information sources to determine whether the applicant, or any of its affiliates, or any of its controlling interests, or any of the affiliates of its controlling interests, currently owes or was ever delinquent in the payment of non-tax debt owed to any Federal agency.

74. An applicant owned by members of minority groups and/or women, as defined in 47 CFR 1.2110(c)(3), or that is a rural telephone company, as defined in 47 CFR 1.2110(c)(4), may identify itself as such in filling out its FCC Form 175. This applicant status information is collected for statistical purposes only and assists the Commission in monitoring the participation of various groups in its auctions.

75. 47 U.S.C. 309(j)(2)(C) exempts from competitive bidding applications for construction permits for noncommercial educational (NCE) broadcast. For purposes of Auction 111, this exemption applies to a construction permit application for a new or modified LPTV/translator station that will be owned and operated by a municipality and will transmit only noncommercial programs for educational purposes. Applications for such NCE stations are exempt from competitive bidding in Auction 111. Accordingly, in the FCC Form 175, applicants will have an opportunity to designate their status as an exempt NCE station application under the definition specified in 47 U.S.C. 397(6)(B).

76. Applications for exempt NCE stations on non-reserved spectrum, filed during an auction filing window, will be returned as unacceptable for filing if mutually exclusive with any application for a commercial station. If an FCC Form 175 identifies the application's proposed station as an exempt noncommercial educational and that application remains mutually exclusive with any short-form application for a commercial station after the limited settlement period, the NCE application will be returned as unacceptable for filing and the applicant will not be provided with any further opportunity to become eligible to bid in this auction. For this reason, each prospective applicant in this auction should consider carefully whether it wishes to propose operation as an exempt noncommercial educational station under 47 U.S.C. 397(6)(B) for any LPTV/translator station acquired in this auction. This exempt NCE election cannot be reversed after the initial short-form application filing deadline. Short-form applications that do not identify the facilities proposed in the FCC Form 175 as NCE will be considered, as a matter of law, applications for commercial broadcast stations.

77. After the initial short-form application filing deadline, an Auction 111 applicant will be permitted to make only minor changes to its FCC Form 175. Examples of minor changes include the deletion or addition of authorized bidders (to a maximum of three) and the revision of addresses and telephone numbers of the applicant, its responsible party, and its contact person. Major modification to an FCC Form 175 ( e.g., change of construction permit selection, certain changes in ownership that would constitute an assignment or transfer of control of the applicant, change in the required certifications, change in applicant's legal classification that results in a change in control, or change in claimed eligibility for a higher percentage of bidding credit) will not be permitted after the FCC Form 175 filing deadline. If an amendment reporting changes is a major amendment, as described in 47 CFR 1.2105(b)(2), the major amendment will not be accepted and may result in the dismissal of the application. Questions about FCC Form 175 amendments should be directed to the Auctions Division at (202) 418-0660.

78. Pursuant to 47 CFR 1.65, each applicant has a continuing obligation to maintain the accuracy and completeness of information furnished in a pending application, including a pending application to participate in Auction 111 or a pending LPTV/TV translator station application. Consistent with the requirements for spectrum auctions, an applicant for Auction 111 must furnish additional or corrected information to the Commission within five business days after a significant occurrence, or amend its FCC Form 175, no more than five business days after the applicant becomes aware of the need for the amendment. In accordance with the Commission's rules, an applicant's obligation to make modifications to a pending auction application in order to provide additional or corrected information continues beyond the five-day period, even if the report is not made within the five-day period. An applicant is obligated to amend its pending application even if a reported change may result in the dismissal of the application because it is subsequently determined to be a major modification.

79. Additional information on the procedures for modifying an FCC Form 175 appear in the Auction 111 Procedures Public Notice. As with filing the FCC Form 175, any amendment(s) to the application and related statements of fact must be certified by an authorized representative of the applicant with authority to bind the applicant. Submission of any such amendment or related statement of fact constitutes a representation by the person certifying that he or she is an authorized representative with such authority and that the contents of the amendment or statement of fact are true and correct.

80. Each potential bidder is solely responsible for investigating and evaluating all technical and marketplace factors that may have a bearing on the value of the construction permit(s) it is seeking in Auction 111. The Commission makes no representations or warranties about the use of this spectrum or these construction permits for particular services. Each applicant should be aware that a Commission auction represents an opportunity to become an FCC permittee in a broadcast service, subject to certain conditions and regulations. This includes the established authority of the Commission to alter the terms of existing licenses by rulemaking, which is equally applicable to licenses awarded by auction. A Commission auction does not constitute an endorsement by the Commission of any particular service, technology, or product, nor does a Commission construction permit or license constitute a guarantee of business success.

81. An applicant should perform its due diligence research and analysis before proceeding, as it would with any new business venture. In particular, each potential bidder should perform technical analyses and/or refresh its previous analyses to assure itself that, should it become a winning bidder for any Auction 111 construction permit, it will be able to build and operate facilities that will fully comply with all applicable technical and legal requirements. Stations in the LPTV/translator services are licensed and operate on a secondary interference basis. This means that they may not interfere with, and must accept interference from, primary services including full power television stations. As a result, the operating channel of an LPTV/translator station may be displaced by a full power television station and the LPTV/translator station will either have to relocate to a new channel that does not cause interference or else discontinue operations altogether. Each applicant should also inspect any prospective transmitter sites located in, or near, the service area for which it plans to bid, to confirm the availability of such sites, and to familiarize itself with the Commission's rules regarding any applicable federal, state, and local requirements, including the National Environmental Policy Act (NEPA), the National Historic Preservation Act (NHPA), and other environmental statutes.

82. Each applicant in Auction 111 should continue to conduct its own research throughout the auction in order to determine the existence of pending or future administrative or judicial proceedings that might affect its decision to continue participating in the auction. Each applicant is responsible for assessing the likelihood of the various possible outcomes and for considering the potential impact on construction permits available in this auction. The due diligence considerations mentioned in the Auction 111 Procedures Public Notice do not comprise an exhaustive list of steps that should be undertaken prior to participating in Auction 111. As always, the burden is on the potential bidder to determine how much research to undertake, depending upon specific facts and circumstances related to its interests.

83. Applicants are solely responsible for identifying associated risks and for investigating and evaluating the degree to which such matters may affect their ability to bid on, otherwise acquire, or make use of the construction permits available in Auction 111. Each potential bidder is responsible for undertaking research to ensure that any permits won in this auction will be suitable for its business plans and needs. Each potential bidder must undertake its own assessment of the relevance and importance of information gathered as part of its due diligence efforts.

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

85. Before the opening of the short-form application filing window for Auction 111, detailed educational information will be provided in various formats to would-be participants on the Auction 111 web page. Specifically, OEA will provide various materials on the pre-bidding processes in advance of the opening of the short-form application window, beginning with the release of step-by-step instructions for completing the FCC Form 175, which OEA will make available in the Education section of the Auction 111 website at www.fcc.gov/auction/111. In addition, OEA will provide an online tutorial for the auction, covering pre-auction procedures including completing a short-form application in the FCC Auction Application System, and bidding procedures including how to use the FCC auction bidding system. In advance of the start of the mock auction, OEA will release a user guide for the bidding system.

86. These materials will be accessible in the Education section of the Auction 111 website at www.fcc.gov/auction/111.

87. In order to be eligible to bid in Auction 111, an applicant must first submit a short-form application (FCC Form 175) electronically via the Auction Application System following the instructions set forth in the FCC Form 175 Instructions, which are available on the Education tab of the Auction 111 website at www.fcc.gov/auction/111. The short-form application will become available with the opening of the initial filing window and must be submitted prior to 6:00 p.m. ET on November 9, 2021. Late applications will not be accepted. No filing fee is required to be paid at the time of filing a short-form application.

88. Applications may be filed at any time beginning at noon ET on November 1, 2021, until the filing window closes at 6:00 p.m. ET on November 9, 2021. Applicants are strongly encouraged to file early and are responsible for allowing adequate time for filing their applications. There are no limits or restrictions on the number of times an application can be updated or amended until the initial filing deadline on November 9, 2021.

89. An applicant must always click on the CERTIFY & SUBMIT button on the Certify & Submit screen to successfully submit its FCC Form 175 and any modifications; otherwise the application or changes to the application will not be received or reviewed by Commission staff. Additional information about accessing, completing, and viewing the FCC Form 175 is provided in the FCC Form 175 Instructions. Applicants requiring technical assistance should contact FCC Auctions Technical Support at (877) 480-3201, option nine; (202) 414-1250; or (202) 414-1255 (text telephony (TTY)). Hours of service are Monday through Friday, from 8:00 a.m. to 6:00 p.m. ET. In order to provide better service to the public, all calls to Technical Support are recorded.

