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Office of Energy Efficiency and Renewable Energy, Department of Energy.
Notification of final interpretive rule.
On August 27, 2021, the U.S. Department of Energy (DOE or Department) published in the
This final interpretive rule is effective December 29, 2021.
The docket for this activity, which includes
The docket web page can be found at:
For further information on how to review the docket, contact the Appliance and Equipment Standards Program staff at (202) 586-6636 or by email:
Ms. Julia Hegarty, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (240) 597-6737. Email:
Mr. Eric Stas, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 586-5827. Email:
The following sections discuss the statutory authority underlying this final interpretive rule, as well as the relevant background related to determination of what constitutes a “feature” for the purpose of establishing energy conservation standards under EPCA. Additionally, these sections address: DOE's historical interpretation of what constitutes a “feature” for the purpose of establishing energy conservation standards under EPCA; DOE's interpretation in the January 15, 2021 final interpretive rule (86 FR 4776; January 2021 Final Interpretive Rule); the issuance of Executive Order (E.O.) 13990; and the proposed interpretation in the August 27, 2021 notice of proposed interpretive rule (NOPIR) (86 FR 48049; August 2021 NOPIR). The following discussion provides the background for the final interpretive rule presented in this document addressing whether non-condensing technology (and associated venting) constitutes a performance-related “feature” under EPCA which may not be eliminated by an energy conservation standard.
EPCA,
EPCA provides a companion provision at 42 U.S.C. 6295(q)(1), which requires that a rule prescribing an energy conservation standard for a type of covered products shall specify a level of energy use or efficiency higher or lower than that which applies (or would apply) to any group of covered products that have the same function or intended use, if the Secretary determines that covered products within such group:
(A) Consume a different kind of energy from that consumed by other covered products within such type (or class); or
(B) have a capacity or other performance-related feature that other products within such type (or class) do not have and such feature justifies a higher or lower standard from that which applies (or will apply) to other products within such type (or class).
In making a determination of whether a performance-related feature justifies the establishment of a higher or lower standard, the Secretary must consider such factors as the utility to the consumer of such a feature, and such other factors as the Secretary deems appropriate. (42 U.S.C. 6295(q)(1))
These provisions apply generally to covered commercial and industrial equipment, other than ASHRAE equipment,
On January 20, 2021, the White House issued E.O. 13990, “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.” 86 FR 7037 (Jan. 25, 2021). Section 1 of that Order lists several policies related to the protection of public health and the environment, including reducing greenhouse gas emissions and bolstering the Nation's resilience to climate change.
As noted in the August 2021 NOPIR, DOE undertook a review of the final interpretation and withdrawal of proposed rulemakings published in the
As discussed previously in this document, when evaluating and establishing energy conservation standards, DOE is required to divide covered products into product classes by the type of energy used, by capacity, or by other performance-related features that DOE determines justify a different standard. In making a determination of whether a performance-related feature justifies a different standard, the Department must consider factors such as the utility to the consumer of the feature and other factors DOE determines are appropriate. (42 U.S.C. 6295(q)) As the product class provision is complementary to the “features” provision, consideration of what constitutes a feature and what constitutes utility for the purpose of establishing a product class is germane to the application of the “features” provision.
At a basic level, a “feature” is a trait, attribute, or function of a product. The usefulness and benefit provided to a consumer by a feature is the feature's “utility.” Given the multitude of covered products and equipment for which DOE is responsible, the Department has found the concept of “feature” to be very case-specific. 86 FR 4776, 4797 (Jan. 15, 2021). No single definition could effectively capture the potential for features across the broad array of consumer products and commercial equipment subject to EPCA's regulatory scheme.
Historically, DOE has viewed utility as an aspect of the product that is accessible to the layperson and is based on user operation and interaction with the product. This interpretation has been applied in DOE's previous rulemakings by determining utility based on the usefulness or value of the specific feature to the consumer, rather than based on considerations (including design parameters) that do not impact what the consumer perceives as the function of the product, or costs that anyone, including the consumer, manufacturer, installer, or utility companies, may bear. DOE reasoned that this approach is consistent with EPCA's requirement for a separate and extensive analysis of economic justification for the adoption of any new or amended energy conservation standard (
In a final rule addressing energy conservation standards for cooking products, DOE did not consider a design option that eliminated oven door windows. 63 FR 48038, 48041 (Sept. 8, 1998). A number of commenters asserted that the oven door window provides consumer utility by alleviating the need for users to open the oven door to check on the contents.
In the case of residential clothes washers, DOE has maintained a product class distinction based on axis of loading (
In a 2011 rulemaking, DOE created separate product classes for vented and ventless residential clothes dryers based on DOE's recognition of the “unique utility” that ventless clothes dryers offer to consumers. 76 FR 22454, 22485 (April 21, 2011). This utility could be characterized as the ability to have a clothes dryer in a living area where vents are impossible to install (
In a rulemaking for consumer water heaters, DOE found that water heaters that utilize heat pump technology did not need to be placed in a separate product class from conventional types of hot water heaters that utilize electric resistance technology, even though water heaters utilizing heat pumps require the additional installation of a condensate drain that a hot water heater utilizing electric resistance technology does not require. 75 FR 20112, 20135 (April 16, 2010). Regardless of the installation factors, DOE did not find the mode of heating water to be a performance-related feature or provide a unique utility.
However, DOE has cautioned that disparate products may have very different consumer utilities, thereby making direct comparisons difficult and potentially misleading. 76 FR 22454, 22485 (April 21, 2011).
On March 12, 2015, DOE published a notice of proposed rulemaking (NOPR) in the
In both the residential furnaces rulemaking and the commercial water heaters rulemaking, DOE proposed amended energy conservation standards that would effectively require products/equipment in certain classes to use condensing technology to meet the proposed amended standards, if adopted.
In the March 2015 Furnaces NOPR, DOE tentatively concluded that the methods by which a furnace is vented, which are significantly different for condensing and non-condensing furnaces,
On October 18, 2018, DOE received a petition for rulemaking submitted by the American Public Gas Association, Spire, Inc., the Natural Gas Supply Association, the American Gas Association, and the National Propane Gas Association, collectively referred to as the “Gas Industry Petitioners,” asking DOE to: (1) Issue an interpretive rule stating that DOE's proposed energy conservation standards for residential furnaces and commercial water heaters would result in the unavailability of “performance characteristics” within the meaning of EPCA, specifically by eliminating from the market units utilizing non-condensing technology; and (2) withdraw the proposed energy conservation standards for residential furnaces and commercial water heaters based upon such findings. DOE published the notice of petition in the
Following consideration of the comments on the petition, DOE published a NOPIR on July 11, 2019, presenting DOE's tentative
DOE published a supplemental notice of proposed interpretation in the
On January 15, 2021, DOE published in the
In light of this final interpretation, DOE withdrew its March 12, 2015 proposed rule and September 23, 2016 supplemental proposed rule for energy conservation standards for non-weatherized gas furnaces and mobile home gas furnaces, as well as its May 31, 2016 proposed rule for energy conservation standards for commercial water heating equipment. 86 FR 3873 (Jan. 15, 2021). However, DOE has not implemented the January 15, 2021 final interpretation in the context of any individual energy conservation standards rulemakings for affected covered products/equipment.
On August 27, 2021, DOE published a proposed interpretative rule in the
DOE initially found this interpretation to be the best reading of the relevant provisions of EPCA, which is consistent with the intent and purposes of the statute.
DOE requested comment on the proposed interpretation, which would reinstate DOE's prior reading of EPCA's “features” provision in the context of residential furnaces, commercial water heaters, and similarly-situated products. 86 FR 48049, 48057-48058 (August 27, 2021). The comment period was scheduled to close on September 27, 2021. However, in response to a request from a number of stakeholders,
DOE received comments in response to the August 2021 NOPIR from the interested parties listed in Table I.1.
A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record.
Based on DOE's reconsideration of the January 2021 Final Interpretative Rule and careful consideration of the comments received in response to the August 2021 NOPIR, the Department is revising its interpretation of EPCA's “features” provision in the context of condensing and non-condensing technology used in furnaces, water heating equipment, and similarly-situated appliances. Consistent with the interpretation presented in the May 2015 Furnaces NOPR, the September 2016 Furnaces SNOPR, and the May 2016 Commercial Water Heaters NOPR, DOE concludes that, in the context of residential furnaces, commercial water heaters, and similarly-situated products or equipment, use of non-condensing technology (and associated venting) is not a performance-related “feature” for the purpose of the EPCA prohibitions at 42 U.S.C. 6295(o)(4) and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa). DOE finds that non-condensing technology (and the associated venting) does not provide unique utility to consumers separate from an appliance's function of providing heated air or water, as applicable.
Upon further consideration, DOE concludes that utility is determined through the benefits and usefulness the feature provides to the consumer while interacting with the product, not through design parameters impacting installation complexity, or costs that anyone, including the consumer, manufacturer, installer, or utility companies, may bear. Stated differently, DOE has determined that differences in cost or complexity of installation between different methods of venting (
This interpretation is consistent with EPCA's requirement for a separate and extensive analysis of economic justification for the adoption of any new or amended energy conservation standard (
In response to the August 2021 NOPIR, DOE received a number of general comments either supporting or opposing DOE's proposed change in interpretation. Along these lines, the State Attorneys General commented in support of DOE's proposed interpretation of the EPCA's “features” provision, stating they strongly support a robust national appliance and equipment efficiency program. (State Attorneys General, No. 136 at p. 1) ASAP
In contrast, Crown Boiler, New Yorker Boiler, U.S. Boiler,
GEUAG objected to the proposed interpretation, asserting that DOE failed to engage in the reasoned decision-making in the August 2021 NOPIR required by administrative law. (GEUAG, No. 132 at p. 4) GEUAG commented that nothing in the technology or operation of these products has changed since DOE published the January 2021 Final Interpretive Rule, nor has anything changed in the extensive analyses, facts, and studies that supported that features determination. (
APGA
In response to these comments and as further explained elsewhere in this document, DOE is issuing this final interpretation following a reexamination of the record developed in the rulemakings for residential furnaces and commercial water heaters, review of the comments received to the August 2021 NOPIR, and further analysis of DOE's authority under EPCA. The issues addressed by this re-evaluation and the information on which this final interpretation is based have been thoroughly aired, not only in this proceeding, but also in a number of prior rulemakings (which themselves had ample opportunity for public comment), so the record before the agency is substantial. Moreover, as noted previously, DOE provided an extension of the opportunity for public comment on the August 2021 NOPIR at stakeholder request. Consequently, this final interpretive rule is the product of considerable public input.
DOE agrees with the commenters that little has changed in terms of the technology or operation of the products/equipment at issue since promulgation of the January 2021 Final Interpretive Rule and DOE has not acted to implement that interpretation during the intervening period. However, the absence of subsequent developments on the manufacturing and regulatory fronts does not preclude DOE from reexamining the substantial existing record to assess the soundness of its prior “features” determination. Furthermore, because stakeholder positions on the relevant issues have been well documented in the past, when coupled with the lack of any substantial changes during the intervening period, the Department does not agree with those stakeholders who argued that the comment period provided for in the August 2021 NOPIR (45 days in total) was inadequate to analyze DOE's proposal or to prepare written comments. Commenters have also failed to demonstrate any specific harms suffered as a result of reliance on DOE's interpretation between the January 2021 Final Interpretive Rule and the August 2021 NOPIR, and, particularly because that final interpretation was never implemented through amended energy conservation standards, the
As discussed in the following sections, based on this review and the extensive record that exists, DOE finds its historical interpretation (
As described previously in this document, DOE must follow specific statutory criteria for prescribing new or amended energy conservation standards for covered products and covered equipment. In general, a new or amended standard must be designed to achieve the maximum improvement in energy efficiency that the Secretary determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A); 42 U.S.C. 6295(o)(3)(B); 42 U.S.C. 6316(a)) In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens after receiving comments on the proposed standard and by considering, to the greatest extent practicable, seven factors. One of the seven factors for consideration is the lessening of the utility or the performance of the covered products likely to result from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(IV); 42 U.S.C. 6313(a)(6)(B)(ii)(IV); 42 U.S.C. 6316(a))
EPCA further directs that the Secretary may not prescribe an amended
As discussed in the August 2021 NOPIR, a “feature” is a trait, attribute, or function of a product. 86 FR 48049, 48053 (August 27, 2021). The usefulness and benefit provided to a consumer by a feature is the feature's “utility,” and consumer utility is used to evaluate whether a purported feature justifies a separate product class.
DOE has historically viewed utility of a product or equipment as an aspect of the appliance that is accessible to the layperson consumer and is based upon user operation and interaction with that appliance. Borrowing from the examples presented in the previous section of this document, oven door windows and angle of access for clothes washers are illustrative of this principle. Consumers use the oven door window (in conjunction with the oven lamp) to gauge the progress of food undergoing baking, without the need to open the oven door. Needing to open the oven door and losing heat would arguably decrease the energy efficiency of the oven. The oven door window is a feature which consumers generally appreciate and with which they routinely interact when cooking. The window's elimination would result in the loss of a performance-related feature that provides valued utility for consumers. Regarding the angle of access of a clothes washer, consumers currently have two options when purchasing clothes washers: Front-loading machines and top-loading machines. Some consumers, such as the elderly, may prefer a top-loading clothes washer, because it is easier to reach the laundry without excessive bending, which is in contrast to the angle of access of a front-loading washer. A broad spectrum of consumers recognizes and appreciates the ability of a top-loading washer to readily accept additional clothing items, even after a wash cycle has begun. Other consumers, such as those with disabilities, may prefer a front-loading machine because that angle of access better suits their access needs. The two angles provide consumer utility in terms of ease of loading or use to different consumer subgroups. As with the oven door window, the angle of access is a feature with which consumers routinely interact while washing clothes. Consequently, consistent with the requirements of EPCA, DOE views angle of access as a performance-related feature for clothes washers that cannot be eliminated from the market through adoption of an energy conservation standard.
In contrast to the examples discussed in the preceding paragraph, DOE has historically viewed a consumer's interaction with a furnace or water heater to be a simple one, whereby the user interacts only to initiate demand for heated air or water. After the consumer adjusts the thermostat or faucet, the user receives the requested heated air or water. There is no noticeable difference to the consumer in output based upon the type of technology (non-condensing or condensing) or venting used by the appliance, and, therefore, there is no difference in the utility derived from the appliance based on these factors. As noted previously, this approach had been DOE's longstanding interpretation of EPCA's “features” provision in the context of these appliances until the January 2021 Final Interpretive Rule.
On this topic, commenters had divergent viewpoints as to whether non-condensing technology, and associated venting, constitute a performance-related feature under EPCA. One group of commenters clearly favored the approach proposed in the August 2021 NOPIR. For example, NEEA commented in support of DOE's proposed interpretation that the technology used to supply heated air or water does not constitute a performance-related “feature” and that venting type or the use of non-condensing technology does not constitute a performance-related feature as defined in EPCA. (NEEA, No. 137 at p. 1) NEEA asserted that users are typically unaware of their water heater's or furnace's venting category or heating technology, as it does not provide them with any utility. (NEEA, No. 137 at p. 2)
CEC generally supported reinstatement of the prior interpretation of “features,” stating that the interpretation from the January 2021 Final Interpretive Rule is unjustified, is not authorized by law, misapplies EPCA, and will preserve inefficient products that offer no unique utility to the consumer. (CEC, No. 134 at p. 1) CEC agreed that the use of non-condensing technology (and associated venting) is not a performance-related feature for the purpose of the EPCA prohibitions because it does not have a direct effect on the utility of providing the consumer with hot air or water. (CEC, No. 134 at p. 3)
NBI commented that non-condensing technologies used in furnaces and water heaters do not represent a performance-related feature that justifies a different energy conservation standard. (NBI, No. 128 at p. 1) NBI further commented that non-condensing technology does not represent a unique utility to consumers that is separate from the appliance's function of providing heated air or water. (
The Institute for Policy Integrity stated that, while there may be some undefined, limited number of cases in which installation of a condensing unit could result in the loss of some usable space, in all other cases, such installation would not result in the loss of usable space. The commenter went on to state that the potential unavailability of a unit using non-condensing technology would not result in any significant loss of utility for many, if not most, consumers. (Institute for Policy Integrity, No. 145 at p. 3)
A.O. Smith stated that the proposed reversal of the January 2021 Final Interpretive Rule would return the Department to the most sensible reading of the statute. (A.O. Smith, No. 133 at p. 2) The State Attorneys General commented that furnaces and water heaters using non-condensing technologies and associated venting offer no unique utility to consumers beyond the basic function of providing heated air and heated water and that DOE had a strong statutory basis for its historical interpretation of “features.” (State Attorneys General, No. 136 at pp. 2, 3)
Another group of commenters supported the January 2021 Final Interpretive Rule as the proper application of EPCA's “features” provision. Among this group, Bradford White asserted that, based on the dictionary definitions of “attribute” and “characteristic,” a feature would include an attribute, which could be
Crown Boiler, New Yorker Boiler, and U.S. Boiler commented that the historical definition of “utility” for furnaces and water heaters, provided by DOE, ignores the installation considerations that impact the consumer directly. (Crown Boiler, No. 127 at p. 3; New Yorker Boiler, No. 130 at p. 3; U.S. Boiler, No. 129 at p. 3) GEUAG commented that, in considering what constitutes a “feature,” DOE must consider that condensing appliances cannot (physically or economically) perform in conjunction with non-condensing venting systems. (GEUAG, No. 132 at p. 11) GEUAG stated that in order to preserve consumer choice over the use of those energy alternatives that best meet the consumer's economic and operational needs, the January 2021 Final Interpretative Rule should be maintained. (
AGA
Crown Boiler, New Yorker Boiler, and U.S. Boiler stated that a “layperson consumer” may not understand the technical issues associated with a move from Category I (“atmospheric”) venting (
HARDI commented that it disagrees with DOE's interpretation of consumer utility and determining it only through the lens of whether the feature benefits the consumer. The commenter argued that changes to the living space caused by these retrofits do impact the utility of the new equipment, often in negative ways. (HARDI, No. 142 at pp. 2-3) For example, HARDI commented that replacing venting systems and/or relocating equipment in existing homes could lead to changes in the living space that would be unnecessary if a non-condensing system were installed, and that condensing venting systems may require freeze mitigation equipment (to prevent condensate from freezing) that could be impractical. (
HARDI also commented that inclusion of “size” in the “features” provision is not specifically limited to the size of the equipment itself, and that the change in size caused by the encroachment of a consumer's living space due to new venting or increased equipment closet size would similarly violate EPCA's protections. (
DOE responds to these comments as follows. As discussed in the August 2021 NOPIR and in the following paragraphs, there is a strong statutory basis for returning to DOE's historical interpretation of viewing the utility of a product or equipment as an aspect of the appliance that is accessible to the layperson consumer and is based upon user operation and interaction with that appliance. As stated, EPCA prohibits the Secretary from prescribing an amended or new standard if the Secretary finds (and publishes such finding) that interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered product (or certain covered equipment) type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary's finding. (42 U.S.C. 6295(o)(4); 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa); 42 U.S.C. 6316(a))
EPCA does not define these listed attributes or the related utility of such “features.” Therefore, to understand further those attributes that qualify as “features” and their relevant utility, DOE looks to EPCA as a whole and the purpose of the statute. (
First, EPCA authorizes DOE to prescribe new or amended energy conservation standards for covered products and covered equipment. (42 U.S.C. 6295(a)(2); 42 U.S.C. 6313) EPCA defines “energy conservation standard,” in relevant part, as a performance standard that prescribes the minimum
Reading these provisions in the context of EPCA as a whole, the statute requires the Department to establish energy conservation standards that regulate the energy use associated with the useful output or energy consumption at the point of use of an appliance in operation of its major function. Where an appliance possesses more than one major function, Congress authorized and directed DOE to consider regulation of energy efficiency or consumption of an appliance for each major function. Where Congress tasked DOE to address other matters beyond the appliance's major function(s), it expressly directed DOE to set standards that pursue those other objectives, such as when it directed the agency to establish standards for standby mode and off mode operation of covered products (
Given EPCA's focus on an appliance's major function(s), it is reasonable to assume that the consumer would be cognizant of such function and recognize such feature as providing additional benefit in the appliance's performance of such major function. It follows that an aspect of the appliance whose elimination would not be noticed by the consumer when interacting with the appliance would not be the type of product characteristic that Congress would expect DOE to preserve at the expense of energy savings. Given that DOE is directed to consider the application of EPCA's “features” provision in appropriate cases when prescribing new or amended energy conservation standards, DOE finds the better reading of the “features” provision (
Using this logic, in the context of residential furnaces, commercial water heaters, and similarly-situated products or equipment, incorporation of non-condensing technology (and associated venting) is not a performance-related “feature” for the purpose of the EPCA prohibitions at 42 U.S.C. 6295(o)(4) and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa).
As discussed in the subsequent paragraphs, DOE acknowledges that a condensing appliance generally cannot operate as intended by the manufacturer if installed with a non-condensing venting system without modifications. Also, issues of complex and costly installations that require modifications to the existing venting system to be properly installed, as well as potential alternatives, are economic matters appropriately addressed as part of the determination of whether new or amended standards are economically justified, as required by EPCA.
DOE finds that non-condensing technology (and the associated venting) does not provide unique utility to consumers distinct from an appliance's function of providing heated air or water, as applicable. Regardless of changes to the living space that may be required at the time of installation, the consumer utility of a condensing residential furnace or commercial water heater is the same as that of a non-condensing residential furnace or commercial water heater once installed and operating. While interacting with a residential furnace or commercial water heater during operation of the appliance, a consumer discerns no unique utility resulting from the specific heat exchanger technology (non-condensing or condensing) or the associated venting, as the heated air or water provided by the appliance is indistinguishable to the consumer regardless of those attributes. Because the consumer realizes the same perceived benefit (
DOE disagrees with Bradford White that the Department's reading, as adopted in this final interpretive rule, is inconsistent with the inclusion of “reliability” in the “features” provision. Whether a consumer can depend on a product to provide its useful output when needed goes directly to an aspect of the appliance that is accessible to the layperson consumer and is based upon user operation and interaction with that appliance. Preserving reliability ensures, for example, that when a consumer calls upon a residential furnace or commercial water heater, the consumer is provided heated air or water, as the case may be. Conversely, there is no noticeable difference to the consumer in access or output based upon the type of technology or venting used by the appliance. In addition, DOE disagrees with Bradford White's assertion that condensing technology requires an increase in the overall size of a water heater, and instead, the agency agrees with the Institute for Policy Integrity that installation of a condensing appliance would not result in a loss of useful space for most consumers. To confirm this understanding, DOE conducted a review of several condensing and non-condensing models having similar characteristics (
APGA
In response to APGA
In the August 2021 NOPIR, DOE clarified that the proposed view of the “features” provision in the present case of non-condensing gas-fired residential furnaces and commercial water heaters is distinguishable from certain other products that the Department has regulated in the past (
Certain commenters agreed with the reasoning in DOE's August 2021 NOPIR that DOE's past determinations of the statute's “features” provision were properly applied and that the current case examining condensing vs. non-condensing technology is distinguishable. Along these lines, NEEA commented that the interpretation proposed in the August 2021 NOPIR is consistent with DOE's historical interpretation of a performance-related feature and that the features of water heaters and furnaces accessible to a layperson that affect user operation are the ability of the equipment to provide hot water or heated air on demand when called for by the end user, which does not depend on the technology used to heat the water or how the equipment is vented. (NEEA, No. 137 at p. 2) NEEA distinguished the present issue from DOE's prior interpretation of the “features” provision in the context of ventless clothes dryers, stating that ventless clothes dryers allow for the installation of a clothes dryer for certain consumers that would otherwise not be able to install a clothes dryer, whereas a condensing product can always be installed, despite a small percentage of cases where installation is complicated. (
In contrast, other commenters viewed DOE's proposed approach in the August 2021 NOPIR as conflicting with the Department's past precedent. For example, AHRI and IER cited the rulemaking for ventless clothes dryers as precedent for the proposition that venting provides utility. (AHRI, No. 139 at p. 4; IER, No. 138 at p. 5) IER stated that utility of a residential furnace to the consumer is not merely heated air, but also, based on the DOE's previous ruling on ventless clothes dryers, installation considerations. (IER, No. 138 at p. 5) IER also referenced DOE's prior statement that “compact-size clothes dryers provide utility to consumers by allowing for installation in space-constrained environments.” (IER, No. 138 at p. 5 (
In their comments, AGA
AGA
In response to these comments, DOE does not find any tension or inconsistency between its prior application of the “features” provision and the interpretation adopted in this document (
Regarding ventless clothes dryers, DOE recognizes that there may be some parallels between those appliances and the noncondensing furnaces and water heaters at issue here (particularly regarding problematic installation situations), but the Department would once again clarify that the circumstances surrounding these two sets of appliances are distinguishable. Those different circumstances lead to different results when DOE is interpreting EPCA's “features” provision. Stated simply, DOE found
The clothes dryer situation was explained in detail in a direct final rule (DFR) published in the
The present case of residential furnaces and commercial water heaters is quite different. Unlike consumers of ventless dryers, consumers facing the prospect of replacing a non-condensing residential furnace or commercial water heater with a condensing furnace or water heater do have options available to either modify existing venting or install a new venting system to accommodate a condensing furnace or water heater, or to install a feasible alternative to have heated air or water provided (
With regard to compact clothes dryers, the “compact” delineation relates directly to the size and capacity of the product—two attributes explicitly listed in the “features” provision. (
In establishing a separate product class for space-constrained central air conditioners, DOE recognized the space constraints faced by these products and that the efficiency of such products is limited by physical dimensions that are rigidly constrained by the intended application. 76 FR 37408, 37446 (June 27, 2011). Space-constrained central air conditioners have an indoor or outdoor unit that is limited in size due to the location in which the unit operates. As a result, space-constrained central air conditioners lack the flexibility of other central air conditioners to increase the physical size of the unit, thereby limiting the ability of space-constrained units to achieve improved efficiency through use of a larger coil.
With regard to the equipment classes for PTACs, in its prior rulemaking, DOE found that the size of the heat exchanger directly affects the energy efficiency of the equipment. 73 FR 58772, 58782 (October 7, 2008). Like space-constrained central air conditioners, the
The furnace fan product classes also are not an analogous comparison to residential furnaces and commercial water heaters that rely on non-condensing technology. Furnace fans are electrically-powered devices used in consumer products for the purpose of circulating air through ductwork. 10 CFR 430.2. A furnace fan operates to allow the furnace in which it is installed to function. The references to condensing and non-condensing in the furnace fan product classes do not reflect a difference in utility between condensing and non-condensing furnaces, but rather reflect the differences between the operation of a furnace fan installed in a condensing furnace as compared to a furnace fan installed in a non-condensing furnace. In establishing the energy conservation standards for furnace fans, DOE differentiated between furnace fan product classes based on internal structure and application-specific design differences that impact furnace fan energy consumption. 79 FR 38130, 38142 (July 3, 2014). The internal structures encountered differ for a furnace fan installed in a condensing furnace, as compared to a furnace fan installed in a non-condensing furnace. The presence of an evaporator coil or secondary heat exchanger, as in a condensing furnace, significantly impacts the internal structure of an HVAC product, and in turn, the energy performance of the furnace fan integrated in that HVAC product.
For the reasons presented in the August 2021 NOPIR and the preceding paragraphs, DOE has determined that its historical interpretation—that utility is properly determined through an assessment of the benefits and usefulness that the feature provides to the consumer while interacting with the product—is the better reading of EPCA. The differences in cost or complexity of installation between products/equipment with different heat exchanger technology (
The Department acknowledges that, in its January 2021 Final Interpretative Rule, it extended its view of consumer utility of residential furnaces and commercial water heaters beyond those appliances' primary function of providing heated air or water, giving considerable weight to installation situations that could require the addition of new pipes or venting to the usable space of a home or business, major modifications to a utility room, or encroachment upon an existing window or patio. 86 FR 4776, 4786 (Jan. 15, 2021).
However, differences in cost or complexity of installation between different methods of venting (
Once again, commenters had mixed views on the change in position outlined in the August 2021 NOPIR, with some in favor and others opposed to DOE's proposed modified approach. Among those in favor, ASAP
The Institute for Policy Integrity commented that in making a “feature” determination, DOE should consider consumer utility as separate from any cost considerations, any technological advances that could resolve the current challenges, and any benefits of fuel switching. (Institute for Policy Integrity, No. 145 at p. 1) CEC commented that the “features” provision makes no mention of cost as a relevant consideration and that such factors are properly considered during the evaluation of a proposed standard level's economic justification. (CEC, No. 134 at p. 3)
NRDC
The State Attorneys General commented that any differences in cost or complexity of installation between different methods of venting for condensing and non-condensing products are more properly considered as part of the DOE's economic analysis in individual energy conservation standards rulemakings. (State Attorneys General, No. 136 at p. 3) These commenters stated that any potential
A.O. Smith commented that it is technologically feasible to replace a non-condensing gas-fired water heater with a condensing gas-fired water heater in all circumstances, but that there are certain instances where it is cost prohibitive to do so. To address such circumstances, A.O. Smith recommended that DOE expand the economic analysis for different subgroups with specific installation considerations as part of any future substantive rulemaking on efficiency standards. (A.O. Smith, No. 133 at p. 9) Similarly, ASAP
A.O. Smith and the Institute for Policy Integrity commented that the January 2021 reinterpretation of the “features” provision double-counts the economic impact of certain costs as compared to the efficiency gains, in that installation issues would be considered in terms of both utility and the economic analyses. (A.O. Smith, No. 133 at p. 4; Institute for Policy Integrity, No. 145 at pp. 2, 3)
Turning to the commenters opposed to DOE's proposed change in approach, IER disagreed with the DOE's tentative finding that the issues sought to be addressed by the January 2021 Final Interpretative Rule were based on cost. (IER, No. 138 at p. 3) IER urged DOE to explain why the final interpretive rule was “framed as a matter of cost” when DOE stated in the January 2021 Final Interpretive Rule that the decision was not based on the cost of the feature. (
AGA
AGA
Bradford White commented that although energy conservation standards at condensing levels would likely benefit their company, it predicted that eliminating non-condensing technologies from the market would impact both installers and consumers negatively, with there being circumstances where condensing gas-fired water heaters could not be used, either due to installation challenges or increased cost. (Bradford White, No. 146 at p. 1)
Crown Boiler, New Yorker Boiler, and U.S. Boiler asserted that DOE itself acknowledged problems with sole reliance on the economic justification during promulgation of the current rule (
Kramer commented that the “non-condensing” feature of furnaces should be preserved to avoid economic burden for low-income households for which the installation of a condensing furnace is not feasible due to the current location of the installed unit and the costs associated with changing ductwork or upgrading electric services to accommodate a condensing unit. (Kramer, No. 124 at p. 1)
HARDI commented that for existing homes, the need to change the venting system to install a condensing furnace leads to modifications to the living space that are unnecessary if the equipment is replaced with a non-condensing furnace or water heater. The commenter also stated that non-condensing furnaces and water heaters likewise obviate the need for a consumer to install heat-tape and other freeze mitigation equipment used to prevent the freezing of condensate in the vent and without which, there could be resulting damage to the furnace or water heater. Finally, HARDI argued that for consumers with heating equipment that is only in use part-time, the need to constantly heat the venting system would be impractical. (HARDI, No. 142 at p. 2)
DOE acknowledges that the interpretation adopted in this final interpretive rule is a departure from the January 2021 Final Interpretative Rule. The interpretation adopted in this document, which reverts to DOE's historical interpretation, gives meaning to the “features” provision in the context of EPCA's direction to DOE to establish minimum levels of energy efficiency or maximum quantities of energy use for covered products and equipment when performing their intended function. Conversely, the January 2021 Final Interpretive Rule expanded the “features” provision to include consideration beyond the operation of a product or equipment, namely through consideration of other installation matters best characterized as cost issues. As explained previously in this document and in the paragraphs that follow, DOE has concluded that its historical interpretation is the best reading of the statute, an understanding shared by numerous commenters on the August 2021 NOPIR.
As indicated by several commenters, in certain instances, replacing a non-condensing appliance with a condensing one may involve complications, including the need for installation of new venting and renovation of existing living space. However, these installation complications are separate and apart from any performance-related impacts of the unit once installed. When properly installed, a condensing furnace or water heater would be expected to provide the consumer with heated air or water indistinguishable from that supplied by a non-condensing appliance.
DOE finds strong statutory support for its changed position. EPCA's “features” provision makes no mention of cost as a relevant consideration. (42 U.S.C. 6295(o)(4); 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa)) As AGA
EPCA enumerates seven factors for economic justification that DOE must consider when evaluating whether to establish or amend energy conservation standards.
As part of evaluating this factor, DOE conducts a LCC and PBP analysis. The LCC is the total consumer expense of an appliance or product over the life of that product, consisting of total installed cost plus operating costs. The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost, including installation, of a more-efficient product through lower operating costs.
In this case, DOE originally considered the additional costs associated with installing condensing residential furnaces and condensing commercial water heaters in the rulemaking proceedings for those appliances whose proposals were withdrawn in conjunction with the January 2021 Final Interpretive Rule. (
In proposing to return to its historical interpretation, DOE furthermore added that it tentatively concluded that it gave undue weight to the arguments presented by the Gas Industry Petitioners. 86 FR 48049, 48054-48055 (August 27, 2021). After reexamining the record, DOE preliminarily determined that the qualitative arguments made by the Gas Industry Petitioners were not accompanied by sufficient evidence to establish the existence or magnitude of the alleged problem, as would support the significant change from DOE's historical interpretation to the interpretation contained in the January 2021 Final Interpretive Rule. 86 FR 48049, 48055 (August 27, 2021). To the extent that consumers would be faced with difficult installation situations, DOE tentatively concluded that consumers have other options for resolving such situations without the need for the Department to declare non-condensing technology and associated venting to be a performance-related feature under EPCA.
In response to these tentative findings in the August 2021 NOPIR, NEEA cited results from a study conducted by NEEA, Pacific Gas and Electric Company, National Grid, and Northeast Energy Efficiency Partnerships, which found that 5 percent or fewer of condensing gas appliance installations were challenging, and stated that, even in cases that present significant challenges, technical solutions were always possible. (NEEA, No. 137 at p. 2) The commenter referenced technologies available on the market (
In contrast, AGA
AHRI commented that consumers, especially in older homes, will struggle to replace their appliances if condensing-only appliance standards are set in efficiency rulemakings. (AHRI, No. 139 at p. 1) Kramer commented that non-condensing furnaces are sometimes installed in unheated spaces such as an attic or garage, and that such locations cannot accommodate a condensing furnace because the condensation will freeze and cause damage to the heating unit. (Kramer, No. 124 at p.1) Kramer further commented that relocation of such units to the heated part of the home is cost-prohibitive due to reworking of the ductwork and would result in loss of living space inside the home. (
Crown Boiler, New Yorker Boiler, and U.S. Boiler stated that the research conducted by Oak Ridge National Laboratory (ORNL) referenced by DOE in the August 2021 NOPIR demonstrates that condensing furnace standards would result in a significant problem. (Crown Boiler, No. 127 at p. 3; New Yorker Boiler, No. 130 at pp. 3-4; U.S. Boiler, No. 129 at pp. 3-4) These commenters asserted that the “EntrainVent” technology discussed in the ORNL research cited by DOE is problematic because: (1) If the common portion of the vent becomes blocked, the condensing appliance will force flue products backwards down the category I vent and into the living space through the draft diverter and that detecting this spillage will be a significant technical challenge; and (2) this system will only work when the furnace inducer is running, meaning that water heater cannot safely operate when the furnace inducer is off. (Crown Boiler No. 127 at p. 4; New Yorker Boiler, No. 130 at pp. 4-5; and U.S. Boiler, No. 129 at pp. 4-5) Crown Boiler, New Yorker Boiler, and U.S. Boiler further commented that the use of other venting systems described in the ONRL report (
Bradford White commented that a non-condensing commercial gas-fired water heater installed in a high-rise building in a large, older city (
AGA
Bradford White commented that DOE should not base its analysis on a technology that is not currently commercially available (
AHRI stated that there is no justification or evidence provided by DOE for its statements regarding the existence of technological solutions for gas-fired installation issues, orphaned water heaters, or other issues raised by the gas industry petition that would support the Department's proposed policy change. (AHRI, No. 139 at p. 2) The commenter argued that requiring new venting for condensing
As discussed previously, installation costs are addressed in the LCC and PBP analyses, as well as in consumer subgroup-specific analyses. These analyses account for the cost of difficult (
With respect to concerns raised regarding the safety of the venting technologies evaluated by ORNL, DOE reiterates that the evaluated technologies are discussed in the August 2021 NOPIR only as examples of potential solutions that could emerge to mitigate installation issues related to venting, ones whose development could be hampered by the interpretation provided in the January 2021 Final Interpretive Rule. DOE notes that the EntrainVent evaluated by ORNL was a proof-of-concept designed to demonstrate key functionality, rather than a commercially-available product, and as such, it had not incorporated additional safety-related features (
DOE would point out that the DuraVent FasNSeal 80/90 is a commercially-available product intended for a similar purpose (
As stated, DOE acknowledges that installation of condensing products/equipment requires modifications to the installed space in some applications and that such modifications may impact the installation cost and/or complexity. As illustrated by the analyses conducted in the prior rulemakings for residential furnaces and commercial water heaters, such costs and complexities can be and have been addressed as part of DOE's evaluation under EPCA's factors for determining whether new or amended standards would be economically justified. To the extent that commenters raised concern regarding the practicability and safety of certain developing technologies that address the orphaned water heater issue, DOE notes that its analysis for the prior residential furnaces rulemaking accounted for the potential of separate venting, limiting consideration of such developing technology to a sensitivity analysis.
Installation costs may influence consumer decisions regarding fuel choice, and, at any time, a segment of consumers may choose replacement products that rely on a different fuel source than that of the unit being replaced. In a limited number of cases, a consumer facing a difficult installation situation may decide it to be impracticable (due to cost or other considerations, including local safety and building codes as suggested by Bradford White and AHRI) to replace a product with another that relies on the same fuel source. In such cases, the consumer may choose to replace the existing appliance with one utilizing a different fuel type as another viable solution. However, the mere potential for fuel switching does not serve as the basis for establishment of a performance-related feature under EPCA.
As discussed in the August 2021 NOPIR, a consumer may replace a gas-fired furnace or water heater with an electric heat pump or water heater, thereby obviating the need for extensive changes to existing venting. 86 FR 48049, 48055-48056 (August 27, 2021). Consumers routinely make such choices, where they deem it appropriate, which reflects economic decision-making. Installation of an electric heat pump or water heater would provide the consumer with heated air or hot water, respectively, without the loss of usable space or aesthetics because it would obviate the need to make significant changes to the residential or commercial space. An electric heat pump or water heater would also be an option to provide the consumer with heated air or hot water,
Commenters offered a variety of views on the topic of fuel switching. The CA IOUs expressed their belief that fuel switching will occur in the market regardless of whether standards are changed, and that fuel switching should not be a rationale for designating non-condensing technologies as a feature. (CA IOUs, No. 141 at p. 3)
NRDC
CEC commented that EPCA does not authorize DOE to limit energy conservation standards to allow for the inefficient consumption of energy by certain fuel types; instead, standards must be “designed to achieve the maximum improvement in energy efficiency that the Secretary determines is technologically feasible and economically justified.” (CEC, No. 134 at p. 4)
The State Attorneys General stated that nothing in EPCA precludes fuel switching, as long as DOE's standard would not eliminate the appliance of that fuel type entirely, and the commenters suggested that a consumer facing difficult installation could replace a gas-fired appliance with an electric unit to eliminate the need for extensive changes to existing venting. (State Attorneys General, No. 136 at p. 3) The State Attorneys General and ASAP
The Institute for Policy Integrity commented that the rulemakings would likely cause a small amount of fuel switching, but that theorizing about the extent of this impact would unnecessarily suggest that there is a “threshold” that violates EPCA. (Institute for Policy Integrity, No. 145 at pp. 1, 7) The commenter argued that “fuel-type” is not explicitly listed among the traits that standards may not make unavailable. (
In contrast, APGA
AGA
AGA
Bradford White stated that DOE appeared to put a fair amount of weight in past trends related to fuel switching continuing to be representative of what will occur in the future, but the commenter disagreed with any such assumption because it argued that significant activity at the State and local levels is driving all parties to shift to primarily electric products. (Bradford White No, 146 at p. 2)
AGA
Kramer commented that a fuel change to an electric unit is very frequently not economically feasible for lower income clients due to necessary electrical upgrades. Kramer elaborated that if the home only has 60 or 100 amp service, a breaker panel and electric meter
GEUAG asserted that the proposed interpretive rule constrains fuel choice and is, therefore, incompatible with the law and detrimental to consumers. (GEUAG, No. 132 at p. 3) GEUAG commented that the alternatives of electric resistance and heat pumps typically resort to electric resistance when cold weather conditions exist, negating much of the claimed benefit and putting lives at risk in extreme temperature events, asserting that grid reliability becomes an issue when switching to electric. (
Once again, in response to these comments, DOE does not find potential fuel switching to be a basis to support a determination that non-condensing technology and associated venting constitute a performance-related feature. As stated in the August 2021 NOPIR, nothing in EPCA precludes such effects, as long as DOE's standard would not eliminate the appliance of that fuel type entirely. 86 FR 48049, 48056 (August 27, 2021). In this case, interpretation of EPCA's “features” provision that maintains non-condensing and condensing units under a single class of product or equipment would not eliminate residential furnaces or commercial water heaters that rely on natural gas, propane, or other any other fuel type, from the U.S. market. Notably, both non-condensing and condensing units rely on natural gas and propane as the fuel source. The interpretation adopted in this document would continue to preserve consumer choice, which DOE understands to be influenced by a variety of considerations, including market conditions, such as fuel prices. The final interpretive rule adopted in this document allows consumers to make the choice of when market forces (and installation costs) warrant replacement of a gas-fired appliance with a comparable electric appliance.
It bears noting that while EPCA recognizes that various fuel types exist in the appliance marketplace and provides certain protections, the statute itself does not act, nor does it mandate, that DOE take regulatory action to preclude such marketplace effects, except in limited cases expressly defined. In certain areas, Congress set statutory energy conservation standard levels for products, such as consumer water heaters (
Where Congress required DOE to consider the potential impacts of fuel switching, it stated so explicitly. Congress directed DOE to prescribe a final rule not later than January 1, 1989, to establish an energy conservation standard for certain furnaces,
Conversely, ECPA's “features” provision at 42 U.S.C. 6295(o)(4) does not include fuel type within its ambit. Thus, Congress structured EPCA to recognize fuel-type distinctions and to create a level playing field, while balancing the need for overall energy savings. For these reasons, DOE finds the positions of GEUAG, AGA
Regarding the concerns raised by commenters about the safety of fuel switching and grid reliability, DOE notes that modern gas-fired central furnaces also require electricity to operate and would, therefore, be rendered inoperable during a power outage without an appropriately-sized back-up generator. Thus, while grid reliability may be a legitimate societal concern, it is not limited to any one specific fuel type.
In response to concerns about using commercial electric water heaters in place of commercial gas-fired water heaters, DOE has concluded that solutions are available to resolve the potential issues raised by commenters. For example, DOE notes that issues related to the maximum temperature setting on a heat pump water heater could be mitigated by utilizing electric resistance heating as a backup or supplementary source to reach the desired outlet temperature. The concerns raised about the panel and outlet upgrades needed to handle the increased amp draw are appropriately considered as installation costs. Finally, the recovery rate will largely be a function of the rate at which the water heater provides heat to the water, so sizing an electric water heater with a heating rate comparable to that of the gas-fired water heater it is replacing should not result in any loss of recovery ability.
Regarding the prevalence of fuel switching, DOE has typically found fuel switching to occur in a small number of cases in any given rulemaking, and the Department takes this potential into account as part of the analyses conducted to determine whether amended standards would be economically justified. For example, in the September 2016 Furnaces SNOPR, DOE estimated the percentages of consumers that would switch from a residential non-weatherized gas furnace to either a residential heat pump or electric furnace, and from a commercial gas-fired water heater to a commercial electric water heater (as a result of the existing gas-fired water heater being “orphaned”) that would occur under the various potential amended standards scenarios under consideration.
Even if the Department had definitive evidence regarding the extent of difficult or impossible installation situations, loss of usable residential or commercial space, or fuel switching effects, DOE nonetheless had a strong statutorily-based rationale for its historical interpretation and the return
As discussed previously, utility is not determined through analyzing or making comparisons to considerations that impact installation, or costs that anyone, including the consumer, manufacturer, installer, or utility companies, may bear. Utility is determined through the benefits and usefulness the feature provides to the consumer while interacting with the product. This approach is consistent with EPCA's requirement for a separate and extensive analysis of economic justification for the adoption of any new or amended energy conservation standard (
In the August 2021 NOPIR, DOE tentatively concluded that it gave insufficient weight to other policy arguments in development of the January 2021 Final Interpretive Rule. 86 FR 48049, 48054 (August 27, 2021). In particular, DOE expressed concern that tying the concept of “feature” to a specific technology would effectively lock in the currently existing technology as the ceiling for product efficiency and eliminate DOE's ability to address technological advances that could yield significant consumer benefits in the form of lower energy costs while providing the same functionality/utility for the consumer.
On this topic, A.O. Smith commented that the January 2021 Final Interpretive Rule imposes an artificial ceiling on energy efficiency that is well below the maximum improvement that the Department would likely determine is technologically feasible if it followed its longstanding interpretation. The commenter also argued that the January 2021 Final Interpretive Rule would lock in an outdated and inefficient technology with no consumer benefit, an outcome contrary to EPCA. (A.O. Smith, No. 133 at p. 7) A.O. Smith added that the preservation of non-condensing water heaters at the current minimum efficiency level would freeze the marketplace, reduce innovation, increase regulatory burden, and limit consumer choice. (
NEEA commented that establishing product classes based on non-condensing technology or venting type would limit innovation and increase the cost of efficiency for both consumers and utility programs. (NEEA, No. 137 at p. 3) NEEA further stated that maintaining a single product class for condensing and non-condensing equipment will: (1) Continue to encourage the market to develop lower-cost solutions for the small percentage of installations that are challenging; (2) reduce the cost of efficiency for consumers and utility programs, and (3) result in overall cost and energy savings as more condensing equipment is installed. (
CEC commented that finalizing the proposal from the August 2021 NOPIR will ensure that DOE is able to continue to address technological advances that could lower energy costs (something which is especially important to low-income consumers) and maintain product utility. (CEC, No. 134 at p. 2)
The State Attorneys General stated that the January 2021 Final Interpretive Rule unlawfully interpreted EPCA's statutory requirements and improperly constrained DOE's ability to adopt more stringent, updated efficiency standards for residential furnaces, commercial water heaters, and similarly-situated products and equipment. (State Attorneys General, No. 136 at p. 2) The State Attorneys General expressed concern that determining what constitutes a feature based solely on product technology, rather than how the consumer interacts with and benefits from a feature, could undermine the entire Appliance Standards Program, and they agreed that tying the concept of “feature” to a specific technology would effectively lock in the currently existing technology as the ceiling for product efficiency and eliminate DOE's ability to address technological advances that could yield significant consumer benefits in the form of lower energy costs while providing the same functionality/utility for the consumer. (
The CA IOUs and ASAP
In contrast, Bradford White disagreed with the contention that establishing non-condensing technology as a feature would limit technological innovation in the industry. The commenter pointed to condensing gas water heaters as an example, as that technology was nonetheless developed even though previous technologies were far more efficient than DOE and ENERGY STAR requirements. (Bradford White, No. 146 at p. 2)
AGA
AHRI stated that separate product classes for condensing and non-condensing products/equipment would not deter technical development or slow the adoption of condensing technologies, but it would protect consumers who do not have the ability change the technology used in their building. (AHRI, No. 139 at p. 1) In support of its position that a separate product class would not hinder the movement in the market towards condensing products when feasible, AHRI also commented that existing market data demonstrate a trend towards condensing furnaces where venting does not present a technical problem. (
GEUAG and APGA
IER stated that there is no explanation provided for the assertion made by DOE that the January 2021 Final Interpretive Rule would impede innovation and the development of more efficient technologies, and IER further stated that the market is moving toward more efficient appliances. (IER, No. 138 at p. 7) In addition, IER argued that Congress's purposes and goals in enacting EPCA were not that energy efficiency should overtake all competing concerns. (
Crown Boiler, New Yorker Boiler, and U.S. Boiler reiterated their prior recommendations that DOE use “compatibility with Category I venting” as the feature that should be protected, stating that this approach would address the concern with potentially locking in a particular technology. (Crown Boiler, No. 127 at pp. 5-6; New Yorker Boiler, No. 130 at p. 6; U.S. Boiler, No. 129 at p. 6) Crown Boiler, New Yorker Boiler, and U.S. Boiler further commented that DOE's reliance on E.O. 13990 to initiate the review of the January 2021 Final Interpretive Rule suggests that DOE's reversal is rooted more in politics than in fault with the current rule. (Crown Boiler, No. 127 at p. 1; New Yorker Boiler, No. 130 at p. 1; U.S. Boiler, No. 129 at p. 1).
Similarly, APGA
Additionally, GEUAG stated that nothing has changed in the applicable legal standards and requirements that govern such determinations and asserted that DOE's decision is a result of changing policy preferences. The commenter stated that DOE cited E.O. 13990 as part of its rationale to justify its change in position, but argued that such executive actions cannot supersede existing statutes, such as EPCA, that protect consumers from regulatory overreach. (GEUAG, No. 132 at p. 8).
APGA
As stated previously, DOE initiated a re-review of the January 2020 Final Interpretative Rule in response to E.O 13990. However, the final interpretation, which reinstates DOE's historical interpretation, is based solely on EPCA, review of public comments received, and the analysis presented in this document. Contrary to assertions from certain commenters, it is not based on political considerations or a policy to promote electrification. Instead, as explained in detail previously, it is based on what the Department has concluded to be the better reading of the “features” provision in light of EPCA's direction for DOE to establish new and amended energy conservation standards for covered products and equipment to achieve the congressional purpose of improving the energy efficiency of major appliances and certain other consumer products. (42 U.S.C. 6201(5)) It is further noted that EPCA directs DOE to regulate enumerated types of covered products and equipment, not specific subcategories of equipment tied to the technologies they utilize. Not surprisingly, different groups of commenters on the August 2021 NOPIR had diametrically opposed viewpoints as to the lawful interpretation of the relevant statutory provisions.
In the 2016 Furnaces SNOPR, DOE expressed concern that separate standards based on preserving a technology used to produce heated air (or the associated type of venting) would not place any restriction on the use of non-condensing appliances and, therefore, would not be a meaningful standard, resulting in little or no change in products offered, their market shares, or energy savings.
As previously discussed and identified by commenters, newer technologies are being developed and introduced into the market that, when mature could address issues of difficult installation (orphaned appliances in particular), thereby allowing consumers to switch from a non-condensing furnace to a condensing furnace while permitting continued use of existing common venting in a greater variety of applications. This venting technology may allow a consumer to obtain the efficiency of a condensing furnace using the existing venting in a residence by sharing venting space with a water heater. However, DOE also notes that such technology was not incorporated into the analysis conducted for the prior rulemakings and would include such technology in its analysis only after evaluating the technological feasibility of any such technology in future rulemakings.
In response to Crown Boiler, New Yorker Boiler, and U.S. Boiler's suggestions to rely on venting capability as the “feature,” DOE previously determined that such an approach would increase the complexity and regulatory burden of its regulatory framework (
If DOE is required to maintain separate product classes to preserve less-efficient technologies (
Moreover, EPCA provides for consideration of the costs associated with difficult installations and the potential impact on consumers, including sub-groups of consumers, as part of the robust economic factors DOE is statutorily required to consider. As discussed, such installation costs are appropriately considered when comparing the savings in operating costs to any increase in the price of, or in the initial charges for, a covered product or article of covered equipment which are likely to result from the imposition of standards, as directed by EPCA. (42 U.S.C. 6295(o)(2)(B)(i)(II)) It is noted that EPCA requires DOE to consider whether its overall energy conservation standards are economically justified, not to assess economic justification in each individual instance, which is tantamount to what certain commenters would ask the agency to do.
In response to comments about market trends moving towards condensing appliances, DOE takes into consideration such trends as part of the national impact analysis conducted to determine whether amended standards are justified under EPCA's economic factors. As explained in the withdrawn March 2015 Furnaces NOPR and September 2016 Furnaces SNOPR for residential furnaces, a key component of the national impact analysis is the trend in energy efficiency projected for the no-new-standards case and each of the evaluated standards cases. 81 FR 65720, 65796 (Sept. 23, 2016). In the withdrawn September 2016 Furnaces SNOPR, DOE projected growth in the national market share of condensing products in the base case analysis (
Moreover, simply relying on the market to realize improvements in energy efficiency and related technological innovations would result in the Appliance Standards Program being largely voluntary, contrary to the purposes and goals of EPCA. The regulatory scheme prescribed by EPCA directs DOE to drive efficiencies beyond what the market provides where energy conservation would result in significant energy savings and are technologically feasible and economically justified.
Based on the foregoing discussion, DOE revises its interpretation of EPCA's “features” provision in the context of condensing and non-condensing technology used in furnaces, water heating equipment, and similarly-situated appliances (where permitted by EPCA) along the lines discussed. Accordingly, DOE concludes that in the context of residential furnaces, commercial water heaters, and similarly-situated products/equipment, use of non-condensing technology (and associated venting) is not a performance-related “feature” for the purpose of the EPCA prohibitions at 42 U.S.C. 6295(o)(4) and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa).
In the August 2021 NOPIR, DOE stated that at the conclusion of this proceeding, the Department plans to again evaluate whether amended energy conservation standards would result in significant savings of energy, be technologically feasible, and be economically justified, consistent with its latest interpretation. 86 FR 48049, 48057 (August 27, 2021).
Regarding the petition-for-rulemaking process, the CA IOUs commented that DOE should produce explicit guidelines on what types and what quantity of evidence is necessary to be considered as a petition to change DOE policies and processes for DOE rulemakings, in order to avoid wasted time and funds. (CA IOUs, No. 141 at p. 2).
A.O. Smith commented that the January 2021 reinterpretation disadvantages U.S.-based manufacturers against low-cost and subsidized products imported from outside the United States. (A.O. Smith, No. 133 at p. 8) A.O. Smith also expressed concern that the January 2021 Final Interpretative Rule, if relied upon to set Federal efficiency standards, will invite many State petitions for exemption from Federal preemption in order to allow for stricter State regulations, given the low Federal standards that would be adopted. (
GEUAG provided a number of criticisms of the economic analysis performed by DOE as part of past rulemakings to evaluate amended energy conservation standards. (GEUAG, No. 132 at pp. 9, 11) GEUAG also provided a number of comments regarding the economic analyses conducted as part of the withdrawn rulemaking notices, including comments on the assumptions relied on in the Monte Carlo analyses conducted as part of the national impact analysis, which GEUAG asserted inflated the estimated energy savings. (
AGA
Other commenters urged DOE to finalize the August 2021 NOPIR and proceed with rulemakings to set new energy efficiency standards expeditiously. The CA IOUs commented that DOE should not restart rulemakings for residential furnaces and commercial water heaters from scratch, because the previous analyses are still relevant, and new standards should be established. (CA IOUs, No. 141 at p. 3) The State Attorneys General and ASAP
As discussed previously, given the multitude of covered products and equipment for which DOE is responsible, the Department has found the concept of “feature” to be very case-specific. 86 FR 4776, 4797 (Jan. 15, 2021). As such, DOE finds that it would not be practicable, as suggested by the CA IOUs, to develop guidelines as to the type and degree of the information and data necessary to make a determination under the “features” provision.
With regard to rulemakings for residential furnaces and commercial water heaters, as noted, DOE withdrew its March 12, 2015 proposed rule and September 23, 2016 supplemental proposed rule for energy conservation standards for non-weatherized gas furnace and mobile home gas furnaces, as well as its May 31, 2016 proposed rule for energy conservation standards for commercial water heating equipment, for further proceedings consistent with the interpretation contained in the January 2021 Final Interpretive Rule. 86 FR 4776, 4817 (Jan. 15, 2021);
As explained in this document, after a careful review of the available information and public comments received, DOE is adopting the interpretation as proposed in the August 2021 NOPIR, which reinstates its historical interpretation of the “features” provision. This change in approach should address any competition concerns or preemption waiver issues mentioned by A.O. Smith. With the finalization of this interpretation, DOE plans to once again evaluate whether amended energy conservation standards for the subject covered products/equipment would result in significant savings of energy, be technologically feasible, and be economically justified, consistent with its latest interpretation. As always, DOE welcomes public comments from all interested parties and will take into account the viewpoints expressed in this proceeding. As part of that evaluation, DOE will consider the comments addressing the technical and economic analyses, as well as any associated assumptions.
As explained in the August 2021 NOPR, in any future rulemaking, DOE will make clear that the rulemakings for residential furnaces and commercial water heating equipment have been subject to multiple rounds of public comment, including public meetings, and extensive records have been developed in the relevant dockets. (
In summary, for this final interpretive rule, DOE has concluded that differences in cost or complexity of installation between different methods of venting (
Based on the foregoing discussion and careful consideration of available information and comments received, DOE hereby revises its interpretation of EPCA's “features” provision in the context of condensing and non-condensing technology used in furnaces, water heating equipment, and similarly-situated appliances (where permitted by EPCA) along the lines discussed previously elsewhere in this document. DOE concludes that in the context of residential furnaces, commercial water heaters, and similarly-situated products/equipment, use of non-condensing technology (and associated venting) is not a performance-related “feature” for the purpose of the EPCA prohibitions at 42 U.S.C. 6295(o)(4); 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa); 42 U.S.C. 6316(a).
DOE has determined that its interpretation is the better reading of the relevant language of EPCA and DOE's statutory obligation to establish energy conservation standards for covered products and equipment. Additionally, the interpretation allows DOE to consider more-efficient standards for certain products and equipment, consistent with the agency's statutory mandate.
DOE is revising its application of the “features” provisions in 42 U.S.C. 6295(o)(4) and 42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa) as an interpretive rule within the meaning of the Administrative Procedure Act (APA). 5 U.S.C. 551(4), 5 U.S.C. 553(b). DOE published the proposed interpretive rule in the
The Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) waived review of this interpretive rule under Executive Order 12866, “Regulatory Planning and Review.” 58 FR 51735 (Oct. 4, 1993).
The Secretary of Energy has approved publication of this notification of final interpretive rule.
This document of the Department of Energy was signed on December 20,
Food and Drug Administration, HHS.
Final rule; confirmation of effective date.
The Food and Drug Administration (FDA or we) is confirming the effective date of October 5, 2021, for the final rule that appeared in the
Effective date of final rule published in the
For access to the docket to read background documents or comments received, go to
Stephen DiFranco, Center for Food Safety and Applied Nutrition, Food and Drug Administration, 5001 Campus Dr., College Park, MD 20740, 240-402-2710.
In the
We gave interested persons until October 4, 2021, to file objections or requests for a hearing. We received no objections or requests for a hearing on the final rule. Therefore, we find that the effective date of the final rule that published in the
Color additives, Cosmetics, Drugs, Foods, Medical devices.
Therefore, under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321, 341, 342, 343, 348, 351, 352, 355, 361, 362, 371, 379e) and under authority delegated to the Commissioner of Food and Drugs, we are giving notice that no objections or requests for a hearing were filed in response to the September 2, 2021, final rule. Accordingly, the amendments issued thereby became effective October 5, 2021.
Food and Drug Administration, HHS.
Final rule; confirmation of effective date.
The Food and Drug Administration (FDA or we) is confirming the effective date of November 8, 2021, for the final rule that appeared in the
Effective date of final rule published in the
For access to the docket to read background documents or comments received, go to
Rachel Morissette, Center for Food Safety and Applied Nutrition, Food and Drug Administration, 5001 Campus Dr., College Park, MD 20740, 240-402-1212.
In the
We gave interested persons until November 5, 2021, to file objections or requests for a hearing. We received no objections or requests for a hearing on the final rule. Therefore, we find that the effective date of the final rule that published in the
Color additives, Cosmetics, Drugs, Foods, Medical devices.
Therefore, under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321, 341, 342, 343, 348, 351, 352, 355, 361, 362, 371, 379e) and under authority delegated to the Commissioner of Food and Drugs, we are giving notice that no objections or requests for a hearing were filed in response to the October 6, 2021, final rule. Accordingly, the amendments issued thereby became effective November 8, 2021.
Food and Drug Administration, HHS.
Final amendment; final order.
The Food and Drug Administration (FDA or we) is classifying the transcutaneous electrical continence device into class II (special controls). The special controls that apply to the device type are identified in this order and will be part of the codified language for the transcutaneous electrical continence device's classification. We are taking this action because we have determined that classifying the device into class II (special controls) will provide a reasonable assurance of safety and effectiveness of the device. We believe this action will also enhance patients’ access to beneficial innovative devices.
This order is effective December 29, 2021. The classification was applicable on November 6, 2018.
Purva Pandya, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 4634, Silver Spring, MD 20993-0002, 240-402-9979,
Upon request, FDA has classified the transcutaneous electrical continence device as class II (special controls), which we have determined will provide a reasonable assurance of safety and effectiveness. In addition, we believe this action will enhance patients’ access to beneficial innovation, by placing the device into a lower device class than the automatic class III assignment.
The automatic assignment of class III occurs by operation of law and without any action by FDA, regardless of the level of risk posed by the new device. Any device that was not in commercial distribution before May 28, 1976, is automatically classified as, and remains within, class III and requires premarket approval unless and until FDA takes an action to classify or reclassify the device (see 21 U.S.C. 360c(f)(1)). We refer to these devices as “postamendments devices” because they were not in commercial distribution prior to the date of enactment of the Medical Device Amendments of 1976, which amended the Federal Food, Drug, and Cosmetic Act (FD&C Act).
FDA may take a variety of actions in appropriate circumstances to classify or reclassify a device into class I or II. We may issue an order finding a new device to be substantially equivalent under section 513(i) of the FD&C Act (see 21 U.S.C. 360c(i)) to a predicate device that does not require premarket approval. We determine whether a new device is substantially equivalent to a predicate device by means of the procedures for premarket notification under section 510(k) of the FD&C Act (21 U.S.C. 360(k)) and part 807 (21 CFR part 807).
FDA may also classify a device through “De Novo” classification, a common name for the process authorized under section 513(f)(2) of the FD&C Act. Section 207 of the Food and Drug Administration Modernization Act of 1997 established the first procedure for De Novo classification (Pub. L. 105-115). Section 607 of the Food and Drug Administration Safety and Innovation Act modified the De Novo application process by adding a second procedure (Pub. L. 112-144). A device sponsor may utilize either procedure for De Novo classification.
Under the first procedure, the person submits a 510(k) for a device that has not previously been classified. After receiving an order from FDA classifying the device into class III under section 513(f)(1) of the FD&C Act, the person then requests a classification under section 513(f)(2).
Under the second procedure, rather than first submitting a 510(k) and then a request for classification, if the person determines that there is no legally marketed device upon which to base a determination of substantial equivalence, that person requests a classification under section 513(f)(2) of the FD&C Act.
Under either procedure for De Novo classification, FDA is required to classify the device by written order within 120 days. The classification will be according to the criteria under section 513(a)(1) of the FD&C Act. Although the device was automatically placed within class III, the De Novo classification is considered to be the initial classification of the device.
When FDA classifies a device into class I or II via the De Novo process, the device can serve as a predicate for future devices of that type, including for 510(k)s (see 21 U.S.C. 360c(f)(2)(B)(i)). As a result, other device sponsors do not have to submit a De Novo request or premarket approval application to market a substantially equivalent device (see 21 U.S.C. 360c(i), defining “substantial equivalence”). Instead, sponsors can use the less-burdensome 510(k) process, when necessary, to market their device.
On September 18, 2017, FDA received Bio-Medical Research Ltd.'s request for De Novo classification of the INNOVO. FDA reviewed the request in order to classify the device under the criteria for classification set forth in section 513(a)(1) of the FD&C Act.
We classify devices into class II if general controls by themselves are insufficient to provide reasonable assurance of safety and effectiveness, but there is sufficient information to establish special controls that, in combination with the general controls, provide reasonable assurance of the safety and effectiveness of the device for its intended use (see 21 U.S.C. 360c(a)(1)(B)). After review of the information submitted in the request, we determined that the device can be classified into class II with the establishment of special controls. FDA has determined that these special controls, in addition to the general controls, will provide reasonable assurance of the safety and effectiveness of the device.
Therefore, on November 6, 2018, FDA issued an order to the requester classifying the device into class II. In this final order, FDA is codifying the classification of the device by adding 21 CFR 876.5330.
FDA has identified the following risks to health associated specifically with this type of device and the measures required to mitigate these risks in table 1.
FDA has determined that special controls, in combination with the general controls, address these risks to health and provide reasonable assurance of safety and effectiveness. In order for a device to fall within this classification, and thus avoid automatic classification in class III, it would have to comply with the special controls named in this final order. The necessary special controls appear in the regulation codified by this order. This device is subject to premarket notification requirements under section 510(k) of the FD&C Act.
The Agency has determined under 21 CFR 25.34(b) 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 order establishes special controls that refer to previously approved collections of information found in other FDA regulations and guidance. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). The collections of information in the guidance document “De Novo Classification Process (Evaluation of Automatic Class III Designation)” have been approved under OMB control number 0910-0844; the collections of information in 21 CFR part 814, subparts A through E, regarding premarket approval, have been approved under OMB control number 0910-0231; the collections of information in part 807, subpart E, regarding premarket notification submissions, have been approved under OMB control number 0910-0120; the collections of information in 21 CFR part 820, regarding quality system regulation, have been approved under OMB control number 0910-0073; and the collections of information in 21 CFR part 801, regarding labeling, have been approved under OMB control number 0910-0485.
Medical devices.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 876 is amended as follows:
21 U.S.C. 351, 360, 360c, 360e, 360j, 360l, 371.
(a)
(b)
(1) Non-clinical performance testing must characterize the electrical stimulation, including the following: Waveforms, output modes, maximum output voltage, maximum output current, pulse duration, frequency, net charge per pulse, maximum phase charge at 500 ohms, maximum current density, maximum average current, and maximum average power density.
(2) The patient-contacting materials must be demonstrated to be biocompatible.
(3) Performance data must demonstrate the electromagnetic compatibility (EMC), electrical safety, thermal safety, and mechanical safety of the device.
(4) Software verification, validation, and hazard analysis must be performed.
(5) Labeling must include the following:
(i) Instructions for use, including specific instructions regarding the proper placement of electrodes;
(ii) A summary of electrical stimulation parameters; and
(iii) Cleaning instructions and reuse information.
Food and Drug Administration, HHS.
Final amendment; final order.
The Food and Drug Administration (FDA or we) is classifying the diagnostic neurosurgical microscope filter into class II (special controls). The special controls that apply to the device type are identified in this order and will be part of the codified language for the diagnostic neurosurgical microscope filter's classification. We are taking this action because we have determined that classifying the device into class II (special controls) will provide a reasonable assurance of safety and effectiveness of the device. We believe this action will also enhance patients' access to beneficial innovative devices.
This order is effective December 29, 2021. The classification was applicable on March 28, 2019.
Daryl Kaufman, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 4212, Silver Spring, MD 20993-0002, 301-796-6467,
Upon request, FDA has classified the diagnostic neurosurgical microscope filter as class II (special controls), which we have determined will provide a reasonable assurance of safety and effectiveness. In addition, we believe this action will enhance patients' access to beneficial innovation by placing the device into a lower device class than the automatic class III assignment.
The automatic assignment of class III occurs by operation of law and without any action by FDA, regardless of the level of risk posed by the new device. Any device that was not in commercial distribution before May 28, 1976, is automatically classified as, and remains within, class III and requires premarket approval unless and until FDA takes an action to classify or reclassify the device (see 21 U.S.C. 360c(f)(1)). We refer to these devices as “postamendments devices” because they were not in commercial distribution prior to the date of enactment of the Medical Device Amendments of 1976, which amended the Federal Food, Drug, and Cosmetic Act (FD&C Act).
FDA may take a variety of actions in appropriate circumstances to classify or reclassify a device into class I or II. We may issue an order finding a new device to be substantially equivalent under section 513(i) of the FD&C Act (21 U.S.C. 360c(i)) to a predicate device that does not require premarket approval. We determine whether a new device is substantially equivalent to a predicate by means of the procedures for premarket notification under section 510(k) of the FD&C Act (21 U.S.C. 360(k)) and part 807 (21 CFR part 807).
FDA may also classify a device through “De Novo” classification, a common name for the process authorized under section 513(f)(2) of the FD&C Act. Section 207 of the Food and Drug Administration Modernization Act of 1997 established the first procedure for De Novo classification (Pub. L. 105-115). Section 607 of the Food and Drug Administration Safety and Innovation Act modified the De Novo application process by adding a second procedure (Pub. L. 112-144). A device sponsor may utilize either procedure for De Novo classification.
Under the first procedure, the person submits a 510(k) for a device that has not previously been classified. After receiving an order from FDA classifying the device into class III under section 513(f)(1) of the FD&C Act, the person then requests a classification under section 513(f)(2).
Under the second procedure, rather than first submitting a 510(k) and then a request for classification, if the person determines that there is no legally marketed device upon which to base a determination of substantial equivalence, that person requests a classification under section 513(f)(2) of the FD&C Act.
Under either procedure for De Novo classification, FDA is required to classify the device by written order within 120 days. The classification will be according to the criteria under section 513(a)(1) of the FD&C Act. Although the device was automatically within class III, the De Novo classification is considered to be the initial classification of the device.
We believe this De Novo classification will enhance patients' access to beneficial innovation. When FDA classifies a device into class I or II via the De Novo process, the device can serve as a predicate for future devices of that type, including for 510(k)s (see 21 U.S.C. 360c(f)(2)(B)(i)). As a result, other device sponsors do not have to submit a De Novo request or premarket approval application to market a substantially equivalent device (see 21 U.S.C. 360c(i), defining “substantial equivalence”). Instead, sponsors can use the less-burdensome 510(k) process, when necessary, to market their device.
On April 27, 2018, Leica Microsystems AG submitted a request for De Novo classification of the Leica FL400. FDA reviewed the request in order to classify the device under the criteria for classification set forth in section 513(a)(1) of the FD&C Act.
We classify devices into class II if general controls by themselves are insufficient to provide reasonable assurance of safety and effectiveness, but there is sufficient information to establish special controls that, in combination with the general controls, provide reasonable assurance of the safety and effectiveness of the device for its intended use (see 21 U.S.C. 360c(a)(1)(B)). After review of the information submitted in the request, we determined that the device can be classified into class II with the establishment of special controls. FDA has determined that these special controls, in addition to the general controls, will provide reasonable assurance of the safety and effectiveness of the device.
Therefore, on March 28, 2019, FDA issued an order to the requester classifying the device into class II. In this final order, FDA is codifying the classification of the device by adding 21 CFR 882.4950.
FDA has identified the following risks to health associated specifically with this type of device and the measures required to mitigate these risks in table 1.
FDA has determined that special controls, in combination with the general controls, address these risks to health and provide reasonable assurance of safety and effectiveness. In order for a device to fall within this classification, and thus avoid automatic classification in class III, it would have to comply with the special controls named in this final order. The necessary special controls appear in the regulation codified by this order. This device is subject to premarket notification requirements under section 510(k).
At the time of classification, diagnostic neurosurgical microscope filters are for prescription use only. Prescription devices are exempt from the requirement for adequate directions for use for the layperson under section 502(f)(1) of the FD&C Act (21 U.S.C. 352(f)(1)) and 21 CFR 801.5, as long as the conditions of 21 CFR 801.109 are met.
The Agency has determined under 21 CFR 25.34(b) 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 order establishes special controls that refer to previously approved collections of information found in other FDA regulations and guidance. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). The collections of information in the guidance document “De Novo Classification Process (Evaluation of Automatic Class III Designation)” have been approved under OMB control number 0910-0844; the collections of information in 21 CFR part 814, subparts A through E, regarding premarket approval, have been approved under OMB control number 0910-0231; the collections of information in part 807, subpart E, regarding premarket notification submissions, have been approved under OMB control number 0910-0120; the collections of information in 21 CFR part 820, regarding quality system regulation, have been approved under OMB control number 0910-0073; and the collections of information in 21 CFR part 801, regarding labeling, have been approved under OMB control number 0910-0485.
Medical devices.
Therefore, under the Federal Food, Drug, and Cosmetic Act, and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 882 is amended as follows:
21 U.S.C. 351, 360, 360c, 360e, 360j, 360l, 371.
(a)
(b)
(1) Non-clinical performance testing must demonstrate that the device performs as intended under anticipated conditions of use, and verify and validate filter specifications and functional characteristics, including the following:
(i) Spectrum and intensity of the illumination source;
(ii) Spectrum of the excitation and emission filter modules when integrated in the surgical operating microscope;
(iii) Excitation power and power density;
(iv) Optical path loss from illumination source to objective lens or microscope camera;
(v) Homogeneity of the excitation light at the focal plane;
(vi) Fluorescence detection sensitivity;
(vii) Verification of calibration or preoperative procedures; and
(viii) If camera-based, spectral sensitivity of the camera.
(2) Labeling must include:
(i) Identification of the filter characteristics in conjunction with a compatible surgical operating microscope, to include the following:
(A) Illumination spectrum and power density; and
(B) Excitation and emission filter spectra.
(ii) Instructions for calibration or preoperative checks to ensure device functionality prior to each use;
(iii) Instructions for use with compatible surgical operating microscopes, external light sources, and cameras;
(iv) A warning that the device should only be used with fluorophores approved for use within the specified spectral ranges; and
(v) A warning that the device is not a standalone diagnostic.
Food and Drug Administration, HHS.
Final amendment; final order.
The Food and Drug Administration (FDA or we) is classifying the cerebrospinal fluid shunt system into class II (special controls). The special controls that apply to the device type are identified in this order and will be part of the codified language for the cerebrospinal fluid shunt system's classification. We are taking this action because we have determined that classifying the device into class II (special controls) will provide a reasonable assurance of safety and effectiveness of the device. We believe this action will also enhance patients' access to beneficial innovative devices.
This order is effective December 29, 2021. The classification was applicable on August 22, 2014.
Xiaolin Zheng, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 2674, Silver Spring, MD 20993-0002, 301-796-2823,
Upon request, FDA has classified the cerebrospinal fluid shunt system as class II (special controls), which we have determined will provide a reasonable assurance of safety and effectiveness. In addition, we believe this action will enhance patients' access to beneficial innovation.
The automatic assignment of class III occurs by operation of law and without any action by FDA, regardless of the level of risk posed by the new device. Any device that was not in commercial distribution before May 28, 1976, is automatically classified as, and remains within, class III and requires premarket approval unless and until FDA takes an action to classify or reclassify the device (see 21 U.S.C. 360c(f)(1)). We refer to these devices as “postamendments devices” because they were not in commercial distribution prior to the date of enactment of the Medical Device Amendments of 1976, which amended the Federal Food, Drug, and Cosmetic Act (FD&C Act).
FDA may take a variety of actions in appropriate circumstances to classify or reclassify a device into class I or II. We may issue an order finding a new device to be substantially equivalent under section 513(i) of the FD&C Act (21 U.S.C. 360c(i)) to a predicate device that does not require premarket approval. We determine whether a new device is substantially equivalent to a predicate by means of the procedures for premarket notification under section 510(k) of the FD&C Act (21 U.S.C. 360(k) and part 807 (21 CFR part 807).
FDA may also classify a device through “De Novo” classification, a common name for the process authorized under section 513(f)(2) of the FD&C Act. Section 207 of the Food and Drug Administration Modernization Act of 1997 established the first procedure for De Novo classification (Pub. L. 105-115). Section 607 of the Food and Drug Administration Safety and Innovation Act modified the De Novo application process by adding a second procedure (Pub. L. 112-144). A device sponsor may utilize either procedure for De Novo classification.
Under the first procedure, the person submits a 510(k) for a device that has not previously been classified. After receiving an order from FDA classifying the device into class III under section 513(f)(1) of the FD&C Act, the person then requests a classification under section 513(f)(2).
Under the second procedure, rather than first submitting a 510(k) and then a request for classification, if the person determines that there is no legally marketed device upon which to base a determination of substantial equivalence, that person requests a classification under section 513(f)(2) of the FD&C Act.
Under either procedure for De Novo classification, FDA is required to classify the device by written order within 120 days. The classification will be according to the criteria under section 513(a)(1) of the FD&C Act. Although the device was automatically placed within class III, the De Novo classification is considered to be the initial classification of the device.
We believe this De Novo classification will enhance patients' access to beneficial innovation. When FDA classifies a device into class I or II via the De Novo process, the device can serve as a predicate for future devices of that type, including for 510(k)s (see section 513(f)(2)(B)(i) of the FD&C Act). As a result, other device sponsors do not have to submit a De Novo request or premarket approval application to market a substantially equivalent device (see section 513(i) of the FD&C Act, defining “substantial equivalence”). Instead, sponsors can use the less-burdensome 510(k) process, when necessary, to market their device.
For this device, FDA issued an order on November 27, 2012, finding the Medtronic DUET
On December 21, 2012, FDA received Medtronic Neurosurgery's request for De Novo classification of the Medtronic DUET
We classify devices into class II if general controls by themselves are insufficient to provide reasonable assurance of safety and effectiveness, but there is sufficient information to establish special controls that, in combination with the general controls, provide reasonable assurance of the safety and effectiveness of the device for its intended use (see section 513 (a)(1)(B) of the FD&C Act). After review of the information submitted in the request, we determined that the device can be classified into class II with the establishment of special controls. FDA has determined that these special controls, in addition to the general controls, will provide reasonable assurance of the safety and effectiveness of the device.
Therefore, on August 22, 2014, FDA issued an order to the requester classifying the device into class II. In this final order, FDA is codifying the classification of the device by adding 21 CFR 882.5560.
FDA has identified the following risks to health associated specifically with this type of device and the measures required to mitigate these risks in table 1.
FDA has determined that special controls, in combination with the general controls, address these risks to health and provide reasonable assurance of safety and effectiveness. For a device to fall within this classification, and thus avoid automatic classification in class III, it would have to comply with the special controls named in this final order. The necessary special controls appear in the regulation codified by this order. This device is subject to premarket notification requirements under section 510(k) of the FD&C Act.
At the time of classification, cerebrospinal fluid shunt systems are for prescription use only. Prescription devices are exempt from the requirement for adequate directions for use for the layperson under section 502(f)(1) of the FD&C Act (21 U.S.C. 352(f)(1)) and 21 CFR 801.5, as long as the conditions of 21 CFR 801.109 are met.
The Agency has determined under 21 CFR 25.34(b) 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 order establishes special controls that refer to previously approved collections of information found in other FDA regulations and guidance. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521). The collections of information in the guidance document “De Novo Classification Process (Evaluation of Automatic Class III Designation)” have been approved under OMB control number 0910-0844; the collections of information in 21 CFR part 820, regarding quality system regulation, have been approved under OMB control number 0910-0073; the collections of information in 21 CFR part 814, subparts A through E, regarding premarket approval, have been approved under OMB control number 0910-0231; the collections of information in part 807, subpart E, regarding premarket notification submissions, have been approved under OMB control number 0910-0120; and the collections of information in 21 CFR part 801, regarding labeling, have been approved under OMB control number 0910-0485.
Medical devices.
Therefore, under the Federal Food, Drug, and Cosmetic Act, and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 882 is amended as follows:
21 U.S.C. 351, 360, 360c, 360e, 360j, 360l, 371.
(a)
(b)
(1) The device description must include a detailed summary of the device technical parameters, including design configuration, dimensions, engineering drawings, and a list of all components with identification of their materials of construction.
(2) The patient-contacting components of the device must be demonstrated to be biocompatible.
(3) Non-clinical performance testing must demonstrate that the device performs as intended under anticipated conditions of use. The following performance characteristics must be tested:
(i) Simulated use testing must be conducted to characterize fluid flow and resistance to leakage; and
(ii) Mechanical integrity testing of all connections must be conducted.
(4) Performance data must support the shelf life of the device by demonstrating continued sterility, package integrity, and device functionality over the specified shelf life.
(5) Performance data must demonstrate the sterility and pyrogenicity of patient-contacting components of the device.
(6) The labeling must include:
(i) Contraindications with respect to patients who should not receive a lumbar drain;
(ii) A warning that the device should have 24-hour-a-day availability of trained personnel to supervise monitoring and drainage;
(iii) Instructions on proper device setup, positioning, and monitoring;
(iv) Warnings and precautions to inform the user of serious hazards and special care associated with the use of the device;
(v) A statement that the device is not to be reused, reprocessed, or resterilized when open but unused; and
(vi) Cleaning instructions for the injection sites.
Employee Benefits Security Administration, Labor.
Final forms revisions.
This document contains final revisions to the instructions for the Form 5500 Annual Return/Report of Employee Benefit Plan and Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan effective for plan years beginning on or after January 1, 2021. These final revisions to the instructions were included in a broader proposal of form and instruction changes published on September 15, 2021. The limited number of instruction changes in this document implement annual reporting changes for multiple-employer plans (including pooled employer plans) that result from statutory provisions in section 101 of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). The other changes to the Form 5500 Annual Return/Report included in the September 2021 proposal will be the subject of one or more separate and later final notices.
The final instruction revisions in this document are effective for plan years beginning on or after January 1, 2021. The Form 5500 Annual Return/Report for the 2021 plan year generally is not required to be filed until seven months after the end of the 2021 plan year,
Janet Song or Florence Novellino, Office of Regulations and Interpretations, Employee Benefits Security Administration, U.S. Department of Labor, (202) 693-8500, (this is not a toll-free number).
Titles I and IV of Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (Code), generally require pension and other employee benefit plans to file annual returns/reports concerning, among other things, the financial condition and operations of the plans. Filing a Form 5500 Annual Return/Report of Employee Benefit Plan (Form 5500) or, if eligible, a Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan (Form 5500-SF), together with any required schedules and attachments (together “the Form 5500 Annual Return/Report”),
The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), included various provisions designed to improve the private employer-based retirement system that either directly changed or necessitated changes to the annual reporting requirements under ERISA and the Code.
SECURE Act section 101 amended ERISA section 3(2) and added ERISA sections 3(43) and 3(44) to allow for a new type of ERISA-covered multiple employer pension plan (MEP) for plan years beginning on or after January 1, 2021—a defined contribution pension plan called a “pooled employer plan” operated by a “pooled plan provider.” Pooled employer plans allow multiple unrelated employers to participate without the need for any common interest among the participating employers (other than having adopted the plan). Under section 3(2) of ERISA, as amended by the SECURE Act, a pooled employer plan is treated for purposes of ERISA as a single plan that is a multiple employer plan. New section 3(44) of ERISA establishes requirements for pooled plan providers, including a requirement to register with the DOL before beginning operations as a pooled plan provider. A parallel requirement to file a registration statement with the Secretary of Treasury is in section 413(e)(3)(A)(ii) of the Code. On November 16, 2020, the DOL published a notice of final rulemaking establishing the registration requirement for pooled plan providers. 85 FR 72934 (Nov. 16, 2020). The Treasury Department and the IRS have advised that filing the Form PR with the DOL will satisfy the requirement to register with the Secretary of the Treasury. The instructions to the Form PR (Pooled Plan Provider Registration) (Form PR) advised registrants to use the same identifying information on the Forms 5500 Annual Return/Report filed by the pooled employer plans, particularly name; EIN for the pooled plan provider; any identified affiliates providing services; trustees; and plan name and number for each pooled employer plan.
Section 101 of the SECURE Act also amended ERISA section 103(g), effective for plan years beginning on or after January 1, 2021. Section 103(g) was added to ERISA by the Cooperative and Small Employer Charity Pension Flexibility Act (CSEC Act) in 2014.
As discussed in the NPFR, the statutory establishment of pooled employer plans as a type of multiple employer plan under Title I of ERISA requires some adjustments to the Form 5500 Annual Return/Report to acknowledge the existence of this new type of plan and to confirm that pooled employer plans must file a Form 5500 Annual Return/Report in accordance with the requirements that apply to other MEPs that file the Form 5500. The adjustments to accommodate pooled employer plan reporting on the Form 5500 were presented in the NPFR largely in the form of a new proposed Schedule MEP and its instructions that would be a required part of the Form 5500 Annual Return/Report for various types of MEPs, including pooled employer plans. As proposed, however, the Schedule MEP would not be effective until plan years beginning on or after January 1, 2022, but under the SECURE Act, pooled employer plans could begin operating for plan years beginning on or after January 1, 2021. In order to implement core elements of the SECURE Act section 101(d) reporting requirements on a timely basis, the NPFR included proposed amendments to the instructions for the 2021 Form 5500 and Form 5500-SF, specifically for the multiple-employer plan check box that is currently on Part I, line A of the Form 5500 and Form 5500-SF. Upon review of the public comments, the Department continues to believe that amending those instructions is an efficient and appropriate way to provide for the reporting of ERISA section 103(g) information for the 2021 reporting year.
Specifically, the instructions to the 2021 Form 5500
Some commenters asked that the Department interpret the SECURE Act's requirement to report employer-level aggregate account balances as applying only to defined contribution MEPs. The commenters noted that neither the operative language of the SECURE ACT nor its legislative history support applying this requirement to defined benefit pension plans that do not maintain “account balances” for each employee. Two of these commenters noted that this requirement is particularly inappropriate for defined benefit MEPs established before 1989 that determine their minimum funding requirements as if all participants were employed by a single employer and, therefore, did not elect “employer-by-employer” treatment under the Technical and Miscellaneous Revenue Act of 1988 (TAMRA). One of the commenters also noted that participants already receive annual funding notices on their defined benefit pension plan, so reporting of an artificial “account balance” could give the false impression that, in these MEPs, specific assets are set aside to provide benefits for employees of each employer when, in fact, all of the assets of a defined benefit MEP (like any other defined benefit pension plan) are available to pay all of the benefits of all of the participants in that MEP, regardless of where the participants are employed.
The Department agrees that the SECURE Act's requirement to report employer-level aggregate account balances should not apply to defined benefit pension MEPs. The SECURE Act expressly states that the aggregate account balances attributable to each employer in the plan is to be determined “as the sum of the account balances of the employees of such employer (and the beneficiaries of such employees).” Although the SECURE Act amended ERISA section 103(g) to provide that it applies to plans subject to ERISA section 210(a), and there may be a relatively small number of defined benefit MEPs that are subject to ERISA section 210(a), in the Department's view, it would not be a reasonable reading of the statutory text to conclude that Congress intended by the reference to ERISA section 210(a) to mandate that aggregate account balance information be reported by defined benefit plans that do not maintain account balances for covered participants. Accordingly, the final instructions for the 2021 reporting year provide that only defined contribution MEPs must report the new SECURE Act required employer-level aggregate account balances.
One commenter requested clarification of the requirement to report the “Percentage of Total Contributions for the Plan Year” (element 3 for the 2021 non-standard attachment). Specifically, the commenter asked whether the total of all participating employers must equal 100 percent, and whether it will cause red flags with the DOL/IRS if it does not. They also asked whether filers should round the percentage entry for each employer to decimal places, and if so, how many. The Department read these commenter's questions as primarily directed at issues that may arise when in the context of a standardized Schedule MEP structure for reporting this information. The Agencies will take into account such questions in designing the form and developing appropriate instructions and edit tests. For the 2021 reporting year, as noted above, the instructions will continue to allow filers to use a non-standard attachment to report the required information. The Department also notes that this is not a new reporting requirement. It has been part of the Form 5500 since it was added in 2014 in response to the CSEC Act addition of section 103(g) to Title I of ERISA. Nonetheless, for the 2021 reporting year, it would be acceptable for filers to round to the nearest whole number similar to rounding conventions that apply to the Form 5500 financial statements and schedules. To the extent the filer's concern is whether rounding could result in the total reported percentage either slightly above or slightly below 100 percent, the filer can indicate that on the non-standard attachment as part of its filing.
A commenter asked for guidance on the asset values that should be used for the “Aggregate Account Balances Attributable to Participating Employer” (element 4 for the 2021 non-standard attachment) and, in particular, whether the end of year net value may be used based on the values reported on the Schedules H and I. The SECURE Act expressly states that the aggregate account balances information should be determined as the sum of the account balances of the employees of such employer and the beneficiaries of such employees. In the Department's view, an end of year valuation is an appropriate reporting requirement as it will provide the most up to date value for the plan year covered by the Form 5500 report. The final instructions include directions to that effect. Further, rounding to the nearest dollar, as with the financial reporting on other parts of the Form 5500 and schedules, would be appropriate. The final instructions have been revised to provide this clarification as well.
With respect to the additional ERISA section 103(g) information regarding pooled employer plans that must be included for the 2021 reporting year, the Department had proposed that the substance of the proposed Schedule MEP changes would apply to the 2021 reporting year requirements except that the information could be filed as a non-standard attachment. The Department received comments opposing or expressing concern about some elements of the proposed Schedule MEP. Since the Department intends to address those comments and resolve the Schedule MEP content requirement in a later final rule, the Department agrees that it would be premature to impose the requirements wholesale to the 2021 Form 5500 Annual Return/Reports. Rather, for the 2021 reporting year, in addition to the participating employer information required for all MEPs, pooled employer plans only will be required to indicate, on a non-standard attachment, whether they are in compliance with the Form PR registration requirements and provide the AckID number for their latest Form PR filing.
Some commenters complained that pooled employer plans should not be required to provide the AckID number, claiming that this requirement was unnecessary because the Department already has the Form PR and issued the AckID number. Some commenters suggested that asking any questions about the pooled plan provider was duplicative of the Form PR and that the “AckID” could be found by a separate
The Department disagrees with the commenters opposing the collection of information regarding the Form PR. In the preamble to the final regulation establishing the Form PR, the DOL specifically noted that it would add new questions on the Form 5500 that would ask whether a pooled plan provider filed its registration statement with the Secretary, including any required updates, and to report the electronic confirmation number provided to the pooled plan provider at the time that the registration was received. Further, as explained in the preamble to the proposal to add this information collection item for pooled employer plans, the questions related to the Form PR are intended to provide the Department, the Treasury Department, the IRS, participating employers, and other stakeholders with information that would allow them to connect the Form PR registration with the Form 5500 for all pooled employer plans operated by the registrant. 85 FR 72934, 72946 (Nov. 16, 2020). In fact, one commenter representing retirees and plan participants specifically indicated its support for requesting the “AckID” to help workers and retirees keep track of their assets and the plan, especially with the anticipated limited involvement of their employer in the design of pooled employer plans. Also, as discussed above, SECURE Act section 101(d) specifically requires the annual report of pooled employer plans to include identifying information for the person designated under the terms of the plan as the pooled plan provider. Thus, the requirement is neither arbitrary nor unsupported by the statute. The AckID requirement is also similar to the questions currently on the Form 5500 that require multiple employer group health plans to report about their compliance with registration and reporting requirements on the Form M- 1 (Report for Multiple Employer Welfare Arrangements (MEWAs) and Certain Entities Claiming Exception (ECEs)). The Department also does not agree that the filing requirements are ambiguous, that there is a lack of guidance regarding the filing requirement, or that it is unfair to require pooled employer plans to report on the registration status of their pooled plan providers. Unlike other ERISA-covered multiple employer plans, the SECURE Act expressly sets forth roles and responsibilities for pooled plan providers. One of those clear requirements is that the pooled plan provider must register with the Department and with the IRS. The Form PR was adopted after public notice and comment to implement a specific registration requirement added to ERISA by the SECURE Act. The Form PR also includes instructions for completing the form, which also were developed as part of the notice and comment rulemaking process. The Form 5500 is signed by the plan administrator stating that the administrator has reviewed the filing and that “to the best of my knowledge and belief, it is true, correct, and complete.” In the case of a pooled employer plan, the pooled plan provider is the administrator. Pooled plan providers should be able to say whether they believe the Form PR filing requirements have been met. In the Department's view, it does not impose any meaningful burden on the pooled plan provider acting as the plan administrator to acknowledge on the plan's Form 5500 annual report that it believes to the best of the pooled plan provider's knowledge and belief that it has fulfilled its statutory registration obligation. Further, the DOL continues to believe that linking the Form PR filed by a pooled plan provider to the Forms 5500 is a reasonable method to help make sure that workers, retirees, and the agencies charged with oversight have the information they need to be sure that the Form PR information is consistent and up to date. For example, having the AckID number on the plan's Form 5500 will assist plan participants and participating employers in finding the relevant Form PR on the Department's website. The requirement to report Form PR compliance information on the Form 5500 will also help the Department ensure compliance with those registration requirements. While there is no explicit civil penalty for failing to file a Form PR, there is a civil penalty for failing to file a complete and accurate Form 5500.
Finally, with respect to the requirement that multiple employer welfare plans file the participating employer information as a non-standard attachment to the 2021 Form 5500 Annual Return/Report, one commenter representing retirees and plan participants specifically indicated its support for continuing to require multiple employer welfare plans to provide participating employer information. Two commenters argued to the contrary that the DOL could no longer ask multiple employer welfare plans to report any participating employer information because Congress, by amending ERISA section 103(g) to add a reference to plans subject to ERISA section 210(a), was explicitly saying that welfare plans should no longer report such information. One of the commenters noted that DOL had cited ERISA section 103(c)(2) as separate authority for DOL to require welfare plans to report such information, but argued that section 103(c)(2) was not applicable because the DOL is not establishing this reporting requirement to obtain “the name and address of each fiduciary” but rather to reinstate a reporting requirement that was repealed by the SECURE Act.
Although the DOL agrees that ERISA section 103(g) technically is not applicable to welfare plans as a result of the SECURE Act amendment, the DOL does not agree the SECURE Act amendment precludes its continued collection of participating employer information on the Form 5500 from multiple employer welfare plans.
DOL is also continuing to rely on ERISA section 103(c)(2) and its general regulatory authority under ERISA section 505 as authority for requiring multiple employer welfare plans to continue reporting the participating employer information for the 2021 plan year filing.
Two commenters argued that reporting of employer names and EINs (and the health plan to which they are linked) on a publicly available document exposes plan participants and beneficiaries and their employers to potential cybersecurity fraud. They also argued that the list of participating employers and contribution percentage information is proprietary information and contended that making the information publicly available would negatively impact businesses and their employees. The commenters did not offer empirical evidence or other data to support their assertions about consequences to plan participants and beneficiaries or the participating employers' businesses. This reporting requirement has been in place since the 2014 plan year and the Department is not aware of any such consequences resulting from the disclosure requirement. In fact, the more powerful argument here is likely that employers have the freedom to choose to change plans or plan service providers, are undoubtedly receiving marketing solicitations about these matters now, and that transparency about which employers participate in a plan MEWA may well generate competitive pressures to offer better services at lower fees.
The DOL also has addressed similar arguments on several prior occasions in the context of the ERISA section 103(g) requirement for multiple employer plans to include participating employer information as part of the Form 5500 Annual Return/Report. For example, in a 2019 Field Assistance Bulletin, the DOL noted that it had received and considered similar objections in connection with the Paperwork Reduction Act (PRA) notice associated with the publication of the interim final rule on ERISA section 103(g) that implemented the CSEC Act requirement.
This Final Rule does not constitute a “significant regulatory action” for purposes of Executive Order 12866. The changes are minor additions to existing reporting requirements that in large part merely adopt requirements set forth in statutory amendments to the annual reporting requirements that apply under ERISA and the Code. Therefore, this action has not been reviewed by OMB pursuant to the Executive Order. Pursuant to the Congressional Review Act, OMB has determined that this final rule is not a “major rule,” as defined by 5 U.S.C. 804(2).
In accordance with the Paperwork Reduction Act of 1995 (PRA 95) (44 U.S.C. 3506(c)(2)(A)), the Department solicited comments concerning the information collection request (ICR) included in the revision of the Form 5500 Annual Return/Report. At the same time, the Department also submitted an information collection request (ICR) to the Office of Management and Budget (OMB), in accordance with 44 U.S.C. 3507(d).
The Department did not received comments that specifically addressed the paperwork burden analysis of the information collection requirement contained in the proposed rule.
In connection with publication of this final rule, the Department is submitting an ICR to OMB requesting a revision of the collection of information under OMB Control Number 1210-0110 reflecting the instruction changes being finalized in this document. The Department will notify the public when OMB approves the ICR.
A copy of the ICR may be obtained by contacting the PRA addressee shown below or at
The burden analysis is based on data from the 2019 Form 5500 filings (the latest year for which complete data are available). The burden analysis includes the burden of the current information collection and adjusts it for changes made by the final rule.
Burden estimates take into account the changes in plan counts due to the creation of pooled employer plans, with an increase in multiple-employer plans and a small decrease in single employer plans, reflecting some single employer plans moving to pooled employer plans. The agencies estimated that there are 4,538 defined contribution multiple-employer pension plans and that 75 pooled employer plans will be formed.
Reporting the information about participating employers required by the changes being finalized in this document should not be burdensome for defined contribution multiple-employer plan administrators as current requirements under ERISA already require them to maintain a list of participating employers and records of the contributions made by each employer. Although likely an overestimate of the actual time required, to ensure that we are not underestimating the potential burden, the Department is using an estimate of on average 30 minutes to comply with the new question for defined contribution MEPs regarding aggregate account balances on the currently required attachment to the Form 5500 Annual Return/Report containing the list of participating employers, their EINs, and their percentage of total plan contributions. The Department estimates that the anticipated 75 pooled employer plans would take an additional five minutes to indicate whether they are in compliance with the Form PR registration requirements and provide the AckID number for their latest Form PR filing.
The Agencies' burden estimation methodology excludes certain activities from the calculation of “burden.” If the activity is performed for any reason other than compliance with the applicable federal tax administration system or the Title I annual reporting requirements, it was not counted as part of the paperwork burden. For example, most businesses or financial entities maintain, in the ordinary course of business, detailed accounts of assets and liabilities, and income and expenses for the purposes of operating the business or entity. These recordkeeping activities were not included in the calculation of burden because prudent business or financial entities normally have that information available for reasons other than federal tax or Title I annual reporting. Only time for gathering and processing information associated with the tax return/annual reporting systems, and learning about the law, was included. In addition, an activity is counted as a burden only once if performed for both tax and Title I purposes. The Agencies also have designed the instruction package for the Form 5500 Annual Return/Report so that filers generally will be able to complete the Form 5500 Annual Return/Report by reading the instructions without needing to refer to the statutes or regulations. The Agencies, therefore, have considered in their PRA
This PRA calculation does not include any burden related to Form M-1 changes related to reporting of participating employer information by plans and non-plan MEWAs that are required to file the Form M-1 because those changes are not included in this document. Rather, for the 2021 Form 5500 reporting year, plan MEWAs, including those that offer or provide coverage for medical care, will continue to be required to provide participating employer information as a nonstandard attachment to the 2021 Form 5500 Annual Return/Report in substantially the same manner as has been required since the 2014 forms.
Note that to reflect OMB's preference that burden incurred by service providers be reported as hour burden instead of cost burden, burden that has historically been included as cost burden has been included here as hour burden. This change led to an increase in reported hour burden and an offsetting decrease in cost burden.
A summary of paperwork burden estimates follows. As noted above, these estimates include the burden of the overall Form 5500 information collection and makes adjustments for the final instructions revisions included in this document.
The aggregate hour burden for the Form 5500 Annual Return/Report (including schedules and short form) is estimated to be 4.5 million hours annually shared between the DOL, IRS, and the PBGC. The hour burden reflects filing activities carried out directly by filers.
Presented below is a chart showing the total hour and cost burden of the revised Form 5500 Annual Return/Report allocated to the DOL, including the changes to the DOL burden by these 2021 SECURE Act revisions.
The Regulatory Flexibility Act (RFA)
The Department prepared an Initial Regulatory Flexibility Analysis at the proposed rule stage. However, this final rule is focused only on a subset of the requirements proposed. The Department certifies that this final rule will not have a significant impact on a substantial number of small entities. Therefore, the Department has not prepared a Final Regulatory Flexibility Analysis.
Title II of the Unfunded Mandates Reform Act of 1995 requires each federal agency to prepare a written statement assessing the effects of any federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (adjusted annually for inflation with the base year 1995) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector.
Executive Order 13132 outlines fundamental principles of federalism, and requires the adherence to specific criteria by federal agencies in the process of their formulation and implementation of policies that have “substantial direct effects” on the States, the relationship between the national government and States, or on the distribution of power and responsibilities among the various levels of government.
In the DOL's view, this final rule would not have federalism implications because they would not have direct effects on the States, on the relationship between the national government and the States, or on the distribution of
To implement the SECURE Act section 101 changes, the current instructions including the graphic, in the Form 5500 and Form 5500-SF instructions, as applicable, for Part I, Line A “Box for Multiple Employer Plan” and graphic entitled “Multiple-Employer Plan Participating Employer Information,” are replaced with instructions below and two separate graphics. The second graphic, which will appear only in the Form 5500 instructions shows information pooled employer plans must provide in addition to the participating employer information. It may be attached as part of the “Multiple-Employer Plan Participating Employer Information” attachment or as a separate attachment entitled “Pooled Employer Plan Information.”
• All multiple-employer pension plans must complete elements 1-3 of the “Multiple-Employer Plan Participating Employer Information” attachment. For element 3, enter a good faith estimate of each employer's percentage of the total contributions (including employer and participant contributions) made by all participating employers during the year. The percentage may be rounded to be nearest whole percentage. To the extent the rounding results in the total reported percentage being either slightly above or slightly below 100 percent, the filer can indicate that on the attachment. Any employer who was obligated to make contributions to the plan for the plan year, made contributions to the plan for the plan year, or whose employees were covered under the plan is a “participating employer” for this purpose. If a participating employer made no contributions, enter “-0-” in element 3.