90. After the initial short-form application filing deadline, Commission staff will review all timely submitted applications for Auction 111 to identify the MX Groups listed in Attachment A to the Auction 111 Procedures Public Notice for which two or more short-form applications were submitted and which are therefore subject to competitive bidding procedures. Following this review, OEA and MB will release a public notice identifying the remaining MX Groups in Auction 111. That public notice will also specify a settlement period, of no more than 10 business days, for resolving mutual exclusivity by the filing of technical amendments, dismissal requests, and requests for approval of settlement agreements. Technical amendments submitted by applicants to resolve their mutual exclusivities must be minor, as defined by the applicable rules, and must not create any new mutual exclusivity or other application conflict. Unless the mutual exclusivity is resolved during this limited settlement opportunity, an applicant in one of these MX Groups cannot obtain the construction permit without placing a bid, even if no other auction applicant in that MX Group becomes qualified to bid or in fact places a bid.

91. No more than one construction permit will be awarded through Auction 111 for each MX group identified in Attachment A to the Auction 111 Procedures Public Notice. Likewise, any settlement reached during this limited settlement opportunity may not result in more than one surviving application for an LPTV/translator station construction permit. Accordingly, partial settlements ( i.e., settlements which reduce the number of proposals in a group, but which do not completely resolve the mutual exclusivity of that group) and engineering solutions that completely resolve the mutual exclusivity of the group but result in more than one surviving application will not be permitted. To facilitate resolution of mutual exclusivity, the prohibited communications rule will be suspended during the settlement period as specified by future public notice(s). Discussions between applicants of bids, bidding strategies, or settlements outside of any announced settlement period would violate the Commission's prohibition on certain communications by auction applicants.

92. Non-mutually exclusive applications will be listed in a subsequent public notice to be released by OEA and MB. Such applications will not proceed to auction, but will proceed in accordance with instructions set forth in that public notice.

93. Commission staff will review all timely submitted applications for Auction 111 that remain mutually exclusive after the limited settlement period to determine whether each applicant has complied with the application requirements and whether it has provided all required information concerning its qualifications for bidding. After this review is completed, OEA and MB will issue a public notice announcing applicants' initial application status by identifying: (1) Those that are complete; (2) those that are rejected; and (2) those that are incomplete or deficient because of defects that may be corrected. That public notice also will establish an application resubmission filing window, during which an applicant may make permissible minor modifications to its application to address identified deficiencies. The public notice will include the deadline for resubmitting corrected applications and a copy of the public notice will be sent by overnight delivery to the contact address listed in the FCC Form 175 for each applicant. OEA and MB ask all applicants to make sure that the contact address provided in its short-form application is accurate and is a location capable of accepting packages that require a signature. In addition, each applicant with an incomplete application will be sent information on the nature of the deficiencies in its application, along with the name and contact information of a Commission staff member who can answer questions specific to the application. To become a qualified bidder, an applicant must have a complete application ( i.e., have timely corrected any identified deficiencies) and make a timely and sufficient upfront payment. Qualified bidders will be identified by public notice at least 10 days prior to the mock auction.

94. After the initial application filing deadline on November 9, 2021, applicants can make only minor modifications to their applications. Major modifications will not be permitted. After the deadline for resubmitting corrected applications, an applicant will have no further opportunity to cure any deficiencies in its application or provide any additional information that may affect Commission staff's ultimate determination of whether and to what extent the applicant is qualified to participate in Auction 111.

95. Commission staff will communicate only with an applicant's contact person or certifying official, as designated on the applicant's FCC Form 175, unless the applicant's certifying official or contact person notifies Commission staff in writing that another representative is authorized to speak on the applicant's behalf. Authorizations may be sent by email to auction111@fcc.gov.

96. After Commission staff review resubmitted applications for Auction 111 and evaluate upfront payments, OEA and MB will release a public notice identifying applicants that have become qualified bidders. Qualified bidders are those applicants with submitted FCC Forms 175 that are deemed timely filed and complete and that have made a sufficient upfront payment.

97. In order to be eligible to bid in Auction 111, a sufficient upfront payment and a complete and accurate FCC Remittance Advice Form (FCC Form 159, Revised 2/03) must be submitted before 6:00 p.m. ET on January 25, 2022. After completing its short-form application, an applicant will have access to an electronic pre-filled version of the FCC Form 159. An accurate and complete FCC Form 159 must accompany each payment. Proper completion of this form is critical to ensuring correct crediting of upfront payments. Payers using the pre-filled FCC Form 159 are responsible for ensuring that all the information on the form, including payment amounts, is accurate. Instructions for completing FCC Form 159 for Auction 111 are provided in Attachment B to the Auction 111 Procedures Public Notice.

98. Upfront payments for Auction 111 must be wired to, and will be deposited in, the U.S. Treasury.

99. Wire transfer payments for Auction 111 must be received before 6:00 p.m. ET on January 25, 2022. No other payment method is acceptable. To avoid untimely payments, applicants should discuss arrangements (including bank closing schedules and other specific bank wire transfer requirements, such as an in-person written request before a specified time of day) with their bankers several days before they plan to make the wire transfer, and must allow sufficient time for the transfer to be initiated and completed before the deadline. Wire transfer information is specified in the Making Upfront Payments by Wire Transfer section of the Auction 111 Procedures Public Notice.

100. To meet the upfront payment deadline, an applicant's payment must be credited to the Commission's account for Auction 111 before the deadline.

101. Each applicant is responsible for ensuring timely submission of its upfront payment and for timely filing of an accurate and complete FCC Form 159. An applicant should coordinate with its financial institution well ahead of the due date regarding its wire transfer and allow sufficient time for the transfer to be initiated and completed prior to the deadline. The Commission repeatedly has cautioned auction participants about the importance of planning ahead to prepare for unforeseen last-minute difficulties in making payments by wire transfer. Each applicant also is responsible for obtaining confirmation from its financial institution that its wire transfer to the U.S. Treasury was successful and from Commission staff that its upfront payment was timely received and that it was deposited into the proper account. As a regulatory requirement, the U.S. Treasury screens all payments from all financial institutions before deposits are made available to specified accounts. If wires are suspended, the U.S. Treasury may direct questions regarding any transfer to the financial institution initiating the wire. Each applicant must take care to assure that any questions directed to its financial institution(s) are addressed promptly. To receive confirmation from Commission staff, contact Scott Radcliffe of the Office of Managing Director's Revenue & Receivables Operations Group/Auctions at (202) 418-7518 or Theresa Meeks at (202) 418-2945.

102. Please note the following information regarding upfront payments: (1) All payments must be made in U.S. dollars; (2) all payments must be made by wire transfer; and (3) upfront payments for Auction 111 go to an account number different from the accounts used in previous FCC auctions.

103. Failure to deliver a sufficient upfront payment as instructed in the Auction 111 Procedures Public Notice by the upfront payment deadline will result in dismissal of the short-form application and disqualification from participation in the auction.

104. An accurate and complete FCC Form 159 (February 2003 edition) must be sent to the FCC to accompany each upfront payment. At least one hour before placing the order for the wire transfer (but on the same business day), applicants must fax a completed Form 159 to the FCC at (202) 418-2843. Alternatively, the completed form can be scanned and sent as an attachment to an email to RROGWireFaxes@fcc.gov. On the fax cover sheet or in the email subject header, write Wire Transfer—Auction Payment for Auction 111.

105. The Commission has delegated authority to OEA and MB to determine appropriate upfront payments for each construction permit being auctioned, taking into account such factors as the efficiency of the auction process and the potential value of similar licenses. An upfront payment is a refundable deposit made by each applicant seeking to participate in bidding to establish its eligibility to bid on construction permits. Upfront payments that are related to the specific construction permits being auctioned protect against frivolous or insincere bidding and provide the Commission with a source of funds from which to collect payments owed at the close of bidding. In the Auction 111 Comment Public Notice, OEA and MB proposed an upfront payment amount for each construction permit and sought comment on the upfront payment amounts. OEA and MB received no comments regarding the upfront payment amounts for Auction 111, and OEA and MB adopted the upfront payment amounts proposed in Attachment A of the Auction 111 Comment Public Notice.

106. An applicant must make an upfront payment sufficient to obtain bidding eligibility on the construction permits on which it will bid. The upfront payment amount submitted by an applicant will determine its initial bidding eligibility, the maximum number of bidding units on which a bidder may place bids in any single round. In order to bid on a particular construction permit, a qualified bidder must have a current eligibility level that meets or exceeds the number of bidding units assigned to that construction permit. At a minimum, therefore, an applicant's total upfront payment must be enough to establish eligibility to bid on at least one of the construction permits selected on its FCC Form 175 for Auction 111, or else the applicant will not become qualified to participate in the auction. An applicant does not have to make an upfront payment to cover all construction permits the applicant selected on its FCC Form 175, rather only enough to cover the maximum number of bidding units that are associated with construction permits on which the applicant wishes to place bids and hold provisionally winning bids in any given round. The total upfront payment does not affect the total dollar amount the bidder may bid on any given construction permit.

107. In calculating its upfront payment amount, an applicant must determine the maximum number of bidding units on which it may wish to bid in any single round and submit an upfront payment amount for the auction covering that number of bidding units. In order to make this calculation, an applicant should add together the bidding units for all construction permits on which it seeks to be active in any given round. Applicants should check their calculations carefully, as there is no provision for increasing a bidder's eligibility after the upfront payment deadline.