• Multiple-employer pension plans that are defined contribution plans must also complete element 4 of the “Multiple-Employer Plan Participating Employer Information” attachment to report the aggregate account balances for each participating employer determined as the sum of the account balances of the employees of such employer (and the beneficiaries of such employees). For element 4, the aggregate account balance attributable to each employer is the sum of the account balances of the employees of such employer and their beneficiaries at the end of the year. Consistent with the information on the schedules of assets for the plan as a whole, use the end of year valuation to calculate the amount of assets by employer. The amounts can be rounded to the nearest dollar, consistent with other asset reporting on the forms and schedules.
• [For Form 5500 Instructions Only] Multiple-employer welfare plans that are unfunded, fully insured, or a combination of unfunded/insured and exempt under 29 CFR 2520.104-44 from the obligation to file financial statements with their annual report are required to complete elements 1 and 2 only of the “Multiple-Employer Plan Participating Employer Information” attachment.
• [For Form 5500 Instructions Only] Multiple-employer pension plans that are pooled employer plans must also complete the “Pooled Employer Plan Information” attachment. The attachment may be attached as part of the “Multiple-Employer Plan Participating Employer Information” attachment or as a separate attachment entitled “Pooled Employer Plan Information.” For element 1b, AckID is the acknowledgement code generated by the system in response to a completed Form PR submitted. The instructions to the Form PR advise the pooled plan provider that it must keep, under ERISA section 107, the electronic receipt for the Form PR filing as part of the records of the pooled employer plans operated by the pooled plan provider.
The following revisions are being made to the Form 5500-SF instructions:
• In the first paragraph of the “General Instruction” section, add a seventh bulleted paragraph that reads “Not be a pooled employer plan. See ERISA section 3(43).”
• In the “General Instruction” section, under the heading “Who May File Form 5500-SF,” add a new paragraph number 7 before the Note that reads: “7. The plan is not a pooled employer plan. See ERISA section 3(43).”
• In the “Specific Line-By-Line Instructions (Form 5500-SF)” in instructions for Part II, Line 6, add a new paragraph number 7 that reads: “7. The plan is not a pooled employer plan. See ERISA section 3(43).”
Accordingly, pursuant to the authority in sections 101, 103, 104, 109, 110, the Form 5500 Annual Return/Report and the Form 5500-SF Short Form Annual Return/Report are amended as set forth herein.
United States Patent and Trademark Office, Department of Commerce.
Final rule; correction.
The United States Patent and Trademark Office (USPTO or Office) makes corrections to a final rule published on October 14, 2021, that amended the rules of practice to permit higher-capacity physical media to be submitted to the USPTO. This rule fixes typographical errors.
This rule is effective on December 29, 2021.
Mary C. Till, Senior Legal Advisor, Office of Patent Legal Administration, Office of the Deputy Commissioner for Patents, at
On October 14, 2021, the USPTO published a final rule amending the rules of practice to permit higher-capacity physical media to be submitted to the USPTO (86 FR 57035). That final rule, which went into effect on November 15, 2021, contained two incorrect cross-references in 37 CFR 1.77 to the methods by which a sequence listing may be submitted to the USPTO. This final rule corrects those cross-references to avoid any confusion.
Section 1.77(b)(13) is revised to reference § 1.821(c)(2) for a “Sequence Listing” that is submitted as a Portable Document Format (PDF) file via the USPTO patent electronic filing system and § 1.821(c)(3) for a “Sequence Listing” that is submitted on physical sheets of paper. The references published in the October 14, 2021, final rule—§ 1.821(c)(1)(ii) and § 1.821(c)(1)(iii)—do not exist.
This rulemaking corrects typographical errors in a rulemaking permitting higher-capacity physical media to be submitted to the USPTO. The changes in this rulemaking involve a rule of agency practice and procedure and/or an interpretive rule.
Accordingly, prior notice and opportunity for public comment for the changes in this rulemaking are not required pursuant to 5 U.S.C. 553(b) or (c), or any other law.
In addition, the Director of the USPTO finds good cause under 5 U.S.C. 553(b)(B) to waive the notice and comment requirements of the Administrative Procedure Act. As discussed above, the changes in this rulemaking involve correcting typographical errors in two cross-references in the final rule published on October 14, 2021. These changes are administrative in nature and will have no substantive impact on the evaluation of a patent application. If this rule were delayed to allow for notice and comment, this would lead to confusion as to the sections intended to be cross-referenced.
The Director of the USPTO also finds good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in effectiveness. As discussed above, the changes in this rulemaking involve correcting typographical errors in two cross-references in the final rule published on October 14, 2021. These changes are administrative in nature and will have no substantive impact on the evaluation of a patent application. The purpose of a delay in effectiveness is to allow affected parties time to modify their behaviors, businesses, or practices to come into compliance with new regulations. This rule imposes no additional requirements on the affected entities. Therefore, the requirement for a 30-day delay in effectiveness is not applicable, and the rule is made effective immediately upon publication.
As prior notice and an opportunity for public comment are not required pursuant to 5 U.S.C. 553 or any other law, neither a Regulatory Flexibility Act analysis nor a certification under the Regulatory Flexibility Act (5 U.S.C. 601
This rulemaking has been determined to be not significant for purposes of Executive Order 12866 (Sept. 30, 1993).
The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the USPTO consider the impact of paperwork and other information collection burdens imposed on the public. The USPTO has determined that there are no new requirements for information collection associated with this final rule.
Administrative practice and procedure, Biologics, Courts, Freedom of information, Inventions and patents, Reporting and recordkeeping requirements, Small businesses.
For the reasons stated in the preamble and under the authority contained in 35 U.S.C. 2, as amended, the USPTO amends 37 CFR part 1 as follows:
35 U.S.C. 2(b)(2), unless otherwise noted.
(b) * * *
(13) “Sequence Listing,” required by § 1.821(c), that is submitted as a Portable Document Format (PDF) file (as set forth in § 1.821(c)(2)) via the USPTO patent electronic filing system or on
Centers for Medicare & Medicaid Services (CMS), HHS.
Final rule.
This final rule rescinds the Most Favored Nation Model interim final rule with comment period that appeared in the November 27, 2020,
This final rule is effective February 28, 2022.
Lara Strawbridge, (410) 786-7400 or
In the August 10, 2021
Given that the nationwide preliminary injunction precluded implementation of the MFN Model on January 1, 2021, as contemplated, that multiple courts found procedural issues with the November 2020 interim final rule, and that stakeholders expressed concern about the model start date,
The following is a summary of the public comments received as well as our responses.
As stated in section 1115A(d)(3) of the Act, Chapter 35 of title 44, United States Code shall not apply to the testing and evaluation of CMS Innovation Center Models. However, costs incurred through information collections were described in sections III.H., III.I.b., and VI.C.5. of the November 2020 MFN Model interim final rule (85 FR 76221, 76222, and 76244, respectively). We are finalizing the provisions of the August 2021 proposed rule, which proposed to rescind requirements related to the information collection described in the November 2020 MFN Model interim final rule. As such, the estimate of the impact of this final rule in section IV.C. of this final rule includes the savings from rescinding the information collection requirements in the November 2020 MFN Model interim final rule. Further, the August 2021 proposed rule and this final rule do not impose information collection requirements, that is, reporting, recordkeeping, or third-party disclosure requirements. Consequently, there is no need for review by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
We did not receive comments on the discussion of information collection in the proposed rule.
The purpose of this final rule is to finalize the rescission of the Most Favored Nation Model interim final rule with comment period that appeared in the November 27, 2020
We have examined the impact of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more in any one year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as “economically significant”); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.
Based on our estimates, OMB's Office of Information and Regulatory Affairs has determined this rulemaking is “economically significant” as measured by the $100 million threshold, and hence also a major rule under Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (also known as the Congressional Review Act). Accordingly, we have prepared a regulatory impact analysis that to the best of our ability presents the costs and benefits of the rulemaking.
Removing the regulatory text at 42 CFR part 513, which withdraws the MFN Model, prevents realization of the annualized/monetized estimates of costs and transfers presented in the November 2020 MFN Model interim final rule (85 FR 76235 through 76248). The RIA of the November 2020 MFN Model interim final rule estimated that the MFN Model would result in substantial overall savings for the Medicare program, the Medicaid program, and beneficiaries, and that model participants would experience costs associated with complying with the regulations, survey completion, and potential requests for a financial hardship exemption.
In the November 2020 MFN Model interim final rule, we presented estimates from the CMS Office of the Actuary (OACT) (85 FR 76236) and the HHS Office of the Assistant Secretary for Planning and Evaluation (ASPE) (85 FR 76240). We noted that there is much uncertainty around the assumptions for both the OACT and ASPE estimates, and refer readers to section VI.C. of the November 2020 MFN Model interim final rule for a more complete discussion of the estimated impacts of the MFN Model. These potential impacts were estimated to occur beginning January 2021 through December 2028, in alignment with a January 1, 2021 model start. However, because the MFN Model was not implemented on January 1, 2021, as contemplated in the November 2020 MFN Model interim final rule, such effects have not occurred.
Nevertheless and notwithstanding the nationwide preliminary injunction, this analysis uses a baseline in which the November 2020 MFN Model interim final rule was implemented on January 1, 2021, to calculate the monetized estimates of the effects of this final rule. We maintain the analytical approach described in the RIA of the November 2020 MFN Model interim final rule and August 2021 proposed rule, and for the purpose of quantifying the effects of this final rule, assume that the regulations added by the November 2020 MFN Model interim final rule would remain in full effect if this final rule was not finalized. By rescinding the regulations added by the November 2020 MFN Model interim final rule, this final rule prevents the occurrence of the estimated costs and transfers presented in the November 2020 MFN Model interim final rule. As presented in the August 2021 proposed rule (86 FR 43621), we summarize this result in Tables 1 and 2, which illustrate, inversely, the monetized estimates contained in Table 17 (85 FR 76247) and Table 18 (85 FR 76248) of the November 2020 MFN Model interim final rule. The period covered shown in Tables 1 and 2 begins January 2021 in alignment with the accounting statements and tables presented in the November 2020 MFN Model interim final rule and in the August 2021 proposed rule. This approach illustrates that this final rule prevents the realization of the annualized/monetized estimates of costs and transfers that were presented in the November 2020 MFN Model interim final rule. Because the MFN Model was not implemented, readers should understand that this final rule does not affect conditions in the past.
The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of less than $8 million to $41.5 million in any 1 year. Individuals and States are not included in the definition of a small entity. For details, see the Small Business Administration's “Table of Small Business Size Standards” at
This final rule affects the vast majority of Medicare-participating providers and suppliers that submit claims for separately payable Medicare Part B drugs by preventing the impacts described in the November 2020 MFN Model interim final rule (85 FR 76246) from being realized. Over 20,000 small entities would have been included or affected by the MFN Model if the model had been implemented. We refer readers to Table 3 and Table 8 in the November 2020 MFN Model interim final rule (85 FR 76195 and 76219, respectively) to see the number of entities, as well as the types of providers and suppliers, that most likely would have been impacted by the MFN Model had it been implemented. This final rule withdraws the MFN Model, and therefore likely impacts these same entities. Accordingly, we have determined that a Regulatory Flexibility Analysis is required. As its measure of significant economic impact on a substantial number of small entities, HHS uses a change in revenue of more than 3 to 5 percent. We believe that this threshold will be reached by the requirements in this final rule. Therefore, the Secretary has certified that the August 2021 proposed rule and this final rule will have a significant economic impact on a substantial number of small entities. The Regulatory Flexibility Analysis presented in the November 2020 MFN Model interim final rule (85 FR 76245) describes the potential impact of the MFN Model, if it had been implemented, on small entities. This final rule prevents those impacts from being realized. Specifically, the lower drug payments and alternative add-on payments described in section III.F. of the November 2020 MFN Model interim final rule will not occur. Instead, payment for submitted claims will be made under the applicable Medicare payment methodology. This Regulatory Flexibility Analysis, together with the preamble, constitutes the required analysis.
In addition, section 1102(b) of the Act requires us to prepare an RIA if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area for Medicare payment regulations and has fewer than 100 beds. We estimate that this final rule will have a significant impact on small rural hospitals by preventing the impacts described in the November 2020 MFN Model interim final rule (85 FR 76246) from being realized. Specifically, these rural entities will not experience drug payment reductions and overall payment reductions. Instead, payment for submitted claims will be made under the applicable Medicare payment methodology. We estimate that this final rule will have a parallel significant impact on urban entities.
We welcomed comments on our estimate of significantly affected providers and suppliers and the magnitude of estimated effects for the proposed rule.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2021, that threshold is approximately $158 million. As discussed in section V.C. of the August 2021 proposed rule and section IV.C. of this final rule, the financial impacts for States (that is, an estimated overall reduction in State spending) presented in the November 2020 MFN Model interim final rule (85 FR 76235 through 76248) will not be realized. The August 2021 proposed rule and this final rule did not mandate any spending by State, local, or tribal governments, or by the private sector, and hence an UMRA analysis is not required.
Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. As discussed in section V.C. of the August 2021 proposed rule and section IV.C. of this final rule, the financial impacts for States (that is, an estimated overall reduction in State spending) presented in the November 2020 MFN Model interim final rule (85 FR 76235 through 76248) will not be realized. Since this rule does not impose any costs on State or local governments, preempt State law, or otherwise have Federalism implications, the requirements of Executive Order 13132 are not applicable.
In accordance with the provisions of Executive Order 12866, this final rule was reviewed by the Office of Management and Budget.
Administrative practice and procedure, Health facilities, Medicare, Reporting and recordkeeping requirements.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Final specifications.
NMFS specifies a 2022 limit of 2,000 metric tons (t) of longline-caught bigeye tuna for each U.S. Pacific territory (American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands (CNMI), the territories). NMFS will allow each territory to allocate up to 1,500 t in 2022 to U.S. longline fishing vessels through specified fishing agreements that meet established criteria. The overall allocation limit among all territories, however, may not exceed 3,000 t. As an accountability measure, NMFS will monitor, attribute, and restrict (if necessary) catches of longline-caught bigeye tuna, including catches made under a specified fishing agreement. These catch limits and accountability measures support the long-term sustainability of fishery resources of the U.S. Pacific Islands.
The final specifications are effective January 28, 2022, through December 31, 2022. The deadline to submit a specified fishing agreement pursuant to 50 CFR 665.819(b)(3) for review is June 27, 2022.
Copies of the Fishery Ecosystem Plan for Pelagic Fisheries of the Western Pacific (FEP) are available from the Western Pacific Fishery Management Council (Council), 1164 Bishop St., Suite 1400, Honolulu, HI 96813, tel 808-522-8220, or
Pursuant to the National Environmental Policy Act, the Council and NMFS prepared environmental analyses that support this action and are available at
Lynn Rassel, NMFS PIRO Sustainable Fisheries, 808-725-5184.
NMFS is specifying a 2022 catch limit of 2,000 t of longline-caught bigeye tuna for each U.S. Pacific territory. NMFS is also authorizing each territory to allocate up to 1,500 t of its 2,000 t bigeye tuna limit, not to exceed a 3,000 t total annual allocation limit among all the territories, to U.S. longline fishing vessels permitted to fish under the FEP. A specified fishing agreement with the applicable territory must identify those vessels.
NMFS will monitor catches of longline-caught bigeye tuna by the longline fisheries of each U.S Pacific territory, including catches made by U.S. longline vessels operating under specified fishing agreements. The criteria that a specified fishing agreement must meet, and the process for attributing longline-caught bigeye tuna, will follow the procedures in 50 CFR 665.819. When NMFS projects that the fishery will reach a territorial catch or allocation limit, NMFS will, as an accountability measure, prohibit the catch and retention of longline-caught bigeye tuna by vessels in the applicable territory (if the territorial catch limit is projected to be reached), and/or vessels in a specified fishing agreement (if the allocation limit is projected to be reached).
You may find additional background information on this action in the preamble to the proposed specifications published on October 27, 2021 (86 FR
On October 27, 2021, NMFS published the proposed specifications and request for public comments (86 FR 59357); the comment period closed on November 12, 2021. NMFS received comments from two sources who generally supported the proposed action. A third commenter expressed concern about the status of bigeye tuna, and we respond below.
Pursuant to section 304(b)(3) of the Magnuson-Stevens Act, the NMFS Assistant Administrator (AA) has determined that this final rule is consistent with the FEP, other provisions of the Magnuson-Stevens Act, and other applicable laws.
The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that the proposed specifications would not have a significant economic impact on a substantial number of small entities. NMFS published the factual basis for the certification in the proposed specifications, and we do not repeat it here. NMFS received no comments relevant to this certification; as a result, a final regulatory flexibility analysis is not required, and none has been prepared.
This action is exempt from review under Executive Order 12866.
This document contains no information collection requirements under the Paperwork Reduction Act of 1995.
16 U.S.C. 1801,
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Notification of petition for rulemaking; request for comments.
This document announces receipt of a petition for rulemaking received by the Department of Energy (DOE) on October 22, 2021, from the Natural Resources Defense Council (NRDC) and Sierra Club requesting that DOE update its regulations concerning procedures for calculating a value for the petroleum-equivalent fuel economy of electric vehicles (EVs) for use in the Corporate Average Fuel Economy (CAFE) program administered by the Department of Transportation (DOT). This document summarizes the substantive aspects of this petition and requests public comments on the merits of the petition.
DOE will accept comments, data, and information with respect to the NRDC and Sierra Club Petition until February 28, 2022.
You may submit comments, identified by docket number “EERE-2021-VT-0033,” by the following method:
Although DOE has routinely accepted public comment submissions through a variety of mechanisms, including the Federal eRulemaking Portal, postal mail and hand delivery/courier, the Department has found it necessary to make temporary modifications to the comment submission process in light of the ongoing coronavirus 2019 (“COVID-19”) pandemic. DOE is currently suspending receipt of public comments via postal mail and hand delivery/courier. If a commenter finds that this change poses an undue hardship, please contact Vehicle Technologies Program staff to discuss the need for alternative arrangements. Once the COVID-19 pandemic health emergency is resolved, DOE anticipates resuming all of its regular options for public comment submission, including postal mail and hand delivery/courier.
The docket web page can be found at:
The docket web page will contain simple instructions on how to access all documents, including public comments, in the docket.
Mr. Kevin Stork, U.S. Department of Energy, Vehicle Technologies Program, EE-3V, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 586-8306. Email:
Mr. Peter Cochran, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0103. Telephone: (202) 586-9496. Email:
The Administrative Procedure Act (APA), 5 U.S.C. 551
In their petition, the petitioners propose that DOE should update regulations for calculating the PEF for electric vehicles. Petitioners assert that the data underlying the current regulation are outdated, resulting in higher imputed values of fuel economy for electric vehicles. The petitioners assert that with this higher imputed value, a smaller number of EVs enable fleetwide compliance at lower real-world average fuel economy across an automaker's overall fleet. The petitioners assert that the PEF should be based upon statutory factors at 49 U.S.C 32904, rather than the existing regulatory approach based upon 49 U.S.C. 32905. The petitioners request that DOE review the PEF calculation and approach and work with the National Highway Traffic Safety Administration to ensure PEF regulations support the goals of the CAFE program.
The petition is available in the docket at
DOE welcomes comments and views of interested parties on any aspect of the petition for rulemaking and on whether DOE should proceed with the rulemaking.
DOE invites all interested parties to submit in writing by the date under the
However, your contact information will be publicly viewable if you include it in the comment or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments.
Do not submit to
DOE processes submissions made through
Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide only documents that are: Not secured, written in English, and free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author.
It is DOE's policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure).
DOE considers public participation to be a very important part of its process for considering rulemaking petitions. DOE actively encourages the participation and interaction of the public during the comment period. Interactions with and between members of the public provide a balanced discussion of the issues and assist DOE in determining how to proceed with a petition. Anyone who wishes to be added to DOE mailing list to receive future notices and information about this petition should contact Vehicle Technologies Program staff at
This document of the Department of Energy was signed on December 16, 2021, by Kelly J. Speakes-Backman, Principal Deputy Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the
Natural Resources Defense Council and Sierra Club submit the following petition for rulemaking to update Department of Energy regulations at 10 CFR part 474 that contain procedures for calculating a value for the petroleum-equivalent fuel economy of electric vehicles for use in the Department of Transportation's Corporate Average Fuel Economy program, as required by 49 U.S.C. 32904(a)(2). The subject regulations have not been updated in more than twenty years and must be revised to account for the best available current data so as to not undermine the effectiveness of federal fuel economy standards.
Natural Resources Defense Council and Sierra Club submit this petition under 5 U.S.C. 553(e) for the Department of Energy (DOE) to update its regulations at 10 CFR part 474 concerning procedures for calculating a value for the petroleum-equivalent fuel economy of electric vehicles (EVs) for use in the Corporate Average Fuel Economy program administered by the Department of Transportation (DOT).
In 1975, Congress passed the Energy Policy and Conservation Act (EPCA), which required the National Highway Traffic Safety Administration (NHTSA) to set corporate average fuel economy (CAFE) standards for automobiles as part of a suite of measures to reduce energy consumption.
Notwithstanding DOT's recommendations, in 1980 Congress directed DOE “to conduct a seven-year evaluation program of the inclusion of electric vehicles . . . in the calculation of average fuel economy [in the CAFE program] . . . to determine the value and implications of such inclusion as an incentive for the early initiation of industrial engineering development and initial commercialization of electric vehicles.”
(i) The approximate electrical energy efficiency of the vehicles considering the vehicle type, mission, and weight;
(ii) the national average electricity generation and transmission efficiencies;
(iii) the need of the Nation to conserve all forms of energy, and the relative scarcity and value to the Nation of all fuel used to generate electricity; and
(iv) the specific driving patterns of electric vehicles as compared with those of petroleum fueled vehicles.
DOE promulgated procedures for calculating EV CAFE values in April 1981.
In 1987, DOE completed the mandated seven-year evaluation, concluding that the EV CAFE provision was not effective at incentivizing early industrial development or initial commercialization of EVs.
Over time, Congress amended various aspects of the statutes governing the CAFE program,
In February 1994, “[d]ue to continued technology development and a strong interest in the corporate average fuel economy of electric vehicles from
In 1999, DOE withdrew the 1994 proposal and proposed an alternative PEF methodology.
Observing that “the methods specified in [Section 32905]” “intentionally and substantially overstated” the “true energy efficiency of” those vehicles, DOE proposed an EV PEF “conceptually based on the [provisions] at 49 U.S.C. 42905(c).”
The agency finalized the proposal in 2000 without substantial modification.
DOE's regulations for calculating CAFE program fuel economy values for EVs are long overdue to be updated. Statute requires the agency to “review those values each year and determine and propose necessary revisions” based on the enumerated statutory factors.
The consequences of outdated regulations are not academic. Because NHTSA is prohibited from considering the fuel economy of EVs when determining the maximum feasible CAFE standards for a given model year,
The values for several component terms in the PEF equation are no longer accurate. For example, the “gasoline-equivalent energy content of electricity factor” (Eg) is determined by combining various values for the efficiency of national electricity and petroleum generation and distribution.
Further, the generation fuel mix has changed significantly since 2000. In 2000, fossil fuels made up about 71% of the generation mix, while renewables made up only about 9% and nuclear power provided the remaining 20%.
Other real-world changes since 2000 should also inform the agency's regulations. For example, data on the harms of fossil-fuel driven climate change, on the scale of petroleum consumption by regulated vehicles, and on the projected fleet share of EVs, have all changed over the past twenty years. DOE should ensure that its regulations are based on the best available data fitted to the required statutory considerations.
Existing regulations are arguably inconsistent with DOE's statutory mandate. The statute provides that EV CAFE values should be “based on” the statutory factors at 49 U.S.C. 32904. But current regulations are actually “based on the existing regulatory approach at 49 U.S.C. 32905 for determining the petroleum-equivalent fuel economy of alternative [gaseous] fueled vehicles.”
To illustrate, the value of the PEF currently attributable to the Section 32904 EV factors is only 12,307 Wh/gal.
The entire delta from 51 mpg to 315 mpg is virtual. It does not reflect any efficiency characteristic of the EV or of the national electricity generation system, nor does it reflect any discretionary adjustment tied to the relevant statutory factors. Because CAFE is a fleet average standard,
If the 1/0.15 multiplier was accounting for a real-world improvement in fuel conservation or had the effect of causing net improvements in real-world fuel efficiency, then the multiplier might be more defensible. But DOE justified its inclusion primarily on the basis of affording similar treatment to EVs as gaseous fueled vehicles.
DOE should holistically review its approach to calculating the PEF to ensure its regulations comport with the relevant statutory language. For example, the statute provides that DOE should account for “the need of the United States to conserve all forms of energy.”
DOE should also work with NHTSA to ensure PEF regulations further the goals of the CAFE program. By way of illustration, DOE historically suggested that EV CAFE values should be high to help with “early commercialization” of EVs.
The early commercialization of EVs has already occurred and EVs comprise a significant and increasing share of new motor vehicle sales each model year.
For the above reasons, Petitioners ask that DOE grant this petition and initiate a rulemaking process to revise and update the regulations at 10 CFR part 474 for calculating equivalent petroleum-based fuel economy values for EVs. Petitioners thank DOE for its consideration.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to supersede Airworthiness Directive (AD) 2019-22-05, which applies to all General Electric Company (GE) CF34-8C model turbofan engines. AD 2019-22-05 requires initial and repetitive inspections of the operability bleed valve (OBV) fuel tubes, OBV bleed air manifold link rod assemblies, and the OBV fuel fittings. AD 2019-22-05 also requires replacement of OBVs or related OBV hardware that fail inspection. Since the FAA issued AD 2019-22-05, the manufacturer has redesigned the OBV, which terminates the need for the repetitive inspections. This proposed AD would require initial and repetitive inspections of the OBV fuel tubes, OBV bleed air manifold link rod assemblies, and the OBV fuel fittings. This proposed AD would also require replacement of OBVs or related OBV hardware that fail inspection. As a terminating action to the repetitive inspections, this proposed AD would require replacement of certain OBVs installed on GE CF34-8C and CF34-8E model turbofan engines. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by February 14, 2022.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this NPRM, contact General Electric Company, 1 Neumann Way, Cincinnati, OH 45215; phone: (513) 552-3272; email:
You may examine the AD docket at
Scott Stevenson, Aviation Safety Engineer, ECO Branch, FAA, 1200 District Avenue, Burlington, MA 01803; phone: (781) 238-7132; fax: (781) 238-7199; email:
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under
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
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 NPRM 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 NPRM, 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
The FAA issued AD 2019-22-05, Amendment 39-19784 (84 FR 63569, November 18, 2019), (AD 2019-22-05), for all GE CF34-8C1, CF34-8C5, CF34-8C5A1, CF34-8C5B1, CF34-8C5A2, and CF34-8C5A3 model turbofan engines. AD 2019-22-05 was prompted by multiple reports of fuel leaks, some leading to engine fires, that have occurred as a result of malfunctions related to the OBV. AD 2019-22-05 requires initial and repetitive inspections of the OBV fuel tubes, OBV bleed air manifold link rod assemblies, and the OBV fuel fittings. AD 2019-22-05 also requires replacement of OBVs or related OBV hardware that fail inspection. The agency issued AD 2019-22-05 to prevent failure of the OBV.
Since the FAA issued AD 2019-22-05, the manufacturer redesigned the OBV to eliminate the need for the repetitive inspections of the OBV fuel tubes, OBV bleed air manifold link rod assemblies, and the OBV fuel fittings. The manufacturer has issued service information specifying procedures to replace certain OBVs installed on CF34-8C1, CF34-8C5, CF34-8C5A1, CF34-8C5B1, CF34-8C5A2, CF34-8C5A3 (CF34-8C), and GE CF34-8E2, CF34-8E2A1, CF34-8E5, CF34-8E5A1, CF34-8E5A2, CF34-8E6, and CF34-8E6A1 (CF34-8E) model turbofan engines. Additionally, the FAA determined that the CF34-8E model turbofan engines are susceptible to the same unsafe condition as the CF34-8C model turbofan engines, and therefore, added the CF34-8E model turbofan engines to the applicability of this proposed AD. The FAA is proposing to require installation of the newly-designed OBV as a terminating action to the repetitive inspections required for CF34-8C model turbofan engines. The FAA is also proposing to require replacement of certain OBVs installed on CF34-8E model turbofan engines.
The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop on other products of the same type design.
The FAA reviewed GE CF34-8C Service Bulletin (SB) 75-0020 R04, dated May 10, 2019 (GE SB 75-0020). The SB specifies procedures for inspecting the bleed air manifold link rod assemblies; the supply, return, and drain fuel fittings; and the fuel tubes on the OBV. The SB also specifies procedures for performing corrective actions and replacing any OBVs or related OBV hardware that fail the inspection criteria. The Director of the Federal Register approved the incorporation by reference of GE SB 75-0020 as of December 23, 2019 (84 FR 63569, November 18, 2019).
The FAA reviewed GE CF34-8C SB 75-0025 R01, dated August 1, 2019. This SB describes procedures for replacing and upgrading the suspect population of OBVs VIN 5000728-104 (part number (P/N) 4123T71P02), VIN 5000728-106 (P/N 4123T71P03), and VIN 5080046-101 (P/N 4123T71P04).
The FAA reviewed GE CF34-8E SB 75-0019 R01, dated August 1, 2019. This SB describes procedures for replacing and upgrading the suspect population of OBVs VIN 5000728-104 (P/N 4123T71P02), VIN 5000728-106 (P/N 4123T71P03), and VIN 5080046-101 (P/N 4123T71P04).
This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in
The FAA reviewed GE CF34-8C SB 75-0026 R00, dated February 21, 2020. This SB introduces OBV VIN 5080046-103 (P/N 4123T71P06).
The FAA also reviewed GE CF34-8E SB 75-0021 R00, dated February 21, 2020. This SB introduces OBV VIN 5080046-103 (P/N 4123T71P06).
This proposed AD would retain certain requirements of AD 2019-22-05. This proposed AD would require initial and repetitive inspections of the OBV fuel tubes, OBV bleed air manifold link rod assemblies, and the OBV fuel fittings and replacement of OBVs or related OBV hardware that fail inspection. As a terminating action to the repetitive inspections of the OBV fuel tubes, OBV bleed air manifold link rod assemblies, and the OBV fuel fittings, this proposed AD would require replacement of certain OBVs installed on GE CF34-8C model turbofan engines. This proposed AD would also require replacement of certain OBVs installed on CF34-8E model turbofan engines.
GE SB 75-0020 specifies that the results of the inspections must be documented in an inspection chart form and sent to GE Product Support Engineering. This proposed AD would not mandate sending information to GE Product Support Engineering.
The FAA estimates that this AD, if adopted as proposed, would affect 1,172 engines installed on airplanes of U.S. registry.
The FAA estimates the following costs to comply with this proposed AD:
The FAA estimates the following costs to do any necessary replacements that would be required based on the results of the proposed inspection. The agency has no way of determining the number of aircraft that might need this replacement.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that the proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Would not affect intrastate aviation in Alaska, and
(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
a. Removing Airworthiness Directive 2019-22-05, Amendment 39-19784 (84 FR 63569, November 18, 2019); and
b. Adding the following new airworthiness directive:
The FAA must receive comments on this airworthiness directive (AD) action by February 14, 2022.
This AD replaces AD 2019-22-05, Amendment 39-19784 (84 FR 63569, November 18, 2019).
This AD applies to General Electric Company (GE) CF34-8C1, CF34-8C5, CF34-8C5A1, CF34-8C5B1, CF34-8C5A2, CF34-8C5A3, CF34-8E2, CF34-8E2A1, CF34-8E5, CF34-8E5A1, CF34-8E5A2, CF34-8E6, and CF34-8E6A1 model turbofan engines.
Joint Aircraft System Component (JASC) Code 7532, Compressor Bleed Valve.
This AD was prompted by multiple reports of fuel leaks, some leading to engine fires, that have occurred as a result of malfunctions related to the operability bleed valve (OBV). The FAA is issuing this AD to prevent failure of the OBV. The unsafe condition, if not addressed, could result in an engine fire and damage to the airplane.
Comply with this AD within the compliance times specified, unless already done.
(1) For CF34-8C1, CF34-8C5, CF34-8C5A1, and CF34-8C5B1 model turbofan engines with serial numbers (S/Ns): 965101 through 965670 inclusive; 194101 through 194999 inclusive; and 195101 through 195653 inclusive:
(i) Within 880 flight hours (FHs) since the previous inspection, 500 FHs after December 23, 2019 (the effective date of AD 2019-22-05), or 6,880 FHs since new, whichever occurs later, inspect the OBV bleed air manifold link rod assemblies, the OBV fuel fittings, and the OBV fuel tubes.
(ii) Thereafter, within every 880 FHs since the previous inspection, perform additional repeat inspections of the OBV bleed air manifold link rod assemblies, the OBV fuel fittings, and the OBV fuel tubes.
(iii) Use the Accomplishment Instructions, paragraph 3.B., of GE CF34-8C Service Bulletin (SB) 75-0020 R04, dated May 10, 2019 (GE SB 75-0020), to perform inspections required by paragraphs (g)(1)(i) and (ii) of this AD and, per the inspection criteria in paragraph 3.B., of GE SB 75-0020 (the inspection criteria), do the following:
(A) Before further flight, if fuel leakage is observed at the OBV fittings or the OBV fittings are loose, replace the OBV with a part eligible for installation.
(B) Before further flight, if any OBV fuel tube clamp is found to be outside the inspection criteria, re-torque the OBV fuel tube clamp or replace the OBV fuel tube clamp.
(C) Within 50 flight cycles (FCs) after the inspections required by paragraphs (g)(1)(i) and (ii) of this AD, replace any link rod hardware found to be outside the inspection criteria. Until the worn link rod hardware is replaced, the OBV fittings must be inspected before the first flight of each day for leakage and looseness in accordance with the inspection criteria. If the OBV fittings fail to meet the inspection criteria, before further flight, replace the OBV and worn link rod hardware.
(2) For CF34-8C5B1 model turbofan engines with S/Ns not listed in paragraph (g)(1) of this AD and for all CF34-8C5A2 and CF34-8C5A3 model turbofan engines, perform the following:
(i) Within 880 FHs after the effective date of this AD or prior to accumulating 6,880 FHs since new, whichever occurs later, perform an initial inspection of the OBV bleed air manifold link rod assemblies, OBV fuel fittings, and OBV fuel tubes.
(ii) Thereafter, within every 880 FHs since the last inspection, repeat the inspection of the OBV bleed air manifold link rod assemblies, OBV fuel fittings, and OBV fuel tubes.
(iii) Use the Accomplishment Instructions, paragraph 3.B., of GE SB 75-0020, to perform the inspections in paragraph (g)(2)(i) or (ii) of this AD and, per the inspection criteria in paragraph 3.B., of GE SB 75-0020, do the following:
(A) Before further flight, if fuel leakage is observed at the OBV fittings or the OBV fittings are loose, replace the OBV with a part eligible for installation.
(B) Before further flight, if any OBV fuel tube clamp is found to be outside the inspection criteria, re-torque the OBV fuel tube clamp or replace the OBV fuel tube clamp.
(C) Within 50 FCs after the inspections required by paragraphs (g)(2)(i) and (ii) of this AD, replace any link rod hardware found to be outside the inspection criteria. Until the worn link rod hardware is replaced, the OBV fittings must be inspected before the first flight of each day for leakage and looseness in accordance with the inspection criteria. If the OBV fittings fail to meet the inspection criteria, before further flight, replace the OBV and worn link rod hardware.
(3) For all affected engines with an installed OBV, VIN 5000728-104 part number (P/N) (P/N 4123T71P02), VIN 5000728-106 (P/N 4123T71P03), or VIN 5080046-101 (P/N 4123T71P04), having an OBV S/N listed in Appendix A, paragraph 4., of GE CF34-8C SB 75-0025 R01, dated August 1, 2019 (GE SB 75-0025), or Appendix A, paragraph 4., of GE CF34-8E SB 75-0019 R01, dated August 1, 2019 (GE SB 75-0019), respectively, within 180 days after the effective date of this AD, remove the OBV and replace with a part eligible for installation.
(4) For all affected engines with an installed OBV, VIN 5000728-104 (P/N 4123T71P02), VIN 5000728-106 (P/N 4123T71P03), or VIN 5080046-101 (P/N 4123T71P04), having an OBV S/N not listed in Appendix A, paragraph 4., of GE SB 75-0025 or Appendix A, paragraph 4., of GE SB 75-0019, respectively, remove the OBV and replace with a part eligible for installation within the following compliance times:
(i) Within 16 months after the effective date of this AD for an OBV that has accumulated more than 25,000 FHs since new.
(ii) Within 32 months after the effective date of this AD for an OBV that has accumulated between 12,500 to 25,000 FHs since new, inclusive.
(iii) Within 48 months after the effective date of this AD for an OBV with fewer than 12,500 FHs since new.
(5) For all affected engines with an installed OBV, VIN 5080046-102 (P/N 4123T71P05), before the OBV accumulates 25,000 FHs since new or within 10 years after the effective date of this AD, whichever occurs first, remove the OBV and replace with a part eligible for installation.
Installation of an OBV that meets the definition of a part eligible for installation in paragraph (i) of this AD constitutes terminating action for the inspections required by paragraphs (g)(1) and (2) of this AD.
For the purpose of this AD, a “part eligible for installation” is an OBV VIN 5080046-103 (P/N 4123T71P06) or an OBV reworked to VIN 5080046-103 (P/N 4123T71P06).
The reporting instructions specified in GE SB 75-0020 are not required by this AD.
You may take credit for the initial inspection required by paragraph (g)(1)(i) or (2)(i), of this AD if you performed this initial inspection before the effective of this AD using GE CF34-8C SB 75-0019 R01, dated October 24, 2017, or R00, dated August 4, 2017; or GE CF34-8C-AL S/B 75-0020, Revision 03, dated December 14, 2018, as applicable.
(1) The Manager, ECO Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ECO Branch, send it to the attention of the person identified in paragraph (m)(1) of this AD. Information may be emailed to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(1) For more information about this AD, contact Scott Stevenson, Aviation Safety Engineer, ECO Branch, FAA, 1200 District Avenue, Burlington, MA 01803; phone: (781) 238-7132; fax: (781) 238-7199; email:
(2) For service information identified in this AD, contact General Electric Company, 1 Neumann Way, Cincinnati, OH 45215; phone: (513) 552-3272; email:
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to establish United States Area Navigation (RNAV) route T-364 in the vicinity of Kotzebue, AK in support of a large and comprehensive T-route modernization project for the state of Alaska.
Comments must be received on or before February 14, 2022.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: 1(800) 647-5527, or (202) 366-9826. You must identify FAA Docket No. FAA-2021-1156; Airspace Docket No. 19-AAL-28 at the beginning of your comments. You may also submit comments through the internet at
Christopher McMullin, Rules and Regulations Group, Office of Policy, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-8783.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would expand the availability of RNAV in Alaska and improve the efficient flow of air traffic within the National Airspace System (NAS) by lessening the dependency on ground based navigation.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.
Communications should identify both docket numbers (FAA Docket No. FAA-2021-1156; Airspace Docket No. 19-AAL-28) and be submitted in triplicate to the Docket Management Facility (see
Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2021-1156; Airspace Docket No. 19-AAL-28”. The postcard will be date/time stamped and returned to the commenter.
All communications received on or before the specified comment closing date will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the comment closing date. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see
This document proposes to amend FAA Order JO 7400.11F, Airspace Designations and Reporting Points, dated August 10, 2021, and effective September 15, 2021. FAA Order JO 7400.11F is publicly available as listed in the
In 2003, Congress enacted the Vision 100-Century of Aviation Reauthorization Act (Pub. L. 108-176), which established a joint planning and development office in the FAA to manage the work related to the Next Generation Air Transportation System (NextGen). Today, NextGen is an ongoing FAA-led modernization of the nation's air transportation system to make flying safer, more efficient, and more predictable.
In support of NextGen, this proposal is part of a larger and comprehensive T-route modernization project in the state of Alaska. The project mission statement states: “To modernize Alaska's Air Traffic Service route structure using satellite based navigation Development of new T-routes and optimization of existing T-routes will enhance safety, increase efficiency and access, and will provide en route continuity that is not subject to the restrictions associated with ground based airway navigation.” As part of this project, the FAA evaluated the existing Colored Airway structure for: (a) Direct replacement (
The aviation industry/users have indicated a desire for the FAA to transition the Alaskan en route navigation structure away from dependency on Non-Directional Beacons (NDB), and move to develop and improve the RNAV route structure. The FAA proposes to establish RNAV route T-364 between the COGNU, AK, waypoint (WP) northwest of Wales, AK to the Kotzebue, AK, (OTZ) VHF Omnidirectional Radar/Distance Measuring Equipment (VOR/DME). The proposed route would provide an alternate airway for Colored airways, B-8 and B-2, in anticipation of the future decommissioning of the Hotham, AK, (HHM) and the Shishmaref, AK, (SHH) NDBs. Furthermore, the proposed route would allow for a lower GNSS MEA, while providing connectivity to instrument approach procedures at Wales Airport, Alaska.
The FAA is proposing an amendment to 14 CFR part 71 to establish RNAV route T-364 in the vicinity of Kotzebue, AK in support of a large and comprehensive T-route modernization project for the state of Alaska. The proposed route is described below.
United States Area Navigation Routes are published in paragraph 6011 of FAA Order JO 7400.11F dated August 10, 2021, and effective September 15, 2021, which is incorporated by reference in 14 CFR 71.1. The RNAV listed in this document would be published subsequently in FAA Order JO 7400.11.
FAA Order JO 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F,
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend United States Area Navigation (RNAV) route T-278 in the vicinity of Sisters Island, AK in support of a large and comprehensive T-route modernization project for the state of Alaska.
Comments must be received on or before February 14, 2022.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: 1(800) 647-5527, or (202) 366-9826. You must identify FAA Docket No. FAA-2021-1153; Airspace Docket No. 19-AAL-76 at the beginning of your comments. You may also submit comments through the internet at
FAA Order JO 7400.11F, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Christopher McMullin, Rules and Regulations Group, Office of Policy, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-8783.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would expand the availability of RNAV in Alaska and improve the efficient flow of air traffic within the National Airspace System (NAS) by lessening the dependency on ground based navigation.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.
Communications should identify both docket numbers (FAA Docket No. FAA-2021-1153; Airspace Docket No. 19-AAL-76) and be submitted in triplicate to the Docket Management Facility (see “
Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2021-1153; Airspace Docket No. 19-AAL-76”. The postcard will be date/time stamped and returned to the commenter.
All communications received on or before the specified comment closing date will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the comment closing date. A report summarizing each substantive public
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see “
This document proposes to amend FAA Order JO 7400.11F, Airspace Designations and Reporting Points, dated August 10, 2021, and effective September 15, 2021. FAA Order JO 7400.11F is publicly available as listed in the
In 2003, Congress enacted the Vision 100—Century of Aviation Reauthorization Act (Pub. L. 108-176), which established a joint planning and development office in the FAA to manage the work related to the Next Generation Air Transportation System (NextGen). Today, NextGen is an ongoing FAA-led modernization of the nation's air transportation system to make flying safer, more efficient, and more predictable.
In support of NextGen, this proposal is part of a larger and comprehensive T-route modernization project in the state of Alaska. The project mission statement states: “To modernize Alaska's Air Traffic Service route structure using satellite based navigation. Development of new T-routes and optimization of existing T-routes will enhance safety, increase efficiency and access, and will provide en route continuity that is not subject to the restrictions associated with ground based airway navigation.” As part of this project, the FAA evaluated the existing Colored Airway structure for: (a) Direct replacement (
The aviation industry/users have indicated a desire for the FAA to transition the Alaskan en route navigation structure away from dependency on Non-Directional Beacons (NDB), and move to develop and improve the RNAV route structure. The FAA proposes to amend RNAV route T-278 by adjusting the segment of the airway between the HAPIT, AK, Fix and Sisters Island, AK, (SSR) VHF Omnidirectional Radar and Tactical Air Navigational System (VORTAC) by adding two new waypoints (WP), BIKUW, AK WP, and CSPER, AK WP to allow for a lower GNSS MEA. Additionally, the FAA proposes to extend the route from the Sisters Island, AK, (SSR) VORTAC to the RADKY, AK, WP, in order to provide connectivity with T-266. These amendments would support the future decommissioning of the Elephant Island, AK, (EEF) NDB.
The FAA is proposing an amendment to 14 CFR part 71 to amend RNAV route T-278 in the vicinity of Sisters Island, AK in support of a large and comprehensive T-route modernization project for the state of Alaska. The proposed route is described below.
United States Area Navigation Routes are published in paragraph 6011 of FAA Order JO 7400.11F dated August 10, 2021, and effective September 15, 2021, which is incorporated by reference in 14 CFR 71.1. The RNAV listed in this document would be published subsequently in FAA Order JO 7400.11.
FAA Order JO 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend United States Area Navigation (RNAV) route T-269 in the vicinity of Yakutat, AK in support of a large and comprehensive T-route modernization project for the state of Alaska.
Comments must be received on or before February 14, 2022.
Send comments on this proposal to the U.S. Department of Transportation, Docket Operations, 1200 New Jersey Avenue SE, West Building Ground Floor, Room W12-140, Washington, DC 20590; telephone: 1(800) 647-5527, or (202) 366-9826. You must identify FAA Docket No. FAA-2021-1152; Airspace Docket No. 19-AAL-72 at the beginning of your comments. You may also submit comments through the internet at
FAA Order JO 7400.11F, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Christopher McMullin, Rules and Regulations Group, Office of Policy, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-8783.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would expand the availability of RNAV in Alaska and improve the efficient flow of air traffic within the National Airspace System (NAS) by lessening the dependency on ground based navigation.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.
Communications should identify both docket numbers (FAA Docket No. FAA-2021-1152; Airspace Docket No. 19-AAL-72) and be submitted in triplicate to the Docket Management Facility (see
Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2021-1152; Airspace Docket No. 19-AAL-72”. The postcard will be date/time stamped and returned to the commenter.
All communications received on or before the specified comment closing date will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the comment closing date. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Office (see
This document proposes to amend FAA Order JO 7400.11F, Airspace Designations and Reporting Points, dated August 10, 2021, and effective
In 2003, Congress enacted the Vision 100-Century of Aviation Reauthorization Act (Pub. L. 108-176), which established a joint planning and development office in the FAA to manage the work related to the Next Generation Air Transportation System (NextGen). Today, NextGen is an ongoing FAA-led modernization of the nation's air transportation system to make flying safer, more efficient, and more predictable.
In support of NextGen, this proposal is part of a larger and comprehensive T-route modernization project in the state of Alaska. The project mission statement states: “To modernize Alaska's Air Traffic Service route structure using satellite based navigation Development of new T-routes and optimization of existing T-routes will enhance safety, increase efficiency and access, and will provide en route continuity that is not subject to the restrictions associated with ground based airway navigation.” As part of this project, the FAA evaluated the existing Colored Airway structure for: (a) Direct replacement (
The aviation industry/users have indicated a desire for the FAA to transition the Alaskan en route navigation structure away from dependency on Non-Directional Beacons (NDB), and move to develop and improve the RNAV route structure. The FAA proposes to amend RNAV route T-269 by re-routing the segment of the airway between the Yakutat, AK, (YAK) VHF Omnidirectional Range/Distance Measuring Equipment (VOR/DME) to the Johnstone Point, AK, (JOH) VOR/DME by altering the segment in order to allow for a lower GNSS MEA along the route while ensuring continuous two-way VHF communications. The amended portion would include six new waypoints (WP), OXIDS; FOGNU; HORGI; ZIXIM; JOVOM; and OXUGE. Adding these new WPs would cause the MALAS, AK, WP to become a turn point, so it will be included in the legal description. Finally, the FAA proposes to remove six WPs, (TURTY; HAPIT; CENTA; YONEK; VEILL; and VIDDA), two navigational aids (Sparrevohn, AK, (SQA); and Bethel, AK, (BET)), and one Fix (FLIPS, AK, Fix) from the legal description, since they are not turn points on straight segments of the route. These points will still be depicted on the sectional chart, so it will be transparent to pilots.
The FAA is proposing an amendment to 14 CFR part 71 to amend RNAV route T-269 in the vicinity of Yakutat, AK in support of a large and comprehensive T-route modernization project for the state of Alaska. The proposed route is described below.
United States Area Navigation Routes are published in paragraph 6011 of FAA Order JO 7400.11F dated August 10, 2021, and effective September 15, 2021, which is incorporated by reference in 14 CFR 71.1. The RNAV listed in this document would be published subsequently in FAA Order JO 7400.11.
FAA Order JO 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
Bureau of Industry and Security, Commerce.
Proposed rule.
The Additional Protocol is an agreement between the United States and the International Atomic Energy Agency (IAEA) to allow monitoring and reporting of certain civil nuclear fuel cycle-related activities. The Bureau of Industry and Security (BIS) administers the Additional Protocol Regulations (APR), which implement the provisions of the Additional Protocol affecting U.S. industry and other U.S. persons engaged in certain civil nuclear fuel cycle-related activities that are not regulated by the U.S. Nuclear Regulatory Commission (NRC), or its domestic Agreement States, and are not situated at certain U.S. government locations. The APR describe the requirement to report such activities to BIS, as well as the conduct of on-site activities in conjunction with IAEA complementary access to locations where such civil nuclear fuel cycle-related activities take place. This rule proposes to amend the APR to replace the existing manual reporting and processing procedures with a mandatory requirement to submit reports and other documents on-line through the Additional Protocol Reporting System (APRS). As a result of this proposed change, all persons and locations in the United States that are subject to the reporting requirements in the APR would be required to register on-line to set up an APRS account, submit reports and other documents to BIS via APRS, and maintain current user account information in APRS. This rule also proposes to amend the APR to clarify and update other requirements (
Comments must be received by BIS no later than February 14, 2022.
You may submit comments, identified by docket number BIS-2021-0034 or RIN 0694-AH95, through any of the following:
•
•
All filers using the portal or email should use the name of the person or entity submitting the comments as the name of their files, in accordance with the instructions below. Anyone submitting business confidential information should clearly identify the business confidential portion at the time of submission, file a statement justifying nondisclosure and referring to the specific legal authority claimed, and provide a non-confidential submission.