108. An applicant that is a former defaulter, as described above, must pay an upfront payment 50% greater than that required of an applicant that is not a former defaulter. For purposes of this rule, defaults and delinquencies of the applicant itself and its controlling interests are included. If an applicant is a former defaulter, it must calculate its upfront payment for all of its selected construction permits by multiplying the number of bidding units on which it wishes to be active (bid on or hold provisionally winning bids on) during a given round by 1.5. In order to calculate the number of bidding units to assign to former defaulters, the Commission will divide the upfront payment received by 1.5 and round the result up to the nearest bidding unit. If an applicant fails to submit a sufficient upfront payment to establish eligibility to bid on at least one of the construction permits selected on its FCC Form 175, the applicant will not be eligible to participate in bidding in the auction. This applicant will retain its status as an applicant in Auction 111 and will remain subject to 47 CFR 1.2105(c) and 73.5002(d).

109. All qualified bidders for Auction 111 are automatically registered for the auction. Registration materials will be distributed prior to the auction by overnight delivery. The mailing will be sent only to the contact person at the contact address listed in the FCC Form 175 and will include the SecurID® tokens that will be required to place bids, the web address and instructions for accessing and logging in to the auction bidding system, FCC assigned username (User ID) for each authorized bidder, and the Auction Bidder Line phone number.

110. Qualified bidders that do not receive this registration mailing will not be able to submit bids. Therefore, if this mailing is not received by the contact person for a qualified bidder by noon on February 15, 2022, call the Auctions Hotline at (717) 338-2868. In no event, however, will the Commission send auction registration materials to anyone other than the contact person listed on the applicant's FCC Form 175 or respond to a request for replacement registration materials from anyone other than the authorized bidder, contact person, or certifying official listed on the applicant's FCC Form 175. Receipt of this registration mailing is critical to participating in the auction, and each qualified bidder is responsible for ensuring it has received all registration materials.

111. In the event that a SecurID® token is lost or damaged, only a person who has been designated as an authorized bidder, the contact person, or the certifying official on the applicant's short-form application may request a replacement. To request a replacement, call the Auction Bidder Line at the telephone number provided in the registration materials or the Auction Hotline at (717) 338-2868.

112. Bidders will be able to participate in Auction 111 over the internet using the FCC Auction Bidding System (bidding system) or by telephonic bidding. Each applicant should indicate its bidding preference—electronic or telephonic—on its FCC Form 175. Please note that telephonic bid assistants are required to use a script when entering bids placed by telephone. Telephonic bidders are therefore reminded to allow sufficient time to bid by placing their calls well in advance of the close of a round. The length of a call to place a telephonic bid may vary; please allow a minimum of 10 minutes. The toll-free telephone number for the auction bidder line will be provided to qualified bidders prior to the start of bidding in the auction.

113. Only qualified bidders are permitted to bid. Each qualified bidder will be issued three SecurID® tokens, which the Commission will provide at no charge. Each authorized bidder for a qualified bidder must have an individually assigned SecurID® token in order to access the bidding system, either by telephone or over the internet. In order to access the bidding function of the bidding system, bidders must be logged in during the bidding round using the passcode generated by the SecurID® token and a personal identification number (PIN) created by the bidder. Bidders are strongly encouraged to print a bid summary for each round after they have completed all their activity for that round. For security purposes, the SecurID® tokens, bidding system web address, FCC assigned username, and the telephonic bidding telephone number are only mailed to the contact person at the contact address listed on the FCC Form 175. Each SecurID® token is tailored to a specific auction. SecurID® tokens issued for other auctions or obtained from a source other than the FCC will not work for Auction 111. Please note that the SecurID® tokens can be recycled, and the Commission requests that bidders return the tokens to the FCC. Pre-addressed envelopes will be provided to return the tokens once the auction has ended.

114. The Commission makes no warranties whatsoever, and shall not be deemed to have made any warranties, with respect to the FCC Auction Application System and the auction bidding system, including any implied warranties of merchantability or fitness for a particular purpose. In no event shall the Commission, or any of its officers, employees, or agents, be liable for any damages whatsoever (including, but not limited to, loss of business profits, business interruption, loss of use, loss of revenue, loss of business information, or any other direct, indirect, or consequential damages) arising out of or relating to the existence, furnishing, functioning, or use of the FCC Auction Application System or the FCC auction bidding system. Moreover, no obligation or liability will arise out of the Commission's technical, programming, or other advice or service provided in connection with the FCC auction systems.

115. To the extent an issue arises with the bidding system itself, the Commission will take all appropriate measures to resolve such issues quickly and equitably. Should an issue arise that is outside the bidding system or attributable to a bidder, including, but not limited to, a bidder's hardware, software, or internet access problem that prevents the bidder from submitting a bid prior to the end of a round, the Commission shall have no obligation to resolve or remedy such an issue on behalf of the bidder. Similarly, if an issue arises due to bidder error using the bidding system, the Commission shall have no obligation to resolve or remedy such an issue on behalf of the bidder. Accordingly, after the close of a bidding round, the results of bid processing will not be altered absent evidence of any failure in the bidding system.

116. All qualified bidders will be eligible to participate in a mock auction on February 17, 2022. The mock auction will enable qualified bidders to become familiar with the FCC auction bidding system and to practice submitting bids prior to the auction. OEA and MB recommend that all qualified bidders, including all their authorized bidders, participate to ensure that they can log in to the bidding system and gain experience with the bidding procedures. Participating in the mock auction may reduce the likelihood of a bidder making a mistake during the auction. Details regarding the mock auction will be announced in the public notice announcing the qualified bidders for Auction 111.

117. By public notice or by announcement through the FCC auction bidding system, OEA and MB may delay, suspend, or cancel bidding in the auction in the event of natural disaster, technical obstacle, network interruption, administrative or weather necessity, evidence of an auction security breach or unlawful bidding activity, or for any other reason that affects the fair and efficient conduct of competitive bidding. In such cases, OEA and MB, in their sole discretion, may elect to resume the auction starting from the beginning of the current round or from some previous round, or cancel the auction in its entirety. OEA and MB emphasize that they will exercise this authority solely at their discretion, and not as a substitute for situations in which bidders may wish to apply their activity rule waivers.

118. Permittees or licensees must comply with the Commission's rules for environmental review under the National Environmental Policy Act, the National Historic Preservation Act, and other federal environmental statutes. The construction of a broadcast facility is a federal action, and the permittee or licensee must comply with the Commission's environmental rules for each such facility. These environmental rules require, among other things, that the permittee or licensee consult with expert agencies having environmental responsibilities, including the U.S. Fish and Wildlife Service, the State Historic Preservation Office, the U.S. Army Corps of Engineers, and the Federal Emergency Management Agency (through the local authority with jurisdiction over floodplains). In assessing the effect of facility construction on historic properties, the permittee or licensee must follow the provisions of the FCC's Nationwide Programmatic Agreement Regarding the Section 106 National Historic Preservation Act Review Process. The permittee or licensee must prepare environmental assessments for any facility that may have a significant impact in or on wilderness areas, wildlife preserves, threatened or endangered species, or designated critical habitats, historical or archaeological sites, Indian religious sites, floodplains, and surface features. In addition, the permittee or licensee must prepare environmental assessments for facilities that include high intensity white lights in residential neighborhoods or excessive radio frequency emission.

119. The first round of bidding for Auction 111 will begin on February 23, 2022. The initial bidding schedule will be announced in a public notice listing the qualified bidders, which is released at least one week before the start of bidding in the auction.

120. All construction permits listed in Attachment A to the Auction 111 Procedures Public Notice will be auctioned in a single auction using a simultaneous multiple-round auction format. This type of auction offers every construction permit for bid at the same time and consists of successive bidding rounds in which qualified bidders may place bids on individual construction permits. Unless otherwise announced, bids will be accepted on all construction permits in each round of the auction until bidding stops on every construction permit.

121. All bidding will take place remotely either through the FCC auction bidding system or by telephonic bidding. Please note that telephonic bid assistants are required to use a script when entering bids placed by telephone. Telephonic bidders are therefore reminded to allow sufficient time to bid by placing their calls well in advance of the close of a round. The length of a call to place a telephonic bid may vary; please allow a minimum of ten minutes.

122. An Auction 111 bidder's ability to bid on specific construction permits is determined by two factors: (1) The construction permits selected by that applicant in its FCC Form 175 and (2) the bidder's bidding eligibility measured in bidding units. The FCC auction bidding system will allow bidders to submit bids on only those construction permits the bidder selected on its FCC Form 175.

123. In order to access the bidding function of the FCC auction bidding system, bidders must be logged in during a bidding round using the passcode generated by the SecurID® token and a PIN created by the bidder. Bidders are strongly encouraged to print a round summary for each round after they have completed all of their activity for that round.

124. The initial schedule of bidding rounds will be announced in the public notice listing the qualified bidders in the auction. Each bidding round is followed by the release of round results. Multiple bidding rounds may be conducted each day.

125. OEA and MB retain the discretion to adjust the bidding schedule in order to foster an auction pace that reasonably balances speed with the bidders' need to study round results and adjust their bidding strategies. OEA and MB may change the amount of time for bidding rounds, the amount of time between rounds, or the number of rounds per day, depending upon bidding activity and other factors.