For comments submitted electronically containing business confidential information, the file name of the business confidential version should begin with the characters “BC.” Any page containing business confidential information must be clearly marked “BUSINESS CONFIDENTIAL” on the top of that page. The corresponding non-confidential version of those comments must be clearly marked “PUBLIC.” The file name of the non-confidential version should begin with the character “P.” The “BC” and “P” should be followed by the name of the person or entity submitting the comments or rebuttal comments. Any submissions with file names that do not begin with a “P” or “BC” will be assumed to be public and will be made publicly available through
For general information on APR requirements, including the APRS requirements proposed by this rule, contact Hung Ly, Treaty Compliance Division, Office of Nonproliferation and Treaty Compliance, Email:
The Protocol Additional to the Agreement Between the United States of America and the International Atomic Energy Agency for the Application of Safeguards in the United States of America (hereinafter referred to as the “Additional Protocol” or “AP”) was developed to strengthen existing verification agreements established under the International Atomic Energy Agency (IAEA) safeguards regime and to promote the non-proliferation of nuclear weapons, which is a cornerstone of U.S. foreign and national security policy. The U.S. Additional Protocol requires the United States to declare to the IAEA a number of commercial nuclear and nuclear-related items, materials, and activities that have peaceful nuclear applications, but are also necessary elements for a nuclear weapons program.
To obtain the information needed to prepare the U.S. Declaration under the Additional Protocol, BIS administers the Additional Protocol Regulations (APR) (15 CFR 781-786) reporting requirements related to: (1) Nuclear fuel cycle research and development activities not involving nuclear materials; (2) nuclear-related
To facilitate compliance with the reporting requirements in the APR, BIS has developed the Additional Protocol Reporting System (APRS), an internet-based application, for industry to use to prepare and submit AP reports. APRS is a user-friendly, time-saving tool that will reduce the burden on industry related to the preparation and submission of these reports. Accordingly, BIS is proposing to amend the APR to replace the existing manual reporting requirement (
This proposed APRS electronic submission requirement would be mandatory only for the BIS administered AP reporting requirements described in § 783.1 of the APR. This APRS submission requirement would not be mandatory for information submitted in accordance with the AP-related reporting requirements in the regulations administered by the Nuclear Regulatory Commission (NRC), as follows: (1) Information concerning exports of nuclear facilities and equipment and non-nuclear materials (nuclear grade graphite for nuclear end use and deuterium) listed in Annex II of the Additional Protocol and submitted in accordance with 10 CFR 110.54(a); (2) facility information described in 10 CFR 75.10(b)(5) and submitted in accordance with 10 CFR 75.6(c) and 75.10(e); and (3) location information described in 10 CFR 75.11(b) and submitted in accordance with 10 CFR 75.6(d) and 75.11(c). Consequently, locations and sites subject to these NRC reporting requirements would have the option of continuing to submit their AP reports to BIS manually, in accordance with the instructions provided in the aforementioned NRC regulations, or registering for access to submit their reports electronically to BIS via APRS (provided that the locations and sites otherwise satisfy their NRC reporting requirements).
In addition to proposing the mandatory electronic submission of AP reports via APRS, this rule proposes to amend the APR to: (1) Clarify the uranium hard-rock mine and ore beneficiation activities that are subject to the reporting requirements in the APR; (2) remove the provisions that address the outdated requirement to submit
This rule proposes to amend § 781.1 of the APR (Definitions of Terms) by adding a definition of the
The most extensive and substantive amendments related to the establishment of APRS are proposed to the provisions in part 782 of the APR.
First, this rule proposes to replace the last two sentences in § 782.1 of the APR, which currently provide information on how to obtain hard copies of AP report forms, with a sentence instructing persons or locations subject to the APR reporting requirements to submit their AP reports via APRS in accordance with the instructions provided in §§ 782.5 and 782.6 of the APR (as proposed to be amended by this rule).
Second, this rule proposes to amend § 782.5 of the APR to indicate that persons and locations subject to the reporting requirements described in § 783.1 of the APR must submit their AP reports to BIS via the internet, using their APRS account. Section 782.5 also would be amended to indicate that BIS would provide persons and locations subject to the reporting requirements in the APR with information on how to use APRS (including the roles of the account administrator and individual users and how to electronically file AP reports with BIS) as part of the APRS registration process. Furthermore, this section would indicate that the AP Forms required to submit these reports, including the due dates of the reports, are identified in supplement no. 1 to part 783 of the APR and may be accessed via the location's APRS account. The AP website maintained by BIS at
Third, this rule proposes to revise § 782.6 of the APR to require U.S. persons or locations with reportable activities under the APR to register on-line with BIS to request the establishment of a user account for the purpose of electronically submitting AP reports through the APRS. Specifically, each person or location with reportable activities under the APR, as proposed to be amended by this rule, would be required to designate at least one individual who would be authorized to act on behalf of that person or location as an APRS account administrator. The account administrator would be responsible for registering to open an account under APRS for the purpose of submitting AP reports to BIS on behalf of the person or location.
To register for an account in APRS, the account administrator would visit the APRS login page, at
Following BIS's approval of the registration request for an APRS account, the account administrator would be authorized to add or remove individual users, who would be able to use the account to view, add, edit and
For persons and locations that have previously submitted a report pursuant to the APR, BIS would notify the AP report point of contact (POC), via email, indicating the date on which electronic submission of AP reports under APRS would become mandatory and instructing the POC or designated organization administrator on how to register on the APRS login page, at
As a result of these proposed amendments to §§ 782.5 and 782.6 of the APR, all reports required under the APR would have to be submitted electronically using APRS, instead of manually, as is currently the case. However, the information collected and reported electronically under APRS would be the same type of information that is currently required to be submitted using paper AP report forms. BIS expects that the implementation of APRS would, over time, reduce industry's processing times and errors (
This rule proposes to amend § 783.1 (Reporting Requirements) to include a number of specific references to the mandatory APRS electronic registration and reporting requirements described in §§ 782.5 and 782.6, as proposed to be amended by this rule. BIS also is proposing a similar conforming change in the introductory text of § 783.4 (Deadlines for Submission of Reports).
To clarify the types of uranium hard-rock mines and ore beneficiation plants that are subject to the reporting requirements of the APR and to ensure that the description of these mines and plants in the APR is consistent with the terminology used in the Additional Protocol, this rule proposes to amend § 781.1 of the APR by: (1) Adding a definition for “
The proposed addition of the definition “
The proposed changes to the definition of “
This rule also proposes to revise the definition of “
In addition, this rule proposes to amend the APR to make conforming changes to the “
This rule proposes to amend § 783.1(a) introductory text and (a)(3), § 783.4(a) and Supplement No. 1 to part 783 of the APR to remove references to calendar year 2008 activities (including the due date for reporting such activities) from the
This rule proposes to amend § 783.2 of the APR by replacing the current
To reflect the elimination of the
Section 782.4(a)(1) of the APR, which addresses the submission of activity determination requests to BIS, is proposed to be amended to remove and replace the current email address identified therein (
Supplement No. 1 to part 783 of the APR is proposed to be amended to clarify, within the text identifying the due date for
The legal authorities for 15 CFR parts 781 through 786 are revised by removing the reference to the applicable public law (
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 proposed rule has been determined to be not significant for purposes of Executive Order 12866.
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
The estimated annual cost to all respondents (locations and sites) of preparing and submitting the reports required under the APR is $42,054. The cost per hour for the respondents was derived from the cost per hour of the salaries and overhead of the Federal employees working on this project. Thus, the estimated total annual cost burden to all respondents for these activities is 920.3 hours × $38.08/hour (GS-13 Step 1) × 1.2 (20% Overhead) = $42,054.
This approved information collection also involves a recordkeeping requirement of three years, as specified in § 786.2 of the APR. The estimated recordkeeping cost for this collection is $675. Each AP report submitted to BIS averages around 25 pages of supporting documents that can be stored in a filing cabinet occupying 0.15 square feet of office space. The average estimated cost of office space in the Washington, DC area is around of $45/sq. ft./year. Applying this cost to the approximately 100 respondents, per annum, who submit AP reports to BIS yields an estimated annual recordkeeping cost for this information collection of $675 (0.15 sq.ft. × $45/sq.ft. × 100 reports).
The estimated total annual cost to all locations and sites of preparing and submitting their AP reports to BIS, together with the recordkeeping costs associated with these reports, is $42,729 [$42,054 (annual cost of preparing and submitting AP reports) + $675 (annual cost of complying with the APR recordkeeping requirements associated with these reports) = $42,729.]
Although this rule proposes to replace the current method of manually submitting AP reports (
Written comments and recommendations for the information collection referenced above should be sent within 30 days of the publication of this final rule to:
3. This rule does not contain policies with federalism implications as that term is defined in Executive Order 13132.
4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military and foreign affairs function of the United States (see 5 U.S.C. 553(a)(1)). Notwithstanding, BIS believes this rule would benefit from public comment prior to issuance. Consistent with the Regulatory Flexibility Act, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) (5 U.S.C. 601
The policy reasons for issuing this proposed rule are discussed in the background section of the preamble of this document and, consequently, are not repeated here.
The objective of the amendments proposed by this rule is to facilitate the compliance of locations and sites who have reporting requirements under the APR by implementing the Additional Protocol Reporting System (APRS), an internet-based application designed for industry to use in preparing and submitting reports required by the APR. The legal basis for this proposed rule is as follows: 22 U.S.C. 8101-8181; Executive Order 13458 (February 4, 2008).
No other federal rules duplicate, overlap, or conflict with this proposed rule.
This proposed rule would apply to locations and sites who are engaged in certain civil nuclear fuel cycle-related activities that are not regulated by the NRC, or its domestic Agreement States, and are not situated at certain U.S. government locations. The APR require that such activities be reported to BIS, and also contain requirements concerning the conduct of on-site activities in conjunction with IAEA complementary access to locations where such civil nuclear fuel cycle-related activities take place. Currently, these reports are submitted to BIS via facsimile, hand delivery, courier, or the mail using paper forms. This rule proposes to amend the APR to replace the existing manual reporting and processing procedures with a mandatory requirement to submit reports and other documents through an on-line application known as the Additional Protocol Reporting System (APRS).
BIS does not collect or maintain the data necessary to determine how many of the affected persons or locations are small entities as that term is used by the Small Business Administration. However, BIS does maintain data on the number of AP reports that the agency receives, annually, in response to the reporting requirements of the APR, and is using these data as a means of assessing the impact that the changes proposed in this rule would have on small businesses.
Based on the data provided for calendar year 2019, in BIS's most recent Supporting Statement for the information collection approved under OMB control number 0694-0135, there are approximately 300 AP report forms
The aforementioned BIS Supporting Statement and the information collection approved under OMB control number 0694-0135 estimate the total number of AP reports submitted to BIS per annum, instead of indicating the estimated number of entities (
As indicated in the preamble of this proposed rule, participation in APRS would be mandatory only for those entities having one or more locations or sites subject to the reporting requirements described in § 738.1 of the APR. For location and site information that is subject to the AP reporting requirements in the NRC's regulations (
Although BIS estimates that the majority of these entities are substantially sized entities, having more than 500 employees, BIS does not have sufficient information on these businesses and organizations to definitively characterize them as large entities. The Small Business Administration (SBA) has established standards for what constitutes a small business, with respect to each of the Standard Industrial Classification (SIC) code categories. For example, a business in the uranium mining industry (NAICS Code: 212291, SIC Code: 1094), is considered by SBA to be a small business if it is independently owned and operated and not dominant in its field of operation and it employs 500 or fewer persons on a full-time basis, part-time, temporary, or other basis. The Mine Safety and Health Administration (MSHA) estimates that approximately 99.8% of the metal/non-metal mining industry would qualify as small businesses. However, many of the uranium mining and milling entities in the United States appear to be subsidiaries of large companies and BIS estimates that most of the small entities likely to be impacted by the AP reporting changes proposed by this rule would fall within one of the following categories: (1) Colleges and universities; (2) nuclear fuel manufacturers and utility companies; or (3) corporate entities and contractors involved in research and development, manufacturing, assembly and construction activities. In addition, BIS is not able to determine which SIC code categories apply to other locations or sites that are likely to be impacted by the AP reporting changes proposed by this rule. Therefore, for the purpose of assessing the impact of this proposed rule, BIS assumes that all of the approximately 100 entities having locations and sites that are likely to be affected by the proposed changes are small entities. Although this proposed rule would likely affect a substantial number of small entities (
As indicated in the PRA analysis for this rule (see Rulemaking Requirements #2, above), the total estimated annual burden hours for preparing and submitting AP reports to BIS is 920.3 hours and the total estimated annual cost is $42,054 [920.3 hours × $38.08/hour (GS-13 Step 1) × 1.2 (20% Overhead) = $42,054]. In addition, BIS estimates that the total annual cost to locations and sites for satisfying the recordkeeping requirement of three years, as specified in § 786.2 of the APR, is $675 (see the PRA analysis in Rulemaking Requirements #2, above).
The total estimated annual burden hours required to comply with the AP reporting and recordkeeping requirements described above would be 920 burden hours and the total estimated annual cost would be $42,729. Although the primary impact of these new requirements would affect a substantial number of small entities (
Based on the analysis provided above, the amendments proposed in this rule would not impose a significant economic impact on a substantial number of small businesses.
The changes proposed in this rule, if adopted, would mean that the AP reports required under § 783.1 of the APR, which currently must be submitted to BIS via facsimile, hand delivery, courier, or the mail using paper forms, would have to be submitted electronically to BIS using APRS. Neither the scope nor the type of information that would have to be reported to BIS would be affected by these proposed changes. In addition, although the changes proposed by this rule might result in more records being maintained electronically than is currently the case, the scope of the recordkeeping requirements described in § 786.2 of the APR would not be affected as a result of the changes proposed by this rule.
Furthermore, this proposed mandatory APRS electronic submission requirement would apply only to those locations and sites subject to the BIS administered reporting requirements described in § 783.1 of the APR. Locations and sites whose information is subject to the AP reporting requirements in the NRC's regulations
To the extent that compliance with the changes proposed in this rule would impose a burden on entities, including small businesses, BIS believes the burden would be minimal. As indicated in the above analysis of the description and number of small entities likely to be affected by these proposed changes, these new APRS submission requirements would affect a substantial number of small entities (
As noted above, BIS does not believe that the amendments proposed in this rule, if implemented in a final rule, would have a significant economic impact on small businesses. Nevertheless, as required by 5 U.S.C. 603(c), BIS considered significant alternatives to these proposed amendments to assess whether the alternatives would: (1) Accomplish the stated objective of this rule (
BIS could have proposed more extensive changes to the reporting requirements in the APR to further facilitate compliance of affected locations and sites with these requirements. However, the changes proposed by this rule should be viewed in light of the fact that BIS's discretion in addressing the reporting requirements of the APR is limited by the necessity of meeting U.S. obligations under the Additional Protocol. The Additional Protocol specifies the information that the United States must declare to the IAEA. Nevertheless, in addressing these requirements in this proposed rule, BIS has attempted to minimize the recordkeeping and reporting burden by: (1) Ensuring that only information that the United States must declare to the IAEA will have to be reported to BIS; and (2) making the process by which this information must be submitted to BIS as seamless as possible (
BIS is not proposing different compliance or reporting requirements for small businesses. If a small business is subject to a reporting requirement under the APR, then it would submit an AP report using the same process as any other company (
Lastly, as required under 5 U.S.C. 603(c), BIS assessed the use of performance standards rather than design standards and also considered whether an exemption for small businesses was practical under the circumstances (
This rule proposes the establishment of a mandatory internet-based AP reporting submission requirement (
This rule does not propose to exempt small businesses from the requirement to use APRS to submit their AP reports, because BIS and its interagency partners have determined that this new electronic submission process will facilitate the efforts of locations and sites to submit their AP reports to BIS by providing an approach that would be less time consuming and more cost effective, irrespective of the size of the entity. This approach also would ensure more timely and accurate reporting of the information needed by BIS to prepare the U.S. declaration for submission to the IAEA. Consequently, an exemption for small businesses would undermine the effectiveness of the changes proposed by this rule.
Although BIS has determined that the provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military and foreign affairs function of the United States (see 5 U.S.C. 553(a)(1)), BIS believes that this rule would benefit from public comment, prior to issuance, and has prepared this initial regulatory flexibility analysis (IRFA), consistent with the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601
Please submit any comments concerning this IRFA in accordance
Imports, Nuclear energy, Reporting and recordkeeping requirements, Treaties.
Nuclear energy, Reporting and recordkeeping requirements.
Imports, Nuclear energy, Reporting and recordkeeping requirements.
Administrative practice and procedure.
For the reasons stated in the preamble, parts 781 through 786 of the Additional Protocol Regulations (15 CFR parts 781-786) are proposed to be amended as follows:
22 U.S.C. 8101-8181; Executive Order 13458 (February 4, 2008).
The additions and revisions read as follows:
22 U.S.C. 8101-8181; Executive Order 13458 (February 4, 2008).
Part 783 of the APR describes the reporting requirements for specified activities. For each activity identified in part 783, BIS may require that an
The revisions read as follows:
(a)
(b)
(2)
Persons and locations subject to the reporting requirements described in § 783.1 of the APR must submit their Additional Protocol (AP) reports to BIS via the internet, using their Additional Protocol Reporting System (APRS) account. Changes to information submitted by reportable locations in their most recent AP reports also must be submitted to BIS, via APRS, in accordance with the instructions provided in § 783.2 of the APR. Section 782.6 of the APR describes how to register for an APRS account. BIS will provide persons and locations subject to the AP reporting requirements with information on how to use APRS (including the roles of the account administrator and individual users and how to electronically file AP reports with BIS) as part of the APRS registration process. The specific AP Forms required to submit these reports, including due dates, are indicated in supplement no. 1 to part 783 of the APR. AP Forms may be accessed via the location's APRS account. For additional information on how to prepare and submit AP reports, see the “
(a)
(b)
(c)
(d)
(e)
(f)
(2)
(3)
22 U.S.C. 8101-8181; Executive Order 13458 (February 4, 2008).
(a)
(1)
(i) You must complete and submit Form AP-3 if you conducted any civil nuclear fuel cycle-related research and development activities defined in § 781.1 of the APR that:
(A) Did not involve nuclear material; and
(B) Were funded, specifically authorized or controlled by, or conducted on behalf of, the United States.
(ii) You must complete and submit Form AP-4 if you conducted any civil nuclear fuel cycle-related research and development activities defined in § 781.1 of the APR that:
(A) Did not involve nuclear material;
(B) Were specifically related to enrichment, reprocessing of nuclear fuel, or the processing of intermediate or high-level waste containing plutonium, high enriched uranium or uranium-233 (where “processing” involves the separation of elements);
(C) Were not funded, specifically authorized or controlled by, or conducted on behalf of, the United States.
(2)
(3)
(b)
(1)
(2)
(3)
(ii) If your location ceases to engage in activities subject to the AP reporting requirements described in paragraph (a) of this section, and you have not previously reported this to BIS, you must submit an
(iii) The decommissioned status of a uranium hard-rock mine or ore beneficiation (concentration) plant must be reported by submitting an
(c)
(d)
(2)
(e)
In order for BIS to maintain accurate information on previously submitted AP reports, including information necessary for BIS to facilitate complementary access notifications or to communicate that specific AP reporting requirements may apply, changes to information submitted by reportable locations in their most recent AP reports must be reported to BIS under the circumstances described in paragraphs (a), (b), and (d) of this section. This section applies only to changes affecting information contained in
(a)
(b)
(i) Name of report point of contact (R-POC), including telephone number, facsimile number, and email address;
(ii) Name(s) of complementary access point(s) of contact (A-POC), including telephone number(s), facsimile number(s) and email address(es);
(iii) Organization name;
(iv) Organization mailing address;
(v) Location owner, including telephone number, and facsimile number;
(vi) Location operator, including telephone number, and facsimile number.
(2)
(i) The following information must be submitted to BIS by an organization that is selling or that has sold a reportable location (use
(A) Name of seller (
(B) Reporting Code (this code is assigned to a reportable location after BIS has approved a request to open an APRS account for the location);
(C) Name of purchaser (
(D) Date of ownership transfer or change;
(E) Additional details on the sale of the reportable location relevant to ownership or operational control over any portion of the reportable location (
(F) Details regarding whether the new owner of a reportable location will submit the next report for the entire calendar year in which the ownership change occurred, or whether the previous owner and new owner will submit separate reports for the periods of the calendar year during which each owned the reportable location.
(ii) The following information must be submitted to BIS by an organization that is purchasing or that has purchased a reportable location (use
(A) Name of purchaser (
(B) Details on the purchase of the reportable location relevant to ownership or operational control over any portion of the reportable location (
(C) Details on whether the purchaser intends to continue existing civil nuclear fuel cycle-related activities at the reportable location or to cease such activities during the current reporting period.
(iii) If the new owner of a reportable location is responsible for submitting a report that covers the entire calendar year in which the ownership change occurred, the new owner must obtain and maintain possession of the location's records covering the entire year, including those records for the period of the year during which the previous owner still owned the property.
(c)
(d)
If you submit a report and BIS determines that none of the information contained therein is required by the APR, BIS will not process the report and will notify you, either electronically or in writing, explaining the basis for its decision. BIS will not maintain any record of the report. However, BIS will maintain a copy of the notification.
Reports required under this part must be submitted to BIS via APRS, as provided in §§ 782.5 and 782.6 of the APR, no later than the appropriate due date indicated in supplement no. 1 to this part. Required reports include those identified in paragraphs (a) through (e) of this section.
(a)
(b)
(c)
(d)
(e)
22 U.S.C. 8101-8181; Executive Order 13458 (February 4, 2008).
Upon receiving the IAEA's final report on complementary access, BIS will forward a copy of the report to the location for its review, in accordance with § 784.3(k)(2) of the APR. Locations may submit comments concerning the IAEA's final report to BIS, and BIS will consider them, as appropriate, when preparing its comments to the IAEA on the final report. BIS also will send locations a post complementary access letter detailing the issues that require follow-up action (see § 783.2(d) of the APR).
22 U.S.C. 8101-8181; Executive Order 13458 (February 4, 2008).
22 U.S.C. 8101-8181; Executive Order 13458 (February 4, 2008).
Food and Drug Administration, HHS.
Notification of petition.
The Food and Drug Administration (FDA or we) is announcing that we have filed a petition, submitted by Lallemand Inc., proposing that the food additive regulations be amended to provide for the safe use of vitamin D
The food additive petition was filed on September 28, 2021.
For access to the docket to read background documents or comments received, go to
Katie Overbey, Center for Food Safety and Applied Nutrition, Food and Drug Administration, 5001 Campus Dr., College Park, MD 20740, 240-402-7536.
Under section 409(b)(5) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 348(b)(5)), we are giving notice that we have filed a food additive petition (FAP 1A4829), submitted by Lallemand Inc., 1620 rue Prefontaine, Montreal, Quebec, H1W 2N8, Canada. The petition proposes to amend the food additive regulations in 21 CFR part 172,
The petitioner has claimed a categorical exclusion under 21 CFR 25.32(k) because the substance is intended to remain in food through ingestion by consumers and is not intended to replace macronutrients in food. In addition, the petitioner has stated that, to their knowledge, no extraordinary circumstances exist that would warrant at least an environmental assessment (see 21 CFR 25.21). If FDA determines a categorical exclusion applies, neither an environmental assessment nor an environmental impact statement is required. If FDA determines a categorical exclusion does not apply, we will request an environmental assessment and make it available for public inspection.
Department of State.
Proposed rule.
The Department of State (Department) proposes adjustments to the Schedule of Fees for Consular Services (Schedule of Fees) of the Bureau of Consular Affairs (CA) for several nonimmigrant visa (NIV) application processing fees, the Border Crossing Card (BCC) for Mexican citizens age 15 and over, and the waiver of the two-year residency requirement (J-Waiver) fee. The proposed changes are based on the findings of the most recently approved update to the Cost of Service Model (CoSM). They ensure that the fees for providing these consular services better align with the costs of providing the services.
The Department of State will accept comments until February 28, 2022.
Interested parties may submit comments to the Department by any of the following methods:
• Visit the
•
• All comments should include the commenter's name, the organization the commenter represents (if applicable), and the commenter's address. If the Department is unable to read your comment for any reason, and cannot contact you for clarification, the Department may not be able to consider your comment. After the conclusion of the comment period, the Department will publish a Final Rule that will address relevant comments as expeditiously as possible.
During the comment period, the public may request an appointment to review CoSM data on site if certain conditions are met.
Johanna Cruz, Management Analyst, Office of the Comptroller, Bureau of Consular Affairs, Department of State; phone: 202-485-8915, email:
The proposed rule makes changes to the Schedule of Fees in 22 CFR 22.1. The Department generally sets and collects fees for consular services based on the concept of full cost recovery to the U.S. government. The Department's CoSM uses an Activity-Based Costing (ABC) methodology to calculate annually the direct and indirect costs to the U.S. government associated with each consular good and service the Department provides. The fees are based on these cost estimates and the Department aims to update the Schedule of Fees biennially unless a significant change in costs warrants an immediate recommendation to amend the Schedule. The Department proposes these fee changes based on the results of the most recently approved update to the CoSM, which indicates that the increases are needed to fully recover the costs of providing these services. Specifically, the Department is incurring additional costs attributable to several NIV application processing fees, the adult BCC fee, and the J-Waiver fee that are not reflected in the current fees. To recover the costs of providing these specific consular services, the Department utilized a 10-year demand average to calculate the proposed fees. This was done to reduce the short-term volatility of demand because of the COVID-19 pandemic and stabilize price points for a longer duration of time.
The Department of State derives the general authority to set and collect fees for consular services it provides from the user charges statute, 31 U.S.C. 9701.
Several statutes address specific fees relating to nonimmigrant visas. For instance, Sec. 140(a) of Public Law 103-236, 108 Stat. 382, as amended, reproduced at 8 U.S.C. 1351 (note), establishes a cost-based application processing fee for nonimmigrant machine-readable visas (MRV) and BCCs.
Some people are exempted by law or regulation from paying specific fees. For example, certain individuals who engage in charitable activities or who qualify for diplomatic visas are exempt from the NIV application processing fee.
Various statutes permit the Department to retain some of the fee revenue it collects, rather than depositing it into the general fund of the Treasury. As relevant, the Department retains the MRV and BCC processing fees,
The Department last adjusted certain NIV fees and the J-Waiver fee as part of an interim final rule dated August 28, 2014, and those changes to the Schedule of Fees went into effect September 6, 2014 (79 FR 51247). A final rule regarding those fees was published on August 25, 2015 (80 FR 51464). The fees for non-petition-based NIVs (except E category) and other petition-based NIVs (H, L, O, P, Q, and R category NIVs), have not been updated since April 13, 2012 (77 FR 18907). A final rule adjusting these fees was published on September 17, 2012 (FR 57012). Non-petition-based NIVs constitute a significant majority of the overall NIV applications.
As a general policy, each recipient should pay a reasonable user charge for government services, resources, or goods from which he or she derives a special benefit, at an amount sufficient for the U.S. Government to recover the full costs of providing the service, resource, or good.
The Department reviews consular fees periodically, including through the annual update to its CoSM, to determine each fee's appropriateness in light of the OMB guidance. The results of the most recent update form the basis of the changes proposed in this rule. The proposed fees have been rounded up to the nearest $5 consistent with accepted government fee setting practices, to account for and mitigate against the risk of exchange rate fluctuations.
To set fees to ensure full cost recovery, the Department must determine the true cost to the U.S. government of providing each consular service. Following guidance provided in “Managerial Cost Accounting Concepts and Standards for the Federal Government,” OMB's Statement #4 of Federal Accounting Standards (SFFAS #4), available at
The Government Accountability Office (GAO) defines ABC as a “set of accounting methods used to identify and describe costs and required resources for activities within processes.” Organizations can use the same staff and resources (computer equipment, production facilities, etc.) to produce multiple products or services; therefore, ABC models seek to identify and assign costs to processes and activities and then to individual products and services through the identification of key cost drivers referred to as “resource drivers” and “activity drivers.” The goal is to proportionally and accurately distribute costs. ABC models require financial and accounting analysis and modeling skills combined with a detailed understanding
The ABC approach focuses on the activities required to produce a particular service or product and uses resource drivers to assign costs through activities to services. Resource drivers assign the organization's costs (resources including materials, supplies and labor utilized in the production or delivery of services and products) to activities using business rules that reflect the operational reality of CA and the data available from consular systems, surveys, and internal records. Most resource drivers are based on time spent on each activity. For example, the Consular Overseas Data Collection (CODaC) survey captures how different categories of consular staff spend their time on consular work performed overseas. The information collected through the CODaC is used to populate the CODaC resource driver, which is a model input for time spent on specific activities for several different consular employee types and assigned to different categories of NIVs. Activity drivers differentiate levels of effort associated with activities (the work performed by the organization such as adjudication, printing of visa foils, and performing data intake, etc.) that are applied to each cost object and are often volume driven. For example, the cost of printing NIV visa foils is assigned to the different categories of NIVs based on the total number of NIVs issued for each NIV type.
The Department has been conducting periodic cost of service studies using an ABC methodology to determine the costs of its consular services since 2009. In 2010, the Department moved to adopt an annually updated CoSM that measures all of its consular operations and costs, including all of the activities needed to provide consular services. The CoSM provides a comprehensive and detailed look at all consular services as well as all services that the Department performs for other agencies in connection with its consular operations. The CoSM now includes approximately 112 distinct activities and enables the Department to model its consular-related costs with a higher degree of precision.
The Department continues to refine and improve the CoSM annually in order to achieve full cost recovery for the U.S. government. Because the CoSM is a complex series of iterative computer processes incorporating more than a million calculations, it is not reducible to a tangible form such as a document. Inputs are formatted in spreadsheets for entry into the ABC software package, which is an industry standard commercial off-the-shelf product licensed through SAP Business Objects. The software's output includes spreadsheets with raw unit costs, validation reports, and management reports.
The Department uses three methods outlined in SFFAS Statement #4 (paragraph 149(2)) to assign resource costs to activities in the model: (a) Direct tracing; (b) assigning costs through estimation based on surveys, interviews, or statistical sampling; and (c) allocations. The Department uses direct tracing to assign the cost of, for example, a physical passport book or the visa foil placed in a visa applicant's passport, to the passport or visa service respectively. Assigning costs to activities such as adjudicating a visa application requires estimation based on surveys, interviews, or statistical sampling to determine who performs an activity and how long it takes (see below for additional details regarding assigning labor costs).
Indirect costs (overhead) are allocated according to the level of effort needed for a particular activity. Level of effort captures the time spent on an activity in minutes, hours, or number of full-time equivalent (FTE) employees, as measured in the CODaC and domestic task reports. Where possible, the model uses overhead cost pools to assign indirect costs only to related activities. For instance, the cost of rent for domestic visa offices is assigned only to visas, not to passports or other services the Department provides overseas. The Department allocates indirect support costs to each consular activity by the level of effort needed by that consular activity. For example, the model allocates a portion of the cost of the Department's Bureau of Global Talent Management (formerly known as the Bureau of Human Resources) to consular activities as this Bureau supports CA by providing onboarding and administrative support for domestic and overseas consular employees, including support for permanent change of station (PCS) requirements for all consular personnel that ensures timely deployment of personnel, families, and personal effects.
To assign labor costs, the Department relies on a variety of industry-standard estimation methodologies. To document how consular staff divide their time overseas, the Department conducts CODaC surveys at a representative sample of consular sections overseas each year. In response to the survey, consular officers indicate how much time is spent on particular consular activities overseas, such as data intake and review, interview and adjudication, and passback activities. The Department uses survey data from over 200 consular sections in consulates and embassies worldwide in conjunction with volume data from various consular workload systems to develop resource drivers to assign labor costs to activities. For consular activities that take place in the United States, the Department collects volume data from periodic workload reports provided by the directorates managing these consular services. Financial information is gathered from reports in the Department's Global Financial Management System (GFMS) managed by the Bureau of the Comptroller and Global Financial Services (CGFS). The Department converts the cost and workload data into resource drivers and activity drivers for each resource and activity.
The CoSM uses historical workloads (
The Department proposes to increase the non-petition based NIV fee from $160 to $245 per application. Non-petition-based NIVs include a variety of nonimmigrant visas, such as those for business and tourist travel (B1/B2); students and exchange visitors (F, M, and J); crew and transit visas (C and D); representatives of foreign media (I), and other country-specific visa classes, as well as BCCs for applicants age 15 or older who are citizens of and resident in Mexico. “Non-petition” means that these visas do not require separate requests known as “petitions” to be adjudicated prior to the visa application to establish that the individual meets certain qualifying criteria for the relevant status (
The Department also proposes to increase fees for all petition based NIVs related to employment in the United States from $190 to $310. Petition-based NIVs include categories for temporary workers and trainees (H); intracompany transferees (L); aliens of extraordinary ability (O); athletes, artists, and entertainers (P); international cultural exchange participants (Q); and religious workers (R). These NIVs require an approved petition from U.S. Citizenship and Immigration Services (USCIS) prior to applying for a visa and demand significantly more work by the consular officer than non-petition based NIVs.
The Department last updated the non-petition-based and the petition-based NIV fees noted above through rulemaking in 2012, based on the results of the 2011 CoSM. Costs have increased modestly for non-petition based NIVs each year since 2012, an increase of 1.9 percent per year since the fee was last adjusted. Compensation costs for these services have decreased and non-compensation costs have increased. Compensation costs include the salary, benefits, and costs associated with direct-hire full-time domestic and overseas employees including Foreign Service Officers (FSOs), Locally Employed (LE) staff, Eligible Family Members (EFMs), Consular Agents, and Civil Service employees. Non-compensation costs include operating costs like rent, technology costs, contract costs (including contract staff costs, and large support contracts like the Global Support Strategy (GSS) contract), materials (
Costs have increased slightly for petition-based categories since the last fee updates, from $149 million to $175 million, a 1.6 percent increase per year since the fee was last adjusted. As with non-petition based NIVs, compensation costs for these services have decreased and non-compensation costs have increased, largely the result of the shift of certain support activities to the GSS contract as noted above. The expansion of the GSS contract helped reduce time spent by consular officers on non-adjudication tasks, which in turn reduced overall compensation costs while raising the non-compensation costs with increased time spent by contract staff on these tasks.
While costs for the non-petition-based NIV service and the petition-based NIVs noted above have increased steadily and modestly since the last adjustment to these fees, actual demand has fluctuated more dramatically from year to year and has a greater impact on unit costs.
It is important to capture and analyze these fluctuations in demand to reflect visa demand trends while also approaching fee setting in a moderate and sustainable way. Therefore, as noted above, the proposed NIV fee recommendations use a 10-year average for demand to reduce volatility in unit costs and to prevent the extreme spikes in unit costs that would result if the Department used only demand figures from the lowest levels during the pandemic to set the fee. Because of the dramatic drop in visa demand experienced in FY 2020 due to the pandemic and projected to continue in the coming years, the 10-year average volume used in this calculation is still much lower than demand figures used to calculate this fee in prior models. As a result, the calculated unit cost for these services, which is the total service cost divided by the total service volume, has increased, and has led to the proposed visa application processing fee increases.
The Department also proposes to increase the E category NIV fee from $205 to $485. This fee was last adjusted through an interim final rule in 2014 based on the results of the 2012 CoSM. The E category NIV is for traders, investors, and their employees who are in executive and supervisory positions, as well as those who possess skills essential to the firm's operations from countries that have a qualifying treaty of
The significant increase in the cost of E Visas is attributable to increased level of effort on the part of the adjudicator as well as refined data collection techniques, which established that consular staff spend significantly more time (level of effort) to provide this service than previously captured. Following updates to the Foreign Affairs Manual, E visa adjudication guidelines now require more extensive officer scrutiny of applicant case files, which increases case-processing times. Applicant interviews are also much longer than the standard interview for non-petition based NIVs.
In addition, the CODaC was moved from a paper-based survey to an online platform in 2017, to remedy errors and difficulties in the user experience. The online platform collects more accurate data because the responses go directly to the online database rather than being manually entered by a person. This, in turn, yields a more precise cost estimate, which better reflects the increased staff resources needed to process and adjudicate E visas. Because the associated costs of providing this service have increased significantly and demand for this service has remained relatively stable, the calculated unit cost increased significantly. As a result, the Department proposes to increase this fee to recover the cost of providing this service.
The Department proposes to increase the J-Waiver fee from $120 to $510. This fee was last adjusted through rulemaking in 2014 based on the results of the 2012 CoSM. Certain categories of exchange visitors (J-1) are subject to a two-year home-country physical presence requirement. Exchange visitor program participants who are subject to the two-year home-country physical requirement must apply for a waiver either to stay in the United States beyond the end date of their program or if they want to submit an application to USCIS for a change in visa status. Otherwise, the exchange visitor is required to return to their home country for an aggregate of at least two years before applying for another visa to the United States. This two-year residency requirement upon request and approval may be waived in certain circumstances and the Department proposes increasing the associated fee for processing these waiver requests.
The costs for this service have increased while demand has decreased since the last fee adjustment. Since this fee was last updated, CA discovered that not all costs for J-Waivers were being recorded correctly in the Department's GFMS. As a result, the Visa Office worked with CA's Comptroller offices to identify and assign costs correctly. Prior to this update, no operating costs, particularly those for contractors spending time on this service, were recorded and assigned to the Visa Office's Waiver Review division, the division responsible for adjudicating these waivers.
After identifying and properly assigning these costs, all operating costs for J-Waivers have now been properly recorded, including contract costs related to this service. This update has resulted in more accurate cost assignment to this service and has led to an increase of related compensation and non-compensation costs. These cost increases are primarily attributed to the increases in level of effort that have recently been identified and properly assigned to this service. That combined with a significant decrease in demand led to an increase in the calculated unit cost. The unit cost increase is significant because of the increased costs and the relatively low volume for this service during the 10-year demand timeframe used to calculate this fee.
The Department is publishing this rule as a proposed rule, with a 60-day provision for public comments.
The Department has reviewed this rule and, by approving it, certifies that it will not have a significant economic impact on a substantial number of small entities as defined in 5 U.S.C. 601(6).
This rule will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1501-1504.
Under Executive Order (E.O.) 12866, the Office of Information and Regulatory Affairs (OIRA) determines whether a regulatory action is significant and, therefore, subject to the requirements of the E.O. and review by OMB. 58 FR 51735. Section 3(f) of E.O. 12866 defines a “significant regulatory action” as an action that is likely to result in a rule that: (1) Has an annual effect on the economy of $100 million or more, or adversely affects in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities (also referred to as economically significant); (2) creates serious inconsistency or otherwise interferes with an action taken or planned by another agency; (3) materially alters the budgetary impacts of entitlement grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the E.O.
The Department has reviewed this rule to ensure its consistency with the regulatory philosophy and principles set forth in E.O. 12866. This proposed rule is necessary in light of the CoSM's result that the cost of providing consular services has changed significantly since the last adjustment to these fees and justifies the implementation of new fees through the rulemaking process. The Department is setting the fees in accordance with 31 U.S.C. 9701 and other applicable authorities, as described in more detail above.
The Department has reviewed the potential impact that these NIV application processing fee increases will have on demand and has determined that the impact on those who seek NIVs will be
The following table summarizes the impact of this proposed rule:
In anticipation of questions from the public and various other stakeholders, the Department commissioned a price elasticity of demand study on the proposal for these fee increases. From the perspective of a tourist coming to the United States, the study found that the average cost to travel to the country is $4,834 by air. This information came from correspondence with the National Travel & Tourism Office at the Department of Commerce. Assuming that figure does not include the cost of a visa, the proposed fee increase for non-petition based NIVs would raise the total cost of a trip from $4,994 ($4,834 + $160) to $5,079 ($4,834 + $245). This reflects a minimal increase of less than two percent of the cost of the trip, assuming only one trip is taken during the visa's validity. If two trips are taken, the total cost increase is less than one percent; if more than two trips are taken, the increase is even less. Therefore, we expect this fee increase to have a
In a similar manner, the Department assessed the impact on demand that the fee increase might have on individuals coming over on a particular type of petition-based NIV, the H-2A Visa (Temporary Worker Performing Agricultural Services Unavailable in the United States). The total cost to bring over an agricultural worker is estimated to be $10,177, or $10,367 with the current visa fee of $190. This information came from the U.S. Department of Agriculture. The proposed new fee raises the total cost from $10,367 ($10,177 + $190) to $10,487 ($10,177 + $310). This increases the total cost of bringing a worker over by just over one percent.
While the study did not cover the increases for other petition-based NIVs, E visas, or J-Waiver requests, similar
This regulation will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of E.O. 13132, it is determined that this rule does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. The regulations implementing E.O. 12372 regarding intergovernmental consultation on federal programs and activities do not apply to this regulation.
The Department has determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not preempt tribal law. Accordingly, the requirements of E.O. 13175 do not apply to this rulemaking.
This rule does not impose any new reporting or record-keeping requirements subject to the Paperwork Reduction Act.
Consular services, Fees.
Accordingly, for the reasons stated in the preamble, 22 CFR part 22 is proposed to be amended as follows:
8 U.S.C. 1101 note, 1153 note, 1157 note, 1183a note, 1184(c)(12), 1201(c), 1351, 1351 note, 1713, 1714, 1714 note; 10 U.S.C. 2602(c); 22 U.S.C. 214, 214 note, 1475e, 2504(h), 2651a, 4206, 4215, 4219, 6551; 31 U.S.C. 9701; E.O. 10718, 22 FR 4632 (1957); Exec. Order 11295, 31 FR 10603, 3 CFR 1966-1970 Comp. p. 570.
The following table sets forth the proposed change to the following category listed on the U.S. Department of State's Schedule of Fees for Consular Services:
Federal Communications Commission.
Proposed rule.
In this document, the Federal Communications Commission (Commission or FCC) proposed an Enhanced Competition Incentive Program to encourage licensees to offer opportunities for small carriers, Tribal Nations, and entities committing to serve rural areas to obtain spectrum via lease, partition, or disaggregation. The
Interested parties may file comments on or before February 28, 2022, and reply comments on or before March 29, 2022.
You may submit comments, identified by WT Docket No. 19-38, by any of the following methods:
•
•
• Filings can be sent by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 45 L Street NE, Washington DC 20554.
• Effective March 19, 2020, and until further notice, the Commission no longer accepts any hand or messenger delivered filings. This is a temporary measure taken to help protect the health and safety of individuals, and to mitigate the transmission of COVID-19. See FCC Announces Closure of FCC Headquarters Open Window and Change in Hand-Delivery Policy, Public Notice, DA 20-304 (March 19, 2020).
Katherine Nevitt of the Wireless Telecommunications Bureau, Mobility Division, at (202) 418-0638 or
This is a summary of the Commission's
This proceeding shall continue to be treated as a “permit-but-disclose” proceeding in accordance with the Commission's
1. With this
2.
3. The Commission's partitioning and disaggregation rules apply to all “Covered Geographic Licenses,” which consist of specified “Wireless Radio Services” (WRS) for which the Commission has auctioned exclusive spectrum rights in defined geographic areas. The license term for a partitioned license area or disaggregated spectrum license is the remainder of the original licensee's license term. Parties to a geographic partitioning, a spectrum disaggregation, or a combination of both have two options to satisfy service-specific performance requirements (
4.
5. While the licensee/lessor remains responsible for compliance with any construction and performance requirements applicable to the leased spectrum, the licensee/lessor may attribute to itself the build-out or performance activities of its spectrum lessee(s) for purposes of compliance with any such requirements.
6.
7.
8. Section 616 required the Commission to consider four questions in conducting an assessment of whether to establish a new program or modify an existing program to achieve the stated goals. First, would “reduced performance requirements with respect to the spectrum obtained through the program . . . facilitate deployment of advanced telecommunications services in areas covered by the program”? Second, “what conditions may be needed on transfers of spectrum under the program to allow covered small carriers that obtain spectrum under the program to build out the spectrum obtained under the program in a reasonable period of time”? Third, “what incentives may be appropriate to encourage licensees to lease or sell spectrum, including (i) extending the term of a license . . . or (ii) modifying performance requirements of the license relating to the leased or sold spectrum”? And fourth, what is “the administrative feasibility” of those incentives and of “other incentives considered by the Commission that further the goals of [section 616]”? Section 616 provided, however, that the Commission “may offer a licensee incentives or reduced performance requirements under this section only if the Commission finds that doing so would likely result in increased availability of advanced telecommunications services in a rural area.” Additionally, section 616 directs that, “[i]f a party fails to meet any build out requirements set by the Commission for any spectrum sold or leased under this section, the right to the spectrum shall be forfeited to the Commission unless the Commission finds that there is good cause for the failure of the party.”
9. On March 15, 2019, the Commission released the
10. The Commission received 15 comments and 10 reply comments in response to the
11. This
12. The ECIP that we propose here would establish specific incentives based on the record in the
13. To be eligible for ECIP benefits through a qualifying transaction, we propose that any covered geographic licensee may offer spectrum to an unaffiliated eligible entity through a partition and/or disaggregation, and any WRS licensee eligible to lease in an included service may offer spectrum to an unaffiliated eligible entity through a long-term leasing arrangement. As detailed below, we propose two types of ECIP qualifying transactions: Those that focus on small carriers and Tribal Nations gaining spectrum access, and those that involve any interested party that commits to operating in, or providing service to, rural areas. We recognize that stakeholders may be eligible for one or both paths. However, to achieve the goals of the program, maintain administrative feasibility as set forth in the MOBILE NOW Act, and reduce the potential for program abuse, we propose that each transaction be filed under either, but not both, prongs. This approach would result in consistent application of program benefits and safeguards to ensure program integrity.
14. One of the goals of the MOBILE NOW Act was to encourage Commission examination of a program(s) that would promote spectrum availability for small carriers. Through qualifying transactions under this ECIP prong, we would promote small carriers' access to unused spectrum in any market licensed to a covered geographic licensee. We also find it appropriate to propose a narrow expansion beyond the MOBILE NOW Act statutory framework to increase spectrum access for Tribal Nations.
15.
16. We note that most commenters supported an expansion of the covered small carrier definition in the
17.
18. We also propose that a qualifying transaction must include a minimum of 25% of the licensed market area for each license(s) that is part of the transaction, regardless of market size or market type. We seek comment on whether the 25% geographic threshold is the appropriate amount to balance incentives for program participation against concerns of sufficient land area for small carriers or Tribal Nations, and concerns related to preventing program gaming. Are there considerations that would warrant an increase or decrease in the minimum geography required for a qualifying transaction under this prong? For example, should the geographic thresholds be different based upon the varying size of the overall licensed market area (
19. We note that the MOBILE NOW Act directed the Commission to examine potential changes to our partitioning, disaggregation, and leasing framework to offer incentives to meet specific goals. Such a focus would appear to exclude full license assignments, even those to small carriers and/or to rural licensees. We recognize that implementing the ECIP solely for transactions involving partition, disaggregation, or leasing, as Congress directed us to consider, may create a disincentive for stakeholders to engage in otherwise mutually beneficial transactions for full license assignments. Rather, these parties may instead negotiate transactions for smaller areas and/or less spectrum, solely to acquire ECIP benefits even where a full license assignment might be more appropriate given stakeholder needs. We therefore seek comment on whether we should permit full license assignments within the ECIP and, if so, how we should implement these types of transactions. We note that many of the ECIP benefits discussed below are applicable to both parties to a transaction involving partition, disaggregation, or lease of a license, but would only be available to the assignee in a full license assignment scenario, where the assignor is not licensed for that spectrum after consummation of the assignment. If we determine that the public interest would be served by including in the ECIP those transactions involving full license assignments, what safeguards should we put in place to ensure that these full license assignments achieve the intended benefits of the program?
20. We also propose a rural-focused transaction approach that is intended to facilitate coverage to rural areas by tying ECIP benefits to construction and operation obligations, as further detailed below, furthering the Commission's goal of promoting the availability of advanced telecommunications services in rural areas.
21.
22. Accordingly, we propose to include, by relying on our general Title III powers, any unaffiliated interested party that commits to serve a minimum amount of rural area under the proposed ECIP rural-focused transactions prong, if they meet the proposed requirements. This would expand upon the focus of the MOBILE NOW Act and include a substantial variety of stakeholders seeking to engage in transactions that we anticipate could result in increased spectrum usage and competition in rural areas, such as large or small carriers, common carriers, non-common carriers, Tribal Nations, critical infrastructure, and other entities (large or small) operating private wireless systems in rural areas. This expanded scope could incentivize transactions that accommodate a wide variety of spectrum users in rural areas facing challenges in accessing spectrum and result in more efficient and intensive spectrum use in rural areas. We seek comment on this flexible approach, including whether there is any reason we should restrict the types of licensees eligible for the ECIP benefits under this rural-focused prong of the program. Similar to our approach in small carrier and Tribal Nation transactions, we also seek comment on whether we should permit full license assignments within the rural-focused prong of the ECIP and, if so, how we should implement these types of transactions. We seek comment on the appropriate definition of affiliated in the context of rural-focused transactions.
23. For purposes of the rural-focused transaction approach and consistent with Congressional intent, we propose to adopt the MOBILE NOW Act definition of “rural area,” which is “any area except (1) a city, town, or incorporated area that has a population of more than 20,000 inhabitants; or (2) an urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants.” We seek comment on this approach and any alternatives that might be more appropriate to achieve ECIP goals.
24.
25.
26. We also find it appropriate, given the Commission's current market sizes and goal of incentivizing meaningful service and operation in rural areas, to propose a minimum geography of 300 square miles of rural area for PEA markets and smaller markets. However, given the wide range in size of available markets subject to geographic area licensing, we seek comment on whether it would be appropriate to scale the amount of Qualifying Geography on a proportional basis in two ways. First, we recognize that there are variations in market sizes even for PEAs and smaller markets. For example, in approximately 3% of PEA markets (located in large Western states, including some in Alaska), 300 square miles represents less than 1% of the market land area. We seek comment on whether we should proportionally scale the minimum required Qualifying Geography upwards in these PEA markets to account for their larger size. Second, we seek comment on whether we should proportionally scale the minimum required Qualifying Geography upwards for all markets larger than PEAs. We note that the next largest market area size in relation to PEAs are Basic Economic Areas (BEA), where the average land area is almost twice the size of the average PEA. For Regional Economic Area Grouping (REAG) market areas, which can be comprised of several states, the market size on average is approximately 45 times larger than the average PEA. Would scaling in the large PEA context and/or for markets larger than PEAs prevent windfall benefits for transactions yielding nominal spectrum access and minimal rural buildout relative to the geographic size of the license receiving ECIP benefits? We seek comment on what the costs and benefits are with respect to any such proportional scaling and any suggested alternatives.
27. In addition, we seek comment on whether we should consider coverage on Tribal lands as an alternative to coverage of rural areas. We understand many Tribal lands are located in rural areas and to that extent might already qualify for ECIP benefits under this rural prong, but note that such lands may not be located in all instances in a contiguous 300 square mile area, or might be at least partially located in suburban or urban areas. Should we deem non-contiguous blocks of Tribal land that collectively reach the Qualifying Geography threshold sufficient to warrant ECIP benefits? In addition, we seek comment on the appropriate definition of Tribal lands for purposes of the ECIP.