126. The amount of the upfront payment submitted by a bidder will determine its initial bidding eligibility in terms of bidding units. A bidder's bidding eligibility is the maximum number of bidding units on which a bidder may be active (bid or hold provisionally winning bids) in a given round. In Auction 111, each construction permit is assigned a specific number of bidding units as listed in Attachment A to the Auction 111 Procedures Public Notice. Bidding units assigned to each construction permit do not change as prices rise during the auction. Upfront payments are not attributed to specific construction permits. Rather, a bidder may place bids on any of the construction permits selected on its FCC Form 175 as long as the total number of bidding units associated with those construction permits does not exceed the bidder's current eligibility.

127. Eligibility cannot be increased during the auction; it can only remain the same or decrease. Thus, in calculating its upfront payment amount, an applicant must determine the maximum number of bidding units on which it may wish to bid or hold provisionally winning bids in any single round, and submit an upfront payment amount covering that total number of bidding units. At a minimum, an applicant's upfront payment must cover the bidding units for at least one of the construction permits it selected on its short-form application. The total upfront payment does not affect the total dollar amount a bidder may bid on any given construction permit.

128. To ensure that an auction closes within a reasonable period of time, an activity rule requires bidders to bid actively throughout the auction, rather than wait until late in the auction before participating. A bidder in Auction 111 will be required to be active on 100% of its current bidding eligibility during each round of the auction. A bidder's activity level in a round is the sum of the bidding units associated with construction permits covered by the bidder's new bids in the current round and provisionally winning bids from the previous round. That is, a bidder must either place a bid or be a provisionally winning bidder during each round of the auction. Failure to maintain the requisite activity level will result in the use of an activity rule waiver, if any remain, or a reduction in the bidder's eligibility, possibly curtailing or eliminating the bidder's ability to place bids in subsequent rounds of the auction.

129. Each bidder in the auction will have three activity rule waivers, which are principally a mechanism for a bidder to avoid the loss of bidding eligibility in the event that exigent circumstances prevent it from bidding in a particular round. Use of an activity rule waiver preserves the bidder's eligibility despite its activity in the current round being below the required minimum activity level. An activity rule waiver applies to an entire round of bidding and not to a particular construction permit. A bidder may use an activity rule waiver in any round of the auction as long as the bidder has not used all of its waivers.

130. The FCC auction bidding system will assume that a bidder that does not meet the activity requirement would prefer to use an activity rule waiver (if available) rather than lose bidding eligibility. Therefore, the system will automatically apply a waiver at the end of any bidding round in which a bidder's activity level is below the minimum required unless (1) the bidder has no activity rule waiver remaining, or (2) the bidder overrides the automatic application of a waiver by reducing eligibility, therefore meeting the activity requirement. If the bidder has no waivers remaining and does not satisfy the required activity level, the bidder's current eligibility will be permanently reduced, possibly curtailing or eliminating the ability to place additional bids in the auction.

131. A bidder with insufficient activity may wish to reduce its bidding eligibility rather than use an activity rule waiver. If so, the bidder must affirmatively override the automatic waiver mechanism during the bidding round by using the reduce eligibility function in the FCC auction bidding system. In this case, the bidder's eligibility will be permanently reduced to bring it into compliance with the activity rule described above. Reducing eligibility is an irreversible action once the round has closed, and a bidder cannot regain its lost bidding eligibility.

132. Finally, a bidder may apply an activity rule waiver proactively as a means to keep the auction open without placing a bid. If a bidder proactively applies an activity rule waiver (using the proactive waiver function in the FCC auction bidding system) during a bidding round in which no bids are placed, the auction will remain open and the bidder's eligibility will be preserved. An automatic waiver applied by the FCC auction bidding system in a round in which there is no new bid or a proactive waiver will not keep the auction open.

133. For Auction 111, OEA and MB will employ a simultaneous stopping rule approach, which means all construction permits remain available for bidding until bidding stops on every construction permit. Specifically, bidding will close on all construction permits after the first round in which no bidder submits a new bid or applies a proactive waiver.

134. In certain circumstances, OEA and MB may employ the alternative versions of the simultaneous stopping rule listed below for Auction 111, for example, where the auction is proceeding unusually slowly or quickly, there is minimal overall bidding activity, or it appears likely that the auction will not close within a reasonable period of time or will close prematurely. Before exercising these options, OEA and MB are likely to attempt to change the pace of the auction. For example, OEA and MB may adjust the pace of bidding by changing the number of bidding rounds per day and/or the minimum acceptable bids. OEA and MB retain the discretion to exercise any of these options with or without prior announcement during the auction:

Option 1. The auction would close for all construction permits after the first round in which no bidder applies a proactive waiver or places a new bid on any construction permit on which it is not the provisionally winning bidder. Thus, absent any other bidding activity, a bidder placing a new bid on a construction permit for which it is the provisionally winning bidder would not keep the auction open under this modified stopping rule.

Option 2. The auction would close for all construction permits after the first round in which no bidder applies a waiver or places any new bid on any construction permit that already has a provisionally winning bid. Thus, absent any other bidding activity, a bidder placing a new bid on an FCC-held construction permit (a construction permit that does not have a provisionally winning bid) would not keep the auction open under this modified stopping rule.

Option 3. The auction would close using a modified version of the simultaneous stopping rule that combines Option 1 and Option 2 above.

Option 4. The auction would close after a specified number of additional rounds (special stopping rule) to be announced in advance in the FCC auction bidding system. If OEA and MB invokes this special stopping rule, it will accept bids in the specified final round(s), after which the auction will close.

Option 5. The auction would remain open even if no bidder places a new bid or applies a waiver. In this event, the effect will be the same as if a bidder had applied a waiver. Thus, the activity rule will apply as usual, and a bidder with insufficient activity will either lose bidding eligibility or use a waiver.

135. Section 309(j) of the Communications Act of 1934 calls upon the Commission to prescribe methods by which a reasonable reserve price will be required or a minimum opening bid established when applications for FCC licenses or construction permits are subject to auction ( i.e., because they are mutually exclusive), unless the Commission determines that a reserve price or minimum opening bid is not in the public interest. Consistent with this mandate, the Commission directed the Bureaus to seek comment on the use of a minimum opening bid and/or reserve price prior to the start of each auction. Among other factors, OEA and MB must consider the amount of spectrum being auctioned, levels of incumbency, the availability of technology to provide service, the size of the geographic service areas, the extent of interference with other spectrum bands, and any other relevant factors that could have an impact on the spectrum being auctioned.

136. For Auction 111, there will be no reserve prices for specific construction permits listed in Attachment A to the Auction 111 Procedures Public Notice that are different from minimum opening bid amounts. This is consistent with previous broadcast spectrum auctions.

137. In the Auction 111 Comment Public Notice, OEA and MB sought comment on specifically proposed minimum opening amounts for each construction permit listed in Attachment A to the Auction 111 Procedures Public Notice, reasoning that a minimum opening bid, which has been used in other broadcast auctions, is an effective tool for accelerating the competitive bidding process. Specifically, a minimum opening bid was proposed for each construction permit by taking into account various factors relating to the efficiency of the auction and the potential value of the spectrum, including the type of service and class of facility offered, market size, population covered by the proposed broadcast facility, industry cash flow data, and recent broadcast transactions.

138. OEA and MB received no comments on the proposed minimum opening bids, and therefore they adopted the minimum opening bid amounts proposed in the Auction 111 Comment Public Notice. The specific minimum opening bid amounts for each of the construction permits are specified in Attachment A to the Auction 111 Procedures Public Notice.

139. In each round, a qualified bidder will be able to place a bid on a given construction permit in any of up to nine different amounts. The FCC auction bidding system interface will list the nine acceptable bid amounts for each construction permit.

140. To calculate the first of the acceptable bid amounts, OEA and MB will use a minimum acceptable bid increment percentage of 10%. This means that the minimum acceptable bid amount for a construction permit will be approximately 10% greater than the provisionally winning bid amount for the construction permit. To calculate the eight additional acceptable bid amounts, OEA and MB will use an additional bid increment percentage of 5%.

141. In Auction 111, the minimum acceptable bid amount for a construction permit will be equal to its minimum opening bid amount until there is a provisionally winning bid for the construction permit. After there is a provisionally winning bid for a construction permit, the minimum acceptable bid amount will be calculated by multiplying the provisionally winning bid amount by one plus the minimum acceptable bid percentage— i.e., provisionally winning bid amount * 1.10, rounded. Under the Commission's standard rounding procedure for auctions, results above $10,000 are rounded to the nearest $1,000; results below $10,000 but above $1,000 are rounded to the nearest $100; and results below $1000 are rounded to the nearest $10.

142. In Auction 111, the FCC auction bidding system will calculate the eight additional bid amounts by multiplying the minimum acceptable bid amount by the additional bid increment percentage of 5%, and that result (rounded) is the additional increment amount. The first additional acceptable bid amount equals the minimum acceptable bid amount plus the additional increment amount. The second additional acceptable bid amount equals the minimum acceptable bid amount plus two times the additional increment amount; the third additional acceptable bid amount is the minimum acceptable bid amount plus three times the additional increment amount; etc. Because the additional bid increment percentage is 5%, the calculation of the additional increment amount is (minimum acceptable bid amount) * (0.05), rounded. The first additional acceptable bid amount equals (minimum acceptable bid amount) + (additional increment amount); the second additional acceptable bid amount equals (minimum acceptable bid amount) + (2*(additional increment amount)); the third additional acceptable bid amount equals (minimum acceptable bid amount) + (3*(additional increment amount)); etc.

143. OEA and MB retain the discretion to change the minimum acceptable bid amounts, the minimum acceptable bid increment percentage, the additional bid increment percentage, and the number of acceptable bid amounts if it determines that circumstances so dictate, consistent with past practice. OEA and MB also retain the discretion to do so on a construction permit-by-construction permit basis. OEA and MB also retain the discretion to limit (a) the amount by which a minimum acceptable bid for a construction permit may increase compared with the corresponding provisionally winning bid, and (b) the amount by which an additional bid amount may increase compared with the immediately preceding acceptable bid amount. For example, OEA and MB could set a $1,000 limit on increases in minimum acceptable bid amounts over provisionally winning bids. Thus, if calculating a minimum acceptable bid using the minimum acceptable bid increment percentage results in a minimum acceptable bid amount that is $1,200 higher than the provisionally winning bid on a construction permit, the minimum acceptable bid amount would instead be capped at $1,000 above the provisionally winning bid. OEA and MB typically exercise this discretion based on its monitoring of ongoing bidding. If OEA and MB exercise this discretion, they will alert bidders by announcement in the FCC auction bidding system during the auction.

144. Consistent with practice in past auctions, the FCC auction bidding system at the end of each bidding round will determine a provisionally winning bid for each construction permit based on the highest bid amount received for that permit. A provisionally winning bid will remain the provisionally winning bid until there is a higher bid on the same construction permit at the close of a subsequent round. Provisionally winning bids at the end of the auction become the winning bids.

145. OEA and MB will use a pseudo-random number generator to select a single provisionally winning bid if identical high bid amounts are submitted on a construction permit in a given round ( i.e., tied bids). The FCC auction bidding system will assign a pseudo-random number to each bid upon submission. The tied bid with the highest pseudo-random number wins the tiebreaker and becomes the provisionally winning bid. The remaining bidders, as well as the provisionally winning bidder, can submit higher bids in subsequent rounds. However, if the auction were to close with no other bids being placed, the winning bidder would be the one that placed the provisionally winning bid. If the construction permit receives any bids in a subsequent round, the provisionally winning bid again will be determined by the highest bid amount received for the construction permit.

146. As a reminder, provisionally winning bids count toward activity for purposes of the activity rule.

147. Each qualified bidder has the option of removing any bids placed in a round provided that such bids are removed before the close of that bidding round. By removing a bid within a round, a bidder effectively “unsubmits” the bid. A bidder removing a bid placed in the same round is not subject to withdrawal payments. Removing a bid will affect a bidder's activity because a removed bid no longer counts toward bidding activity for the round. Once a round closes, a bidder may no longer remove a bid.

148. In recognition of the site-specific nature and wide geographic dispersion of the permits available in this auction, as well as its experience with past auctions of broadcast construction permits, qualified bidders are prohibited from withdrawing any bid after close of the round in which that bid was placed. Bidders are cautioned to select bid amounts carefully because no bid withdrawals will be allowed, even if a bid was mistakenly or erroneously made.

149. Bids placed during a round will not be made public until the conclusion of that round. After a round closes, OEA and MB will compile reports of all bids placed, current provisionally winning bids, new minimum acceptable bid amounts for the following round, whether the construction permit is FCC-held, and bidder eligibility status (bidding eligibility and activity rule waiver), and post the reports for public access.

150. Commission staff will use auction announcements to report necessary information, such as schedule changes, to bidders. All auction announcements will be available by clicking a link in the FCC auction bidding system.

151. The public notice announcing the close of the bidding and auction results will be released shortly after bidding has ended in Auction 111. That public notice will also establish the deadlines for submitting down payments, final payments, and amendments to long-form applications.

152. The Commission's rules provide that, unless otherwise specified by public notice, within ten business days after the release of the auction closing public notice for Auction 111, each winning bidder must submit sufficient funds (in addition to its upfront payment) to bring its total amount of money on deposit with the Commission to 20% of the net amount of its winning bids (less any bidding credits, if applicable).

153. Each winning bidder will be required to submit the balance of the net amount for each of its winning bids within 10 business days after the deadline for submitting down payments.

154. Because each party eligible to apply for Auction 111 has already filed an application for a new or modified LPTV/translator station (FCC Form 2100, Schedule C (Schedule for a Construction Permit for a LPTV or TV Translator Broadcast Station) of FCC Form 2100 (Application for Media Bureau Video Service Authorization)), a winning bidder will not be required to submit a separate long-form application following close of bidding in Auction 111, but instead will be required to submit a minor amendment to its previously filed LPTV/Translator station application by a deadline to be determined after the close of the auction. Amendments must be filed electronically in the Media Bureau's Licensing and Management System (LMS) available at https://enterpriseefiling.fcc.gov/dataentry/login.html . Winning bidders' applications, as amended, will be placed on public notice, triggering the appropriate period for the filing of petitions to deny. A winning bidder claiming new entrant status must include an exhibit demonstrating its eligibility for the bidding credit. Further instructions will be provided to winning bidders in the auction closing public notice.

155. Any winning bidder that defaults or is disqualified after the close of an auction ( i.e., fails to remit the required down payment by the specified deadline, fails to submit a timely long-form application, fails to make a full and timely final payment, or is otherwise disqualified) is liable for default payments as described in 47 CFR 1.2104(g)(2). A default payment consists of a deficiency payment, equal to the difference between the amount of the bidder's winning bid and the amount of the winning bid the next time a construction permit covering the same spectrum is won in an auction, plus an additional payment equal to a percentage of the defaulter's bid or of the subsequent winning bid, whichever is less.

156. The percentage of the applicable bid to be assessed as an additional payment for defaults in a particular auction is established in advance of the auction. The additional default payment for Auction 111 is 20% of the applicable bid.

157. Finally, in the event of a default, the Commission has the discretion to re-auction the construction permit or offer it to the next highest bidder (in descending order) at its final bid amount. In addition, if a default or disqualification involves gross misconduct, misrepresentation, or bad faith by an applicant, then the Commission may declare the applicant and its principals ineligible to bid in future auctions and may take any other action that it deems necessary, including institution of proceedings to revoke any existing authorizations held by the applicant.

158. All refunds of upfront payment balances will be returned to the payer of record as identified on the FCC Form 159 unless the payer submits written authorization instructing otherwise.

159. This written authorization must comply with the refund instructions provided in the Auction 111 Procedures Public Notice .

160. The refund request must be submitted by fax to the Revenue & Receivables Operations Group/Auctions at (202) 418-2843, or by email to RROGWireFaxes@fcc.gov .

161. The Office of Management and Budget (OMB) has approved the information collections in the Application to Participate in an FCC Auction, FCC Form 175. The Auction 111 Procedures Public Notice does not contain new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. Therefore, it does not contain any new or modified information collection burden for small business concerns with fewer than 25 employees pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198.

162. The Commission has determined, and Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, concurs, that these rules are “non-major” under the Congressional Review Act, 5 U.S.C. 804(2). The Commission will send a copy of the Auction 111 Procedures Public Notice in a report to Congress and the Government Accountability Office pursuant to the Congressional Review Act, 5 U.S.C. 801(a)(1)(A).

163. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission prepared Initial Regulatory Flexibility Analyses (IRFAs) in connection with the Broadcast Competitive Bidding Notice of Proposed Rulemaking (NPRM), 62 FR 65392, December 12, 1997, and other Commission NPRMs (collectively, Competitive Bidding NPRMs ) pursuant to which Auction 111 will be conducted. Final Regulatory Flexibility Analyses (FRFAs) likewise were prepared in the Broadcast Competitive Bidding Order, 63 FR 48615, September 11, 1998, and other Commission rulemaking orders (collectively, Competitive Bidding Orders ) pursuant to which Auction 111 will be conducted. In this proceeding, a Supplemental Initial Regulatory Flexibility Analysis (Supplemental IRFA) was incorporated in the Auction 111 Comment Public Notice. The Commission sought written public comment on the proposals in the Auction 111 Comment Public Notice, including comments on the Supplemental IRFA. The Supplemental Final Regulatory Flexibility Analysis (Supplemental FRFA) supplements the FRFAs in the Competitive Bidding Orders to reflect the actions taken in the Auction 111 Procedures Public Notice and conforms to the RFA.

164. Need for, and Objectives of, the Public Notice. The procedures for the conduct of Auction 111 as described in the Auction 111 Procedures Public Notice implement the Commission's competitive bidding rules, which have been adopted by the Commission in multiple notice-and-comment rulemaking proceedings. More specifically, the Auction 111 Procedures Public Notice provides an overview of the procedures, terms, and conditions governing Auction 111, and the post-auction application and payment processes, as well as setting the minimum opening bid amount for each of the LPTV/translator station construction permits that are subject to being assigned by competitive bidding.