28. To properly incentivize licensees to make spectrum available to small carriers or Tribal Nations, and to engage in other rural-focused transactions, we propose three specific benefits for ECIP participation. Specifically, we propose to: Extend license terms for all parties to a qualifying transaction by five years; extend construction deadlines (both interim and final) by one year for all parties to a qualifying partition/disaggregation transaction and for lessors in a qualifying spectrum lease arrangement; and establish an alternate rural-focused construction requirement for certain transactions. We seek comment on these proposals, any alternative approaches, and associated issues, including whether there are appropriate incentives to encourage licensee participation in the program earlier in the term of the license.
29. The
30. The
31. In response to the
32. To facilitate rural-focused transactions that achieve rural buildout, we propose to substitute an assignee's existing performance requirement with an alternative construction benchmark for those licenses acquired in an ECIP transaction qualifying under the rural-focused transaction approach described above. Specifically, the alternate construction benchmark would require 100% coverage of the Qualifying Geography (coverage to at least 300 contiguous square miles of rural area, for market sizes of PEA or smaller) that was the basis for the qualifying transaction, as well as the provision of service to the public, or operation addressing private internal business needs over that area. We clarify that our proposal for an alternate benchmark does not modify the timeframe for meeting the benchmark, which would remain the current deadline of the partitioned/disaggregated license, plus the one-year extension proposed in the above construction extension benefit section. As previously discussed, the proposed minimum geography seeks to ensure a reasonable investment in construction of facilities in rural areas to warrant the substantial ECIP benefits, while furthering the Commission's long-held goal of providing licensees with flexibility to determine the amount of spectrum licensees will occupy and the geographic area they will serve, and permitting stakeholders to build networks suited to the particular community needs. We seek comment on this approach, including the proposed benchmark, and the associated costs and benefits. Does this approach adequately ensure that an assignor does not enter into partitioning transactions solely for the purpose of reducing the area or population required to be covered under its service-specific performance requirements? In cases where the assignee ultimately fails to construct, should we require the assignor in a partition to meet its obligations consistent with the entire license area, by including in the relevant denominator the population/land of the partitioned-off area? Finally, we also seek comment on whether we should consider an alternative approach specifically tailored to the needs of Tribal Nations. What should the appropriate benchmarks include and what additional factors should be considered to facilitate the provision of service to Tribal Nations?
33. For assignees involved in partitioning and/or disaggregation where the interim performance requirement has not been met, we propose that this alternative construction benchmark would replace the existing interim performance requirement, and remove the final performance requirement, contained in the service rules for the particular license acquired in the ECIP transaction. Where the assignor has previously met the interim construction deadline, this alternative construction benchmark would replace the final construction obligation for the assignee. We propose that the assignor remain bound by the existing substantive coverage requirements for its license(s) (extended by one-year) involved in a qualifying ECIP transaction. We note, however, that this approach provides an additional incentive to the assignor that arguably will meet its performance requirements more easily following a partitioning/disaggregation transaction that reduces the geographic area/population it must cover. We seek comment on this approach, as well as the associated costs and benefits.
34. While our alternate construction benchmark proposal under ECIP focuses on parties individually satisfying performance requirements, the Commission's rules currently permit parties in a partition or disaggregation transaction to share responsibility for any service-specific requirements, and therefore share the penalties associated with failure to meet those performance requirements. We seek comment on whether the construct of a shared buildout requirement runs counter to the ECIP framework proposed herein and, if so, whether, we should afford this particular ECIP benefit solely to those parties that opt to separately meet their construction obligations. Do the ECIP benefits, as well as waste, fraud, and abuse protections, negate the need for the protections that shared responsibility provides? In the context of rural-focused transactions, does a shared responsibility unfairly burden one party over the other?
35. We do not propose an alternate construction benchmark for spectrum lease arrangements. For spectrum lease arrangements that qualify under ECIP, consistent with existing rules, we propose that a lessor would be able to attribute the construction and operation of its lessee's Qualifying Geography to its underlying performance obligations on its license. We believe that retaining this current pass-through benefit is sufficient (given the additional ECIP benefits conferred) to incentivize lessors to lease unused spectrum, particularly in uncovered rural areas. However, consistent with our approach to an assignor in the partition and/or disaggregation context, the lessor is nonetheless bound by the existing performance requirements set forth in the applicable service-specific rules. We seek comment on these tentative conclusions.
36. Given the substantial benefits being proposed for ECIP participants, and to ensure that stakeholders enter into transactions that will further our goals of increased spectrum access, rural service, and competition, we propose certain measures to protect against waste, fraud, and abuse of the program. We note that applicant character qualifications are part of our review of whether a transaction can be approved in the public interest, and we seek comment on the specific measures proposed below. We invite commenters to suggest alternative or additional measures that would ensure that the benefits we propose for ECIP participants are targeted and appropriate. For example, most of the measures we propose focus on assignees or lessees participating in ECIP transactions, but we welcome suggestions on whether additional restrictions should be imposed on ECIP participant assignors and lessors.
37. As stated above, we recognize that parties to an ECIP transaction are likely in many instances to meet the eligibility
38.
39. We also propose to apply a parallel “holding period” safeguard in the leasing context. Specifically, for spectrum leases subject to receiving ECIP benefits, we propose to require a mandatory five-year minimum lease term. We believe that this approach fosters transaction parity by not improperly incentivizing leases over other potential transactions. We seek comment on this proposal and the costs and benefits associated with this approach. In particular, we seek comment on how we should address leases terminated after less than five years. We recognize that the realities of the market often result in early termination of such agreements, but also that the benefits we propose for ECIP transactions could pose a significant risk of program abuse through leasing. Under what circumstances, if any, should such an early termination result in the lessor losing the benefits already applied to its license? Should such benefits be prorated based on how prematurely the lease was terminated? For example, if a lease is terminated after only two years, we could reduce by three years the lessor's license term, but maintain the performance requirement extension. What are the advantages and disadvantages of such an approach? Are there alternative methods of preventing sham leasing? On a related note, we seek comment on whether we should prohibit subleases or otherwise limit subleases to prevent program abuses.
40. To facilitate routine transfers, we propose to allow a
41.
42. For assignees acquiring an ECIP license through partition and/or disaggregation, we propose that this operational period begin the earlier of the date of actual construction or the date of the interim construction deadline for that license, as modified by the ECIP. We propose that ECIP lessees must operate or provide service for three consecutive years during any period within the five-year minimum lease term. We seek comment on this proposal and any alternative structures for operational requirements, including the associated costs and benefits. Specifically, we seek comment on the interplay of this requirement with our concerns discussed above regarding early termination of leases. We also note that there is no current Commission requirement for lessees to independently certify construction of leased spectrum, as the lessor is responsible for meeting performance requirements and may include in its showing, at its option, any construction by its lessee. Considering the construction and operational requirements proposed in the ECIP, should we also impose a construction notification requirement on lessees that would allow us to verify that lessees have complied with ECIP construction and operational requirements, thereby increasing program accountability?
43.
44. For example, should we extend program ineligibility and/or automatic license termination penalties to the assignor or lessor and its affiliates in situations where its assignee(s) or lessee(s) does not meet program requirements, including construction and operation obligations for which both parties to an ECIP transaction received benefits? Should we condition assignor/lessor program benefits on assignee/lessee performance of construction and continuity of service obligations, particularly in the rural-focused transactions context, to ensure that benefits do not accrue without provision of service or operation in these potentially underserved areas? For example, one approach is to not apply the five-year license term extension to an assignor's license where its assignee/lessee fails to timely construct or operate in the identified Qualifying Geography. We seek comment on the costs and benefits of such an approach. We also seek comment on whether, in the rural-focused transactions context to ensure service or operation, we should condition the assignor/lessor's one-year construction extension on an assignee/lessee's timely compliance with its construction deadline(s). We note that an assignor/lessor and assignee/lessee may have the same extended interim or final construction deadline under the ECIP, and therefore the Commission may not be aware of an assignee/lessee's failure to timely construct until after the expiration of the assignor/lessor's construction deadline, which the assignor/lessor may have relied upon in the construction of its license. How should we address this situation to strike the appropriate balance between properly incentivizing transactions and attempting to eliminate instances of program abuse?
45.
46. We recognize that this proposal does not provide incentives for licensees to enter into subsequent assignments or leases of their unused spectrum rights, and that there may be situations where such subsequent transactions can provide public interest benefits without undermining our proposed program policies. For example, Licensee A may wish to partition an area to Licensee B (receiving benefits under the ECIP) and also partition another area to Licensee C; are there circumstances in which Licensee C should receive ECIP benefits beyond those already afforded to the license to be partitioned? We seek comment on whether we should permit these types of subsequent transactions, what benefits are appropriate, and how we might ensure that our renewal and construction policies are not frustrated through multiple transactions.
47.
48.
49. The
50. We recognize that providing alternatives to construction requirements to a wide range of stakeholders can incentivize acquisition of licenses by entities that will deploy innovative spectrum use models and reach underserved areas. We believe that such an alternative option also can serve the public interest by providing all licensees more certainty as to regulatory requirements when planning to deploy networks, even for licensees acquiring spectrum directly from the Commission. We therefore seek comment on providing all WRS flexible use licensees an alternative construction requirement to population-based construction requirements, including for licenses acquired through a transaction (qualifying for ECIP benefits or not) or licenses newly issued to an auction winner. We seek to develop a robust record on the most beneficial alternatives to achieve more efficient use of spectrum, particularly in underserved rural areas.
51. As noted, the Commission has adopted population-based performance requirements in most flexible use radio services. In so doing, the Commission largely departed from providing the “substantial service” option that was available to many licensees in certain services. This option allowed licensees to provide an alternate demonstration as to how its spectrum was used in the public interest where population benchmarks either could not be met or were an inaccurate measure of actual spectrum usage. We therefore seek comment on whether to provide a “substantial service” type alternative as has previously been used in many different services. We recognize that use of the subjective term “substantial” provides flexibility to licensees, but it can also create uncertainty over how to meet the standard and how to enforce the standard. We therefore seek comment on the appropriate definition of substantial service or an appropriate variation of this concept more tailored to individual licensee needs.
52. We seek detailed comment on how we can best accommodate particular use cases that are less suited to meeting population coverage requirements, for example, critical infrastructure, Internet of Things applications, and other private internal uses (
53. If the Commission determined that the public interest would not be served by adopting the substantial service concept on a more widespread basis, we also seek comment on whether there are more suitable alternative metrics for flexible use licenses in lieu of population coverage. What are the appropriate alternative performance benchmarks for these types of spectrum use cases, whether fixed or mobile or both? Should we apply a specific geographic area coverage benchmark to these market areas? How could performance requirements be tailored to meet stakeholder business needs, while ensuring that business decisions do not result in spectrum lying fallow in potentially large areas of a market?
54. Under our current rules, while licensees may partition and disaggregate their licenses through spectrum transactions, there is no provision for reaggregating spectrum, even when the partitioned or disaggregated portions of an original market area are acquired by a single entity. In the
55. Some commenters, however, oppose a reaggregation process on the grounds that it would create the “potential for abuse by large carriers” because it would “encourage . . . licensees to use partitioning to avoid their buildout obligations by partitioning non-desirable or hard-to-serve spectrum” followed by a later reaggregation and consequent spectrum warehousing. Similarly, GeoLink and WISPA argue that allowing reaggregation would undermine the goal of increasing spectrum access by small and rural carriers.
56. The
57. After review of the record, we propose to permit license reaggregation with appropriate safeguards. Our goal is to further the public interest by providing a path to removing unnecessary regulatory barriers to facilitate secondary market transactions and easing administrative burdens for stakeholders and the Commission. Permitting reaggregation can make our licensing information easier to use through a more flexible, yet accountable, data policy for geographic spectrum licenses. The reaggregation proposal described below, however, is not intended as an overall reexamination of the Commission's adopted approaches on key licensing issues related to WRS licenses, including performance requirements, renewal and associated continuing service obligations, and permanent discontinuance of operations.
58. Accordingly, we propose to permit licensees to seek reaggregation of partitioned and/or disaggregated portions of licenses up to the original geographic size and spectrum band(s) for the type of license. We believe that this approach is the appropriate scope for reaggregation requests and that expanding this proposal to permit consolidation of market licenses not previously partitioned or disaggregated, as one commenter suggests, would unnecessarily undermine the established WRS licensing framework and complicate our attempt to ease administrative burdens. As a safeguard against potential abuses, we propose to require that, prior to seeking license reaggregation, the entity requesting reaggregation must ensure that each license to be reaggregated has: (1) Met all performance requirements (both interim and final benchmarks); (2) been renewed at least once after meeting any relevant continuing service or operational requirements, if applicable; and (3) not violated the Commission's permanent discontinuance rules. We seek comment on our proposed approach to preventing potential abuses of our essential licensing requirements, including whether we should consider further safeguards such as requiring any additional certifications from applicants seeking license reaggregation.
59. To implement our proposed reaggregation approach, we propose that a licensee holding multiple active licenses in the same radio service and for the same channel block may seek reaggregation by: Filing FCC Form 601, identifying the licenses to be reaggregated, and certifying that the performance requirements, renewal requirement, and lack of permanent discontinuance conditions have been met. Under this proposal, the licenses must be active and held under the same FCC registration number (FRN). To simplify the administrative process associated with this effort, we propose to treat this as a separate filing from any transactions that may be necessary to transfer the licenses under the same FRN and to prohibit combining a proposed reaggregation with any other transaction in the same FCC 601 application. We recognize that the subdivided licenses within a partitioned/disaggregated market may, over the course of license term(s), be the subject of additional license conditions, rights (such as granted waivers), and other parameters that make them dissimilar. We seek comment on this approach and on how best to reflect those unique parameters on the reaggregated license. For example, if one of the licenses (but not the others) authorizes operation at higher power levels through a granted waiver, should the waiver rights and conditions be transferred to the reaggregated license (but only for the geographic area and spectrum associated with the license subject to waiver)? Alternatively, to simplify the process, should we prevent reaggregation in cases where the licenses do not have identical rights and conditions? We seek comment on how we should address these types of circumstances, as well as the costs and benefits of any suggested alternatives.
60.
61. To that end, we seek comment on whether and how we should factor the use of Open RAN technologies into the ECIP. For example, should we tie ECIP benefits to the use of Open RAN in network deployment? If so, what level of use should we require, and how would parties demonstrate their use in their application? Should this requirement apply to assignors and lessors, and assignees and lessees, or only to some parties? Alternatively, how could we further incentivize ECIP participants to explore Open RAN deployments? Should we retain our proposed ECIP eligibility requirements, and provide additional benefits to parties which use Open RAN in their networks? If so, what should those additional benefits be? Should we make these benefits available to both assignors/lessors and assignees/lessees, if both sides of the transaction demonstrate their use of these technologies?
62.
63. The Open Technology Institute at New America and Public Knowledge's joint comment references various implementations of the use or share
64.
65.
66.
67. Accordingly,
68.
69.
Practice and procedure, Wireless radio services Applications and proceedings, Spectrum leasing.
The Federal Communications Commission proposes to amend 47 CFR part 1 as follows:
47 U.S.C. ch. 2, 5, 9, 13; 28 U.S.C. 2461, unless otherwise noted.
(c)
(i)
(i) Parties may not reaggregate licenses unless all licenses to be aggregated were once part of the same Wireless Radio Service license.
(ii) All performance requirements for the licenses to be combined through reaggregation must have been completed and certified as required prior to the filing of the application.
(iii) Each of the licenses to be combined through reaggregation must have been renewed at least once since the completion and certification of all performance requirements.
(iv) None of the licenses being combined may have violated the Commission's permanent discontinuance rules, as applicable to that license.
(2) A licensee does not need to reaggregate all licenses which were once part of the original Wireless Radio Service license in order to qualify for reaggregation.
(3) Licensees seeking approval for reaggregation of licenses must apply by filing FCC Form 601. Each request which involves geographic area aggregation must include an attachment defining the boundaries of the licenses being aggregated by geographic coordinates to the nearest second of latitude and longitude, based upon the 1983 North American Datum (NAD83). The licenses must all be active in the Commission's licensing system, and held by the same licensee under the same FCC Registration Number.
(a)
(2)
(3)
(4)
(i) A city, town, or incorporated area that has a population of more than 20,000 inhabitants; or
(ii) An urbanized area contiguous and adjacent to a city or town that has a population of more than 50,000 inhabitants.
(5)
(b)
(2) That transaction must also involve either:
(i) An assignee or lessee which is a covered small carrier or Tribal Nation which receives rights to a minimum of 25% of the Wireless Radio Service license area; or
(ii) Any assignee or lessee that proposes to cover at least 300 contiguous square miles of rural area for license areas consisting of a Partial Economic Area or smaller, as defined in § 27.6(a) of this chapter. The transaction may not involve a party which has been previously found to have failed to comply with the requirements of the Enhanced Competition Incentive Program, whether as an assignee or a lessee.
(3) The transaction may not involve any license which has previously been included in a qualifying transaction and received benefits under the Enhanced Competition Incentive Program.
(c)
(1)
(2)
(3) A
(d)
(e) Protections against waste, fraud, and abuse.
(1)
(2)
(ii) Licenses assigned through the Enhanced Competition Incentive Program may not be assigned, even after five (5) years following the grant of the assignment application, unless the underlying construction and operating requirements imposed, either through the Enhanced Competition Incentive Program or by other rule, have been satisfied.
(iii) These assignment restrictions do not apply to
(5)
Federal Communications Commission.
Proposed rule.
In the document, the Wireline Competition Bureau (Bureau) seeks comment on the requirements for the Affordable Connectivity Program and a timeline for its rapid implementation.
January 5, 2022. If you anticipate that you will be submitting comments, but find it difficult to do so within the
Pursuant to § 1.419 of the Commission's rules, 47 CFR 1.419, interested parties may file comments on or before December 28, 2021. All filings should refer to WC Docket No. 21-450. Filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission. Comments may be filed by paper or by using the Commission's Electronic Comment Filing System (ECFS).
• Filings can be sent by commercial overnight courtier or by first-class or overnight U.S. Postal Service mail. Due to the COVID-19 pandemic, the Commission closed its hand-delivery filing location at FCC Headquarters effective March 19, 2020. As a result, hand or messenger delivered filings in response to this Public Notice will not be accepted. Parties are encouraged to take full advantage of the Commission's electronic filing system for filing applicable documents. Except when the filer requests that materials be withheld from public inspection, any document may be submitted electronically through the Commission's ECFS. Persons that need to submit confidential filings to the Commission should follow the instructions provided in the Commission's March 31, 2020 public notice regarding the procedures for submission of confidential materials. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.
Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701.
U.S. Postal Service first-class, Express, and Priority mail must be addressed to 45 L Street NE, Washington, DC 20554.
For further information, please contact Eric Wu, Telecommunications Policy Access Division, Wireline Competition Bureau, at (202) 418-7400 or by email at
This is a summary of the Bureau's Public Notice (Notice) in WC Docket No. 21-450, released on November 18, 2021. The full text of this document is available for public inspection on the Commission's website at:
1. On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act (Infrastructure Act or Act), which modifies and extends the Emergency Broadband Benefit Program (EBB Program) to a longer-term broadband affordability program to be called the Affordable Connectivity Program (sometimes referred to as “ACP”). The Infrastructure Act directs the Commission to undertake a proceeding to adopt final rules for this modified program. Consistent with this directive, the Bureau herein seeks comment on the requirements for the Affordable Connectivity Program and a timeline for its rapid implementation.
2. The Commission established the rules for and structure of the EBB Program earlier this year based on the framework provided in the Consolidated Appropriations Act. The text of the Infrastructure Act establishing the Affordable Connectivity Program relies in large part on the EBB Program directives in the Consolidated Appropriations Act by overlaying new Affordable Connectivity Program requirements on top of EBB Program requirements, as well as by providing additional requirements. The Infrastructure Act, however, retains many of the EBB Program requirements found in the Consolidated Appropriations Act. The Infrastructure Act, for example, does not modify the procedural and rulemaking timeline requirements contained in section 904(c) of the Consolidated Appropriations Act, and the Bureau interprets section 904(c) as also pertaining to the promulgation of rules for the Affordable Connectivity Program. Therefore, for purposes of this rulemaking, the Bureau must initiate this rulemaking within five days of enactment of the Infrastructure Act, must set a 20-day public comment period followed by a 20-day period for replies, and the Commission must resolve the rulemaking within 60 days of enactment.
3. The Infrastructure Act also directs the Commission to effectuate for the Affordable Connectivity Program specified changes, such as to EBB Program eligibility and the program benefit amount, by the effective date, which the statute defines as the date the Commission notifies Congress that all EBB Program funds have been fully expended or December 31, 2021, whichever is earlier. The Bureau does not project EBB Program funds will be fully expended by December, 31, 2021,
4. Pursuant to the Infrastructure Act, the amendments removing and adding certain qualifying eligibility programs, changing the benefit level, and making other modifications to the EBB Program requirements are “delayed amendments” that do not take effect immediately. The Infrastructure Act also provides for a 60-day transition period for “households that qualified” for the EBB Program before the effective date that would otherwise see a reduction in their benefit as a result of the changes made through the delayed amendments. Accordingly, the 60-day transition period for the Affordable Connectivity Program will start on December 31, 2021 for all households enrolled in the EBB Program before the effective date. During the transition period, households currently enrolled in the EBB Program will continue to receive the same benefit level they are receiving as of the effective date, thereby ensuring a seamless migration for all EBB Program households to the Affordable Connectivity Program. Moreover, the Affordable Connectivity Program will also begin to accept enrollments on the effective date. To ensure an orderly transition, the Bureau will provide additional guidance to participating providers, households, outreach partners, and other stakeholders concerning the end of the EBB Program, the 60-day transition period, the Affordable Connectivity Program requirements, and any other guidance necessary for enrollment of households in the Affordable Connectivity Program.
5. The Infrastructure Act does not alter the definition of participating provider or the framework through which providers may seek to participate in the Affordable Connectivity Program. Like participation in the EBB Program, provider participation in the Affordable Connectivity Program is voluntary. For both the Affordable Connectivity and EBB Programs, a “participating provider” is defined as a broadband provider that is either designated as an eligible telecommunications carrier (ETC) or a provider that seeks approval from the Commission to participate in the program. To participate in the EBB Program, ETCs and their affiliates in the states or territories where the ETC is designated were required to file the appropriate information with the Universal Service Administrative Company (USAC) and did not need to seek approval from the Commission in those states. All other broadband providers needed to seek approval from the Commission to participate in the EBB Program.
6. Providers that have not been designated as ETCs by the states or the Commission were required, in order to participate in the EBB Program, to file an application with the Commission that meets the program requirements and must be approved by the Commission. The Infrastructure Act leaves these requirements unchanged for providers seeking to participate in the Affordable Connectivity Program. Moreover, the Infrastructure Act does not modify or eliminate the requirement that the Commission “automatically approve as a participating provider a broadband provider that has an established program as of April 1, 2020, that is widely available and offers internet service offerings to eligible households and maintains verification processes that are sufficient to avoid fraud, waste, and abuse.”
7. The Commission established an expedited and automatic approval process in the EBB Program. The Bureau proposes that all existing EBB Program providers, even those that lack ETC designations or are not affiliated with an ETC, would not need to file or resubmit a completely new application to participate in the ACP prior to resubmitting their ACP election notice to USAC. Only a provider that did not participate in the EBB Program and is not an existing ETC or affiliated with an ETC would need to file an entirely new FCC approval application. The Bureau seeks comment on this proposal.
8. As noted in this document, the Consolidated Appropriations Act also required that the Commission “automatically approve as a participating provider any broadband provider that has an established program as of April 1, 2020 that is widely available and offers internet service offerings to eligible households and maintains verification processes that are sufficient to avoid fraud, waste, and abuse.” In the EBB Program, the Commission implemented this statutory obligation by allowing service providers to file “automatic applications” where the provider's application would be reviewed on a priority basis if it established it had a pre-existing program as of April 1, 2020 that offered discounted service for certain eligible households. In defining what constitutes an “established program” the Commission adopted a “broad interpretation,” finding that “any eligible broadband provider that maintains an existing program that was made available by April 1, 2020 to subscribers meeting at least one of the criteria in the Consolidated Appropriations Act's definition of an eligible household” meets the requirements of an established program. The Commission explained that the principal consideration in determining what constitutes an “established program” for automatic approval is whether EBB eligible subscribers would have received a financial benefit through either reduced rates or rate forbearance. Further, a provider must also show its program is “widely established” by demonstrating the program is offered to subscribers in a substantial portion of the provider's service area in the jurisdiction for which it is seeking approval. The established program must have been available by April 1, 2020 to subscribers meeting at least one of the criteria in the definition of an EBB Program eligible household. Specifically, providers offering broadband households discounted rates based on criteria such as low-income status, loss of income, participation in certain federal, state, or local assistance programs, or other means-tested eligibility criteria qualify for this automatic approval process. Additionally, the Commission made eligible for automatic approval providers that made commitments to keep low-income subscribers connected during the pandemic and offered widely available bill forbearance or forgiveness programs beginning no later than April 1, 2020 and continuing through the end of the EBB Program. The Bureau proposes to retain the process developed for review and approval of automatic applications for such non-ETC providers, and the Bureau seeks comment on that proposal.
9. The Infrastructure Act makes several changes to the ways households can qualify for the Affordable Connectivity Program. In the EBB Program, a household may qualify if it meets the requirements of a provider's existing low-income or COVID-19 program, subject to the requirements of
10. The Bureau next proposes that the Commission should delegate to them the authority to review and approve or deny service provider applications consistent with the authority it possessed for the EBB Program. The Bureau proposes to require only providers that did not participate in the EBB Program to seek Commission approval prior to submitting to USAC the ACP election notices. The Bureau also proposes that applications should be reviewed on a rolling basis throughout the Affordable Connectivity Program. The Bureau seeks comment on these proposals. What efficiencies should the Commission consider to manage the speedy and thorough review of provider applications? Once the Commission has approved (or denied) an application, how should it inform the applicant of that determination? The Bureau seeks comment generally on using the application and review processes from the EBB Program in the Affordable Connectivity Program, and any modifications the Commission should consider for the implementation of the Affordable Connectivity Program.
11. The Bureau seeks comment on any additional changes that should be made to the provider approval process given the anticipated longer timeframe of the Affordable Connectivity Program. For instance, what requirements for notice and approval should the Commission impose with respect to transactions between participating providers? Historically, transactions that alter the ownership interests of ETCs participating in the High Cost and Lifeline programs must receive approval from the Bureau under its license transfer, Universal Service Fund and compliance plan authorities. Should the Commission impose a similar requirement for ACP providers? Should the Commission instead only require the providers to maintain up-to-date ownership information in its election notice filed with USAC? The Bureau also recognizes that providers are not required to participate in the Affordable Connectivity Program and it anticipates that some providers may wish to voluntarily relinquish their eligibility. Should the Commission adopt a formal process providers must follow to relinquish ACP eligibility? Must the Commission act on such notice before a provider can withdraw from the Affordable Connectivity Program? The Bureau seeks comment on a process through which ACP providers can cease providing service supported by the program while also ensuring that their subscribers are provided adequate notice and given the opportunity to transfer their benefit to another service provider.
12. In the EBB Program, the Commission required all participating providers to file an election notice with USAC to participate. The Commission also established an expedited process where existing ETCs and other approved providers could gain access to the necessary USAC systems being used to administer the EBB Program. The EBB provider election notice includes: (1) The states in which the provider plans to participate in the EBB Program; (2) a statement that, in each such state, the provider was a “broadband provider” as of December 1, 2020; (3) a list of states where the provider is an existing ETC, if any; (4) a list of states where the provider received FCC approval, whether automatic or expedited, to participate, if any; (5) whether the provider intends to distribute connected devices under the EBB Program; (6) a description of the internet service offerings for which the provider plans to seek reimbursement from the EBB Program in each state; (7) documentation demonstrating the standard rates for those services; and (8) any other administrative information necessary for USAC to establish participating providers in the EBB Program. Should the Commission require all providers to submit a new election notice for the Affordable Connectivity Program? By doing so, the Commission would not only give providers an opportunity to refresh the information they initially provided for the EBB Program, but would also ensure that providers are committed to participating in this new program and understand the program requirements. Alternatively, the Bureau seeks comment on whether the Commission should require only providers that have not certified any claims for the EBB Program to submit an election notice for the Affordable Connectivity Program. Would this alternative approach be sufficient to ensure that EBB Program providers are committed to participate in the Affordable Connectivity Program and are aware of the new program requirements? If the Commission does not require all EBB Program providers to submit new election notices in order to participate in the Affordable Connectivity Program, should the Commission require those providers to update their election notices to reflect new services and connected devices to be offered in the Affordable Connectivity Program? The Bureau also seeks comment on the EBB Program election notice form and process administered by USAC and what modifications would be appropriate for the Affordable Connectivity Program.
13. The Infrastructure Act removes the Consolidated Appropriations Act requirement that the EBB Program supported service must have been offered “in the same manner, and on the same terms, as described in any of such provider's offerings for broadband internet access service to such household, as on December 1, 2020.” Moreover, the Infrastructure Act also imposes a new requirement that providers “shall allow an eligible household to apply the affordable connectivity benefit to any internet service offering of the participating provider, at the same rates and terms available to households that are not eligible households.” Given these
14. EBB Program election notices are also required to include information about the connected devices offered by the provider. With respect to the connected devices providers seek to offer through the Affordable Connectivity Program, what information should the Commission require in the election notice? Should providers be required to submit documentation on the retail rate of the device, including, but not limited to, the make, model, and specifications of the device, and the cost of the device to the provider? Currently, in the EBB Program, providers only need to include documentation detailing the equipment, rates, applicable costs of the laptop, desktop or tablet and provide summary information regarding the devices, rates, and costs. The Bureau seeks comment on requiring connected device specifications and the cost of the device in the ACP election notice to help USAC and the Commission determine whether the reimbursement claims for the device are compliant with the Commission's rules and to help guard against waste, fraud, and abuse.
15. The Bureau also proposes that with their election notices providers submit to USAC the lists of ZIP codes where they will offer the supported services to be used to populate the Companies Near Me tool on USAC's website without delay. The Companies Near Me tool allows consumers to find a Lifeline or EBB Program provider in their area. The Bureau seeks comment on this proposal and other information the election notice should collect.
16. As in the EBB Program, the Bureau proposes to accept election notices on a rolling basis throughout the Affordable Connectivity Program. Should the Commission adopt a specific timeframe for acting on provider elections? How should the timeframe take into account the need for USAC simultaneously to administer the EBB Program or the Affordable Connectivity Program, and also process election notices? Once USAC has reviewed an election notice and verified that the broadband provider is eligible to participate in the Affordable Connectivity Program, how should it inform applicants of that determination? The Bureau also seek comments on when and under what circumstances USAC should reject an election notice. Can USAC take into account past complaints, enforcement actions, fraud convictions, or audit findings as bases for rejecting a provider's election for the Affordable Connectivity Program? Further, if an applicant fails to provide with its election notice or application the information that may be required under the Commission's rules, should that be a basis for rejecting or delisting that applicant? Are there other reasons that would justify rejection? Because the Infrastructure Act eliminated the EBB Program requirement that participating providers must have offered a broadband service as of December 1, 2020 in order for that service to qualify for EBB Program support, the Bureau anticipates the Affordable Connectivity Program will be open to a broader range of providers. The Bureau seeks comment on what information should be collected from providers to ensure that they are legitimate broadband providers committed to adhering to the ACP rules and are capable of providing broadband service to eligible households. For example, should the Commission require providers to certify that they would be able to promptly provide service in an area if a subscriber requested it? Should the Commission require providers to certify that they will respond to consumer complaints filed using the dedicated ACP complaint process within 30 days?
17. Participating providers necessarily will have to interact with both the Commission and USAC. The Bureau proposes that, as with the EBB Program election process, a broadband provider will be required to have already registered with the Commission and USAC and to have received both an FCC Registration Number (FRN) and Service Provider Identification Number, if applicable, before filing an election notice. The Bureau proposes to retain for the Affordable Connectivity Program the information requested on the EBB Program election form. This includes a requirement that providers include their data universal numbering service (DUNS) and employer identification numbers (EIN) on the election form. The Bureau seeks comment on this proposal and asks what other financial information from providers it should collect on the election notice to ease the administration of the program. For instance, requiring each participating provider to file a separate election notice rather than allowing affiliated providers the ability to file a joint election notice would ease the processing of payments to each provider in the Affordable Connectivity Program. The Bureau thus proposes requiring each participating provider to file an election notice separately, that would include the FRN, EIN, and DUNS for the entity receiving payment. The Bureau seeks comment on this proposal. The Bureau also seeks comment on any burdens related to the election notice process, particularly for small providers, and possible ways to alleviate these burdens.
18. The Infrastructure Act leaves unchanged the requirement that the Commission “expedite the ability of all participating providers to access the National Verifier and the National Lifeline Accountability Database (NLAD) for the purposes of determining whether a household is an eligible household.” The Bureau proposes that all participating providers be required to have their agents and other enrollment representatives registered with the Representative Accountability Database (RAD), as is currently required for the Lifeline and EBB Programs as a way to minimize waste, fraud, and abuse. As it does in the Lifeline program, should the Commission prohibit participating ACP providers from offering or providing to their enrollment representatives or their direct supervisors any commission compensation that is based on the number of consumers who apply for or are enrolled in the ACP with that provider? In the
19. To access the databases, Affordable Connectivity Program providers will be required to accept USAC's OnePortal Terms and Conditions, agreeing that their access is conditioned on their compliance with federal laws regarding privacy, data security, and breach notification. The Bureau proposes that once USAC has verified a broadband provider's election notice, it should expeditiously process and prioritize registrations from such providers and take any other steps needed to facilitate access by participating providers to these databases. For providers with an election notice that is verified for the Affordable Connectivity Program, but not for the EBB Program, should the Commission direct USAC to limit the provider's access to USAC systems before the Affordable Connectivity Program is launched? The Bureau seeks comment on ways to help providers, especially those who are new to USAC systems, gain access to and familiarity with the systems they need to enroll households in the Affordable Connectivity Program.
20. The Bureau proposes that the Commission formalize a process for limiting provider access to USAC systems or removing participating providers from the Affordable Connectivity Program in situations where there are concerns of waste, fraud, and abuse. For example, should USAC remove providers if there is a trend of troubling complaints that suggest that the provider is not offering eligible households broadband service or connected devices, is failing to properly enroll subscribers pursuant to ACP rules, is not passing through the discounts to subscribers, is providing devices that do not provide the connectivity that was promised or that consumers require, or is otherwise acting in a way that suggests failures to comply with the Affordable Connectivity Program rules? Should the Commission promulgate rules providing for spot checks by USAC or the Commission to monitor provider compliance? Should the Commission supplement its document retention rules to facilitate such monitoring? Should the Commission provide for a mechanism to promptly delist or suspend providers or their agents where there is sufficient evidence they have (1) submitted material, false information to USAC or the Commission, (2) failed to submit information required by the approval or election process, or (3) otherwise failed to comply with ACP program rules? The Bureau seeks comment on this proposal and request comments on the tools USAC and the Commission have available or should have available to lock out and/or remove providers from the Affordable Connectivity Program.
21. The Consolidated Appropriations Act allows a participating provider to “rely upon an alternative verification process of the participating provider,” to determine household eligibility and enroll households in the EBB program, subject to certain conditions. Pursuant to the process set out by the Consolidated Appropriations Act, the “participating provider submits information as required by the Commission regarding the alternative verification process prior to seeking reimbursement,” and the Commission has seven days after receipt of the information to notify the participating provider if its “alternative verification process will be sufficient to avoid waste, fraud, and abuse.” This approval allows participating providers to verify all household eligibility criteria through their own eligibility verification process in addition to, or instead of, using the National Verifier. The Infrastructure Act does not modify the requirement that a provider seeking automatic approval must have eligibility “verification processes that are sufficient to avoid fraud, waste, and abuse.” However, by eliminating a provider's existing COVID-19 program as a basis for inclusion, the Infrastructure Act does modify the types of acceptable “existing programs” that a provider's alternative verification process would incorporate to determine a household's eligibility in the Affordable Connectivity Program. The Bureau seeks comment on the impact of this change on the Commission's consideration of alternative verification process requirements.
22. The Commission required alternative verification processes for the EBB Program to be at least as stringent as methods used by the National Verifier. To meet this standard, EBB participating providers that use alternative verification processes need to collect a prospective subscriber's: (1) Full name, (2) phone number, (3) date of birth, (4) email address, (5) home and mailing addresses, (6) name and date of birth of the benefit qualifying person if different than applicant, (7) basis for inclusion in program (
23. The Bureau proposes that providers with approved EBB Program alternative verification processes can continue to use those processes when enrolling households in the Affordable Connectivity Program in a manner consistent with the Affordable Connectivity Program's revised eligibility criteria. The Bureau seeks comment on this proposal and any changes that would be necessary to update the alternative verification process application to incorporate these statutory changes for the Affordable Connectivity Program. The Infrastructure Act continues to allow providers to use their alternative verification processes based on the provider's eligibility requirements for its existing low-income program and does not require alternative verification processes to verify all of the statutory household eligibility bases for inclusion in the Affordable Connectivity Program. Additionally, the Infrastructure Act
24. The household eligibility determinations made by the National Verifier represent a strong waste, fraud, and abuse prevention tool. The importance of the independent household eligibility reviews and verification conducted by the National Verifier was recognized by Congress, and the Commission has also stated that the National Verifier is an effective tool and important protection against waste, fraud, and abuse. During the EBB Program, the periodic updates to the National Verifier to improve the EBB household verification process proved to be an effective and robust tool for providers and households to efficiently determine household eligibility. In fact, many providers with approved alternative verification processes choose to use the National Verifier process in addition to or in lieu of their own alternative processes. In light of the reliance on the National Verifier by many providers with an alternative verification process in the EBB Program and the robust verification tools offered by the National Verifier, the Bureau proposes to approve alternative verification process applications only from providers with existing low-income programs and where the provider's existing low-income program requires the provider to use an alternative verification process and not the National Verifier. Accordingly, providers with existing programs that have an established eligibility approval process that would be incompatible with the National Verifier or other justification that prevents the provider's eligibility process from using the National Verifier would be able to seek an alternative verification process. The Bureau seeks comment on this proposal.
25. During the EBB Program, some providers without an established low-income program sought approval of an alternative verification process even where the providers had already been designated as ETCs, had been providing Lifeline service for years, and had a history of using the National Verifier and other USAC systems to determine eligibility for Lifeline. These providers typically claimed they needed an alternative verification process for efficiency reasons or administrative ease, but their requests for approval did not address the increased risk of waste, fraud, and abuse inherent in not using the National Verifier. Moreover, these alternative verification processes were untested and seemingly created only for the purpose of the EBB Program application. The Bureau is concerned that in such cases, the provider may not have the appropriate financial incentives to make accurate eligibility determinations, because the Emergency Broadband Connectivity Fund, and not the provider itself, is subsidizing the discounted service. In contrast, a provider who is enrolling households in its own low-income program has an adequate financial incentive to make accurate eligibility determinations because the process was developed to support an existing program through which the provider had committed to subsidize the discounted service offered to eligible households.
26. Accurately determining household eligibility is the principal consideration for the National Verifier and its independent reviews. The accuracy of the eligibility decision is the principal tool in preventing improper payments and other waste, fraud, and abuse in the EBB Program and will continue to be in the successor Affordable Connectivity Program. A proposal to use an alternative verification process that does not offer an explanation for why the alternative process is necessary when the provider could easily use the National Verifier fails to make the statutorily required showing that the process will be “sufficient to avoid waste, fraud, and abuse.” Further, the National Verifier maintains a number of database connections that produce automatic eligibility approvals that individual providers would have to conduct through a manual application review process. All of these considerations weigh in favor of limiting the use of alternative verification processes to providers that maintain an existing verification process used for its own low-income program or other purpose unrelated to the EBB Program, Affordable Connectivity Program, or similar federal assistance program. The Bureau seeks comment on its proposal and the Commission's authority to limit approvals of an alternative verification process to such providers.
27. The Affordable Connectivity Program will provide eligible households a discount on broadband internet access service and a connected device. Consistent with the EBB Program requirements, the Bureau interprets the Infrastructure Act to limit the ACP benefit to one-per-household for both the monthly benefit and the one-time connected device reimbursement. In administering the EBB Program, the Commission used the definition of “household” under the Lifeline rules and did not limit the number of participating households that could be located at a particular address. The Bureau proposes to apply this same definition and approach to the Affordable Connectivity Program. Consistent with the approach in the EBB Program, the Bureau also proposes (1) to make available a Household Worksheet (with necessary modifications specific to the Affordable Connectivity Program) to help a household determine whether it is an independent economic household from other existing ACP subscribers at the same address, and (2) to require ACP providers using their own approved alternative verification processes to include measures to confirm that a household is not receiving more than one ACP benefit. The Bureau seeks comment on these proposals. Are any changes to the administration of the one-per-household requirement warranted for the Affordable Connectivity Program? For purposes of individual and household duplicate checks, should the Commission make clear that service providers are also required to check their internal records?
28. The Bureau next seeks comment on implementing the eligibility criteria for the Affordable Connectivity Program. A household may qualify for the Affordable Connectivity Program if at least one member of the household: (1) Meets the qualifications for participation in the Lifeline program (with the modification that the qualifying household income threshold is at or below 200 percent of the Federal
29. The Bureau seeks comment on the qualifying benefit programs for the Affordable Connectivity Program. In the
30. The Bureau also seeks comment on whether and how the free and reduced price school lunch and breakfast program eligibility criteria apply where schools elect administrative provisions under the National School Lunch Act that have similar elements as the CEP. For example, many students receive meals from schools that elect to participate in alternative United States Department of Agriculture (USDA) mechanisms without annual eligibility determinations that, like the CEP, may result in students receiving free school breakfast or lunch even though the student did not individually apply for assistance. Would expanding the eligibility of the Affordable Connectivity Program to include students attending Provision 2 and Provision 3 schools broaden participation in the Affordable Connectivity Program to low-income households the Infrastructure Act intends to benefit? Given that the Affordable Connectivity Program is not an emergency program, is the risk of allowing households to qualify under these provisions, even if the household would not otherwise qualify for the school breakfast and lunch program, justified? Should the Commission only permit households to enroll in the Affordable Connectivity Program based on these provisions if the household would individually qualify for the school lunch and breakfast program, even if the household is not required to submit an annual application? While Provisions 2 and 3 require schools to provide school meals at no charge to all participating students, schools with high rates of poverty are most likely to use these provisions. With respect to the possible inclusion of Provisions 2 and 3, do the existing information collection and documentation requirements for the school lunch and breakfast program already cover the types of documentation that would be sufficient for the Affordable Connectivity Program to demonstrate participation in Provision 2 or 3, or should the Commission revise its documentation requirements to accommodate their inclusion? Are there databases that identify which schools use Provisions 2 or 3? Is there a potential for waste, fraud, and abuse associated with any documentation for Provisions 2 or 3 that the Commission should not rely on for purposes of demonstrating eligibility for the Affordable Connectivity Program?
31. For households seeking to qualify for the Affordable Connectivity Program based on a current student's participation in a school lunch or breakfast program, the Bureau proposes allowing households to qualify based on documentation from the current school year in which they submit their ACP application
32. Pursuant to the statute, a household with a student who receives free or reduced-price school lunch or breakfast can qualify for the Affordable Connectivity Program through the National Verifier, a service provider's alternative verification process, or school-based eligibility verification. Households that seek to enroll in the EBB Program via the National Verifier based on participation in a school lunch or breakfast program at a non-CEP school are required to provide specific information and documentation at the time of enrollment, including the name of the consumer or benefit qualified person, qualifying program, the name of the school or school district that issued the documentation, issue date of the documentation (subject to the applicable time limitations) that aligns with the benefit period, and a letter from the school or school district confirming that a member of the household is approved to participate in the school or lunch or breakfast program during the allowed time period. Service providers using an approved alternative verification process are subject to strict subscriber information collection and document retention requirements. The Bureau proposes that the Commission extend these same requirements to the Affordable Connectivity Program, with modifications to the acceptable documentation dates to reflect the expected longer duration of the Affordable Connectivity Program. The Bureau seeks comment on this proposal. For National Verifier enrollments, if the benefit qualifying person attends a school that participates in the CEP, the household selects the school during the application process. Are there any modifications that the Bureau should consider to guard against potential, waste, fraud and abuse where households seek to enroll through the
33. For the EBB Program, where a service provider relies on a school to verify student eligibility for the school lunch or breakfast program, the service provider must certify that it relied on school-provided information and must retain documentation of (1) the school providing the information, (2) the program that the school participates in, (3) the household that qualifies (and qualifying student) and (4) the program the household participates in. Where school-based eligibility verification is used, does the information that providers are required to provide to the NLAD and related document retention requirements sufficiently guard against waste, fraud and abuse? If not, what additional information should be transmitted to the NLAD or what additional documentation should the Commission require service providers to retain where school-based eligibility verifications are used? Is there any additional information that the Commission should require service providers or households to provide at the time of enrollment where a household seeks to enroll based on participation in the school lunch or breakfast program? Should the Commission require service providers to retain any additional documentation of a specific household's ACP eligibility through participation in a school lunch or breakfast program? Should the Commission make any other changes to the required documentation for any other qualifying programs where household eligibility is verified through manual reviews in the National Verifier?
34. The Infrastructure Act permits participating providers to use the same three methods of verifying household eligibility for the Affordable Connectivity Program that are currently used for the EBB Program: (1) Use of the National Verifier and the NLAD; (2) reliance on the participating provider's alternative verification process, subject to certain conditions; and (3) reliance on a school to verify eligibility under the free and reduced price school lunch or school breakfast program. For the Affordable Connectivity Program, the Bureau proposes using the same processes used in the EBB Program for tracking the eligibility of households and verifying household eligibility, with necessary modifications to conform to the ACP requirements, including changed eligibility criteria. To guard against duplicative support, the Bureau proposes requiring all participating providers to track enrollments of eligible households in the Affordable Connectivity Program in the NLAD, including households whose eligibility is verified through a permitted alternative verification process or school-based verification, and to update subscriber information in the NLAD within 10 business days of receiving the changed information. The Bureau seeks comment on this proposal.
35. The Commission's EBB Program rules prohibit participating providers from enrolling or claiming support for any prospective subscriber if USAC cannot verify the subscriber's status as alive, unless the subscriber produces documentation to the National Verifier to demonstrate his or her identity and status as alive. The Bureau proposes to apply the same requirements to the Affordable Connectivity Program, and it seeks comment on that proposal. To promote program integrity, the Bureau also proposes directing USAC to ensure through its program integrity reviews that households whose eligibility is verified through an alternative verification process or other non-National Verifier process comply with this requirement.
36. If a household's eligibility cannot be verified through the National Verifier's automated databases, the Bureau proposes applying the same documentation requirements used for the EBB Program to the qualifying programs for the Affordable Connectivity Program, to the extent consistent with its proposals in this Public Notice. As noted in this document, the Infrastructure Act added WIC as a qualifying program for the ACP. If WIC participation cannot be validated through an automated database connection at launch of the Affordable Connectivity Program, what documentation should the Commission require as the Bureau works to establish an automated connection capable of qualifying WIC participants? For example, do WIC participants receive benefit award letters, approval letters, statements of benefits, or benefit verification letters? Is there any documentation the Bureau should not permit to verify WIC participation for program integrity reasons? How should the Bureau consider WIC Electronic Benefit Transfer (EBT) cards? Do these cards contain sufficient identifying information that would prevent someone who is not enrolled in WIC from using the card to support their enrollment in the Affordable Connectivity Program? In contrast to the other benefit qualifying programs, WIC is designed to provide benefits over a shorter time period, and eligibility is based on income and specific eligibility categories for women, infants and children. For WIC, the benefit period typically lasts six months to one year, after which time the participant must renew their eligibility to continue receiving WIC benefits. What, if any, impact should this have on administering WIC as a qualifying program for the Affordable Connectivity Program? Is the annual recertification requirement that the Bureau proposes below sufficient for households that qualify for the Affordable Connectivity Program based on participation in WIC, given the shorter-term benefit period in the program? Are there any other considerations in administering WIC as a qualifying program?
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38. Consistent with the EBB Program the Bureau proposes requiring prospective ACP subscribers who are not already enrolled in Lifeline to submit an application in order to enroll in the Affordable Connectivity Program. Households enrolled in the Lifeline program are automatically eligible for the Affordable Connectivity Program based on their Lifeline eligibility, and as with the EBB Program, the Bureau proposes not to require these households to submit new applications or new eligibility documentation to participate in the Affordable Connectivity Program, provided that the household opts in or affirmatively requests enrollment in the Affordable Connectivity Program and is already
39. As is permitted for the EBB Program, the Bureau proposes allowing households seeking to enroll in the Affordable Connectivity Program to verify their identity through the last four digits of their Social Security number or other approved identity documentation. The Bureau seeks feedback on the practice of allowing eligible consumers to verify their identity by submitting documentation rather than providing the last four digits of their Social Security number. Did this more flexible approach encourage participation by households that otherwise would not have completed an application for the EBB Program? If the Commission adopts this approach for the Affordable Connectivity Program, how can USAC improve the experience for applicants? Are there other sources, systems or databases the Bureau could rely upon to more quickly qualify households providing alternative documentation?
40. Where participating providers rely on the National Verifier to enroll households in the Affordable Connectivity Program, the Bureau proposes requiring eligible households to interact directly with the National Verifier to apply for the Affordable Connectivity Program, as is currently required for the EBB Program and the Lifeline program. Consistent with the Lifeline program and the EBB Program, the Bureau proposes to provide access to an online portal and application form to apply for the Affordable Connectivity Program, and make available an eligibility check application programming interface (API) that allows providers to help consumers with the ACP application. The Bureau also proposes using the National Verifier automated database connections wherever possible to verify household eligibility for the Affordable Connectivity Program, and extending to the Affordable Connectivity Program the existing manual documentation review process used for the EBB Program (with necessary modifications to reflect the ACP eligibility criteria) where eligibility cannot be verified through a National Verifier automated database. The Bureau seeks comment on these proposals.
41. The Infrastructure Act made several changes to the eligibility criteria for the Affordable Connectivity Program. As a result of these changes, the systems at USAC will require significant development to, among other capabilities, create a new application portal in the National Verifier and make changes in the NLAD to permit and track enrollments under these new qualifying programs. The Bureau seeks comment on ways to expedite the development and testing of the new application, and on any other suggestions for readying the relevant systems to accept enrollments starting on December 31, 2021, as permitted by the Infrastructure Act, for households that qualify for the Affordable Connectivity Program based on the changed eligibility criteria.
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43. As with the Lifeline and EBB Programs, the Bureau also proposes to apply a usage requirement to the Affordable Connectivity Program. Where a household receives a service for which a fee is not assessed or collected, limiting reimbursement to households who are actually using a supported service is an important safeguard against waste, fraud, and abuse. The Bureau proposes applying the same usage definition for the Lifeline and EBB Programs to the Affordable Connectivity Program, and similarly propose to prohibit participating providers from claiming Affordable Connectivity Program reimbursement for households that are not actually using a service for which a fee is not assessed or collected. Is the existing definition of usage adequate and does it include sufficient methods by which subscribers receiving fixed broadband service could demonstrate usage? Should the test be modified to ensure a subscriber is actually using a supported service rather than simply keeping a device powered?