165. To promote the efficient and fair administration of the competitive bidding process for all Auction 111 participants, including small businesses, in the Auction 111 Procedures Public Notice, OEA and MB announce the following procedures: (1) Use of a simultaneous multiple-round auction format, consisting of sequential bidding rounds with a simultaneous stopping procedure (with discretion to exercise alternative stopping rules under certain circumstances); (2) a specific upfront payment amount for each construction permit; (3) a specific minimum opening bid amount for each construction permit; (4) a specific number of bidding units for each construction permit; (5) a bidder's initial bidding eligibility will be based on the amount of that bidder's upfront payment; (6) use of an activity requirement in which a bidder is required to be active on 100% of its bidding eligibility in each round of the auction so that bidders must bid actively during the auction rather than waiting until late in the auction before participating; (7) provision of three activity waivers for each qualified bidder to allow it to preserve bidding eligibility during the course of the auction; (8) use of minimum acceptable bid amounts and additional acceptable increments, along with the methodology for calculating such amounts; (9) a procedure for breaking ties if identical high bid amounts are submitted on one permit in a given round; (10) a prohibition on bid withdrawals while allowing for bid removals (before the close of a bidding round); (11) establishment of an additional default payment percentage of 20% of the applicable bid in the event that a winning bidder defaults or is disqualified after the auction; (12) retention by OEA and MB to exercise discretion to delay, suspend, or cancel bidding in Auction 111 for any reason that affects the ability of the competitive bidding process to be conducted fairly and efficiently; and (13) retention of discretion by OEA to adjust the bidding schedule in order to manage the pace of Auction 111.

166. Summary of Significant Issues Raised by Public Comments in Response to the IRFA. There were no comments filed that specifically addressed the procedures and policies proposed in the Supplemental IRFA.

167. Response to Comments by the Chief Counsel for Advocacy of the Small Business Administration. Pursuant to the Small Business Jobs Act of 2010, which amended the RFA, the Commission is required to respond to any comment filed by the Chief Counsel for Advocacy of the Small Business Administration (SBA), and to provide a detailed statement of any change made to the proposed procedures as a result of those comments. The Chief Counsel did not file any comments in response to the procedures that were proposed in the Auction 111 Comment Public Notice .

168. Description and Estimate of the Number of Small Entities to Which the Procedures 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 rules adopted herein. The RFA generally defines the term small entity as having the same meaning as the terms small business, small organization, and small governmental jurisdiction. In addition, the term small business has the same meaning as the term small business concern under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.

169. The specific competitive bidding procedures and minimum opening bid amounts described in the Auction 111 Procedures Public Notice will affect all applicants participating in Auction 111, in which applicant eligibility is closed. Therefore, the specific competitive bidding procedures and minimum opening bid amounts described in the Auction 111 Comment Public Notice will affect only the 24 parties listed in Attachment A to the Auction 111 Procedures Public Notice and that are the only parties eligible to complete the remaining steps to become qualified to bid in Auction 111. These specific 24 Auction 111 parties include firms of all sizes.

170. Television Broadcasting. This Economic Census category comprises establishments primarily engaged in broadcasting images together with sound. These establishments operate television broadcast studios and facilities for the programming and transmission of programs to the public. These establishments also produce or transmit visual programming to affiliated broadcast television stations, which in turn broadcast the programs to the public on a predetermined schedule. Programming may originate in their own studio, from an affiliated network, or from external sources. The SBA has created the following small business size standard for such businesses: those having $41.5 million or less in annual receipts. The 2012 Economic Census reports that 751 firms in this category operated that entire year. Of that number, 656 had annual receipts of $25,000,000 or less, and 25 had annual receipts between $25,000,000 and $49,999,999. Based on this data OEA and MB therefore estimate that the majority of commercial television broadcasters are small entities under the applicable SBA size standard.

171. Additionally, the Commission has estimated the number of licensed commercial television stations to be 1,374. Of this total, 1,269 stations (or about 92.5%) had revenues of $41.5 million or less, according to Commission staff review of the BIA Kelsey Inc. Media Access Pro Television Database (BIA) on April 20, 2021, and therefore these stations qualify as small entities under the SBA definition.

172. In addition, the Commission has estimated the number of licensed noncommercial educational (NCE) television stations to be 384. These stations are non-profit, and therefore considered to be small entities.

173. There are also 2,371 LPTV stations, including Class A stations, and 3,306 TV translators. Given the nature of these services, OEA and MB presume that all of these entities qualify as small entities under the SBA small business size standard.

174. OEA and MB note, however, that the SBA size standard data does not enable them to make a meaningful estimate of the number of small entities that may participate in Auction 111.

175. In assessing whether a business entity qualifies as small under the SBA definition, business control affiliations must be included. The estimate therefore likely overstates the number of small entities that might be affected by this auction because the revenue figures on which this estimate is based does not include or aggregate revenues from affiliated companies. Moreover, the definition of small business also requires that an entity not be dominant in its field of operation and that the entity be independently owned and operated. The estimate of small businesses to which Auction 111 competitive bidding rules may apply does not exclude any television station from the definition of a small business on these bases and is therefore over-inclusive to that extent. Furthermore, OEA and MB are unable at this time to define or quantify the criteria that would establish whether a specific LPTV station or TV translator is dominant in its field of operation.

176. OEA and MB also note that they are unable to accurately develop an estimate of how many of the 24 parties in this auction are small businesses based on the number of small entities that applied to participate in prior broadcast auctions, because that information is not collected from applicants for broadcast auctions in which bidding credits are not based on an applicant's size (as is the case in auctions of licenses for wireless services). OEA and MB conclude, however, that the majority of Auction 111 eligible bidders would likely meet the SBA's definition of a small business concern.

177. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities. For Auction 111, no new reporting, recordkeeping, or other compliance requirements for small entities or other auction applicants were proposed. The Commission designed the auction application process itself to minimize reporting and compliance requirements for applicants, including small business applicants. For all spectrum auctions, in the first part of the Commission's two-phased auction application process, parties desiring to participate in an auction file streamlined, short-form applications in which they certify under penalty of perjury as to their qualifications. Eligibility to participate in bidding is based on an applicant's short-form application and certifications, as well as its upfront payment. In the second phase of the auction application process, there are additional compliance requirements for winning bidders. Thus, a small business that fails to become a winning bidder does not need to provide the additional showings and more detailed demonstrations required of a winning bidder.

178. Auction 111 applicants, including small entities, will become qualified to bid in Auction 111 only if they comply with the following: (1) Submission of a short-form application that is timely and is found to be substantially complete, and (2) timely submission of a sufficient upfront payment for at least one of the construction permits that the applicant selected on its FCC Form 175. In accordance with the terms of 47 CFR 1.2105(b)(2), an applicant whose application is found to contain deficiencies will have a limited opportunity to bring its application into compliance with the Commission's competitive bidding rules during a resubmission window. In addition, each Auction 111 applicant must maintain the accuracy of its previously filed short-form application electronically using the FCC Auction Application System.

179. In the second phase of the process, there are additional compliance requirements only applicable to winning bidders. As with other winning bidders, any small entity that is a winning bidder will be required to comply with the terms of the following rules, among others: (1) 47 CFR 1.2107(b), by submitting as a down payment within 10 business days after release of the auction closing public notice sufficient funds (in addition to its upfront payment) to bring its total amount of money on deposit with the Commission for Auction 111 to 20% of the amount of its winning bid or bids; (2) 47 CFR 1.2109(a), by submitting within 10 business days after the down payment deadline the balance of the amount for each of its winning bids; and (3) 47 CFR 73.5005(a), by electronically filing an amended long-form application and required exhibits for each construction permit won through Auction 111.

180. Further, as required by 47 CFR 1.2105(c), reports concerning prohibited communications must be filed with the Chief of the Auctions Division, as detailed in the Auction 111 Procedures Public Notice.

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

182. OEA and MB intend that the procedures adopted in the Auction 111 Procedures Public Notice to facilitate participation in Auction 111 will result in both operational and administrative cost savings for small entities and other auction participants. In light of the numerous resources that will be available from the Commission to small entities and other auction participants at no cost, the processes and procedures announced in the Auction 111 Procedures Public Notice should minimize any economic impact of the auction processes and procedures on small entities and should result in both operational and administrative cost savings for small entities and other auction participants. For example, prior to the beginning of bidding in this auction, the Commission will hold a mock auction to allow qualified bidders the opportunity to familiarize themselves with both the processes and systems that will be used in Auction 111. During the auction, participants will be able to access and participate in bidding via the internet using a web-based system, or telephonically, providing two cost-effective methods of participation and avoiding the cost of travel for in-person participation. Further, small entities as well as other auction participants will be able to avail themselves of a telephone hotline for assistance with auction processes and procedures as well as a technical support telephone hotline to assist with issues such as access to or navigation within the electronic FCC Form 175 and use of the FCC's auction bidding system. In addition, all auction participants, including small business entities, will have access to various other sources of information and databases through the Commission that will aid in both their understanding and participation in the process. These mechanisms are made available to facilitate participation by all qualified bidders and may result in significant cost savings for small business entities that utilize these mechanisms. These resources, coupled with the description and communication of the bidding procedures before bidding begins in Auction 111, should ensure that the auction will be administered predictably, efficiently and fairly, thus providing certainty for small entities as well as other auction participants.

183. Notice to SBA. The Commission will send a copy of the Auctions 111 Procedures Public Notice, including the Supplemental FRFA, to the Chief Counsel for Advocacy of the SBA.

This document corrects 49 CFR 64.621. The final rules document published at 86 FR 35632, July 7, 2021.

For the reasons discussed in the preamble, the Federal Communications Commission corrects 47 CFR part 64 by making the following correcting amendment:

The fishery for coastal migratory pelagic fish in the Gulf includes king mackerel, Spanish mackerel, and cobia, and is managed under the Fishery Management Plan for the Coastal Migratory Pelagic Resources of the Gulf of Mexico and Atlantic Region (FMP). The FMP was prepared by the Gulf of Mexico and South Atlantic Fishery Management Councils, and is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622. All weights for the Gulf migratory group of king mackerel (Gulf king mackerel) described in this temporary rule apply as either round or gutted weight.

The commercial ACL (equivalent to the commercial quota) for Gulf king mackerel is divided into separate ACLs for hook-and-line and run-around gillnet gear. The use of run-around gillnets for king mackerel is restricted to the Gulf southern zone. The Gulf southern zone includes the EEZ off Collier and Monroe Counties in south Florida. The Gulf southern zone encompasses an area of the EEZ south of a line extending due west from the boundary of Lee and Collier Counties on the Florida west coast, and south of a line extending due east from the boundary of Monroe and Miami-Dade Counties on the Florida east coast (50 CFR 622.369(a)(1)(iii)).

For the 2020-2021 fishing season, the commercial gillnet quota for Gulf king mackerel was 575,400 lb (260,997 kg). Regulations at 50 CFR 622.8(b) and 622.388(a)(1) require NMFS to close any component of the king mackerel commercial sector when its respective quota has been reached, or is projected to be reached, by filing a notification with the Office of the Federal Register. On January 28, 2021, NMFS determined that the 2020-2021 commercial gillnet quota had been reached, and closed the commercial gillnet component for the remainder of the 2020-2021 fishing year (86 FR 7815, February 2, 2021).

NMFS' most recent landings data for the 2020-2021 fishing year indicate that the commercial gillnet component exceeded the 575,400-lb (260,997-kg) quota by 11,920 lb (5,407 kg). The AM specified in 50 CFR 622.388(a)(1)(iii) states if commercial landings of king mackerel caught by run-around gillnet gear exceed the commercial gillnet ACL, then NMFS will reduce the commercial gillnet ACL in the following fishing year by the amount of the ACL overage.

Prior to the application of the ACL reduction, the 2021-2022 commercial gillnet ACL for Gulf king mackerel in the southern zone is 575,400 lb (260,997 kg) (50 CFR 622.384(b)(1)(iii)(B)). The fishing season for run-around gillnet gear is currently closed from July 1, 2021, through January 17, 2022, and will open at 6 a.m. on January 18, 2022. The 2021-2022 fishing year runs through June 30, 2022.

Consistent with the AM, NMFS reduces the 2021-2022 commercial gillnet quota by the amount of the 2020-2021 commercial gillnet ACL overage resulting in a run-around gillnet ACL of 563,480 lb (255,590 kg). If king mackerel commercial gillnet landings do not exceed the adjusted ACL in the 2021-2022 fishing year, then in the 2022-2023 fishing year, the component's commercial quota will again be 575,400 lb (260,997 kg) as specified in 50 CFR 622.384(b)(1)(iii)(B).

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR 622.8(b) and 622.388(a)(1)(iii), which were issued pursuant to section 304(b), and is exempt from review under Executive Order 12866.

Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, because prior notice and opportunity for public comment on this temporary rule is unnecessary. Such procedure is unnecessary because the rule that implemented the commercial ACL and the associated AM for the commercial ACL reduction has already been subject to public notice and comment, and all that remains is to notify the public of the commercial ACL reduction.

The Gulf reef fish fishery, which includes red snapper, is managed under the Fishery Management Plan for the Reef Fish Resources of the Gulf of Mexico (FMP). The FMP was prepared by the Gulf of Mexico Fishery Management Council and is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.

The final rule implementing Amendment 40 to the FMP established two components within the recreational sector fishing for Gulf red snapper: The private angling component, and the Federal for-hire component (80 FR 22422, April 22, 2015). Amendment 40 also allocated the red snapper recreational ACL (recreational quota) between the components and established separate seasonal closures for the two components. The Federal for-hire component's red snapper annual catch target (ACT) is 9 percent below the for-hire component quota (85 FR 9684, February 20, 2020; 50 CFR 622.41(q)(2)(iii)(B)). The measures in Amendment 40 were subsequently extended indefinitely through Amendment 45 to the FMP (81 FR 86971; December 2, 2016).

The red snapper for-hire component seasonal closure is projected from the component ACT. Projecting the for-hire component's seasonal closure using the ACT reduces the likelihood of the harvest exceeding the component quota and the total recreational quota.

All weights described in this temporary rule are in round weight.

The Federal for-hire component 2021 ACT for red snapper in the Gulf EEZ is 2.848 million lb (1.292 million kg) (50 CFR 622.41(q)(2)(iii)(B)).

The 2021 Federal Gulf red snapper for-hire fishing season was previously determined to be 63 days based on NMFS' projection of the date landings were expected to reach the component ACT. For details about the calculation of the projection for 2021, see https://www.fisheries.noaa.gov/southeast/sustainable-fisheries/gulf-mexico-recreational-red-snapper-management. NMFS previously announced in the Federal Register that the 2021 recreational season for the Federal for-hire component would begin at 12:01 a.m., local time, on June 1, 2021, and close at 12:01 a.m., local time, on August 3, 2021 (86 FR 15430; March 23, 2021).

However, the most recent landings data for the Gulf red snapper for-hire component plus projected landings for data that is not yet available indicate that approximately 670,113 lb (303,958 kg) of the for-hire component ACT remains. NMFS projects that this amount of the remaining ACT will be harvested in 22 days.

Therefore, in accordance with 50 CFR 622.8(c), NMFS reopens the Gulf red snapper Federal for-hire component for 22 days to allow the component ACT to be harvested. The recreational season for the Federal for-hire component will reopen at 12:01 a.m., local time, on October 15, 2021, and close at 12:01 a.m., local time, on November 6, 2021. When the for-hire component closes again on November 6, 2021, the bag and possession limits for red snapper for Federal for-hire vessels are zero. When the Federal for-hire component is closed, these bag and possession limits apply in the Gulf on board a vessel for which a valid Federal for-hire permit for Gulf reef fish has been issued, without regard to where such species were harvested, i.e., in state or Federal waters. In addition, a person aboard a vessel that has been issued a charter vessel/headboat permit for Gulf reef fish any time during the fishing year may not harvest or possess red snapper in or from the Gulf EEZ when the Federal charter vessel/headboat component is closed.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is taken under 50 CFR 622.8(c), which was issued pursuant to section 304(b) of the Magnuson-Stevens Act, and is exempt from review under Executive Order 12866, and other applicable laws.

Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment is unnecessary and contrary to the public interest.

Such procedures are unnecessary because the regulation at 50 CFR 622.8(c) has already has already been subject to notice and public comment, and all that remains is to notify the public that additional harvest is available under the established Federal for-hire component ACT, and therefore, the Federal for-hire component for Gulf red snapper will reopen. Such procedures are contrary to the public interest because many for-hire operations book trips for clients in advance and require as much notice as NMFS is able to provide to adjust their business plans to account for the reopening of the fishing season. Additionally, a reopening of the component in October instead of later in the fishing year is preferable because it may reduce the likelihood of encountering inclement weather that generally occurs with greater frequency later in the fishing year.

Atlantic HMS fisheries, including BFT fisheries, are managed under the authority of the Atlantic Tunas Convention Act (ATCA; 16 U.S.C. 971 et seq. ) and the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act; 16 U.S.C. 1801 et seq. ). The 2006 Consolidated Atlantic HMS Fishery Management Plan (FMP) and its amendments are implemented by regulations at 50 CFR part 635. Section 635.27 divides the U.S. BFT quota recommended by the International Commission for the Conservation of Atlantic Tunas (ICCAT) and as implemented by the United States among the various domestic fishing categories, per the allocations established in the 2006 Consolidated HMS FMP and its amendments. NMFS is required under the Magnuson-Stevens Act to provide U.S. fishing vessels with a reasonable opportunity to harvest quotas under relevant international fishery agreements such as the ICCAT Convention, which is implemented domestically pursuant to ATCA.