44. The Bureau seeks comment on whether the proposed definition of usage could result in service providers receiving payment where the subscriber is not actually using their ACP service. In the
45. Alternatively, for purposes of the Affordable Connectivity Program should the usage documentation standards that have historically been used in Lifeline, with the need to rely on records supporting subscribers' calling, texting and billing activity, as well as data usage, be discontinued in favor of a different model for the Affordable Connectivity Program? For instance, should the Commission mandate a third-party app on subscriber devices that confirms the subscriber is accessing its ACP-supported service so that records substantiating subscriber usage no longer need to be reviewed? Or could subscribers simply be required to contact USAC periodically, to confirm they want to continue with the service? Would these proposals raise any privacy concerns? Are there other alternatives the Commission should consider to ensure that payments are only issued for ACP service the subscriber is actually using where required by program rules?
46. Consistent with the Lifeline program, for purposes of the Affordable Connectivity Program, for households that subscribe to an ACP service that is subject to a usage requirement, the Bureau proposes a 30-day non-usage period, and a 15-day period for households to cure their non-usage. As with the Lifeline program, households that subscribe to an ACP service that is subject to a usage requirement and have not used their ACP-supported service in 30 days cannot be claimed for reimbursement after the initial 30-day non-usage period unless and until they have cured their non-usage. In order to cure non-usage, an ACP subscriber would need to demonstrate usage as defined in the Lifeline rules, and the Bureau proposes to extend the Lifeline usage rules to the Affordable Connectivity Program, with any modifications the Commission may adopt for the Affordable Connectivity Program. The Bureau seeks comment on these proposals. Given that the Affordable Connectivity Program is not an emergency program and will have a longer duration than the EBB Program, the Bureau further proposes requiring the de-enrollment of households who do not cure their non-usage in the permitted cure period, as is currently required in the Lifeline program. Are any modifications warranted to administer non-usage and de-enrollment for non-usage requirements for the Affordable Connectivity Program?
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48. For households whose eligibility for the Affordable Connectivity Program is verified through the National Verifier, the Bureau proposes to model recertification after the Lifeline program, where USAC is responsible for recertification for households who enrolled through the National Verifier. To recertify these households, USAC uses the automated databases in the National Verifier for recertification, and provides a paper recertification form, and online and Interactive Voice Response recertification option for households whose eligibility cannot be verified through the National Verifier's automated database connections. To promote administrative efficiency and minimize the administrative burden on providers and consumers, to the extent that it is technically feasible to track recertification of a particular subscriber across the Lifeline program and Affordable Connectivity Program, should the Commission allow households enrolled in both programs to rely on their Lifeline program recertification, including Lifeline program recertifications conducted by state agencies or state administrators for the opt-out states, to satisfy any recertification requirements the Bureau adopts for the Affordable Connectivity Program? Given the difference in eligibility criteria between the Affordable Connectivity and Lifeline programs, what bearing, if any, should a consumer's unsuccessful recertification for the Lifeline program have on the household's participation in the Affordable Connectivity Program? Should additional consumer outreach or notification be required for ACP households that did not pass or did not timely respond to a Lifeline recertification attempt? Should an unsuccessful recertification for the Lifeline program automatically trigger a need to verify continued eligibility for the Affordable Connectivity Program if the subscriber relied on their enrollment in a Lifeline-qualifying program to qualify for the Affordable Connectivity Program? Is there anything else the Bureau should consider concerning the interplay between Lifeline recertifications and any recertification requirement the Commission may adopt for the Affordable Connectivity Program?
49. How should the recertification process work for households enrolled in the Affordable Connectivity Program whose initial eligibility was verified through a process other than the National Verifier? Should the Commission require USAC to perform the recertifications for these households, or should ACP participating providers be required to perform recertifications? To the extent it is technically and administratively feasible, would requiring USAC to recertify all ACP subscribers best promote program integrity and administrative efficiency? If ACP participating providers perform the recertifications for households enrolled in the Affordable Connectivity Program through a process other than the National Verifier, should the Commission require those providers to submit their recertification plan to the Bureau for prior approval? If so, how should that approval process work? If ACP participating providers conduct recertifications, should the Commission require them to follow the customer notification timelines and processes that USAC currently uses for Lifeline recertifications? Where USAC conducts recertifications for the Lifeline program, for example, the annual recertification is due by the subscriber's anniversary date, rather than using a single uniform recertification deadline for all
50. Just as in the EBB Program, the Affordable Connectivity Program will permit eligible households to receive a discount off the cost of broadband service and certain connected devices, and participating providers to receive a reimbursement for providing such discounts. Similar to the EBB Program, the Infrastructure Act defines “internet service offering” as broadband internet access service provided to a household by a broadband provider. Broadband internet access service retains the definition provided in § 8.1(b) of the Commission's rules.
51. The Infrastructure Act also adds a new requirement that a participating provider “shall allow an eligible household to apply the affordable connectivity benefit to any internet service offering of the participating provider, at the same terms available to households that are not eligible households.” The Bureau seeks comment on whether “any internet offering” should include legacy or grandfathered plans or whether it only includes current offerings of a provider to new customers. The Bureau also seeks comment on how providers will make all of their offerings available for the Affordable Connectivity Program. In particular, the Bureau seeks comment on how providers expect to manage available offerings to ensure compliance with these statutory requirements. It may be that providers offer different plans in different geographies. The Bureau seeks comment on the extent to which geography affects plan availability, and whether some households will be more limited in their ability to apply the affordable connectivity benefit than others? How much time will providers need to assess their available offerings, and does an expedited timeline for launch of the ACP impact a provider's ability to go from hand-picking qualifying service offerings for inclusion in the EBB Program to the comprehensive approach described in the Act?
52. The Bureau next seeks comment on whether the Commission should provide clarity on the internet service offerings that are eligible for reimbursement in the Affordable Connectivity Program. In the
53. While the Infrastructure Act removes the EBB Program requirement that a qualifying internet service offering be “offered in the same manner and on the same terms, as described in any of such provider's offerings for broadband internet access service to such household as of December 1, 2020,” it does allow a household to apply the ACP benefit to any internet service offering “at the same terms available to households that are not eligible households.” The Bureau seeks comment on the contours and administrability of this requirement. The Bureau seeks comment on whether this requirement ensures that eligible households receive competitive broadband service offerings, and what additional safeguards and requirements, if any, the Commission could adopt. For example, the Commission viewed the December 1, 2020 requirement for acceptable service offerings in the EBB Program “as a method of avoiding arbitrage opportunities and waste in the [EBB Program] by allowing unscrupulous providers to take advantage of the increased subsidy available.” Does the Commission have the authority under the Infrastructure Act to impose any limitations on the services offered? The Bureau seeks comment on rules that would enhance the opportunity that low-income households participating in the Affordable Connectivity Program would receive a competitive internet service offering that meets the needs of the household. While households should be able to apply the ACP benefit to an internet service offering of their choosing, should the Commission prevent providers from introducing into the marketplace internet service offerings that seek only to maximize the ACP benefit reimbursement while not actually providing households with a market-rate internet service? Should the Commission be concerned that providers will have an incentive to raise the price of a $15 plan to a $30 dollar plan solely to maximize the reimbursement amount? Are there additional measures the Commission can take to reduce price gouging and other harms? Alternatively, will providers respond to the requirement that Affordable Connectivity Program and non-ACP subscribers have access to the same service offerings by restricting offerings of certain plans for all of their customers? How can the Commission reduce the incentive for providers to enact pricing or offering strategies that may harm non-eligible households?
54. Under the EBB Program, providers are required to make available “at least one EBB Program-reimbursed service to each of its eligible households within its service area.” The Bureau seeks comment on whether the Commission should adopt this policy for the Affordable Connectivity Program. Is this requirement still necessary given that an ACP household may apply the benefit to any broadband service offered by the provider? The Bureau also seeks comment on providers' ability to quickly implement the Infrastructure Act's requirement that a household may apply the benefit to any internet service offering of the participating provider, at the same terms available to households not participating in the Affordable Connectivity Program. What provider billing and system changes are necessary in order to provide discounted broadband service to ACP households? The Bureau suspects that the requirement to make the benefit
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58.
59. In the
60. The Infrastructure Act also does not alter the requirement that a provider may not receive reimbursement for more than one connected device per household. In the
61. The
62. The Bureau also seeks comment on requiring that the reimbursement amount for a connected device reflects the cost of the connected device to the provider. For example, there are many tablets sold for less than $100, and providers may be able to purchase them at wholesale cost or receive volume discounts. Under the rules of the EBB Program, in those circumstances, providers would be able to seek reimbursement for the higher market value of the device, rather than the cost to the provider for obtaining and delivering the device to the household, and make a profit from the EBB Program. Should the Affordable Connectivity Program permit providers to profit off the benefit by receiving more funding in reimbursement than the provider's cost to procure and supply the device? Would using a cost-based standard allow USAC and the Commission to determine if the provider is claiming the appropriate amount, particularly where the provider's device is not widely available or not sold in retail stores? The Bureau seeks comment on how the Commission can ensure that providers are not claiming amounts beyond what it cost them to provide the device. The Bureau also seeks comment on whether limiting providers to claiming a reimbursement amount that reflects the cost to them of acquiring and providing the device to the household would discourage providers from offering connected devices eligible for reimbursement from the Affordable Connectivity Fund? If the Commission were to adopt a cost-based approach, what sort of incentive would providers need (
63. In the
64. The Bureau also seeks comment on the process for resolving disputes involving the connected device reimbursement process. USAC has developed a dispute process to be applied in scenarios where a provider seeks to claim a connected device for a household that has already been claimed by another provider for a connected device. In order to demonstrate that the household is eligible to be claimed by the second provider for a connected device, perhaps because the household contends that it did not receive the connected device from the first provider, the second provider must notify USAC that it wishes to initiate the dispute process. Once the second provider files a dispute, USAC will request from the household's previous provider documentation confirming that the connected device was delivered to the household, the household was charged a co-pay of more than $10 but less than $50 toward the purchase price, and the household consented to purchase the device. USAC will then review the response and documentation provided and determine whether the new provider is eligible to receive reimbursement for the connected device for the household. The Bureau proposes to maintain this dispute resolution process for the Affordable Connectivity Program and it seeks comment on this proposal. What other factors should the Commission consider in developing policies or procedures for ACP connected device claims?
65. The Bureau next seeks comment on EBB household experiences choosing qualifying connected devices for the EBB Program to determine if there are any other improvements the Commission can make to the Affordable Connectivity Program. Did providers offer a broad range of device choices? Data from the EBB Program show that the vast majority of connected devices supported were tablets, with far fewer households receiving laptop or desktop computers. Were the devices offered to households too restrictive or limited in function? Should the Commission require that a connected device be able to connect to all Wi-Fi devices, and not just certain hotspots? The Bureau also seeks comment from providers on what factors they considered in their decisions to offer or not to offer connected devices in the EBB Program.
66. For the EBB Program, the Commission declined to adopt minimum system requirements for connected devices, finding that setting such standards “could limit consumer choice and exacerbate barriers to broadband service that may have existed prior to COVID-19.” The Commission instead said that it expected devices to support video conferencing platforms, should be Wi-Fi enabled and have video and camera functions. The Commission also stated that it expected that connected devices be accessible to and usable by those with disabilities. The
67. The Bureau also proposes that the Commission apply the requirements of § 54.10 of the Commission's rules to the Affordable Connectivity Program in the same manner as those requirements are applied in the EBB Program. § 54.10 says that a “Federal subsidy made available through a program administered by the Commission that provides funds to be used for the capital expenditures necessary for the provision of advanced communications service may not be used to” “[p]urchase, rent, lease, or otherwise obtain, any covered communications equipment or service,” or “[m]aintain any covered communications equipment or service previously purchased, rented, leased, or otherwise obtained.” § 54.10 further notes that “covered communications equipment or service” is defined in section 1.50001 as “any communications equipment or service that is included on the Covered List,” and section 1.50001 further defines “communications equipment or service” as ” any equipment or service used in fixed and mobile networks that provides advanced communication service, provided the equipment or service includes or uses electronic components,” and any device that is on a Covered List is one that poses an unacceptable risk to the national security of the United States or the security and safety of United States persons. As discussed in this document, a connected device supported by the Affordable Connectivity Program includes a laptop, desktop computer, or tablet, and the Bureau believes that funds used for such devices could reasonably be considered to be funds for capital expenditures, and further that such capital expenditures could reasonably be considered to be “necessary for the provision of advanced communications service” as defined in section 1.50001 and contemplated by § 54.10. The Bureau seeks comment on the application of § 54.10 to the Affordable Connectivity Program and on how the Commission and USAC can verify a provider's compliance with this requirement.
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70. As a preliminary matter, “high-cost area” is defined elsewhere in the Infrastructure Act as the “unserved area in which the cost of building out broadband service is higher, as compared with the average cost of building out broadband service in unserved areas in the United States (as determined by the Assistant Secretary [of Commerce for Communications and Information], in consultation with the [Federal Communications] Commission).” The Act further provides that factors to be incorporated into this determination are: (1) The remote location of the area; (2) the lack of population density of the area; (3) the unique topography of the area; (4) a high rate of poverty in the area; or (5) any other factor identified by the Assistant Secretary, in consultation with the Commission, that contributes to the higher cost of deploying broadband service in the area.”
71. Given that the distribution of the enhanced benefit depends on a mechanism that is based on a determination of high-cost areas developed primarily by a separate agency, the enhanced reimbursement to providers for broadband services in high-cost areas cannot be provided until the National Telecommunications and Information Administration (NTIA) identifies such high-cost areas. The Bureau seeks comment on how this mechanism should work once NTIA makes the determination of high-cost areas. What should a provider be required to show to establish that there would be a “particularized economic hardship to the provider such that the provider may not be able to maintain the operation of part or all of its broadband network” if the provider is limited to providing a discount of only $30? Should the Commission adopt a specific standard or test for such hardship, and if so, what should it be? Who should decide whether the provider has met such a standard? How should aggrieved providers appeal decisions related to this standard? How should the Bureau take into consideration other subsidies and financial benefits used by the providers to deploy broadband service in these high-cost areas when evaluating provider requests for the enhanced benefit? Are there administrative steps the Commission can take while the NTIA is working to identify the qualifying high-cost areas to speed the development of the mechanism? The Bureau seeks comment on any other
72. The Bureau proposes to provide reimbursement for discounted services and connected devices delivered to a qualifying household after a provider has elected to participate in the Affordable Connectivity Program. The Bureau proposes that participating providers be reimbursed through a process similar to the EBB Claims System administered by USAC, and subject to all the requirements of the Lifeline Claims System. In both the Lifeline and EBB programs, providers are required to submit a reimbursement request through USAC's Claims System based on the number of households enrolled in the NLAD on a specific date each month, called a snapshot date. Providers must review the snapshot report, validate the households for which they are requesting reimbursement, indicate a reason for any unclaimed subscribers, and review, correct, and certify the requested reimbursement amount. In the EBB Program, the Commission also established a uniform snapshot date of the first of each month for EBB claims, finding that having a uniform snapshot date brings efficiencies to the reimbursement process by restricting support to eligible subscribers that are enrolled in NLAD by the snapshot date. The Commission also found that using a uniform snapshot date removes uncertainties for providers regarding the amount that could be claimed if the Commission allowed providers to claim subscribers on a pro-rata basis. For the Affordable Connectivity Program, the Bureau seeks comment on whether the Commission should also adopt a uniform snapshot date for determining the households that are eligible to be claimed for service in a service month, and whether the snapshot date should be the first day of each month. Are there other alternatives to the snapshot paradigm that the Commission should consider for the Affordable Connectivity Program? The Bureau also seeks comment on how alternatives to the snapshot date approach would affect the claims process for connected devices.
73. In the
74. The Bureau further seeks comment on whether the Commission should allow providers to claim partial month support. The Affordable Connectivity Program provides a more generous monthly subsidy than the Lifeline program and will extend for a much longer period of time than the EBB Program. As a result of these differences, should the Commission consider allowing for partial month, pro-rated support? Specifically, should the Commission permit a provider to claim for pro-rated, partial reimbursement a household that receives service from the provider during part but not all of a service month? In situations where the household switches to a supported service offered by another ACP provider, should both the former provider and the new provider be able to claim pro-rated partial reimbursement for the household for the same month? How will the use of the snapshot date work with partial claims? What will providers need to change about their billing and claims processes to seek partial month support? Will providers be able to determine the appropriate amount to pass through to the household and also claim from the program? The Commission in the
75. Once a provider has received its snapshot report for the previous month, the EBB Program requires the provider to upload and certify its claims by the 15th day of each month, or the following business day in the event the 15th falls on a weekend or holiday. Due to the limited funds and temporary nature of the EBB Program, the Commission concluded that claims cannot be revised after that mid-month deadline. The Commission adopted this approach in part to assist USAC and the Commission in creating a reliable forecast for the limited-funding program. Given the newness of the EBB Program and the number of providers participating, the Bureau has issued waivers allowing these providers extra time to certify the reimbursement claims. Because the Affordable Connectivity Program will extend longer than the EBB Program, the Bureau seeks comment on whether the Commission should offer providers more flexibility regarding the deadlines by when they must certify their claims. The Bureau seeks comment on the length of time providers should have for uploading and certifying their claims for a service month. In addition to the questions posed in this document, the Bureau seeks comment on how any flexibility offered to providers for service claims would impact the claims process for connected devices. Given that the connected device benefit is a one-time benefit, would allowing providers the flexibility to delay the certification of claims interfere with the administration of the claims process for devices? The Bureau seeks comment on the ways the Commission could offer flexibility to the claims process for service and devices while guarding against waste, fraud, and abuse in the program.
76. The Bureau also seeks comment on whether providers should be permitted to revise their certified claims. For example, the Lifeline program has a one-year deadline for upward revisions that increase the amount of funding requested by the provider. The Bureau seeks comment on a reasonable revision period. Should the Commission only allow upward revisions in certain circumstances? If so, what are the circumstances in which a revision would be justified? Because funding for the Affordable Connectivity Program is limited, if the Commission allows revisions, the Bureau seeks comment on imposing reasonable restrictions on upward revisions in the final months of the program when funds are close to exhaustion. Finally, regardless of any rules permitting
77. The Infrastructure Act retains most of the provider certifications that were required by the EBB Program. Providers are required to certify that: Each household for which the provider is seeking reimbursements will not be charged an early termination fee if it later terminates a contract; each household was not subject to a mandatory waiting period; and each household will be subject to a participating provider's generally applicable terms and conditions. Providers are also required to certify that each household for which the provider is claiming reimbursement for a connected device discount has been charged the required co-pay. Providers claiming a household whose eligibility was determined by the provider's alternative verification process must also certify that such households were verified by a process that was designed to avoid waste, fraud and abuse. The Bureau proposes that these certifications accompany each request for reimbursement, by participating providers, and that each certification be submitted under penalty of perjury. The Bureau also proposes that the Commission model the certifications used in the EBB Program to the extent that they are consistent with the rules adopted for the Affordable Connectivity Program and include any additional certifications that may be appropriate to satisfy new rules for the Affordable Connectivity Program. Should the Commission add any other certifications as a prerequisite to reimbursement? The Bureau proposes to require providers to certify that, for any reimbursement claims for a delivered connected device, the household was charged a compliant co-pay and that the co-pay was collected? Should the provider also be required to certify that it will not charge, or has not charged, the household for the amount for which the provider is seeking reimbursement?
78. The Infrastructure Act includes several additional provisions related to consumer protection that build upon the existing consumer protection measures in the Consolidated Appropriations Act. The Infrastructure Act leaves unchanged the requirements that participating providers must not deny an eligible household the ability to participate in the Affordable Connectivity Program based on any past or present arrearages with that provider. Moreover, providers are still required to certify that subscribers will not be required to pay an early termination fee if the eligible household being claimed elects to enter into a contract to receive such internet service offering and later terminates the contract. Providers must also still certify that the subscriber was not subject to a mandatory waiting period for their ACP-supported service based on having previously received internet service from the provider, and that the household will be subject to the provider's generally applicable terms and conditions as applied to other customers. The Bureau next seeks comment on how to implement the new consumer protection provisions included in the Infrastructure Act.
79. The Infrastructure Act prohibits a participating provider from requiring an eligible household to submit to a credit check as a condition for applying the ACP benefit to that provider's internet service offerings. The Bureau proposes to prohibit providers from inquiring, requesting or otherwise causing a consumer to submit to a credit check, or from accessing a consumer's credit information, before enrolling the consumer in the Affordable Connectivity Program. The Bureau seeks comment on how the Commission should ensure that providers are not requiring households to submit to credit checks as a pre-requisite for enrolling in the Affordable Connectivity Program with the provider. Should the Commission rely on self-certification and require providers to certify under penalty of perjury that the households they are claiming were not subject to credit checks as a condition of enrolling with the provider for the Affordable Connectivity Program? Should this requirement apply to all households enrolled in the Affordable Connectivity Program, or only to new households enrolling in the Affordable Connectivity Program? Must providers make this certification for existing customers? The Bureau seeks comment on its proposal and on other approaches the Commission should consider to ensure that providers are complying with this requirement.
80. The Bureau also seeks comment on whether a credit check may be permitted in certain circumstances. Should the Commission allow providers to use the results of a credit check to determine which equipment or devices may be offered to a household so long as the household has access to equipment or devices necessary to use the ACP-supported service? Should the Commission allow providers to use the results of a credit check for services that are not covered by the ACP benefit if the household selects a bundled service plan? Is permitting use of a credit check under these limited circumstances consistent with the statutory provision prohibiting credit checks as a condition for participation in the Affordable Connectivity Program? Would permitting a provider to use the results of a credit check to determine which plans are made available to a household be inconsistent with this statutory provision?
81. The Infrastructure Act permits a participating provider to terminate a subscriber's access to broadband internet access service supported by the Affordable Connectivity Program after 90 days of non-payment. The Infrastructure Act, however, does not disturb the requirement that providers cannot decline to enroll a household based on “any past or present arrearages with a broadband provider . . .” The Bureau seeks comment on how the Commission should reconcile these provisions. Should this non-payment provision apply only to new instances of non-payment associated with the ACP-supported service after a subscriber is enrolled with a participating provider? If a subscriber is de-enrolled for non-payment, how could the subscriber transfer the benefit to a different provider? Could a subscriber de-enrolled for non-payment be able to participate in the Affordable Connectivity Program with a different provider or even re-enroll with the same provider? What options should be available to providers when their ACP subscribers are in non-payment? Should providers be required to mitigate the non-payment by lowering a consumer's service quality (
82. Similar to the EBB Program, the Bureau proposes that providers in the Affordable Connectivity Program must pass through the ACP benefit to households before claiming reimbursement for the discount. Based on the Bureau's experience in the EBB Program, it is concerned that providers may fail to timely apply the ACP benefit to a household's bill after the household is enrolled in the program. In particular, there were complaints that some providers in the EBB Program were
83. To prevent undue termination of service and loss of vital benefits, the Bureau proposes to require participating providers to provide adequate notice to subscribers of their delinquent status before terminating the subscriber's service for non-payment. The Bureau seeks comment on this proposal, specifically on the frequency of notice, timing, and method of communicating the notice. The Bureau also seeks comment on whether the Commission should develop a process by which subscribers may dispute their provider's claim of non-payment. The Bureau seeks comment on the process for households to dispute allegations of non-payment with the provider and whether the provider could terminate the household's internet service for non-payment pending resolution of the dispute.
84. The Infrastructure Act requires the Commission to establish a dedicated complaint process for Affordable Connectivity Program participants to file complaints about the compliance of participating providers with program rules and requirements, including complaints “with respect to the quality of service received under the Program.” The Bureau seeks comment on this requirement, generally, including how the Commission should measure quality of service received under the Program?
85. To date, consumers have used the Commission's Consumer Complaint Center to file EBB-related informal complaints against their providers with the Commission. The Commission's informal consumer complaint process is a long-standing, free, and effective way for consumers to raise issues with their providers and bring issues to the attention of the Commission. To comply with the requirements of the Infrastructure Act, the Bureau proposes that the Commission add Affordable Connectivity Program content to the Consumer Complaint Center to educate consumers about the program, a dedicated pathway in the Consumer Complaint Center to file ACP-related complaints, including notification to the providers that the complaint involves the Affordable Connectivity Program, clear direction to consumers on how to correctly file an ACP complaint, and dedicated Commission staff from the Commission's Consumer and Governmental Affairs Bureau (CGB) to review and process the complaints. The Bureau seeks comment on these proposals. Are there other ways the Commission can provide improvements to its existing informal consumer complaint process to benefit the dedicated complaint process for ACP participants? What, if any, additional changes or modifications should the Commission make to the existing informal consumer complaint process to comply with the Infrastructure Act requirement?
86. The Infrastructure Act also requires the Commission to act expeditiously to investigate potential violations of program rules and requirements and to enforce compliance. Moreover, the Commission is permitted to impose forfeiture penalties to enforce compliance. Consistent with this statutory direction, the Bureau proposes to use the Commission's existing, statutorily permitted enforcement powers to initiate investigations of program rule violations. The Bureau seeks comment on this proposal.
87. The Infrastructure Act also requires participating providers to provide Affordable Connectivity Program participants with information on the Commission's dedicated complaint process. Should the Commission require participating providers to prominently display the Commission's contact center phone number and the website address for the Commission's Consumer Complaint Center on the subscriber's bill, on the provider's Affordable Connectivity Program web page, and on all of the provider's marketing materials? The Bureau seeks comment on how information about the dedicated consumer complaint process should be disseminated to consumers. If a consumer complains to the participating provider regarding an ACP-supported service or any difficulty enrolling with the provider, does the provider have an obligation under the statute to inform the consumer of their right to file a complaint with the Commission? If not, should the Commission require participating providers to do so?
88. The Infrastructure Act also requires the Commission to regularly issue public reports regarding consumer complaints alleging provider non-compliance with the Affordable Connectivity Program rules. The Bureau seeks comment on what these statutorily mandated reports should include, the frequency of such reports, and the method by which the reports should be made available to the public. How should the Commission balance subscriber privacy and its obligations under the Privacy Act with the need for transparency when determining the contents of those reports?
89. The Infrastructure Act mandates that the Commission promulgate additional rules to protect consumers who participate in or seek to participate in the Affordable Connectivity Program. As a preliminary matter, the Bureau notes that the Infrastructure Act states that the Commission must craft these particular rules “after providing notice and opportunity for comment in accordance with section 553 of title 5, United States Code,” which is the Administrative Procedure Act (APA). At the same time, section 904(h) provides an exemption from APA requirements for “regulation[s] promulgated under subsection (c),” the general rulemaking for section 904, which includes the consumer protection requirements. The Bureau seeks comment on how the Commission should reconcile these apparently conflicting provisions.
90. In the event that the Commission concludes that the Infrastructure Act requires the consumer protection rules to be implemented through APA notice-and-comment rulemaking, the Bureau seeks comment on whether the Commission could find that there is good cause to depart from those requirements. The APA generally requires us to adopt rules only after publishing a Commission-level “general notice of proposed rule making” in the
91. As for the substantive topics the Commission must evaluate, the Infrastructure Act requires that the Commission promulgate rules prohibiting any inappropriate upselling or downselling by a provider. The Bureau first seeks comment on what practices constitute inappropriate upselling or downselling. Are upselling or downselling always inappropriate, or are there instances where such practices are beneficial to the consumer? If so, when is upselling or downselling appropriate? What, if any, upselling or downselling practices should be permitted?
92. The Infrastructure Act also requires that the Commission promulgate rules that would protect consumers in the Affordable Connectivity Program from any inappropriate requirements that a consumer opt-in to an extended service contract as a condition of participating in the Affordable Connectivity Program. The Infrastructure Act, however, does not alter the requirement from the EBB Program that participating providers must certify that an eligible household will not be required to pay an early termination fee if the household elects to enter into—but later terminates—a contract for internet service. The Bureau first seeks comment on what constitutes an inappropriate opt-in requirement. Can a provider require an opt-in to a longer term contract before the household enrolls in the Affordable Connectivity Program? Should the Commission prohibit opt-ins prior to enrollment in all situations? Or are there times when pre-enrollment opt-in is beneficial to the enrolling household? Are there circumstances where an extended service contract would be beneficial to consumers, and if so, what are those circumstances? The Bureau also seeks comment on the tension between the consumer protection provisions described in this document. How should the Commission determine the circumstances in which requiring an extended service agreement would be inappropriate in light of the requirement that providers must also certify that the household will not be required to pay an early termination fee?
93. The Infrastructure Act also prohibits providers from implementing any inappropriate restrictions on the ability of a customer to switch internet service offerings. Should the Commission prohibit providers from limiting their ACP-supported service offerings to new or existing customers? How can the Commission determine what constitutes an inappropriate restriction? Are there any restrictions on the ability to switch internet service offerings that would be considered appropriate, and if so, under what circumstances would such restrictions be appropriate? What restrictions should the Commission prohibit or permit?
94. The Infrastructure Act requires the Commission to promulgate rules to protect consumers from any inappropriate restrictions by a participating provider on the ability of a consumer to switch participating providers other than a requirement that the customer return customer premises equipment provided by the participating provider. The Bureau seeks comment on what constitutes an inappropriate restriction of a consumer's ability to switch participating providers? Should the Commission prohibit providers from seeking to recover any discounts passed through to the household if the provider is unable to claim the household as a result of the transfer? Should an attempt or threat to recover the discount be considered an inappropriate restriction on the consumer's ability to switch providers? What restrictions should the Commission prohibit or permit? Have there been any practices by providers in the Lifeline or EBB Programs that have the effect of restricting a consumer from transferring their benefit to another provider? For example, should the Commission require that a provider offer a way for the customer to de-enroll online and also provide sufficient customer care representatives to respond to customers' requests or calls within a certain time (
95. Additionally, the Infrastructure Act requires that the Commission promulgate rules related to unjust and unreasonable acts or practices that undermine the purpose, intent, or integrity of the Affordable Connectivity Program. The Bureau seeks comment on what additional consumer protection measures the Commission should enact to protect prospective and existing program participants. For example, to ensure that eligible households receive their ACP-supported service without delay, should the Commission require that providers enroll eligible households or transfer their benefit within a set time after the subscriber provides affirmative consent to enroll with the provider and that failure to do so constitutes an unjust and unreasonable practice? The Bureau seeks comment on what steps the Commission should take to ensure that providers pass through the Affordable Connectivity Program discount to subscribers. The Bureau also proposes to prohibit providers from unreasonably delaying the application of Affordable Connectivity Program discounts to subscribers' bills.
96. The Bureau also seeks comment on how USAC and the Commission can best address provider misconduct to avoid consumers being subject to potential fraudulent activity that could or may have already occurred. What is the best method to notify the public of any such conduct? How can the Commission address circumstances where an unauthorized provider holds itself out to consumers as a participating provider in the Affordable Connectivity Program? How should the Commission treat misconduct by providers authorized to participate in the Affordable Connectivity Program? Should the Commission have requirements for how the Affordable Connectivity Program is advertised and promoted, with remedies for violations of those requirements? The Bureau further proposes that failure to provide the service that is advertised and promoted shall be considered a violation of ACP program rules. The Bureau seeks comment on these proposals and other protections the Commission should consider based on commenters' experiences with the EBB and Lifeline Programs.
97. The Bureau next seeks comment on the disclosures and consumer consent providers participating in the Affordable Connectivity Program should be required to make before enrolling consumers in the program. In the EBB Program, for example, the Commission required participating providers to make several disclosures to their customers and to obtain their consent before enrolling them in the program. Specifically, providers are required to disclose to an existing subscriber prior to enrollment that the EBB Program is a government program that reduces the customer's broadband internet access service bill, is temporary in nature, that the household will be subject to the provider's undiscounted rates and general terms and conditions at the end of the program if they continue to receive service, that the household may obtain broadband service supported by the EBB Program from any participating provider of its choosing, and that the household may transfer its EBB Program benefit to another provider at any time. Additionally, Lifeline enrollees must opt in or affirmatively request enrollment in the EBB Program.
98. For the Affordable Connectivity Program, the Bureau proposes requiring that providers make similar disclosures
99. The EBB Program rules also require participating providers to collect and retain documentation that the provider, before enrolling an existing subscriber in the EBB Program, gave the subscriber notice, among other things, that they may transfer their EBB Program benefit to another provider at any time. The EBB Program rules further require that service providers “obtain, from each new and existing subscriber, consent to transmit the subscriber's information” to the NLAD. § 54.1606(d)(2) of the Commission's rules also prohibits providers from providing EBB-supported service or claiming support for a consumer that is currently receiving an EBB-supported service if the consumer is not “seeking to transfer his or her Emergency Broadband Benefit.” However, some providers report that households enrolled in the EBB Program are being transferred to new providers perhaps even without the household's consent or knowledge of the transfer or its effect on the household's existing service. The Bureau seeks comment on EBB participating providers' experience with transfers of households between providers in the EBB Program. Are there restrictions or requirements the Commission should implement to ensure that a household has fully consented to transfer its benefit at the time of transfer? Should the Commission consider limiting the number of times a household can transfer its benefit per month in order to assist providers in managing the application of the discount on their subscriber's ACP-supported service? Is there some other metric or benchmark by which the Commission can determine if or when to impose an appropriate limitation on transfers? Should the Commission require that households independently verify a request to transfer? How should such verification take place? How will the Commission balance these limitations with the importance of allowing households freedom to move between providers? What is the harm, if any, of households switching between participating providers, given the importance of household choice in selecting the preferred provider? The Bureau also seeks comment on its proposal to require participating providers, before transferring-in a household, to clearly disclose in easily understood language that the household will be transferred and that the ACP benefit will now be applied to the transfer-in provider's service.
100. In addition to a disclosure requirement, the Bureau proposes that participating providers seeking to enroll any subscriber in the Affordable Connectivity Program must obtain that household's affirmative consent after the household has reviewed the program disclosures and before the provider can enroll the household in the program. The Bureau also proposes that such consent must be obtained by a provider performing a transfer transaction for a subscriber already enrolled in the program. How should the new provider record and document the transfer request? How should notice of a transfer be communicated to the household? Should providers be required to provide written notice to the household that it has been transferred and enrolled in the program with the new provider? Should providers be required to confirm the household's transfer request before and/or after initiating the transfer? Should providers be required to certify that all transfers completed by the provider are bona fide, requested by the household, and made pursuant to program rules? As in the EBB Program, the Bureau proposes to require providers to obtain a record of this affirmative consent from the household and to make such documentation available to the Commission and USAC upon request and in a timely manner. The Bureau proposes that such documentation clearly identify subscriber information, the date consent was given, and the method of consent. The Bureau seeks comment on what form such consent should take. In the EBB and Lifeline Programs, a subscriber's oral consent is an acceptable form of consent. For the Affordable Connectivity Program, should the Commission consider requiring providers to obtain written consent from a subscriber prior to transferring or enrolling the subscriber rather than allowing oral consent? The Bureau also proposes to prohibit a participating provider from linking consent to enroll in the Affordable Connectivity Program with some other action or program, or from automatically enrolling a subscriber based on information provided by the subscriber for some other purpose. For example, the Bureau proposes that participating providers be required to obtain consent for participation in the Lifeline program, the EBB Program, and the Affordable Connectivity Program separately. The Bureau also seeks comment on a proposal to prohibit providers from requiring a consumer to accept a connected device in order to enroll with the provider.
101. Moreover, the Bureau seeks comment on when providers can begin to obtain a subscriber's consent to enroll in the Affordable Connectivity Program. Similar to the approach in the EBB Program, the Bureau proposes that only providers with an election notice for the Affordable Connectivity Program fully processed by USAC can provide disclosures and collect consents from subscribers regarding their interest in enrolling in the Affordable Connectivity Program. The Bureau seeks comment on
102. The
103. The Bureau recognizes that providers will need time to prepare the necessary disclosures and ensure they have mechanisms in place for obtaining and capturing a consumer's affirmative consent before enrolling the household in the program. The Bureau seeks comment on the time that providers need to make changes to their disclosure and consent mechanisms for purposes of the Affordable Connectivity Program. What would be the earliest date that providers could make these changes and be ready to enroll new subscribers in the Affordable Connectivity Program? Is there a concern that if providers may be unable to develop required disclosures and consent mechanisms in time for the launch of the Affordable Connectivity Program, providers may delay enrolling households until those systems are in place to ensure that enrollment of consumers is compliant with program rules?
104. The Infrastructure Act also requires participating providers to notify all consumers who either subscribe to or renew a subscription to an internet service offering about the Affordable Connectivity Program and how to enroll. The Bureau seeks comment on this requirement. What does it mean to “renew” a subscription for the purposes of this requirement? What are effective methods or best practices providers should employ to ensure that such notifications occur? Should the Commission, for example, require providers to certify when they submit claims for reimbursement that they have provided such notifications to the households? What, if anything, should the Commission require of participating providers to ensure their subscriber base is informed about the Affordable Connectivity Program? Should the notification about the existence of the Affordable Connectivity Program be provided in the consumer's preferred language? What policies or practices should the Commission enact to monitor compliance with this statutory obligation? The Bureau seeks comment on whether providers will have adequate time to train their customer service representatives and prepare their systems in order to provide the required information to consumers on the December 31, 2021 effective date of the Affordable Connectivity Program.
105. Pursuant to the Infrastructure Act, the Commission must collaborate with relevant Federal agencies to ensure a household that participates in any program that qualifies it for the Affordable Connectivity Program is provided with information about the Affordable Connectivity Program, including enrollment information. The Bureau seeks comment on how the Commission could collaborate with such agencies. The Bureau also seeks comment on how state and federal agencies that operate qualifying programs can best support eligible households. Is there a role for these agencies in educating qualifying consumers about the Affordable Connectivity Program? The Bureau also seeks comment on what information about the Affordable Connectivity Program the Commission should distribute to households participating in a qualifying program.
106. The Infrastructure Act also requires the Commission to “ensure relevant Federal agencies update their Systems of Records Notices” to ensure that a household participating in a qualifying program is provided information about the Affordable Connectivity Program. The Bureau seeks comment on how, and whether the Commission has the authority, to compel other agencies to update their System of Records Notices to the extent required to ensure that a household participating in an ACP-qualifying program receives information about the program. The Bureau seeks comment on the steps the Commission could take to ensure that other agencies update their System of Record Notices to allow the use of personally identifiable information in order to share information about the Affordable Connectivity Program.
107. The Infrastructure Act also provides that the Commission may conduct outreach efforts to encourage households to enroll in the Affordable Connectivity Program. The Act permits the Commission to facilitate consumer research, conduct focus groups, engage in paid media campaigns, provide grants to outreach partners, and provide an orderly transition for participating providers and consumers from the EBB Program to the Affordable Connectivity Program. How should the Commission utilize these statutorily provided tools to inform the public about the program? What topics should the Commission include in consumer research and/or focus groups? What methods of consumer research are proving effective in the current pandemic environment?
108. While the Commission administers various types of federal financial assistance programs, it does not have experience with the unique statutory and regulatory requirements applicable to grant programs. As such, the Bureau seeks comment on considerations applicable to standing up a grant program in support of consumer outreach. For example, should grants be used as part of the Commission's first consumer outreach efforts under the modified program or might grants instead be best utilized as part of the longer term program management?
109. The Bureau also seeks comment on the ability to engage in paid media campaigns. What types of paid media
110. The Infrastructure Act also permits the Commission to provide grants to outreach partners. The Bureau first seeks comment on any considerations specific to starting a grant program for consumer outreach partners. Should the Commission itself provide such grants? What types of outreach activities should the grants support? The Bureau seeks comment on the scope and objectives of the outreach plans. What outreach gaps were identified during the EBB Program that grant funding could be effective in addressing? What criteria should the Commission use to review and accept grant proposals? What reporting requirements should the Commission establish for grant recipients? Should the Commission impose restrictions on who may participate as an outreach partner? Should the Commission institute a cap on the individual grant amount and if so how much should that funding cap be? What expenses should be allowed under the grant program? Should the Commission allow grant funding to cover personnel costs, such as salaries, and other financial benefits? Should the Commission limit the activities and administrative expenses that grant funds can be used to cover? How much of the total funding amount should the Commission set aside for grants to outreach partners? What safeguards should the Commission consider to prevent fraud and waste in a potential ACP grant program? Grant application processes and required reporting can be burdensome and may discourage smaller, locally focused organizations from applying. How can the Commission balance the need for grant oversight with the desire to make the grant program within reach for non-profits that are best positioned to serve their local communities?
111. In addition to the examples listed in the Infrastructure Act, are there other tools the Commission should consider utilizing to increase the effectiveness of program outreach efforts? Effective provider outreach and implementation of the Affordable Connectivity Program will also encourage program enrollment. Should the Commission share consumer feedback on the EBB Program and the results of ACP consumer research with providers to inform their outreach and implementation efforts? Are there legal or policy considerations that might impact sharing such information with providers? How can the Commission best share this consumer feedback and research results? Are there lessons learned or effective strategies developed or used by stakeholders, partners or providers to promote the EBB Program that should inform the Commission's ACP outreach? What are best practices the Commission should employ in its outreach efforts? The Infrastructure Act also provides an amount of funding appropriated to the Commission for the Affordable Connectivity Program. The Bureau seeks comment on how the Commission should allocate funding to these outreach projects. In the absence of funds appropriated expressly for this outreach, should the Commission allocate some of the administrative funds permitted by the statute to this outreach? How much of the funding should the Commission set aside for outreach?
112. The Infrastructure Act requires participating providers, in collaboration with state agencies, public interest groups, and non-profit organizations, to carry out public awareness campaigns in their areas of service that highlight the value and benefits of broadband internet access service, and the existence of the Affordable Connectivity Program. The Bureau seeks comment on the best methods to publicize the availability of broadband services and connected devices supported by the Affordable Connectivity Program. What are the most effective means of publicizing the benefit to the communities most in need? The Bureau also seeks comment on whether the Commission should require providers to market the Affordable Connectivity Program in the languages spoken in the areas they serve. The Bureau proposes that providers be required to include in promotional materials how consumers can enroll in the program, including how consumers can best contact the provider in order to enroll in the Affordable Connectivity Program. The Bureau seeks comment on these proposals. The Bureau also seeks comment on the most effective ways providers can collaborate with state agencies, non-profit organizations, and public interest groups to promote the Affordable Connectivity Program.
113. The Bureau next seeks comment on an advertising requirement. The Lifeline program requires providers to “publicize the availability of Lifeline service in a manner reasonably designed to reach those likely to qualify for the service.” Specifically, providers must “[i]ndicate on all materials describing the service, using easily understood language, that it is a Lifeline service, that Lifeline is a government assistance program, the service is non-transferable, only eligible consumers may enroll in the program, and the program is limited to one discount per household.” The Bureau proposes that the Commission adopt a similar advertising requirement for the Affordable Connectivity Program. The Bureau seeks comment on requiring participating providers to indicate on all materials describing the Affordable Connectivity Program the eligibility requirements for consumer participation; that the Affordable Connectivity Program is non-transferrable and limited to one discount per household; a list of qualifying connected devices, if any, with device specifications; the provider's customer service telephone number, which must be prominently displayed on all promotional materials and on the provider's website; and that the Affordable Connectivity Program is a federal government benefit program operated by the Federal Communications Commission and, upon its conclusion, or when a household is no longer eligible, customers will be subject to the provider's regular rates, terms, and conditions. The Bureau seeks comment on its proposal to require providers to clearly display on their website the monetary charges to the customer, and the available upload/download speeds and data caps for its internet service offerings. What other information should providers be required to include in their ACP-related marketing materials? The Bureau also seeks comment on whether there are any marketing practices in the EBB Program that were misleading to customers.
114. The Infrastructure Act provides that the Commission may issue guidance, forms, instructions, publications, or technical assistance as necessary or appropriate to carry out the Affordable Connectivity Program. This authorization includes actions intended to ensure that “programs, projects, or activities” are completed in a timely and effective manner. The Bureau seeks comment on the meaning of this provision. The Bureau proposes that this provision suggests that the Commission should continue to work with USAC and others to ensure that the administrator, providers, and consumers have the tools necessary to meaningfully implement and participate in this program. The Bureau seeks comment on what guidance from the Commission would be helpful for providers. What resources would be helpful to consumers looking to participate in the
115. In the
116. The Bureau also seeks comment on the performance measures the Commission should use in determining the success of the Affordable Connectivity Program. How should success in the Affordable Connectivity Program be defined? The Commission, for example, set three program goals for the Lifeline program: (1) Ensuring the availability of voice and broadband service for low-income Americans; (2) ensuring the affordability of broadband service for low-income Americans; and (3) minimizing the contribution burden on consumers and businesses. In the
117. Should the Commission track how the Affordable Connectivity Program is delivering value to low-income consumers? If so, how can this be measured? Should the Commission consider evaluating take-up rates in communities with low connectivity? Should service type or quality be considered in an analysis? Further, should the Commission seek to understand whether the Affordable Connectivity Program is expanding the market for broadband by enrolling subscribers with no existing broadband service as opposed to those that apply the subsidy to an existing plan? If so, what information should the Commission require that providers submit to understand this distinction? What additional measures of performance should the Commission consider, and what information might be requested from providers to measure performance? Should the Commission use participation rates to measure program performance? To calculate those participation rates, how should the Commission estimate the program eligible population, especially given the limitations in data collection due to the ongoing pandemic? Should data be collected on enrollees' current internet access when applying? If so, should this data be collected from providers or enrollees? What additional data are needed to accurately estimate ACP eligibility? The Bureau seeks comment on the availability of such data and recommended approaches for collection, such as requiring participating providers to submit household eligibility information. Should the Commission consider prioritizing reaching certain demographics of low-income consumers and develop targeted outreach? Should the Commission seek to collect additional demographic information about ACP subscribers and, if so, how can the burdens to consumers and providers be minimized? How might this information be used in measuring the success of the Affordable Connectivity Program? The Bureau seeks comment on whether the Commission should identify goals for this program and how the Commission can measure its success in meeting those goals. Should the success of the Affordable Connectivity Program be measured against Lifeline or the EBB Program? Given that Lifeline-eligible households will be eligible for the Affordable Connectivity Program, how should the Commission judge the concurrent performances of the two programs? Are there any additional data that Lifeline providers participating in the Affordable Connectivity Program can provide to the Commission that can be used to judge any substitution or complementarity between Lifeline and the Affordable Connectivity Program?
118. Given that the Affordable Connectivity Program is anticipated to be a longer-term program than the EBB Program, what data should the Commission ask providers to submit to judge the efficacy of the Affordable Connectivity Program? The subsidy provided by the Affordable Connectivity Program is larger than that provided by the Lifeline program. As such, should the Commission ask ACP providers to submit summary statistics on subscribers' usage of plan features (
119. As explained in this document, the Infrastructure Act provides for a 60-day transition period for “households that qualified” for the EBB Program prior to the December 31, 2021 effective date, that would otherwise see a reduction in their benefit as a result of the changes made through the delayed amendments concerning the eligibility criteria and discount level for the Affordable Connectivity Program. During the transition period, the Bureau proposes that households enrolled in the EBB Program as of December 31, 2021 would not be required to submit a new application to enroll in the Affordable Connectivity Program. However, before the end of the 60-day transition period, EBB-enrolled households that qualified for the EBB Program through eligibility criteria that are not applicable to the Affordable Connectivity Program will be required to demonstrate their eligibility to receive an ACP benefit after the transition period ends. The Bureau expects this requirement will affect only a small number of households currently enrolled in the EBB Program. The Bureau will provide guidance on the processes that this subset of EBB-enrolled households will need to complete in order to demonstrate eligibility to receive the ACP benefit after the transition period.
120. The Bureau also proposes requiring all households seeking to participate in the Affordable Connectivity Program, including EBB-enrolled households that are eligible for the Affordable Connectivity Program, to opt-in or affirmatively request enrollment in the Affordable Connectivity Program. Moreover, the Bureau proposes to require EBB-enrolled households transitioning to the Affordable Connectivity Program that share an address with another ACP household to verify that they are only obtaining one ACP benefit per household, by either completing the one-per-household worksheet, or a similar process under a provider's approved alternative verification process. However, given that these EBB-enrolled households would have completed a worksheet for the EBB Program already, the Bureau proposes that such households may complete the worksheet for the Affordable Connectivity Program after the 60-day transition period if necessary. The Bureau seeks comment on this proposal and the timing for the confirmation of the household's compliance with the one-per-household requirement. The Bureau believes that these approaches for EBB Program-enrolled households transitioning to the Affordable Connectivity Program would best promote an orderly transition and minimize administrative burdens on participating households. The Bureau seeks comment on these proposed approaches.
121. The Bureau next seeks comment on establishing a deadline by when EBB-enrolled households that are eligible for and intend to participate in the Affordable Connectivity Program must opt in or affirmatively request enrollment in the Affordable Connectivity Program after the end of the 60-day transition period. Would it be feasible to require EBB-enrolled households to opt in or request enrollment by the end of the transition period? Are there alternatives to requiring ACP opt-in that the Commission should consider for EBB-enrolled households that remain eligible for the Affordable Connectivity Program and previously consented to continue receiving service from their provider at the end of the EBB Program? Given that the Affordable Connectivity Program is a new program with a different benefit amount, the Bureau is concerned by the idea of allowing providers to rely on prior consent for the EBB Program for enrollment in the Affordable Connectivity Program. The Bureau also seeks comment on how to treat an EBB-enrolled household that remains eligible for the Affordable Connectivity Program but does not provide opt-in or affirmatively request enrollment to participate in the Affordable Connectivity Program by any deadline the Commission may adopt.
122. The Bureau seeks comment on service provider notice requirements for EBB-enrolled households that transition to the Affordable Connectivity Program and would experience a change in their benefit level at the end of the 60-day transition period. Should the Commission require that participating providers issue notices to consumers with the same content as was contemplated for the 15-day and 30-day end of EBB Program notices in the EBB Program rules, with modifications as necessary to comport with the Affordable Connectivity Program rules? The Bureau seeks to minimize the potential for consumer confusion, and seeks comment on when the rate change notices should be issued to these consumers. Would 30-days' notice be sufficient time to allow consumers to prepare for the reduced benefit amount under the Affordable Connectivity Program? Should the Commission adopt a uniform deadline for these consumer notices, such as 30 days before the end of the transition period, or should the timing of the notices coincide with consumer billing cycles? Would a single notice be sufficient to communicate any rate changes that occur as a result of the changed benefit amount under the ACP? Should the Commission require that the notices make clear that consumers can cancel their service before the rate change takes effect? Would it be sufficient for service providers to notify consumers of the expected rate change under the Affordable Connectivity Program via a bill message? The Bureau seeks comment on these ideas.
123. The Infrastructure Act also contains language addressing a transition period for certain households. In particular, legislative text in the Delayed Amendments provides that, after December 31, 2021, an eligible household that was participating in the EBB Program on the date of enactment and that also qualifies for the Affordable Connectivity Program “shall continue to have access to an affordable service offering.” The Bureau seeks comment on this language and its relation to the 60-day transition period into the Affordable Connectivity Program for all households enrolled in the EBB Program starting on December 31, 2021. What is intended by the language providing that such households “shall continue to have access to an affordable service offering”? What are the outer bounds on the period of time when such households shall no longer continue to have access? What is the purpose of the language limiting such households to those that were participating the EBB Program on the date of enactment?
124.
125. In addition, the Infrastructure Act contemplates data sharing with the Department of Health and Human Services (HHS), USDA and the Department of Education by requiring the Secretaries of those agencies to execute a Memorandum of Understanding with USAC to share National Verifier data and to begin sharing such data shortly after executing the Memorandum. The Bureau seeks comment on data maintained by these agencies that could be used by the National Verifier to speed enrollments in the Affordable Connectivity Program and combat program waste. In the case of USDA, the Bureau seeks comment on whether there is a centralized eligibility database for WIC data, which is administered at the state level. The National Verifier also has a number of current CMAs with state agencies permitting access to USDA SNAP participant data in those states. How should USAC and the USDA incorporate these existing CMAs into the Memorandum of Understanding? With respect to the Department of Education, Pell Grant recipients will be eligible to enroll in the Affordable Connectivity Program but, for the EBB Program, applications based on Pell Grant participation are subject to manual review. An automated connection with the Department of Education for Pell Grant data would improve the enrollment experience of Pell Grant recipients. Are there any legal barriers or other challenges that would prevent CMA access to Pell Grant data? Finally, with respect to the Memorandum of Understanding with HHS, USAC and the HHS agency Centers for Medicare & Medicaid Services have a current CMA permitting data sharing to qualify Medicaid recipients nationwide for Lifeline and the EBB Program. The Bureau seeks comment on whether other agencies within HHS would have any data that would benefit applicants for the Affordable Connectivity and Lifeline programs.
126. The Bureau seeks comment on what considerations the Commission should include regarding the end of the Affordable Connectivity Program when the funding is fully expended. If establishing requirements for the sunset of the Affordable Connectivity Program, how can the Commission benefit from the rules already established for the wind-down of the EBB Program? The Bureau seeks comment on whether the Commission should delegate to the Bureau the responsibility for setting the requirements for the wind-down of the Affordable Connectivity Program. What notice requirements should the Commission consider for the wind-down? How much notice should the Commission give to providers and households regarding the end of the program? How much notice will participating providers require in order to give adequate notice to households? The Commission and USAC have developed a projection forecasting the termination of the EBB Program. How best can the Commission forecast the end of the Affordable Connectivity Program?
127. The Infrastructure Act leaves unchanged the requirement that the Commission adopt audit requirements to ensure that participating providers are in compliance with the program requirements and to prevent waste, fraud, and abuse. Moreover, within one year of the date of enactment of the Infrastructure Act, the Commission's Office of Inspector General shall conduct an audit of the disbursements to a representative sample of participating providers. As with the EBB Program, the Bureau proposes that the Commission delegate authority to the Office of Managing Director (OMD) to develop and implement an audit process of participating providers, for which it may obtain the assistance of third parties, including but not limited to USAC. Such audits would be in addition to any audits conducted by the Commission's Office of Inspector General. The Bureau seeks comment on the audit requirements and procedures to be used to test provider compliance with Affordable Connectivity Program rules, including whether “spot checks” of provider practices should be incorporated into those procedures. The Bureau also proposes adopting for the Affordable Connectivity Program the documentation retention requirements used in the EBB Program.
128. In the EBB Program, the Commission directed USAC to conduct program integrity reviews of oversubscribed addresses, of a sample of households qualifying based on a member of their household's enrollment in a CEP school, and a sample of households enrolled through an alternative verification process, in addition to other areas as determined by the Bureau and USAC to deter waste, fraud, and abuse in the Program. The Bureau proposes that USAC also develop a plan and conduct program integrity reviews, subject to OMD and Bureau approval, to determine provider and consumer compliance with ACP program rules. The Bureau seeks comment on the areas that might be most at risk for non-compliance that should be the subject of a program integrity review.
129. The Infrastructure Act leaves unchanged the declaration that a violation of section 904 or any regulation promulgated under that section “shall be treated as violation of the Communications Act of 1934 or a regulation promulgated under such Act.” The Commission is compelled to enforce the section of the Infrastructure Act establishing the Affordable Connectivity Program and associated regulations “in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Communications Act of 1934 were incorporated or made a part of this section.” The Commission in the
130. The Infrastructure Act leaves unchanged the safe harbor provision in the Consolidated Appropriated Act stating that the Commission may not enforce a violation of the Act using sections 501, 502, or 503 of the Communications Act, or any rules of the Commission promulgated under such sections, if a participating provider demonstrates that it relied in good faith
131. Section 904 of the Consolidated Appropriations Act, 2021, as amended by the Infrastructure Act, authorizes the Commission to use the services USAC to administer the Affordable Connectivity Fund, including developing and processing reimbursements and distributing funds to participating providers. Based on USAC's extensive experience administering both the Lifeline and EBB Programs, the Bureau proposes using USAC to administer the Affordable Connectivity Program. Given the challenging timeframe provided in the Act for the implementation of the Affordable Connectivity Program, the Bureau proposes that relying on USAC as the administrator would best facilitate the orderly implementation and administration of the Affordable Connectivity Program and would also minimize provider and consumer confusion. The Bureau seeks comment on the use of the USAC administered systems, including, but not limited to, the Lifeline National Verifier, National Lifeline Accountability Database, Representative Accountability Database, and the Lifeline Claims System for administering the Affordable Connectivity Program. The Bureau also seeks comment on using established USAC functions and processes for administering the Affordable Connectivity Program, including, but not limited to, call centers, provider and communications outreach and training, program integrity reviews, audits, assisting the Commission in conducting its review, and data services. The Bureau seeks comment on this proposal. In addition, how should the Commission measure USAC's performance in administering the Affordable Connectivity Program? What aspects of USAC's administration of the EBB Program were most effective from the perspective of the providers and applicants, and what aspects may need improvement going forward?
132. Given that the Affordable Connectivity Program is expected to be a longer-term program than the EBB Program, the Bureau proposes that the Commission require providers to submit to USAC annual officer certifications, under penalty of perjury, relating to the Affordable Connectivity Program. The Bureau further proposes that each officer must certify that the participating provider has policies and procedures in place to ensure compliance with ACP rules. The Bureau seeks comment on the contents of this certification and feedback on whether such certifications would help guard against waste, fraud, and abuse in the Affordable Connectivity Program. This practice is currently used across the Commission's Universal Service Fund programs through the use of FCC Form 481 that requires providers participating in High Cost and Lifeline to annually certify their compliance with those programs' rules. Pursuant to § 54.416 of the Commission's rules, ETCs must also certify to their compliance with Lifeline program rules and that ETCs have policies and procedures in place to ensure that their Lifeline subscribers are eligible for Lifeline service. The Bureau seeks comment on these ideas.
133.
134.
135. In the
136. In enacting the Affordable Connectivity Program, the Infrastructure Act did not make any substantive changes to section 904(f), which permits the Commission to apply rules contained in part 54 of the Commission's rules to the EBB Program. In addition to the specific instances identified in this document, the Bureau seeks comment on applying the regulations contained in subpart E of part 54 to the Affordable Connectivity Program, to the extent that those rules do not conflict with the Affordable Connectivity Program parameters established by the Infrastructure Act. For example, the Bureau seeks comment on what definitions in section 54.400 should also be applied the Affordable Connectivity Program. Should the Commission include subscriber eligibility determination and certification rules as found in section 54.410? The Bureau also seeks comment on whether regulations in subpart H of the Commission's rules, which pertain to USAC's functions as administrator of the USF, should be applied to the Affordable Connectivity Program. The Bureau proposes to apply sections 54.702(c) of the Commission's rules prohibiting USAC from making policy, interpreting unclear provisions of the statute or rules, or interpreting the intent of Congress. What other provisions of subpart H, would, if applied, facilitate the effective administration of the Affordable Connectivity Program? Alternatively, the Bureau seeks comment on whether the Commission should consider adopting distinct rules for the Affordable Connectivity Program rather than relying on definitions and processes from Lifeline-specific rules. What are the benefits of establishing ACP-specific rules rather than cross-referencing and relying on Lifeline rules? Finally, the Bureau urges commenters to provide feedback on the EBB Program and how the Commission can best use the experiences from the EBB Program to inform its rulemaking with respect to the Affordable Connectivity Program. The Bureau invites providers, consumer groups, EBB subscribers, other governmental agencies, non-profit organizations, and community institutions to share with us in this proceeding their experiences in navigating the EBB Program and what the Commission should consider when establishing rules for the Affordable Connectivity Program.
137. The Infrastructure Act does not modify section 904(h), which exempts the Commission from certain rulemaking requirements under the APA and the Paperwork Reduction Act (PRA). Because section 904(h) applies these exemptions to regulations promulgated to implement the EBB Program (
138.
139. Pursuant to section 904(h)(2) of the Consolidated Appropriations Act, as extended under the Infrastructure Act, the collection of information sponsored or conducted under the rules proposed in this Public Notice is deemed not to constitute a collection of information for the purposes of the Paperwork Reduction Act, 44 U.S.C. 3501-3521.
140. The Commission, as part of its continuing effort to advance digital equity for all, including people of color, persons with disabilities, persons who live in rural or Tribal areas, and others who are or have been historically underserved, marginalized, or adversely affected by persistent poverty or inequality, invites comment on any equity-related considerations and benefits (if any) that may be associated with the proposals and issues discussed herein. Specifically, the Bureau seeks comment on how its proposals may promote or inhibit advances in diversity, equity, inclusion, and accessibility, as well the scope of the Commission's relevant legal authority.
Food Safety and Inspection Service, USDA.
Notice.
The Food Safety and Inspection Service (FSIS) is announcing the 2022 rates it will charge meat and poultry establishments, egg products plants, and importers and exporters for providing voluntary, overtime, and holiday inspection and identification, certification, and laboratory services. Additionally, FSIS is announcing that there will be no changes to the fee FSIS assesses to exporters that choose to apply for export certificates electronically through the export component of the Agency's Public Health Information System.
The new rates will be applied on January 2, 2022.
FSIS will charge the rates announced in this notice beginning January 2, 2022.
For further information contact Michael Toner, Director, Budget Division, Office of the Chief Financial Officer, FSIS, U.S. Department of Agriculture, Room 2159, South Building, 1400 Independence Avenue SW, Washington, DC 20250-3700; Telephone: (202) 690-8398, Fax: (202) 690-4155.
On April 12, 2011, FSIS published a final rule amending its regulations to establish formulas for calculating the rates it charges meat and poultry establishments, egg products plants, and importers and exporters for providing voluntary, overtime, and holiday inspection and identification, certification, and laboratory services (76 FR 20220).
In the final rule, FSIS stated that it would use the formulas to calculate the annual rates, publish the rates in
On September 6, 2017, FSIS published a
On April 29, 2019, FSIS published a
On July 15, 2021, FSIS published a
The following table lists the 2022 Rates per hour, per employee, by type of service:
The regulations that cover these fees (other than the export application fee) state that FSIS will calculate the rates using formulas that include the Office of Field Operations (OFO) inspection program personnel's previous fiscal year's regular direct pay and regular hours (9 CFR 391.2, 391.3, 391.4, 590.126, 590.128, 592.510, 592.520, and 592.530).
FSIS determined the 2022 rates using the following calculations:
The calculation for the 2022 basetime rate per hour per program employee is:
The calculation for the 2022 overtime rate per hour per program employee is:
The calculation for the 2022 holiday rate per hour per program employee calculation is:
The calculation for the 2022 laboratory services rate per hour per program employee is:
These rates are components of the basetime, overtime, holiday, and laboratory services rates formulas.
The calculation for the 2022 benefits rate per hour per program employee is:
The calculation for the 2022 travel and operating rate per hour per program employee is:
The calculation for the 2022 overhead rate per hour per program employee is:
The 2022 calculation for bad debt rate per hour per program employee is:
The 2022 Electronic Export Application Fee:
As published in the 2016 final rule, the Electronic Export Application Fee Formula is:
FSIS stated in the 2016 final rule (81 FR 42225) and the 2017
Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this
In accordance with Federal civil rights law and USDA civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Persons with disabilities who require alternative means of communication for program information (
To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at How to File a Program Discrimination Complaint and at any USDA office or write a letter addressed to USDA and provide in the letter all of the information requested in the form. To request a copy of the complaint form, call (866) 632-9992. Submit your completed form or letter to USDA by: (1) Mail: USDA, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 20250-9410; (2) fax: (202) 690-7442; or (3) email:
Forest Service, Agriculture (USDA).
Notice; withdrawal.
The Caribou-Targhee National Forest is withdrawing the Notice of Intent (NOI) that was published in the
Questions concerning this notice should be directed to: Robbert Mickelsen, Forest Planning Staff Officer, 1405 Hollipark Drive, Idaho Falls, Idaho 83401 or 208-206-3637.
Individuals who use telecommunication devices for the deaf/hard-of-hearing (TDD) may call the Federal Relay Service (FRS) at 1-800-877-8339, 24 hours a day, every day of the year, including holidays.
A NOI to prepare a SEIS was first published in the
The Forest Supervisor in consultation with the Intermountain Regional Office has determined that the 2010 Proposed Forest Plan Amendment should be withdrawn due to changes that have occurred since the publication in the
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that certain companies under review sold common alloy aluminum sheet (aluminum sheet) from the People's Republic of China (China) at less than normal value during the period of review (POR) June 22, 2018, through January 31, 2020, and that certain other companies had no shipments of subject merchandise to the United States during the POR. Commerce also continues to make a successor-in-interest determination with respect to one company.
Applicable December 29, 2021.
Frank Schmitt or Fred Baker, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-4880 or (202) 482-2924, respectively.
Commerce published the Preliminary Results of this administrative review on June 25, 2021.
The merchandise covered by the Order is common alloy aluminum sheet from China. For a complete description of the scope of the Order, see the Issues and Decision Memorandum.
All issues raised in the case and rebuttal briefs filed by interested parties are addressed in the Issues and Decision Memorandum. A list of these issues is attached to this notice.
Based on our analysis of the record and the comments received from interested parties, we made certain changes to the margin calculation. For a discussion of these changes, see the Issues and Decision Memorandum.
In the
In the
In the
In the
For these final results, taking into account the final single entity determination, we determine that the single entity of Jiangsu Alcha, Baotou Alcha, and Alcha International (collectively, Alcha)
The statute and our regulations do not address the establishment of a rate to be assigned to respondents not selected for individual examination when we limit our examination of companies subject to the administrative review pursuant to section 777A(c)(2)(B) of the Act. Generally, we look to section 735(c)(5) of the Act, which provides instructions for calculating the all-others rate in an investigation, for guidance when calculating the rate for respondents not individually examined in an administrative review. Under section 735(c)(5)(A) of the Act, the all-others rate is normally “an amount equal to the weighted average of the estimated weighted average dumping margins established for exporters and producers individually investigated, excluding any zero and
For these final results, we calculated a weighted-average dumping margin that is not zero,
Because no party requested a review of the China-wide entity in this segment of the proceeding, the entity is not under review, and the entity's rate (
For the companies subject to this administrative review which established their eligibility for a separate rate, Commerce determines that the following weighted-average dumping margins exist for the period June 22, 2018, through January 31, 2020:
Commerce
Pursuant to section 751(a)(2)(C) of the Act and 19 CFR 351.212(b), Commerce has determined, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries of subject merchandise in accordance with these final results of review. We intend to issue assessment instructions to CBP no earlier than 35 days after the date of publication of these final results. If a timely summons is filed at the U.S. Court of International Trade, the assessment instructions will direct CBP not to liquidate relevant entries until the time for parties to file a request for a statutory injunction has expired (
Where Alcha reported reliable entered values, we calculated importer-(or customer-) specific ad valorem rates by aggregating the dumping margins calculated for all U.S. sales to each importer (or customer) and dividing this amount by the total entered value of the sales to each importer (or customer).
For the non-selected respondent that received a separate rate, Yinbang Clad, we will instruct CBP to apply an antidumping duty assessment rate of 56.93 percent to all entries of subject merchandise that entered the United States during the POR. For the companies that we determined had no reviewable entries of the subject merchandise in this review period, any suspended entries that entered under those exporters” case numbers (
The following cash deposit requirements will be effective upon publication of the final results of this review for shipments of the subject merchandise from China entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(2)(C) of the Act: (1) For subject merchandise exported by the companies listed above that have separate rates, the cash deposit rate will be the rate established in these final results of review for each exporter as listed above; (2) for previously investigated or reviewed Chinese and non-Chinese exporters not listed above that received a separate rate in a prior segment of this proceeding, except for the companies which lost their separate rate eligibility in this review, the cash deposit rate will continue to be the existing exporter-specific rate; (3) for all Chinese exporters of subject merchandise that have not been found to be entitled to a separate rate, or lost their separate rate eligibility in this review, the cash deposit rate will be that for the China-wide entity; and (4) for all non-Chinese exporters of subject merchandise which have not received their own rate, the cash deposit rate will be the rate applicable to the Chinese exporter that supplied that non-Chinese exporter. These deposit requirements, when imposed, shall remain in effect until further notice.
This notice also serves as the final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during the POR. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice also serves as the final reminder to parties subject to administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305, which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulation and terms of an APO is a sanctionable violation.
These final results of review are issued and published in accordance with sections 751(a) and 777(i)(1) of the Act, and 19 CFR 351.221(b)(5).
International Trade Administration, U.S. Department of Commerce.
Notice of an Open Meeting of a Federal Advisory Committee.
This notice sets forth the schedule and proposed topics for a meeting of the Environmental Technologies Trade Advisory Committee (ETTAC).
The meeting is scheduled for Tuesday, January 18, 2022, from 10:00 a.m. to 2:00 p.m. Eastern Standard Time (EST). The deadline for members of the public to register to participate, including requests to make comments during the meeting and for auxiliary aids, or to submit written comments for dissemination prior to the meeting, is 5:00 p.m. EST on Tuesday, January 11, 2022.
The meeting will be held virtually via Webex. Requests to register to participate (including to speak or for auxiliary aids) and any written comments should be submitted via email to Ms. Victoria Yue, Office of Energy & Environmental Industries, International Trade Administration, at
Ms. Victoria Yue, Office of Energy & Environmental Industries, International Trade Administration (Phone: 202-482-3492; email:
The meeting will take place on Tuesday, January 18, 2022, from 10:00 a.m. to 2:00 p.m. EST. The general meeting is open to the public and time will be permitted for public comment. Members of the public seeking to attend the meeting are required to register in advance. Those interested in attending must provide notification by Tuesday, January 11, 2022, at 5:00 p.m. EST, via the contact information provided above.
Written comments concerning ETTAC affairs are welcome any time before or after the meeting. To be considered during the meeting, written comments must be received by Tuesday, January 11, 2022, at 5:00 p.m. EST to ensure transmission to the members before the meeting. Minutes will be available within 30 days of this meeting.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On August 31, 2021, the Court of Appeals for the Federal Circuit (CAFC) issued its final judgment in
Applicable September 10, 2021.
Nathan James, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-5305.
On April 16, 2018, Commerce published its Final Determination in the LTFV investigation of cold-drawn mechanical tubing from India.
Goodluck appealed Commerce's
The petitioners
Commerce is hereby revising the
As a result of this amended final determination, in which Commerce assigned a dumping margin of 33.80 percent to Goodluck, Commerce is reinstating the
In the
However, as discussed above, the CAFC reversed the CIT's decision, and, as a result, Goodluck is now subject to the
Given the unique circumstances at issue, Commerce is permitting parties an opportunity to withdraw their request(s) for either administrative review, if they wish to do so. Any such withdrawal requests must be submitted within 14 days of publication of this
Following the period for withdrawal of review requests, if there are any remaining review requests for Goodluck, Commerce will invite parties to provide comments relating to our approach in conducting these administrative reviews (including, for example, whether Goodluck should be treated as a mandatory respondent or a non-selected company). A memorandum outlining the timeline for comments will be placed on the records of each administrative review segment.
Commerce did not receive a request for an administrative review of the antidumping duty order with respect to Goodluck for the period of June 1, 2020, through May 31, 2021,
Commerce will issue revised cash deposit instructions to CBP. Effective September 10, 2021, Goodluck's cash deposit rate will be 33.70 percent.
This notice is issued and published in accordance with sections 516A(c) and (e) and 777(i)(1) of the Act.
National Marine Fisheries Service (NMFS); National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of standard prices and fee percentage.
NMFS publishes the individual fishing quota (IFQ) standard prices and fee percentage for cost recovery for the IFQ Program for the halibut and sablefish fisheries of the North Pacific (IFQ Program). The fee percentage for 2021 is 2.3 percent. This action is intended to provide holders of halibut and sablefish IFQ permits with the 2021 standard prices and fee percentage to calculate the required payment for IFQ cost recovery fees due by January 31, 2022.
The standard prices and fee percentages are valid on December 29, 2021.
Charmaine Weeks, Fee Coordinator, 907-586-7231.
NMFS Alaska Region administers the IFQ Program in the North Pacific. The IFQ Program is a limited access system authorized by the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) and the Northern Pacific Halibut Act of 1982 (Halibut Act). Fishing under the IFQ Program began in March 1995. Regulations implementing the IFQ Program are set forth at 50 CFR part 679.
In 1996, the Magnuson-Stevens Act was amended to, among other purposes, require the Secretary of Commerce to “collect a fee to recover the actual costs directly related to the management and enforcement of any . . . individual quota program.” This requirement was further amended in 2006 to include collection of the actual costs of data collection and to replace the reference to “individual quota program” with a more general reference to “limited access privilege program” at § 304(d)(2)(A) of the Act. Section 304(d)(2) of the Magnuson-Stevens Act also specifies an upper limit on these fees, when the fees must be collected, and where the fees must be deposited.
On March 20, 2000, NMFS published regulations at § 679.45 to implement cost recovery for the IFQ Program (65 FR 14919). Under the regulations, an IFQ permit holder must pay a cost recovery fee for every pound of IFQ halibut and sablefish that is landed on their IFQ permit(s). The IFQ permit holder is responsible for self-collecting the fee for all IFQ halibut and sablefish landings on their permit(s). The IFQ permit holder is also responsible for submitting IFQ fee payments(s) to NMFS on or before January 31 of the year following the year in which the IFQ landings were made. The total dollar amount of the fee is determined by multiplying the NMFS published fee percentage by the ex-vessel value of all IFQ landings made on the permit(s) during the IFQ fishing year. As required by § 679.45(d)(1) and (d)(3)(i), NMFS publishes this notice of the fee percentage for the IFQ halibut and sablefish fisheries in the
The fee is based on the sum of all payments made to fishermen for the sale of the fish during the year. This includes any retro-payments (
For purposes of calculating IFQ cost recovery fees, NMFS distinguishes between two types of ex-vessel value: Actual and standard. Actual ex-vessel value is the amount of all compensation, monetary or non-monetary, that an IFQ permit holder received as payment for his or her IFQ fish sold. Standard ex-vessel value is the default value used to calculate the fee. IFQ permit holders have the option of using actual ex-vessel value if they can satisfactorily document it; otherwise, the standard ex-vessel value is used.
Section 679.45(b)(3)(iii) requires the Regional Administrator to publish IFQ standard prices during the last quarter of each calendar year. These standard prices are used, along with estimates of IFQ halibut and IFQ sablefish landings, to calculate standard ex-vessel values. The standard prices are described in U.S. dollars per IFQ equivalent pound for IFQ halibut and IFQ sablefish landings made during the year. According to § 679.2, IFQ equivalent pound(s) means the weight amount, recorded in pounds, and calculated as round weight for sablefish and headed and gutted weight for halibut, for an IFQ landing. The weight of halibut in pounds landed as guided angler fish is converted to IFQ equivalent pound(s) as specified in § 300.65(c)(5)(ii)(E). NMFS calculates the standard prices to closely reflect the variations in the actual ex-vessel values of IFQ halibut and IFQ sablefish landings by month and port or port-group. The standard prices for IFQ halibut and IFQ sablefish are listed in the tables that follow the next section. Data from ports are combined as necessary to protect confidentiality.
NMFS calculates the fee percentage each year according to the factors and methods described at § 679.45(d)(2). NMFS determines the fee percentage that applies to landings made in the previous year by dividing the total costs directly related to the management, data collection, and enforcement of the IFQ Program (management costs) during the previous year by the total standard ex-vessel value of halibut and sablefish IFQ landings made during the previous year (fishery value). NMFS captures the actual management costs associated with certain management, data collection, and enforcement functions through an established accounting system that allows staff to track labor, travel, contracts, rent, and procurement. NMFS calculates the fishery value as described under the section Standard Prices.
Using the fee percentage formula described above, the percentage of management costs to fishery value for the 2021 calendar year is 2.3 percent of the standard ex-vessel value. An IFQ permit holder is to use the fee percentage of 2.3 percent to calculate their fee for IFQ equivalent pound(s) landed during the 2021 halibut and sablefish IFQ fishing season. An IFQ permit holder is responsible for submitting the 2021 IFQ fee payment to NMFS on or before January 31, 2022. Payment must be made in accordance with the payment methods set forth in § 679.45(a)(4)(iv). Payment can be made using credit card, debit card, or electronic check via the
The 2021 fee percentage of 2.3 percent is less than the 2020 fee percentage of 3.0 percent (85 FR 82442, December 18, 2020). Between 2020 and 2021 there was a net decrease in management costs and a net increase in fishery value. Management costs decreased by approximately 10 percent while fishery value increased by approximately 66 percent. The net increase in value was due to higher ex-vessel prices and landings for both halibut and sablefish IFQ fisheries.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meeting.
The Mid-Atlantic Fishery Management Council will conduct two informational meetings regarding Atlantic mackerel rebuilding.
The meetings will be held on Tuesday, January 11, 2022 and Wednesday, January 12, 2022 both starting at 7 p.m. and concluding by 9 p.m. See
The meeting will take place over webinar using the Webex platform. Details on how to connect to the webinar by computer and/or telephone will be available at:
Christopher M. Moore, Ph.D., Executive Director, Mid-Atlantic Fishery Management Council, telephone: (302) 526-5255.
Due to the continued poor condition of the Atlantic mackerel stock as determined by a 2021 management track stock assessment (
These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aid should be directed to Shelley Spedden, (302) 526-5251, at least 5 days prior to the meeting date.
Commodity Futures Trading Commission.
Notice.
In compliance with the Paperwork Reduction Act of 1995 (PRA), this notice announces that the Information Collection Request (ICR) abstracted below has been forwarded to the Office of Information and Regulatory Affairs (OIRA), of the Office of Management and Budget (OMB), for review and comment. The ICR describes the nature of the information collection and its expected costs and burden.
Comments must be submitted on or before January 28, 2022.
Written comments and recommendations for the proposed information collection should be submitted within 30 days of this notice's publication to OIRA, at
In addition to the submission of comments to
Or by either of the following methods:
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All comments must be submitted in English, or if not, accompanied by an English translation. Comments submitted to the Commission should include only information that you wish to make available publicly. If you wish the Commission to consider information that you believe is exempt from disclosure under the Freedom of Information Act, a petition for confidential treatment of the exempt information may be submitted according to the procedures established in § 145.9 of the Commission's regulations.
Melissa Chiang, Senior Assistant General Counsel, Legal Division, Commodity Futures Trading Commission, (202) 418-5578; email:
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. On October 28, 2021, the Commission published in the Federal Register notice of the proposed extension of this information collection and provided 60 days for public comment on the proposed extension, 86 FR 59697 (“60-Day Notice”) The Commission did not receive any relevant comments on the 60-Day Notice.
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There are no capital costs or operating and maintenance costs associated with this collection.
Bureau of Consumer Financial Protection.
Notice and request for comment.
In accordance with the Paperwork Reduction Act of 1995 (PRA), the Bureau of Consumer Financial Protection (Bureau) is publishing this notice seeking comment on a Generic Information Collection titled, “The Effect of Different Savings Elicitation Strategies on Emergency Savings Targets,” prior to requesting the Office of Management and Budget's (OMB's) approval of this collection under the Generic Information Collection “Generic Information Collection Plan for Studies of Consumers using Controlled Trials in Field and Economic Laboratory Settings” under OMB Control number 3170-0048.
Written comments are encouraged and must be received on or before December 29, 2021 to be assured of consideration.
You may submit comments, identified by the title of the information collection, OMB Control Number (see below), and docket number (see above), by any of the following methods:
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Please note that due to circumstances associated with the COVID-19 pandemic, the Bureau discourages the submission of comments by mail, hand delivery, or courier. Please note that comments submitted after the comment period will not be accepted. In general, all comments received will become public records, including any personal information provided. Sensitive personal information, such as account numbers or Social Security numbers, should not be included.
Documentation prepared in support of this information collection request is available at www.regulations.gov. Requests for additional information should be directed to Anthony May, PRA Officer, at (202) 435-7278, or email: CFPB_PRA@cfpb.gov. If you require this document in an alternative electronic format, please contact
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection.
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j. This application is not ready for environmental analysis at this time.
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The Grand Rapids Project is currently operated in a run-of-river mode and generates an annual average of approximately 6,424,000 kilowatt hours. Allete proposes to continue operating the project as a run-of-river facility and does not propose any new construction to the project.
l. A copy of the application can be viewed on the Commission's website at
m. You may also register online at
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o. Final amendments to the application must be filed with the Commission no later than 30 days from the issuance date of the notice of ready for environmental analysis.
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
Take notice that the Commission received the following electric securities filings:
Take notice that the Commission received the following public utility holding company filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
On September 9, 2021, Rover Pipeline LLC (Rover) filed an application in Docket No. CP21-492-000 requesting a Certificate of Public Convenience and Necessity pursuant to Section 7(c) of the Natural Gas Act to construct and operate certain natural gas pipeline facilities in Michigan. The proposed project is known as the Rover-Brightmark Receipt and Delivery Meter Station Project (Project), and would allow Rover to construct a new interconnect on its existing mainline system to receive up to 1,600 dekatherms per day of natural gas from Brightmark SunRyz RNG LLC while also allowing Rover to deliver up to 100 dekatherms per day of natural gas to Brightmark SunRyz RNG LLC for its Brightmark Renewable Natural Gas Facility.
On September 20, 2021 the Federal Energy Regulatory Commission (Commission or FERC) issued its Notice of Application for the Project. Among other things, that notice alerted agencies issuing federal authorizations of the requirement to complete all necessary reviews and to reach a final decision on a request for a federal authorization within 90 days of the date of issuance of the Commission staff's environmental document for the Project.
This notice identifies Commission staff's intention to prepare an environmental assessment (EA) for the Project and the planned schedule for the completion of the environmental review.
If a schedule change becomes necessary, additional notice will be
The Project would consist of Rover constructing and operating a new interconnect and meter station on its existing Market Area Mainline at about milepost 30.5 in Lenawee County, Michigan. The proposed meter station would include hot taps, valves, 65 feet of interconnecting pipe, two meter skids, a gas quality building, a measurement building, and satellite communications. Construction of the proposed facilities would impact about 2.0 acres.
On October 26, 2021, the Commission issued a
In order to receive notification of the issuance of the EA and to keep track of formal issuances and submittals in specific dockets, the Commission offers a free service called eSubscription. This service provides automatic notification of filings made to subscribed dockets, document summaries, and direct links to the documents. Go to
Additional information about the Project is available from the Commission's Office of External Affairs at (866) 208-FERC or on the FERC website (
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection.a.
The Prairie River Project is currently operated in a run-of-river mode and generates an annual average of approximately 3,087,000 kilowatt hours. Allete proposes to continue operating the project as a run-of-river facility and does not propose any new construction to the project.l. A copy of the application can be viewed on the Commission's website at
o. Final amendments to the application must be filed with the Commission no later than 30 days from the issuance date of the notice of ready for environmental analysis.
Environmental Protection Agency (EPA).
Notice.
The purpose of this notice is to inform the public of the Environmental Protection Agency's consideration of the negotiated rulemaking procedure provided for under the Negotiated Rulemaking Act of 1990, and the Agency's decision to not use these procedures for a rulemaking under subsection (i) of the American Innovation and Manufacturing Act of 2020 that will address ten petitions that were granted and one petition that was partially granted by the Agency under this subsection on October 7, 2021.
Petitions referenced in this notice were granted by the Administrator via letters signed on October 7, 2021; thus, EPA is required by statute to promulgate a final rule or rules by October 7, 2023.
Joshua Shodeinde, Stratospheric Protection Division, Office of Atmospheric Programs (6205T), Environmental Protection Agency, telephone number: 202-564-7037; email address:
On October 7, 2021, the Administrator granted or partially granted eleven petitions submitted under subsection (i) of the American Innovation and Manufacturing Act of 2020 (AIM Act or Act).
The purpose of the Negotiated Rulemaking Act of 1990,
If a head of agency determines that the use of the negotiated rulemaking procedure is in the public interest, an agency may convene a federally chartered advisory committee, and may rely on an appointed convener under 5 U.S.C. 563(b) to assist with ascertaining the names of persons who are willing and qualified to represent interests that will be significantly affected by the proposed rule. If the agency decides to establish a negotiated rulemaking committee, the agency must publish in the
Under the Negotiated Rulemaking Act, any agency action relating to establishing, assisting, or terminating a negotiated rulemaking committee shall not be subject to judicial review. 5 U.S.C. 570.
All petitioners indicated their support for EPA not to use negotiated rulemaking procedures in developing a proposed rulemaking associated with their petitions, and to instead rely solely on a traditional notice-and-comment rulemaking process. Per AIM Act section (k)(1)(C) and CAA section 307(d)(1)(I), the rulemaking is governed by CAA section 307(d). Nearly all petitioners indicated that with regards to their petition requests, the negotiated rulemaking process is not needed and would not be efficient because many of the petition requests have already undergone extensive stakeholder processes. For example, petitioners pointed out that in many cases, their requests align with changes of status decisions contained in EPA's Significant New Alternatives Policy (SNAP) program's rules 20 and 21
Petitioners also note that a negotiated rulemaking may unnecessarily delay timely action by the Agency. Several petitions stress the need for quick action from the Agency in finalizing a rule to create a federal regulatory framework, maximize potential climate and environmental benefits, and to give industry sufficient time to prepare to transition away from using HFCs. These petitioners suggest that using negotiated rulemaking procedures requires more commitment of time and resources that may unnecessarily delay action.
One petitioner raised concerns with protecting intellectual property (IP) and trade secrets if EPA uses a negotiated rulemaking.
The Negotiated Rulemaking Act of 1990, 5 U.S.C. 563, provides seven criteria that the head of the agency shall consider when determining whether a negotiated rulemaking is in the public interest. We think these criteria are informative for purposes of making the determination under AIM Act subsection (i) of whether to use the procedures set out in the Negotiated Rulemaking Act for the proposed rule or rules associated with the 11 granted and partially granted petitions. EPA's consideration of each criteria is described below.
Criteria (1) whether there is a need for a rule: The AIM Act requires that EPA promulgate a final rule in response to granted petitions under subsection (i) of the AIM Act.
Criteria (2) whether there are a limited number of identifiable interests that will be significantly affected by the rule: The petitions at issue request the EPA to promulgate restrictions on the use of HFCs in an array of applications across many industries that would affect residential and business consumers in the air conditioning, refrigeration, aerosols, and spray foams spaces. Because of the similarities in the granted petitions, EPA is considering consolidating the issues into significantly fewer than 11 separate rulemakings. We may also, as part of the anticipated rule or rules, consider additional issues not raised in the petitions. For example, initial rulemaking under subsection (i) may also address framework elements that are broader than what is covered by the petitions (
Criteria (3) whether there is a reasonable likelihood that a committee can be convened with a balanced representation of persons who can adequately represent the identified interests and are willing to negotiate in good faith to reach a consensus on the proposed rule: EPA granted ten petitions and partially granted one other petition that covered over 40 applications in the refrigeration, air conditioning, foam, and aerosol sectors, with some petitions covering multiple applications. Although EPA has a long history working with a diverse group of stakeholders in all applications covered by the granted petitions under various CAA Title VI authorities (
Criteria (4) whether there is a reasonable likelihood that a committee will reach a consensus on the proposed rule within a fixed period of time: Based
Criteria (5) whether the negotiated rulemaking procedure will not unreasonably delay the notice of proposed rulemaking and the issuance of the final rule: Given the number of granted petitions, the wide variety of stakeholders, and the number of applications at issue, seeking to identify and convene a negotiated rulemaking committee and following other provisions under the Negotiated Rulemaking Act of 1990, such as publishing a list of potential committee members and awaiting public comment on this list, would likely cause delay in proposing and finalizing a rulemaking in the timeframe provided by the statute.
Criteria (6) whether the agency has adequate resources and is willing to commit such resources, including technical assistance, to the committee: If the determination here or in the future is that a negotiated rulemaking is appropriate, then EPA would take steps to commit resources, including technical assistance to a committee.
Criteria (7) whether the agency, to the maximum extent possible consistent with the legal obligations of the agency, will use the consensus of the committee with respect to the proposed rule as the basis for the rule proposed by the agency for notice and comment: Should the Agency decide to use negotiated rulemaking procedures now or in the future, the Agency would propose rules for notice and comment consistent with language developed by the negotiated rulemaking committee.
We have considered the information provided by petitioners and the criteria listed in section 5 U.S.C. 563 of the Negotiated Rulemaking Act of 1990. In our assessment, using the negotiated rulemaking procedure to develop the proposed rule or rules associated with the eleven AIM Act petitions at issue is not in the public interest. For these eleven petitions, we do not think the negotiated rulemaking procedure for identifying, nominating, and taking comment on a relatively limited group of interested parties would be beneficial to reaching consensus given the potential breadth and scope of the rule or rules associated with the eleven petitions. The Agency would be able to reach a broader audience through other means than it would using the negotiated rulemaking procedure. For example, we could conduct stakeholder meetings prior to the proposal of a rule to solicit early feedback and additional information from stakeholders directly; using a negotiated rulemaking committee could limit the feedback EPA receives to members of the negotiated rulemaking committee, and because the procedure favors nominating individuals to represent certain interests, the procedure could result in failing to capture the nuances of similarly situated but not identical interests. In addition, the Agency views the regular notice-and-comment rulemaking process on its own as providing robust public engagement avenues that will allow for all interested stakeholders to provide input and represent their interests to EPA. Based on these considerations, the Agency has decided not to use a negotiated rulemaking procedure for the rule or rules associated with the eleven petitions under subsection (i) of the AIM Act.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA) is announcing the availability of and requesting public comment on a draft revision to the risk determination for the Cyclic Aliphatic Bromide Cluster (HBCD) risk evaluation issued under TSCA. The draft revision to the HBCD risk determination was developed following a review of the first ten risk evaluations issued under TSCA that was done in accordance with Executive Orders and other Administration priorities, including those on environmental justice, scientific integrity, and regulatory review, and this draft revision reflects the announced policy changes to ensure the public is protected from unreasonable risks from chemicals in a way that is supported by science and the law. Specifically, in this draft revision to the risk determination EPA finds that HBCD, as a whole chemical substance, presents an unreasonable risk of injury to health and the environment when evaluated under its conditions of use. This draft revision supersedes the condition of use-specific no unreasonable risk determinations in the September 2020 HBCD risk evaluation (and withdraw the associated order) and makes a revised determination of unreasonable risk for HBCD as a whole chemical substance. In addition, this draft revised risk determination does not reflect an assumption that workers always appropriately wear personal protective equipment (PPE).
Comments must be received on or before February 14, 2022.
Submit your comments, identified by docket identification (ID) number EPA-HQ-OPPT-2019-0237, using the Federal eRulemaking Portal at
Due to the public health concerns related to COVID-19, the EPA Docket Center (EPA/DC) and Reading Room is open to visitors by appointment only. For the latest status information on EPA/DC services and docket access, visit
This action is directed to the public in general. This action may, however, be of interest to those involved in the manufacture, processing, distribution, use, disposal, and/or the assessment of risks involving chemical substances and mixtures. You may be potentially affected by this action if you manufacture (defined under TSCA to include import), process (including recycling), distribute in commerce, use or dispose of HBCD, including HBCD in products. Since other entities may also be interested in this draft revision to the risk determination, the EPA has not attempted to describe all the specific entities that may be affected by this action.
TSCA section 6, 15 U.S.C. 2605, requires EPA to conduct risk evaluations to determine whether a chemical substance presents an unreasonable risk of injury to health or the environment, without consideration of costs or other non-risk factors, including an unreasonable risk to a potentially exposed or susceptible subpopulation identified as relevant to the risk evaluation by the Administrator, under the conditions of use. 15 U.S.C. 2605(b)(4)(A). TSCA sections 6(b)(4)(A) through (H) enumerate the deadlines and minimum requirements applicable to this process, including provisions that provide instruction on chemical substances that must undergo evaluation, the minimum components of a TSCA risk evaluation, and the timelines for public comment and completion of the risk evaluation. TSCA also requires that EPA operate in a manner that is consistent with the best available science, make decisions based on the weight of the scientific evidence and consider reasonably available information. 15 U.S.C. 2625(h), (i), and (k).
The statute identifies the minimum components for all chemical substance risk evaluations. For each risk evaluation, EPA must publish a document that outlines the scope of the risk evaluation to be conducted, which includes the hazards, exposures, conditions of use, and the potentially exposed or susceptible subpopulations that EPA expects to consider. 15 U.S.C. 2605(b)(4)(D). The statute further provides that each risk evaluation must also: (1) Integrate and assess available information on hazards and exposures for the conditions of use of the chemical substance, including information that is relevant to specific risks of injury to health or the environment and information on relevant potentially exposed or susceptible subpopulations; (2) describe whether aggregate or sentinel exposures were considered and the basis for that consideration; (3) take into account, where relevant, the likely duration, intensity, frequency, and number of exposures under the conditions of use; and (4) describe the weight of the scientific evidence for the identified hazards and exposures. 15 U.S.C. 2605(b)(4)(F)(i) through (ii) and (iv) through (v). Each risk evaluation must not consider costs or other non-risk factors. 15 U.S.C. 2605(b)(4)(F)(iii).
EPA has inherent authority to reconsider previous decisions and to revise, replace, or repeal a decision to the to the extent permitted by law and supported by reasoned explanation.
EPA is announcing the availability of and seeking public comment on a draft revision to the risk determination for the risk evaluation for HBCD under TSCA, published in September 2020. EPA is specifically seeking public comment on the draft revision to the risk determination for the risk evaluation where the Agency intends to determine if HBCD, as a whole chemical substance, presents an unreasonable risk of injury to health and the environment when evaluated under its conditions of use. This whole chemical approach to determining unreasonable risk to health is permissible under EPA's statutory obligations under TSCA section 6(b)(4) and the implementing regulations and would revise and replace section 5 of the 2020 risk evaluation for HBCD where the findings of unreasonable risk to health and the environment were previously made for the individual conditions of use evaluated.
This revision would be consistent with EPA's plans to revise specific aspects of the first ten TSCA chemical risk evaluations in order to ensure that the risk evaluations better align with TSCA's objective of protecting health and the environment. Under the proposed changes, the same six conditions of use would continue to drive the unreasonable risk determination for HBCD. However, the impact of removing the assumption of PPE use by workers would cause four of the six conditions of use that drive the unreasonable risk determination based on only risks to the environment to also drive unreasonable risk based on health risks to workers. The four conditions of use affected by this proposed change are: Import; Processing: Incorporation into formulation, mixture, or reaction products; Processing: Incorporation into articles; and Processing: Recycling (of XPS and EPS foam, resin, panels containing HBCD). Overall, six conditions of use would drive the HBCD whole chemical unreasonable risk determination due to risks identified for both the environment and health.
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In 2016, as directed by TSCA section 6(b)(2)(A), EPA chose the first ten chemical substances to undergo risk evaluations under the amended TSCA. These chemical substances are asbestos, 1-bromopropane, carbon tetrachloride, C.I. Pigment Violet 29, HBCD, 1,4-dioxane, methylene chloride, n-methylpyrrolidone (NMP), perchloroethylene (PCE), and trichloroethylene (TCE).
From June 2020 to January 2021, EPA published risk evaluations on the first ten chemical substances, including for HBCD in September 2020. The risk evaluations included individual unreasonable risk determinations for each condition of use evaluated. The determinations that particular conditions of use did not present an unreasonable risk were issued by order under TSCA section 6(i)(1).
In accordance with Executive Order 13990 (Ref. 2) and other Administration priorities (Refs. 1, 3, and 4), EPA reviewed the risk evaluations for the first ten chemical substances to ensure that they meet the requirements of TSCA, including conducting decision-making in a manner that is consistent with the best available science.
As a result of this review, EPA announced plans to revise specific aspects of the first ten risk evaluations in order to ensure that the risk evaluations appropriately identify unreasonable risks and thereby help ensure the protection of human health and the environment available here
This action pertains only to the risk determination for HBCD. While EPA intends to consider and may take additional similar actions on other of the first ten chemicals, EPA is taking a chemical-specific approach to reviewing these risk evaluations and is incorporating new policy direction in a surgical manner, while being mindful of Congressional direction on the need to complete risk evaluations and move toward any associated risk management activities in accordance with statutory deadlines. To the extent the Agency deems appropriate, additional actions may follow that are specific to each of the other chemical substances for which EPA has issued completed risk evaluations under TSCA section 6.
TSCA section 6 repeatedly refers to determining whether a chemical
The proposed Risk Evaluation Rule (Ref. 5), was premised on the whole chemical approach to making unreasonable risk determinations. EPA acknowledged a lack of specificity in whether the statute compelled EPA's risk evaluations to address all conditions of use of a chemical substance or whether EPA had discretion to evaluate some subset of conditions of use (
As stated in the final Risk Evaluation Rule (82 FR 33726, July 20, 2017) (FRL-9964-38) (Ref. 6): As part of the risk evaluation, EPA will determine whether the chemical substance presents an unreasonable risk of injury to health or the environment under each condition of uses [sic] within the scope of the risk evaluation, either in a single decision document or in multiple decision documents (40 CFR 702.47). For the unreasonable risk determinations in the first ten risk evaluations, EPA applied this provision by making individual risk determinations for each condition of use evaluated as part of each risk evaluation document (
In contrast to this portion of the preamble of the final Risk Evaluation Rule, the regulatory text itself and other statements in the preamble reference a risk determination
Therefore, notwithstanding EPA's choice to issue condition-of-use-specific risk determinations to date, EPA interprets its risk evaluation regulation to also allow the Agency to issue whole-chemical risk determinations. Either approach is permissible under the regulation. A panel of the Ninth Circuit Court of Appeals also recognized the ambiguity of the regulation on this point.
With regard to the specific circumstances of HBCD, as further explained in this document, EPA proposes that a whole chemical approach better aligns with TSCA's objective of protecting health and the environment. For HBCD, EPA favors the whole chemical approach based in part on the benchmark exceedances for multiple conditions of use (spanning across most aspects of the chemical lifecycle—from manufacturing (import), processing, commercial and consumer use, and disposal) for both health and the environment and considering the physical-chemical properties of HBCD as a persistent, bioaccumulative and toxic substance, and the irreversible health effects associated with HBCD exposures. Since the chemical-specific properties cut across the conditions of use within the scope of the risk evaluation, the Agency's risk findings and conclusions encompass the majority of those conditions of use, and the Agency is better positioned to achieve its TSCA objectives for HBCD when issuing a whole chemical determination for HBCD, EPA concludes that the Agency's risk determination for HBCD is better characterized as a whole chemical risk determination rather than condition-of-use-specific risk determinations.
As explained later in this document, the revisions to the unreasonable risk determination (section 5 of the risk evaluation) would be based on the existing risk characterization section of the risk evaluation (section 4 of the risk evaluation) and would not involve additional technical or scientific analysis. The discussion of the issues in this
EPA is announcing the availability of and soliciting public comment on the draft superseding unreasonable risk determination for HBCD, including a list of the condition-of-use-specific risks driving the unreasonable risk determination for the chemical substance as a whole. For purposes of TSCA section 6(i), EPA is making a risk determination on HBCD as a whole chemical. Under the revised approach, EPA is proposing to supersede the no unreasonable risk determinations (and withdraw the associated order) for HBCD that were premised on a condition-of-use-specific approach to determining unreasonable risk.
In the risk evaluations for the first ten chemical substances, as part of the unreasonable risk determination, EPA assumed for several conditions of use that all workers were provided and always used PPE in a manner that achieves the stated assigned protection factor (APF) for respiratory protection, or protection factor (PF) for dermal protection. In support of this assumption, EPA used reasonably available information such as public comments indicating that some employers, particularly in the industrial setting, provide PPE to their employees and follow established worker protection standards (
For the September 2020 HBCD risk evaluation, EPA assumed that workers
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When characterizing the risk to human health from occupational exposures during risk evaluation under TSCA, EPA believes it is appropriate to evaluate the levels of risk present in baseline scenarios where no mitigation measures are assumed to be in place. This approach considers the risk to potentially exposed or susceptible subpopulations of workers who may not be covered by OSHA standards, such as self-employed individuals and public sector workers who are not covered by a State Plan. In addition, EPA believes it is appropriate to evaluate the levels of risk present in scenarios considering applicable OSHA requirements (
When undertaking unreasonable risk determinations as part of TSCA risk evaluations, however, EPA does not believe it is appropriate to assume as a general matter that an applicable OSHA requirement or industry practice is sufficient to address the risk, applicable to all potentially exposed workers, or consistently and always properly applied. Mitigation scenarios included in the EPA risk evaluation (
Therefore, going forward, EPA intends to make its determination of unreasonable risk from a baseline scenario that does not assume compliance with OSHA standards, including any applicable exposure limits or requirements for use of respiratory protection or other PPE. Making unreasonable risk determinations based on the baseline scenario should not be viewed as an indication that EPA believes there are no occupational safety protections in place at any location, or that there is widespread non-compliance with applicable OSHA standards. Rather, it reflects EPA's recognition that unreasonable risk may exist for subpopulations of workers that may be highly exposed because they are not covered by OSHA standards, such as self-employed individuals and public sector workers who are not covered by a State Plan, or because their employer is out of compliance with OSHA standards, or because EPA finds unreasonable risk for purposes of TSCA notwithstanding OSHA requirements.