The baseline General and Reserve category quotas are 555.7 mt and 29.5 mt, respectively. The General category baseline subquota for the October through November time-period is 72.2 mt. Under the regulations, any unused General category quota rolls forward from one time-period to the next and is available for use in subsequent time-periods. To date for 2021, NMFS has published several actions that adjusted the Reserve category quota (86 FR 8717, February 9, 2021; 86 FR 43420, August 9, 2021; 86 FR 51016, September 14, 2021). NMFS recently also recently adjusted the Reserve category quota using the allowable underharvest from 2020 to 2021. The current adjusted Reserve category quota is 151.5 mt.

Under § 635.27(a)(9), NMFS has the authority to transfer quota among fishing categories or subcategories after considering determination criteria provided under § 635.27(a)(8). NMFS has considered all of the relevant determination criteria and their applicability to this inseason quota transfer. These considerations include, but are not limited to, the following:

Regarding the usefulness of information obtained from catches in the particular category for biological sampling and monitoring of the status of the stock (§ 635.27(a)(8)(i)), biological samples collected from BFT landed by General category fishermen and provided by tuna dealers provide NMFS with valuable parts and data for ongoing scientific studies of BFT age and growth, migration, and reproductive status. Additional opportunity to land BFT in the General category would support the continued collection of a broad range of data for these studies and for stock monitoring purposes.

NMFS also considered the catches of the General category quota to date (including during the summer/fall and winter fisheries in the last several years) and the likelihood of closure of that segment of the fishery if no adjustment is made (§ 635.27(a)(8)(ii) and (ix)). The General category October through November time-period subquota has not yet been exceeded, but without a quota transfer at this time, NMFS would likely need to close the General category fishery shortly, and participants would have to stop BFT fishing activities while commercial-sized BFT remain available in the areas where General category permitted vessels operate at this time of year. Transferring 140 mt of quota from the Reserve category for the October through November 2021 subquota time-period would provide limited additional opportunities to harvest the U.S. BFT quota while avoiding exceeding it. NMFS also took into consideration a recently published final rule that would set restricted-fishing days for the General category during the months of September through November 2021 (86 FR 43421, August 9, 2021). That rule would further increase the likelihood that the fishery would remain open throughout the subperiod and year.

Regarding the projected ability of the vessels fishing under the General category quota to harvest the additional amount of BFT quota transferred before the end of the fishing year (§ 635.27(a)(8)(iii)), NMFS considered General category landings over the last several years and landings to date this year. Landings are highly variable and depend on access to commercial-sized BFT and fishing conditions, among other factors, such as the restrictions that some dealers placed on their purchases of BFT from General category participants this year. In the unlikely event that any of this quota is unused by November 30, such quota will roll forward to the next subquota time period within the calendar year ( i.e., to the December period), and NMFS anticipates that it would be used before the end of the fishing year. Thus, this quota transfer would allow fishermen to take advantage of the availability of fish on the fishing grounds and provide a reasonable opportunity to harvest available U.S. BFT quota.

NMFS also considered the estimated amounts by which quotas for other gear categories of the BFT fishery might be exceeded (§ 635.27(a)(8)(iv)) and the ability to account for all 2021 landings and dead discards. In the last several years, total U.S. BFT landings have been below the available U.S. quota such that the United States has carried forward the maximum amount of underharvest allowed by ICCAT from one year to the next. NMFS recently took such an action to carryover the allowable 127.3 mt of underharvest from 2020 to 2021. NMFS will need to account for 2021 landings and dead discards within the adjusted U.S. quota, consistent with ICCAT recommendations, and anticipates having sufficient quota to do that.

NMFS also considered the effects of the adjustment on the BFT stock and the effects of the transfer on accomplishing the objectives of the FMP (§ 635.27(a)(8)(v) and (vi)). This transfer would be consistent with established quotas and subquotas, which are implemented consistent with ICCAT recommendations (established in Recommendation 17-06 and maintained in Recommendation 20-06), ATCA, and the objectives of the 2006 Consolidated HMS FMP and amendments. In establishing these quotas and subquotas and associated management measures, ICCAT and NMFS considered the best scientific information available, objectives for stock management and status, and effects on the stock. This quota transfer is in line with the established management measures and stock status determinations. Another principal consideration is the objective of providing opportunities to harvest the available General category quota without exceeding the annual quota, based on the objectives of the 2006 Consolidated HMS FMP and its amendments, including to achieve optimum yield on a continuing basis and to allow all permit categories a reasonable opportunity to harvest available BFT quota allocations (related to § 635.27(a)(8)(x)). Specific to the General category, this includes providing opportunities equitably across all time-periods.

Given these considerations, NMFS is transferring 140 mt of the available 151.5 mt of Reserve category quota to the General category. Therefore, NMFS adjusts the General category October through November 2021 subquota to 212.2 mt and adjusts the Reserve category quota to 11.5 mt. The General category fishery will remain open until November 30, 2021, or until the adjusted General category quota is reached, whichever comes first.

NMFS will continue to monitor the BFT fishery closely. Dealers are required to submit landing reports within 24 hours of a dealer receiving BFT. Late reporting by dealers compromises NMFS' ability to timely implement actions such as quota and retention limit adjustments, as well as closures, and may result in enforcement actions. Additionally, and separate from the dealer reporting requirement, General category and HMS Charter/Headboat vessel owners are required to report the catch of all BFT retained or discarded dead within 24 hours of the landing(s) or end of each trip, by accessing hmspermits.noaa.gov or by using the HMS Catch Reporting app or calling (888) 872-8862 (Monday through Friday from 8 a.m. until 4:30 p.m.).

Depending on the level of fishing effort and catch rates of BFT, NMFS may determine that additional adjustments ( e.g., quota adjustment, daily retention limit adjustment, or closure) are necessary to ensure available quota is not exceeded or to enhance scientific data collection from, and fishing opportunities in, all geographic areas. If needed, subsequent adjustments will be published in the Federal Register . In addition, fishermen may call the Atlantic Tunas Information Line at (978) 281-9260, or access hmspermits.noaa.gov, for updates on quota monitoring and inseason adjustments.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act and regulations at 50 CFR part 635 and is exempt from review under Executive Order 12866.

The Assistant Administrator for NMFS (AA) finds that it is impracticable and contrary to the public interest to provide prior notice of, and an opportunity for public comment on, this action for the following reasons:

The regulations implementing the 2006 Consolidated HMS FMP and its amendments provide for inseason retention limit adjustments to respond to the unpredictable nature of BFT availability on the fishing grounds, the migratory nature of this species, and the regional variations in the BFT fishery. Affording prior notice and opportunity for public comment to implement the quota transfer for the October through November 2021 time-period is contrary to the public interest as such a delay would likely fail to prevent the closure of the General category fishery when the baseline subquota for the October through November time-period is met and the need to re-open the fishery, with attendant costs to the fishery, including administrative costs and lost fishing opportunities. The delay would preclude the fishery from harvesting BFT that are available on the fishing grounds and that might otherwise become unavailable during a delay. This action does not raise conservation and management concerns. Transferring quota from the Reserve category to the General category does not affect the overall U.S. BFT quota, and the adjustment would have a minimal risk of exceeding the ICCAT-allocated quota. NMFS notes that the public had an opportunity to comment on the underlying rulemakings that established the U.S. BFT quota and the inseason adjustment criteria. Therefore, the AA finds good cause under 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment. For these reasons, there also is good cause under 5 U.S.C. 553(d) to waive the 30-day delay in effective date.

Regulations governing the Atlantic bluefish fishery are found in 50 CFR 648.160 through 648.167. These regulations require annual specification of a commercial quota that is apportioned among the coastal states from Maine through Florida. The process to set the annual commercial quota and the percent allocated to each state is described in § 648.162, and the final 2021 allocations were published on December 16, 2020 (85 FR 81421).

The final rule implementing Amendment 1 to the Bluefish Fishery Management Plan (FMP) published in the Federal Register on July 26, 2000 (65 FR 45844), and provided a mechanism for transferring bluefish quota from one state to another. Two or more states, under mutual agreement and with the concurrence of the NMFS Greater Atlantic Regional Administrator, can request approval to transfer or combine bluefish commercial quota under § 648.162(e)(1)(i) through (iii). The Regional Administrator must approve any such transfer based on the criteria in § 648.162(e). In evaluating requests to transfer a quota or combine quotas, the Regional Administrator shall consider whether: The transfer or combinations would preclude the overall annual quota from being fully harvested; the transfer addresses an unforeseen variation or contingency in the fishery; and the transfer is consistent with the objectives of the FMP and the Magnuson-Stevens Act.

Virginia is transferring 20,000 lb (9,072 kg) to Rhode Island, and New Jersey is transferring 50,000 lb (22,680 kg) to Massachusetts through mutual agreement of the states. These transfers were requested to ensure that Rhode Island and Massachusetts would not exceed their 2021 state quota. The revised bluefish quotas for 2021 are: Virginia, 238,800 lb (108,318 kg); Rhode Island, 223,434 lb (101,348 kg); New Jersey, 320,082 lb (145,187 kg); and, Massachusetts, 235,904 lb (107,004 kg).

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR 648.162(e)(1)(i) through (iii), which was issued pursuant to section 304(b), and is exempted from review under Executive Order 12866.