In accordance with this approach, EPA proposes that the draft revision to the HBCD risk determination not rely on assumptions regarding the occupational use of PPE in making the unreasonable risk determination under TSCA section 6; rather, the use of PPE would be considered during risk management. This would represent a change from the approach taken in the 2020 risk evaluation for HBCD and EPA invites comments on this proposed change to the HBCD risk determination. As a general matter, when undertaking risk management actions, EPA intends to strive for consistency with applicable OSHA requirements and industry best practices, including appropriate application of the hierarchy of controls, when those measures would address an unreasonable risk; ensure the EPA requirements apply to all potentially exposed workers; and develop occupational risk mitigation measures to address any unreasonable risks identified by EPA. Consistent with TSCA section 9(d), EPA will consult and coordinate TSCA activities with OSHA and other relevant Federal agencies for the purpose of achieving the maximum applicability of TSCA while avoiding the imposition of duplicative requirements. Informed by the mitigation scenarios and information gathered during the risk evaluation and risk management process, the Agency might propose rules that require risk management practices that may be already common practice in many or most facilities. Adopting clear, comprehensive regulatory standards will foster compliance across all facilities (ensuring a level playing field) and assure protections for all affected workers, especially in cases where current OSHA standards may not apply or be sufficient to address the unreasonable risk.
By removing the assumption of PPE use in making the whole chemical risk determination for HBCD the same six conditions of use would continue to drive the proposed unreasonable risk determination. However, the impact of removing the assumption of PPE use would cause four of the six conditions of use that drive the unreasonable risk determination based on only risks to the environment to also drive unreasonable risk based on health risks to workers. The four conditions of use affected by this change are:
• Import;
•
•
•
The draft revision to the risk determination would clarify that EPA does not rely on the assumed use of PPE when making the risk determination for the whole substance. EPA is requesting comment on this potential change.
HBCD is a white odorless non-volatile solid that is used as a flame retardant and wetting agent. Domestic manufacture of HBCD ceased in 2017 and was therefore not considered as a condition of use for the risk evaluation. U.S. manufacturers have indicated complete replacement of HBCD in their product lines and that depletion of stockpiles and cessation of export was completed in 2017 based on communications with manufacturers. HBCD has also not been imported by any major importers since 2017; however, it is reasonably foreseen that small imports under the Chemical Data Reporting threshold may have
EPA determined that HBCD presents an unreasonable risk to health and the environment and the unreasonable risk is driven by risks associated with the following conditions of use, considered singularly or in combination with other exposures:
• Import;
•
•
•
•
• Disposal (Demolition).
Note: While commercial and consumer use was assessed as part of the same exposure scenario, risks were quantified separately, and consumer use was not found to contribute to unreasonable risk (Executive Summary of the Risk Evaluation).
EPA is proposing to revise the risk determination for the HBCD risk evaluation pursuant to TSCA section 6(b) and consistent with Executive Order 13990, (Ref 2) and other Administration priorities (Refs. 1, 3, and 4). EPA plans to consider revising specific aspects of the first ten TSCA existing chemical risk evaluations in order to ensure that the risk evaluations better align with TSCA's objective of protecting health and the environment. For the HBCD risk evaluation, this includes the proposed revisions: (1) Making the risk determination in this instance based on the whole chemical approach instead of by individual conditions of use and (2) emphasizing that EPA does not rely on the assumed use of PPE when making the risk determination.
EPA is releasing a draft revision of the risk determination for the HBCD Risk Evaluation pursuant to TSCA section 6(b). Under the revised determination, EPA proposes to conclude that HBCD, as evaluated in the risk evaluation as a whole, presents an unreasonable risk of injury to health and environment when evaluated under its conditions of use. This revision would replace the previous unreasonable risk determinations made for HBCD by individual conditions of use, supersede the determinations (and withdraw the associated order) of no unreasonable risk for the conditions of use identified in the no unreasonable risk order, and clarify the lack of reliance on assumed use of PPE as part of the risk determination.
These draft revisions do not alter any of the underlying technical or scientific information that informs the risk characterization, and as such the hazard, exposure, and risk characterization sections are not changed. The discussion of the issues in this Notice and in the accompanying draft revision to the risk determination would supersede any conflicting statements in the prior executive summary from the HBCD risk evaluation and the response to comments document (
The risk determination (Section 5 of this Risk Evaluation) was not part of the scope of the Science Advisory Committee on Chemicals (SACC) peer reviews of the first ten priority chemicals. Thus, consistent with that approach, EPA does not intend to conduct peer review for the draft revised unreasonable risk determination for the HBCD risk evaluation because no technical or scientific changes will be made to the hazard or exposure assessments or the risk characterization.
EPA will review and consider public comment received on the draft revised risk determination for the HBCD risk evaluation and, after considering those public comments, issue the revised final HBCD risk determination. If finalized as proposed, EPA would also issue a new order to withdraw the TSCA Section 6(i)(1) no unreasonable risk order issued in Section 5.4.1 of the 2020 HBCD risk evaluation. This final revised risk determination would supersede the September 2020 risk determinations of no unreasonable risk. Consistent with the statutory requirements of section 6(a), the Agency would then propose risk management actions to address the unreasonable risk determined in the HBCD risk evaluation.
The following is a listing of the documents that are specifically referenced in this document. The docket includes these documents and other information considered by EPA, including documents that are referenced within the documents that are included in the docket, even if the referenced document is not physically located in the docket. For assistance in locating these other documents, please consult the person listed under
1. Executive Order 13985. Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.
2. Executive Order 13990. Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.
3. Executive Order 14008. Tackling the Climate Crisis at Home and Abroad.
4. Presidential Memorandum. Memorandum on Restoring Trust in Government Through Scientific Integrity and Evidence-Based Policymaking.
5. EPA. Proposed Rule; Procedures for Chemical Risk Evaluation Under the Amended Toxic Substances Control Act.
6. EPA. Final Rule; Procedures for Chemical Risk Evaluation Under the Amended Toxic Substances Control Act.
Environmental Protection Agency (EPA).
Notice.
In accordance with implementing regulations for the Toxic Substances Control Act (TSCA), the Environmental Protection Agency (EPA) is announcing the availability of and soliciting public comment on the draft scope of the Risk Evaluation for Asbestos Part 2: Supplemental Evaluation Including Legacy Uses and Associated Disposals of Asbestos. In the Part 2 risk evaluation for asbestos, EPA will evaluate the conditions of use of asbestos (including other types of asbestos fibers in addition to chrysotile) that EPA had excluded from Part 1 as legacy uses and associated disposals, as well as any conditions of use of asbestos in talc and talc-containing products. The draft scope for this chemical substance includes the conditions of use, hazards, exposures, and the potentially exposed or susceptible subpopulations that EPA plans to consider in conducting the risk evaluation for this chemical substance. EPA is also opening a 45-calendar day comment period on the draft scope to allow for the public to provide additional data or information that could be useful to the Agency in finalizing the scope of the risk evaluation; comments may be submitted to this docket.
Comments must be received on or before February 14, 2022.
Submit your comments, identified by docket identification (ID) number EPA-HQ-OPPT-2021-0254, through the Federal eRulemaking Portal at
Due to the public health concerns related to COVID-19, the EPA Docket Center (EPA/DC) and Reading Room is open to visitors by appointment only. The staff continues to provide remote customer service via email, phone, and webform. For the latest status information on EPA/DC services and docket access, visit
This action is directed to the public in general and may be of interest to entities that manufacture (including import) a chemical substance regulated under TSCA, 15 U.S.C. 2601
The draft scope of the risk evaluation is issued pursuant to TSCA section 6(b) and TSCA implementing regulations at 40 CFR 702.41(c)(7).
EPA is publishing and requesting public comment on the draft scope of the Risk Evaluation under TSCA for Asbestos Part 2: Supplemental Evaluation Including Legacy Uses and Associated Disposals of Asbestos. Through the risk evaluation process, EPA will determine whether the chemical substance presents an unreasonable risk of injury to health or the environment under the conditions of use, as determined by the Administrator, in accordance with TSCA section 6(b)(4).
Following EPA's June 2016 designation of Asbestos as one the first ten chemicals to undergo risk evaluation under TSCA, EPA initially focused the risk evaluation for asbestos on chrysotile asbestos as this is the only asbestos fiber type that is currently imported, processed, or distributed in the U.S. However, in late 2019, the court in
The purpose of a risk evaluation is to determine whether a chemical substance, or group of chemical substances, presents an unreasonable risk to health or the environment, under the conditions of use, including an unreasonable risk to a relevant potentially exposed or susceptible subpopulation (15 U.S.C. 2605(b)(4)(A)). As part of this process, EPA must evaluate both hazards and exposures for the conditions of use; describe whether aggregate or sentinel exposures were considered and the basis for consideration; not consider costs or other non-risk factors; take into account where relevant, likely duration, intensity, frequency, and number of exposures; and describe the weight-of-scientific-evidence for hazards and exposures (15 U.S.C. 2605(b)(4)(F)). This process will culminate in a determination of whether or not the chemical substance presents an unreasonable risk of injury to health or the environment under the conditions of use (15 U.S.C. 2605(b)(4)(A); 40 CFR 702.47).
EPA is publishing the draft scope of the Risk Evaluation for Asbestos Part 2: Supplemental Evaluation Including Legacy Uses and Associated Disposals of Asbestos. For the purposes of scoping and risk evaluation, EPA has adopted the definition of asbestos as defined by TSCA Title II (added to TSCA in 1986), Section 202 as the “asbestiform varieties of six fiber types—chrysotile (serpentine), crocidolite (riebeckite), amosite (cummingtonite-grunerite), anthophyllite, tremolite or actinolite.” The latter five fiber types are amphibole varieties. Given that Part 2 of the risk evaluation will focus on legacy uses of asbestos and associated disposals, a unique consideration will be vermiculite, which was widely used in building materials in the past and was co-located with Libby Amphibole Asbestos (LAA; and its tremolite, winchite, and richterite constituents). Thus, LAA (and its tremolite, winchite, and richterite constituents) will be considered in Part 2 of the risk evaluation. Additionally, another commercially mined substance, talc, has been implicated as a potential source of asbestos exposure. Talc can also be co-located geologically with asbestos, where asbestos can remain in small or trace amounts following extraction. Thus, EPA will determine the relevant conditions of use of talc, including but not limited to any “legacy use” and “associated disposal”, where asbestos is implicated. The draft scope of the risk evaluation for this asbestos Part 2 includes the conditions of use, hazards, exposures, and the potentially exposed or susceptible subpopulations EPA plans to consider in the risk evaluation (15 U.S.C. 2605(b)(4)(D)). Development of the scope is the first step of a risk evaluation. The draft scope of the risk evaluation will include the following components (40 CFR 702.41(c)):
• The conditions of use, as determined by the Administrator, that EPA plans to consider in the risk evaluation.
• The potentially exposed populations that EPA plans to evaluate; the ecological receptors that EPA plans to evaluate; and the hazards to health and the environment that EPA plans to evaluate.
• A description of the reasonably available information and the science approaches that the Agency plans to use.
• A conceptual model that will describe the actual or predicted relationships between the chemical substance, the conditions of use within the scope of the evaluation and the receptors, either human or environmental, with consideration of the life cycle of the chemical substance—from manufacturing, processing, distribution in commerce, storage, use, to release or disposal—and identification of human and ecological health hazards EPA plans to evaluate for the exposure scenarios EPA plans to evaluate.
• An analysis plan, which will identify the approaches and methods EPA plans to use to assess exposure, hazards, and risk, including associated uncertainty and variability, as well as a strategy for using reasonably available information and science approaches.
• A plan for peer review.
EPA encourages commenters to provide information they believe might be missing or may further inform the risk evaluation.
Environmental Protection Agency (EPA).
Notice of public meeting.
The Environmental Protection Agency (EPA), Office of Research and Development (ORD), gives notice of a virtual meeting of the Board of Scientific Counselors (BOSC) Safe and Sustainable Water Resources (SSWR) Subcommittee to deliberate on their report of nutrients and harmful algal blooms research.
The meeting will be held over one day via videoconference: Thursday, January 13, 2022, from 11 a.m. to 2 p.m. (EDT).
Attendees must register by January 12, 2022.
Meeting time is subject to change. This meeting is open to the public. Comments must be received by January 12, 2022, to be considered by the subcommittee. Requests for the draft agenda or making a presentation at the meeting will be accepted until January 12, 2022.
Instructions on how to connect to the videoconference will be provided upon registration at:
Submit your comments to Docket ID No. EPA-HQ-ORD-2015-0467 by one of the following methods:
•
•
•
Copyrighted materials in the docket are only available via hard copy. The telephone number for the ORD Docket Center is (202) 566-1752.
The Designated Federal Officer (DFO), Tom Tracy, via phone/voicemail at: 919-541-4334; or via email at:
Any member of the public interested in receiving a draft agenda, attending the meeting, or making a presentation at the meeting should contact Tom Tracy no later than January 12, 2022.
The Board of Scientific Counselors (BOSC) is a federal advisory committee that provides advice and recommendations to EPA's Office of Research and Development on technical and management issues of its research programs. The meeting agenda and materials will be posted to
Proposed agenda items for the meeting include, but are not limited to, the following: Nutrients and harmful algal blooms.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA) has submitted an information collection request (ICR), Aircraft Engines—Supplemental Information Related to Exhaust Emissions (EPA ICR Number 2427.06, OMB Control Number 2060-0680), to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act. This is a proposed extension of the ICR, which is currently approved through December 31, 2021. Public comments were previously requested on this ICR renewal via the
Comments must be submitted on or before January 28, 2022.
Submit your comments, referencing Docket ID No. EPA-HQ-OAR-2016-0546, online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI), or other information whose disclosure is restricted by statute.
Submit written comments and recommendations to OMB for the proposed information collection within 30 days of publication of this notice to
Cullen Leggett, Office of Transportation and Air Quality, Office of Air and Radiation, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460; telephone number: (734) 214-4514; fax number: (734) 214-4816; email address:
Supporting documents, which explain in detail the information that the EPA will be collecting, are available in the public docket for this ICR. The docket can be viewed online at
Under CAA section 231, the EPA is responsible for establishing standards for emissions from aircraft engines, and under CAA section 232, the Federal Aviation Administration (FAA) is responsible for enforcing these standards. The EPA and the FAA traditionally work within the standard-setting process of the International Civil Aviation Organization (ICAO) to establish international emission standards and related requirements, which individual nations later adopt into domestic law in fulfillment of their obligations under the Convention on International Civil Aviation (Chicago Convention).
The EPA is not proposing to apply this renewed reporting requirement to any additional respondents. For individual gaseous Landing and Take-Off (LTO) test points, the EPA proposes to change reporting from total mass over
The EPA is also expanding the scope of this ICR to include supersonic aircraft engines in addition to subsonic aircraft engines. When this ICR was established and previously renewed, the only aircraft engines that were in production, in development, or in use were subsonic engines. Thus, the EPA only included subsonic engines and only referred to subsonic test procedures. Yet, standards in 40 CFR part 87 (Control of Air Pollution from Aircraft and Aircraft Engines) apply to both subsonic and supersonic aircraft engines. The EPA is expanding this ICR to apply equally to all engines (subsonic and supersonic aircraft engines) that are required to meet standards under Part 87. The EPA is not expecting any supersonic engines to be certified by the FAA in the three-year period covered by this ICR. However, in the event there are, the EPA wants to ensure it has access to this new emissions information in an expeditious manner so that the agency can understand the environmental impacts and inform any appropriate future standard setting activities under CAA section 231. The inclusion of supersonic engines would not expand the number of respondents; nor would it place any additional burden on the manufactures because the EPA is only requesting data related to standards under Part 87.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The FCC may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written PRA comments should be submitted on or before February 28, 2022. If you anticipate that you will be submitting comments but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Cathy Williams, FCC, via email to
For additional information about the information collection, contact Cathy Williams at (202) 418-2918.
In a Report and Order, Memorandum Opinion and Order and Further Notice of Proposed Rulemaking, CS Docket No. 96-83, FCC 96-328, released August 6, 1996, the Commission fully implemented Section 207 of the 1996 Act by adopting final rules for a preemption of state, local and non-governmental regulations that impair viewers ability to receive over-the-air signals. In doing so, the FCC acknowledged the necessity of allowing state, local and non-governmental entities to continue to enforce certain regulations and restrictions, such as those serving safety purposes, and therefore exempted them from its prohibition. Also, state, local and non-governmental entities were permitted to file petitions for waivers.
On September 25, 1998, the Commission released an Order on Reconsideration, FCC 98-214, in this proceeding that further modified and clarified Section 207 rules. Among other things, the Order on Reconsideration clarified how declaratory rulings and waivers in this matter are to be served on all interested parties. If a local government seeks a declaratory ruling or a waiver, it must take steps to afford reasonable, constructive notice to residents in its jurisdiction (
In this regard, the petitioner should provide the Commission with a copy of the notice and an explanation of where the notice was placed and how many people the notice might reasonably have reached. Effective January 22, 1999, FCC 98-273, the Commission amended the rules so that it applies to rental property where the renter has an exclusive use area, such as a balcony or patio.
In FCC 00-366, the Commission then further amended the rule so that it applies to customer-end antennas that receive and transmit fixed wireless signals. This amendment became effective on May 25, 2001.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees. The FCC may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written PRA comments should be submitted on or before February 28, 2022. If you anticipate that you will be submitting comments but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Cathy Williams, FCC, via email to
For additional information about the information collection, contact Cathy Williams at (202) 418-2918.
On October 14, 2008, the Commission released an Order on Reconsideration, FCC 08-239, addressing certain issues raised in petitions for reconsideration and/or clarification filed in response to the Commission's Report and Order and Third Order on Reconsideration (Junk Fax Order), FCC 06-42. In document FCC 08-239, the Commission clarified that: (1) Facsimile numbers compiled by third parties on behalf of the facsimile sender will be presumed to have been made voluntarily available for public distribution so long as they are obtained from the intended recipient's own directory, advertisement, or Internet site; (2) Reasonable steps to verify that a recipient has agreed to make available a facsimile number for public distribution may include methods other than direct contact with the recipient; and (3) a description of the facsimile sender's opt-out mechanism on the first web page to which recipients are directed in the opt-out notice satisfies the requirement that such a description appear on the first page of the website.
The Commission believes these clarifications will assist senders of facsimile advertisements in complying with the Commission's rules in a manner that minimizes regulatory compliance costs while maintaining the protections afforded consumers under the Telephone Consumer Protection Act (TCPA).
The Commission hereby gives notice of the filing of the following agreement under the Shipping Act of 1984. Interested parties may submit comments, relevant information, or documents regarding the agreement to the Secretary by email at
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The public portions of the applications listed below, as well as other related filings required by the Board, if any, are available for immediate inspection at the Federal Reserve Bank(s) indicated below and at the offices of the Board of Governors. This information may also be obtained on an expedited basis, upon request, by contacting the appropriate Federal Reserve Bank and from the Board's Freedom of Information Office at
Comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors, Ann E. Misback, Secretary of the Board, 20th Street and Constitution Avenue NW, Washington, DC 20551-0001, not later than January 27, 2022.
A.
1.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is publishing a list of information collections that have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995.
Ila S. Mizrachi, Office of Operations, Food and Drug Administration, Three White Flint North, 10 a.m.-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-7726,
The following is a list of FDA information collections recently approved by OMB under section 3507 of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507). The OMB control number and expiration date of OMB approval for each information collection are shown in table 1. Copies of the supporting statements for the information collections are available on the internet at
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or we) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995.
Submit written comments (including recommendations) on the collection of information by January 28, 2022.
To ensure that comments on the information collection are received, OMB recommends that written comments be submitted to
Domini Bean, Office of Operations, Food and Drug Administration, Three White Flint North, 10A-12M, 11601 Landsdown St., North Bethesda, MD 20852, 301-796-5733,
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
The Federal Food, Drug, and Cosmetic Act (FD&C Act) establishes the following three categories (classes) of devices, reflecting the regulatory controls needed to provide reasonable assurance of their safety and effectiveness: Class I (general controls), class II (special controls), and class III (premarket approval) (section 513(a)(1) of the FD&C Act (21 U.S.C. 360c(a)(1)). To change a device classification, FDA can initiate a reclassification, or an interested person can petition FDA to reclassify a device based on new information (section 513(e) of the FD&C Act). On July 9, 2012, the Food and Drug Administration Safety and Innovation Act (FDASIA) was enacted, changing the reclassification process under section 513(e) of the FD&C Act from rulemaking to an administrative order process. To reclassify a device under section 513(e) of the FD&C Act, FDA must do the following before making the reclassification final: (1) Publish a proposed order in the
FDASIA also amended the provisions of the FD&C Act authorizing FDA to require submission of a premarket approval application (PMA) for a preamendments class III device (referred to as a “call for PMAs”). Preamendments devices are devices that were in commercial distribution before the enactment of the 1976 Amendments. Under the FD&C Act, preamendments devices classified into class III may be marketed upon clearance of a 510(k) submission, and submission of a PMA is not required until FDA has issued a final order requiring premarket approval (section 515(b) of the FD&C Act (21 U.S.C. 360e(b)). As amended by FDASIA, the FD&C Act requires that FDA, in its call for PMAs, publish a proposed order in the
Under the FD&C Act, FDA's call for PMAs must, among other things, contain an opportunity for interested persons to request a change in the classification of the device based on new information (section 515(b)(2) of the FD&C Act). After consideration of comments on the proposed order and findings, FDA must either: (1) Finalize the call for PMAs by issuing an administrative order requiring approval of a PMA and publishing in the
The FD&C Act, as amended by FDASIA, now requires the use of administrative orders, rather than rulemaking, when FDA calls for PMAs for a preamendments device remaining in class III (section 515(b) of the FD&C Act, as amended by FDASIA).
FDA refers to a device that was not in commercial distribution before the 1976 Amendments as a postamendments device. Postamendments devices are classified automatically into class III by statute, without any rulemaking process (section 513(f)(1) of the FD&C Act). A postamendments device remains in class III and is subject to the PMA requirements unless and until: (1) FDA reclassifies the device into class I or II; (2) FDA issues an order classifying the device into class I or II via the De Novo classification process (see section 513(f)(2) of the FD&C Act); or (3) FDA issues an order finding the device to be substantially equivalent to a predicate device that does not require the filing of a PMA (see section 513(i) of the FD&C Act).
FDA may initiate, or the manufacturer or importer of a device may petition for, the reclassification of a postamendments device classified into class III by operation of law (section 513(f)(3) of the FD&C Act). This FDA-initiated reclassification process consists of a proposed reclassification order, optional panel consultation, and a final reclassification order published in the
Under the 1976 Amendments, Congress classified all those devices previously regulated as new drugs into class III (generally referred to as transitional devices). Under the FD&C Act, FDA may initiate, or the manufacturer or importer of a device may petition for, the reclassification of a transitional device remaining in class III (section 520(l)(2) of the FD&C Act (21 U.S.C. 360j(l)(2)). The process for reclassification of transitional devices initiated by FDA is detailed in 21 CFR ?860.136(c). This process consists of a proposed reclassification order, optional panel consultation, and a final reclassification order published in the
In the
We estimate the burden of this collection of information as follows:
Based on a review of the information collection since our last request for OMB approval, we have made no adjustments to our burden estimate.
Health Resources and Services Administration (HRSA), Department of Health and Human Services.
Notice.
In compliance with the requirement for opportunity for public comment on proposed data collection projects of the Paperwork Reduction Act of 1995, HRSA announces plans to submit an Information Collection Request (ICR), described below, to the Office of Management and Budget (OMB). Prior to submitting the ICR to OMB, HRSA seeks comments from the public regarding the burden estimate, below, or any other aspect of the ICR.
Comments on this ICR should be received no later than February 28, 2022.
Submit your comments to
To request more information on the proposed project or to obtain a copy of the data collection plans and draft instruments, email
When submitting comments or requesting information, please include the information collection request title for reference.
HRSA specifically requests comments on (1) the necessity and utility of the proposed information collection for the proper performance of the agency's functions, (2) the accuracy of the estimated burden, (3) ways to enhance the quality, utility, and clarity of the information to be collected, and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The cooperative agreement applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the cooperative agreement applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the National Advisory Council for Nursing Research.
The meeting will be open to the public as indicated below, with attendance limited to space available. The URL link to this meeting is
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
Information is also available on the Institute's/Center's home page:
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
U.S. Citizenship and Immigration Services, Department of Homeland Security.
60-Day notice.
U.S. Citizenship and Immigration Services (USCIS), the Department of Homeland Security (DHS), invites the general public and other Federal agencies to comment on this proposed revision of a currently approved collection of information. In accordance with the Paperwork Reduction Act (PRA) of 1995, the information collection notice is published in the
Comments are encouraged and will be accepted for 60 days until February 28, 2022.
All submissions received must include the OMB Control Number 1615-0102 in the body of the letter, the agency name and Docket ID USCIS-2008-0028. Submit comments via the Federal eRulemaking Portal Website at
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Samantha Deshommes, Chief, telephone number (240) 721-3000 (This is not a toll-free number. Comments are not accepted via telephone message). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS Website at
You may access the information collection instrument with instructions
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
(4)
(5)
(6)
(7)
U.S. Citizenship and Immigration Services, Department of Homeland Security.
30-Day notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995. The purpose of this notice is to allow an additional 30 days for public comments.
Comments are encouraged and will be accepted until January 28, 2022.
Written comments and/or suggestions regarding the item(s) contained in this notice, especially regarding the estimated public burden and associated response time, must be submitted via the Federal eRulemaking Portal website at
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Samantha Deshommes, Chief, Telephone number (240) 721-3000 (This is not a toll-free number; comments are not accepted via telephone message.). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS website at
The information collection notice was previously published in the
You may access the information collection instrument with instructions, or additional information by visiting the Federal eRulemaking Portal site at:
Written comments and suggestions from the public and affected agencies should address one or more of the following four points:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
(4)
(5)
(6)
(7)
U.S. Citizenship and Immigration Services, Department of Homeland Security.
60-Day notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) invites the general public and other Federal agencies to comment upon this proposed extension of a currently approved collection of information. In accordance with the Paperwork Reduction Act (PRA) of 1995, the information collection notice is published in the
Comments are encouraged and will be accepted for 60 days until February 28, 2022.
All submissions received must include the OMB Control Number 1615-0054 in the body of the letter, the agency name and Docket ID USCIS-2006-0055. Submit comments via the Federal eRulemaking Portal website at
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Samantha Deshommes, Chief, telephone number (240) 721-3000 (This is not a toll-free number. Comments are not accepted via telephone message). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS website at
You may access the information collection instrument with instructions or additional information by visiting the Federal eRulemaking Portal site at:
Written comments and suggestions from the public and affected agencies should address one or more of the following four points:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
(4)
(5)
(6)
(7)
U.S. Citizenship and Immigration Services, Department of Homeland Security.
30-Day notice.
U.S. Citizenship and Immigration Services (USCIS), the Department of Homeland Security (DHS), will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995. The purpose of this notice is to allow an additional 30 days for public comments.
Comments are encouraged and will be accepted until January 28, 2022.
Written comments and/or suggestions regarding the item(s) contained in this notice, especially regarding the estimated public burden and associated response time, must be submitted via the Federal eRulemaking Portal website at
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Samantha Deshommes, Chief, Telephone number (240) 721-3000 (This is not a toll-free number; comments are not accepted via telephone message.). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS website at
The information collection notice was previously published in the
You may access the information collection instrument with instructions, or additional information by visiting the Federal eRulemaking Portal site at:
Written comments and suggestions from the public and affected agencies should address one or more of the following four points:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
(4)
(5)
(6)
(7)
U.S. Citizenship and Immigration Services, Department of Homeland Security.
30-Day notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995. The purpose of this notice is to allow an additional 30 days for public comments.
Comments are encouraged and will be accepted until January 28, 2022.
Written comments and/or suggestions regarding the item(s) contained in this notice, especially regarding the estimated public burden and associated response time, must be submitted via the Federal eRulemaking Portal website at
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Samantha Deshommes, Chief, Telephone number (240) 721-3000 (This is not a toll-free number; comments are not accepted via telephone message.). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS website at
The information collection notice was previously published in the
You may access the information collection instrument with instructions, or additional information by visiting the Federal eRulemaking Portal site at:
Written comments and suggestions from the public and affected agencies should address one or more of the following four points:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
(4)
(5)
(6)
(7)
U.S. Citizenship and Immigration Services, Department of Homeland Security.
60-day notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) invites the general public and other Federal agencies to comment upon this proposed extension of a currently approved collection of information. In accordance with the Paperwork Reduction Act (PRA) of 1995, the information collection notice is published in the
Comments are encouraged and will be accepted for 60 days until February 28, 2022.
All submissions received must include the OMB Control Number 1615-0067 in the body of the letter, the agency name and Docket ID USCIS-2007-0034. Submit comments via the Federal eRulemaking Portal Web site at
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Samantha Deshommes, Chief, telephone number (240) 721-3000 (This is not a toll-free number. Comments are not accepted via telephone message). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS Web site at
You may access the information collection instrument with instructions or additional information by visiting the Federal eRulemaking Portal site at:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Bureau of Land Management, Interior.
Notice of intent and notice of realty action.
The Bureau of Land Management (BLM) is proposing to amend the 1997 White River Resource Management Plan (RMP) to allow for the disposal of 3.73 acres of public land to the Colorado Northwestern Community College (CNCC) at the appraised fair market value of $25,000.
Interested parties may submit written comments regarding the RMP amendment planning criteria and proposed land sale during the 45-day scoping and comment period initiated by publication of this notice in the
Send written comments to Monte Senor, Acting Field Manager, BLM, White River Field Office, 220 East Market Street, Meeker, CO 81641 or by email to
Project information, documents, and associated maps will be available for review during associated public comment and review periods during business hours Monday through Friday at the White River Field Office, except during federally recognized holidays. Project information will also be available on the BLM's e-Planning website:
Heather Sauls, Planning and Environmental Coordinator, BLM White River Field Office, telephone: 970-878-3855, or by email at
The direct sale would be subject to applicable provisions of Section 203 of the Federal Land Policy and Management Act of 1976, as amended (FLPMA), and BLM land-sale regulations. Publication of this notice in the
The purpose and need of the proposed action is to resolve an inadvertent, unauthorized use on public lands for continued operations of an existing shooting range that has been in use for over 20 years. The CNCC shooting range was previously authorized in 1997, but the lease expired in 2006 and was never renewed. This action would allow continued use of the shooting range for training law enforcement officers while alleviating the BLM of any responsibility for oversight, management, and possible future remedial actions of any contamination at the site due to the use of lead ammunition. If this parcel is sold to CNCC, the BLM anticipates authorizing right-of-way grants for an existing access road and power line that serve the shooting range.
The CNCC shooting range is an outdoor range that is presently used by nearly every law enforcement agency in the area for training purposes. These agencies include the Rangely Police Department, Rio Blanco County Sheriff's Office, Colorado Parks and Wildlife, and the National Park Service's Dinosaur National Monument, all of which send their respective armed officers to the range to conduct firearms training. Additionally, CNCC's National Park Ranger Academy conducts 6 weeks of firearms training annually at the range as part of the Federal Law Enforcement Training Center's required curriculum for the basic training of seasonal law enforcement officers.
The RMP identifies parcels suitable for disposal, but the subject lands are not currently listed as available for disposal. The BLM will analyze the suitability for disposal of the 3.73 acres per the criteria listed in FLPMA Section 203(a). The proposed RMP amendment would allow for the lands to be sold if they are found suitable for disposal. The planning criteria identifying the issues and their analytical frameworks the BLM proposes to use to guide the effects analysis of the RMP amendment is provided for review on the BLM's ePlanning website:
The BLM is considering a direct sale of the following described lands:
Sixth Principal Meridian, Colorado, T. 1 N., R. 102 W., sec. 12, lot 2.
The area aggregates 3.73 acres.
If issued, the patent will include the following terms, covenants, conditions, and reservations:
1. A reservation to the United States for all minerals;
2. A reservation to the United States for ditches and canals constructed by authority of the United States under the Act of August 30, 1890 (43 U.S.C. 945);
3. Valid existing rights of record; and
4. Additional terms and conditions that the authorized officer deems appropriate.
In addition to publication in the
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment, including your personal identifying information, may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
National Park Service, Interior.
Notice.
The National Park Service is soliciting electronic comments on the significance of properties nominated before December 18, 2021, for listing or related actions in the National Register of Historic Places.
Comments should be submitted electronically by January 13, 2022.
Comments are encouraged to be submitted electronically to
Sherry A. Frear, Chief, National Register of Historic Places/National Historic Landmarks Program, 1849 C Street NW, MS 7228, Washington, DC 20240,
The properties listed in this notice are being considered for listing or related actions in the National Register of Historic Places. Nominations for their consideration were received by the National Park Service before December 18, 2021. Pursuant to Section 60.13 of 36 CFR part 60, comments are being accepted concerning the significance of the nominated properties under the National Register criteria for evaluation.
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
Nominations submitted by State or Tribal Historic Preservation Officers:
Additional documentation has been received for the following resource:
Occupational Safety and Health Administration (OSHA), Labor.
Notice.
In this notice, OSHA announces the final decision to expand the scope of recognition for TUV Rheinland of North America, Inc., as a Nationally Recognized Testing Laboratory (NRTL).
The expansion of the scope of recognition becomes effective on December 29, 2021.
Information regarding this notice is available from the following sources:
OSHA hereby gives notice of the expansion of the scope of recognition of TUV Rheinland of North America, Inc. (TUVRNA), as a NRTL. TUVRNA's expansion covers the addition of one test standard to the NRTL scope of recognition.
OSHA recognition of a NRTL signifies that the organization meets the requirements specified in 29 CFR 1910.7. Recognition is an acknowledgment that the organization can perform independent safety testing and certification of the specific products covered within the scope of recognition. Each NRTL's scope of recognition includes (1) the type of products the NRTL may test, with each type specified by the applicable test standard and (2) the recognized site(s) that has/have the technical capability to perform the product-testing and product-certification activities for test standards within the NRTL's scope. Recognition is not a delegation or grant of government authority; however, recognition enables employers to use products approved by the NRTL to meet OSHA standards that require product testing and certification.
The agency processes applications by NRTLs or applicant organizations for initial recognition, as well as for expansion or renewal of recognition, following requirements in Appendix A to 29 CFR 1910.7. This appendix requires that the agency publish two notices in the
TUVRNA submitted an application, dated May 14, 2019 (OSHA-2007-0042-0055), to expand recognition to include the addition of one test standard. OSHA staff performed a detailed analysis of the application packet and reviewed other pertinent information. OSHA did not perform any on-site reviews in relation to this application.
OSHA published the preliminary notice announcing TUVRNA's expansion applications in the
To review copies of all public documents pertaining to TUVRNA's application, go to
OSHA staff examined TUVRNA's expansion application, their capability to meet the requirements of the test standard, and other pertinent information. Based on its review of this evidence, OSHA finds that TUVRNA meets the requirements of 29 CFR 1910.7 for expansion of its recognition, subject to the limitations and conditions listed below. OSHA, therefore, is proceeding with this final notice to grant TUVRNA's scope of recognition. OSHA limits the expansion of TUVRNA's recognition to testing and certification of products for demonstration of conformance to the test standard shown below in Table 1.
OSHA's recognition of any NRTL for a particular test standard is limited to equipment or materials for which OSHA standards require third-party testing and certification before using them in the workplace. Consequently, if a test standard also covers any products for which OSHA does not require such testing and certification, a NRTL's scope of recognition does not include these products.
Recognition is contingent on continued compliance with 29 CFR 1910.7, including but not limited to, abiding by the following conditions of recognition:
1. TUVRNA must inform OSHA as soon as possible, in writing, of any change of ownership, facilities, or key personnel, and of any major change in its operations as a NRTL, and provide details of the change(s);
2. TUVRNA must meet all the terms of its recognition and comply with all OSHA policies pertaining to this recognition; and
3. TUVRNA must continue to meet the requirements for recognition, including all previously published conditions on TUVRNA's scope of recognition, in all areas for which it has recognition.
OSHA hereby expands the scope of recognition of TUVRNA, subject to the limitations and conditions specified above.
Douglas L. Parker, Assistant Secretary of Labor for Occupational Safety and Health, 200 Constitution Avenue NW, Washington, DC 20210, authorized the preparation of this notice. Accordingly, the agency is issuing this notice pursuant to 29 U.S.C. 657(g)(2), Secretary of Labor's Order No. 8-2020 (85 FR 58393, September 18, 2020) and 29 CFR 1910.7.
Occupational Safety and Health Administration (OSHA), Labor.
Request for public comments.
OSHA solicits public comments concerning the proposal to extend OMB approval of the information collection requirements contained in the regulations addressing On-Site Consultation Agreements.
Comments must be submitted (postmarked, sent, or received) by February 28, 2022.
Patrick Showalter, Director, Office of Small Business Assistance, Directorate of Cooperative and State Programs, OSHA, U.S. Department of Labor, telephone (202) 693-2220.
The Department of Labor, as part of the continuing effort to reduce paperwork and respondent (
Section 7(c)(1) of the OSH Act authorizes the Secretary of Labor (Secretary) to, “with the consent of any State or political subdivision thereof, accept and use the services, facilities, and personnel of any agency of such State or subdivision with reimbursement.” Section 21(c) of the OSH Act authorizes the Secretary to “consult with and advise employers and employees . . . as to effective means of preventing occupational illnesses and injuries.”
Additionally, Section 21(d) of the OSH Act instructs the Secretary to “establish and support cooperative agreements with the States under which employers subject to the Act may consult with State personnel with respect to the application of occupational safety and health requirements under the Act or under State plans approved under section 18 of the Act.” This gives the Secretary authority to enter into agreements with the States to provide On-Site Consultation services and establish
The Occupational Safety and Health Administration (OSHA) is requesting approval from the Office of Management and Budget (OMB), pursuant to the Paperwork Reduction Act (PRA), to conduct validity and reliability analyses of a safety and health program (SHP) assessment worksheet, the Draft Revised Form 33 (DRF33), that will replace the current SHP Assessment Worksheet, OSHA Form 33, used by the OSHA On-Site Consultation Program (OMB #1218-0110; Expiration Date: January 31, 2022). The studies that will be conducted on the DRF33 will enable OSHA to ensure that a valid, reliable, and efficient tool is provided to On-Site Consultation programs in the fifty (50) states, the District of Columbia, and several United States territories to replace the current OSHA Form 33, thereby, enhancing the quality of consultative services.
The studies for which OSHA is requesting approval will comprise a pre-test (20 consultation visits; to assess Pilot Study procedures and information technology platform, and correct any issues before launching the Pilot Study), Pilot Study (300 consultation visits; to assess the validity and reliability of the DRF33), a follow-up study (30 consultation visits; to assess any updates to the DRF33 resulting from Pilot Study findings), and a Prospective Analysis (conducted 12 months after the Pilot Study to assess any impact of the DRF33 at workplaces that received consultation visits during the Pilot Study).
After completing the Pilot Study OSHA will request OMB approval before implementing the DRF33 for use by state On-Site Consultation programs nationwide (to replace the current Form 33). Similarly, OSHA will seek OMB approval if any additional updates are made to the approved worksheet, following the Prospective Analysis.
OSHA has a particular interest in comments on the following issues:
• Whether the proposed information collection requirements are necessary for the proper performance of the agency's functions, including whether the information is useful;
• The accuracy of OSHA's estimate of the burden (time and costs) of the information collection requirements, including the validity of the methodology and assumptions used;
• The quality, utility, and clarity of the information collected; and
• Ways to minimize the burden on employers who must comply—for example, by using automated or other technological information collection and transmission techniques.
This is s a new request for clearance. The agency is requesting a total of 4,975 burden hours.
Because of security procedures, the use of regular mail may cause a significant delay in the receipt of comments.
Comments and submissions are posted without change at
All submissions, including copyrighted material, are available for inspection and copying at the OSHA Docket Office. Information on using the
Doug Parker, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice. The authority for this notice is the Paperwork Reduction Act of 1995 (44 U.S.C. 3506
The Occupational Safety and Health Administration (OSHA) is soliciting comments concerning the proposed revision of the current information collection requirements contained in the regulation regarding Recordkeeping and Reporting Occupational Injuries and Illnesses.
Comments must be submitted (postmarked, sent or received) by February 28, 2022.
Seleda Perryman or Theda Kenney, Directorate of Standards and Guidance, OSHA, U.S. Department of Labor, telephone (202) 693-2222.
The Occupational Safety and Health Act (OSH Act) and 29 CFR part 1904 prescribe that certain employers maintain records of job-related injuries and illnesses. The injury and illness records are intended to have multiple purposes. One purpose is to provide data needed by OSHA to carry out enforcement and intervention activities to provide workers a safe and healthy work environment. The data are also needed by the Bureau of Labor Statistics to report on the number and rate of occupational injuries and illnesses in the country. The data also provides information to employers and workers of the kinds of injuries and illnesses occurring in the workplace and their related hazards. Increased employer awareness should result in the identification and voluntary correction of hazardous workplace conditions. Likewise, workers who are provided information on injuries and illnesses will be more likely to follow safe work practices and report workplace hazards. This would generally raise the overall level of safety and health in the workplace. This notice initiates the process for OSHA to request an extension of the current OMB approval. This notice also solicits public comments on OSHA's existing paperwork burden estimates from those interested parties and seeks public responses to several questions related to the development of OSHA's estimates. Interested parties are requested to review OSHA's estimates, which are based upon the most current data available, and to comment on their accuracy or appropriateness in today's workplace situation.
OSHA has a particular interest in comments on the following issues:
• Whether the proposed information collection requirements are necessary for proper performance of the agency's functions, including whether the information is useful;
• The accuracy of OSHA's estimate of the burden (time and costs) of the information collection requirements, including the validity of the methodology and assumptions used;
• The quality, utility, and clarity of the information collected; and
• Ways to minimize the burden on employers who must comply. For example, by using automated or other technological information collection and transmission techniques.
OSHA is requesting that OMB revise the approval of the information collection requirements contained in 29 CFR part 1904, Recordkeeping and Reporting Occupational Injuries and Illnesses. The agency is requesting to reduce the current burden hour estimate associated with this regulation from 2,140,861 hours to 2,048,626 for a total reduction of 92,235 hours. The agency will summarize the comments submitted in response to this notice and will include this summary in the request to OMB.
You may submit comments in response to this document as follows: (1) Electronically at
Because of security procedures, the use of regular mail may cause a significant delay in the receipt of comments.
Comments and submissions are posted without change at
All submissions, including copyrighted material, are available for inspection and copying at the OSHA Docket Office. Information on using the
Douglas L. Parker, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice. The authority for this notice is the Paperwork Reduction Act of 1995 (44 U.S.C. 3506
U.S. Nuclear Regulatory Commission.
Notification to licensees of criminal history check fee increase.
The U. S. Nuclear Regulatory Commission (NRC) will increase the current fee of 10 dollars assessed to applicants and licensees for criminal history record checks to 35 dollars. This fee increase is necessary to recover the full cost for the administration of the Criminal History Program (CHP). Information regarding this change can be found on the NRC's CHP public website at
The fee increase will begin on March 1, 2022.
Please refer to Docket ID NRC-2021-0220 when contacting the NRC about the availability of information regarding this document. You may obtain publicly available information related to this document using any of the following methods:
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•
Doreen Turner, Office of Nuclear Security and Incident Response, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone: 301-415-7553, email:
In July 2017, the NRC lowered the fee assessed to applicants and licensees for criminal history record checks from 26 dollars to 10 dollars to draw down on a surplus balance of fee receipts. The NRC's CHP costs have historically been fully covered from fees collected. Over the past several years, the surplus balance of CHP funding has been exhausted, and the program is now operating at a deficit.
Pursuant to requirements in the Chief Financial Officers Act of 1990 (31 U.S.C.), the NRC conducts biennial reviews of the charges assessed to applicants and licensees for CHP background checks to assess the suitability of fees to cover both the cost charged by the Federal Bureau of Investigation (FBI) and the costs of NRC to administer the program. The biennial review completed in Fiscal Year (FY) 2019, concluded that the current fee of 10 dollars being charged to applicants and licensees was not sufficient to recover the full cost of administering the program and the NRC should increase its fee. During FY 2020, the fees charged to applicants and licensees for CHP records checks were not raised due to the COVID-19 public health emergency and a decision by the NRC to defer the fee increase temporarily.
The last biennial review completed by NRC at the end of FY 2021 reaffirmed that the current fee of 10 dollars being charged to applicants and licensees was not sufficient to recover the full cost of administering the program, and the NRC should increase its fee to 35 dollars. This fee is the sum of the user fee charged by the FBI ($11.25 effective January 1, 2019) plus NRC's direct and indirect costs incurred in processing fingerprints.
As a reminder, payment is due upon fingerprint card submission, and the NRC's preferred method of payment is through
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Environmental assessment and Finding of No Significant Impact; issuance.
The U.S. Nuclear Regulatory Commission (NRC) is publishing this notice regarding the issuance of a final Environmental Assessment (EA) and a Finding of No Significant Impact (FONSI) for its review and approval of the initial and updated decommissioning funding plans submitted by GE-Hitachi Nuclear Energy Americas, LLC, for the Morris Operation Independent Spent Fuel Storage Installation.
The final EA and FONSI referenced in this document are available on December 29, 2021.
Please refer to Docket ID NRC-2021-0159 when contacting the NRC about the availability of information regarding this document. You may obtain publicly available
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Kristina L. Banovac, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-7116, email:
The NRC is considering the approval of the initial and updated decommissioning funding plans (DFPs) submitted by GE-Hitachi Nuclear Energy Americas, LLC, (GEH) for the Morris Operation Independent Spent Fuel Storage Installation (ISFSI). The NRC staff has prepared a final Environmental Assessment (EA) and Finding of No Significant Impact (FONSI) determination for the initial and updated DFPs in accordance with the NRC regulations in part 51 of title 10 of the Code of Federal Regulations (10 CFR), “Environmental Protection Regulations for Domestic Licensing and Related Regulatory Functions,” which implements the National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321,
The NRC requires its licensees to plan for the eventual decommissioning of their licensed facilities prior to license termination. On June 17, 2011, the NRC published a final rule in the
The table in this notice includes the ADAMS accession numbers for the final EA and FONSI determination for the Morris Operation ISFSI. The table also includes the ADAMS accession numbers for other relevant documents, including the initial and updated DFP submittals. For further details with respect to this action, see the NRC staff's final EA and FONSI determinations which are available for public inspection in ADAMS and at
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Exemption; issuance.
The U.S. Nuclear Regulatory Commission (NRC) has issued an exemption in response to an October 12, 2021, request from Entergy Operations, Inc., as supplemented on December 13, 2021. The licensee requested a one-time schedular exemption for Waterford Steam Electric Station, Unit 3, to postpone the current scheduled Emergency Preparedness (EP) biennial exercise until Calendar Year 2022. This postponement is due to the impact of Hurricane Ida on the Waterford site, the State of Louisiana and the local government agencies, as they continue to respond to the aftermath of the Hurricane Ida.
The exemption was issued on December 21, 2021.
Please refer to Docket ID NRC-2021-0224 when contacting the NRC about the availability of information regarding this document. You may obtain publicly available information related to this document using any of the following methods:
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Jason J. Drake, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone: 301-415-8378, email:
The text of the exemption is attached.
For the Nuclear Regulatory Commission.
Entergy Operations, Inc. (Entergy or the licensee) is the holder of Renewed Facility Operating License No. NPF-38, which authorizes operation of Waterford Steam Electric Station, Unit 3 (Waterford 3). The license provides, among other things, that the facility is subject to all rules, regulations, and orders of the U.S. Nuclear Regulatory Commission (NRC, the Commission) now or hereafter in effect. The facility consists of a single pressurized-water reactor located in Saint Charles Parish, Louisiana.
Sections IV.F.2.b and IV.F.2.c of Appendix E, “Emergency Planning and Preparedness for Production and Utilization Facilities,” to Title 10 of the Code of Federal Regulations (10 CFR) Part 50 require the licensee at each site to conduct an exercise of its onsite emergency plan and of its offsite emergency plan biennially, with full or partial participation by each offsite authority having a role under the offsite plan. By letter dated October 12, 2021 (Agencywide Documents Access and Management System (ADAMS) Accession No. ML21285A290), as supplemented by email dated December 13, 2021 (ADAMS Accession No. ML21349A224), the licensee requested a one-time exemption from these requirements that would allow the licensee to delay conduct of the biennial emergency preparedness (EP) exercise from October 26, 2021, to March 15, 2022. The licensee's request states that Hurricane Ida made landfall as a Category 4 hurricane near Port Fourchon, Louisiana, on Sunday, August 29, 2021, at 1155 hours Central Standard Time. Hurricane Ida brought damaging winds of 150 miles per hour, heavy rain, and caused loss of power and localized flooding to several areas within the State of Louisiana. Due to the significant widespread damage throughout the State, a Presidential Major Disaster Declaration occurred on August 30, 2021,
The licensee states that a good faith effort to comply with the regulations has been made in that the biennial exercise was previously scheduled to be performed on October 26, 2021. However, Hurricane Ida making landfall in Southeast Louisiana caused widespread devastation and flooding throughout the Waterford 3 site and surrounding areas. The damage onsite required the station to direct all resources to perform hurricane recovery activities. With the amount of damage to the plant site, and the offsite response agencies notifying Entergy that they could not support the originally scheduled biennial EP exercise date due to the magnitude of destruction in their respective jurisdictions (Attachments 1, 2, and 3 in letter dated October 12, 2021), the decision was made to postpone the biennial EP exercise. In a letter to the Federal Emergency Management Agency (FEMA) dated September 8, 2021 (Attachment 4 in the letter dated October 12, 2021), the State of Louisiana, through the Louisiana Department of Environmental Quality (LDEQ), requested that FEMA postpone the exercise until the first quarter of CY 2022, citing the State's focus on ongoing recovery operations due to Hurricane Ida. The licensee states that it has made reasonable efforts to reschedule the biennial EP exercise during CY 2021 but described those efforts as being unsuccessful due to the magnitude of devastation experienced by St. Charles Parish and St. John the Baptist Parish because of Hurricane Ida.
Pursuant to 10 CFR 50.12, the Commission may, upon application by any interested person or upon its own initiative, grant exemptions from the requirements of 10 CFR Part 50, Appendix E, when: (1) The exemptions are authorized by law, will not present an undue risk to public health or safety, and are consistent with the common defense and security; and (2) when special circumstances are present.
This exemption would allow the licensee and offsite response organizations to accommodate Hurricane Ida's impacts upon their resources by postponing the exercise from the previously scheduled date of October 26, 2021, until March 15, 2022.
As stated above, 10 CFR 50.12 allows the NRC to grant exemptions from the requirements of 10 CFR Part 50, Appendix E. The NRC staff has determined that granting of the licensee's proposed exemption will not result in a violation of the Atomic Energy Act of 1954, as amended, or the Commission's regulations. Therefore, the exemption is authorized by law.
The underlying purpose of 10 CFR Part 50, Appendix E, Sections IV.F.2.b and IV.F.2.c is to ensure that the emergency organization personnel are familiar with their duties, to identify and correct any weaknesses that may exist in the licensee's EP Program, and to test and maintain interfaces among affected State and local authorities and the licensee. In order to accommodate the scheduling of full participation exercises, the NRC has allowed licensees to schedule the exercises at any time during the calendar biennium. As stated previously, the last Waterford 3 full participation biennial EP exercise was conducted on November 20, 2019. Conducting the Waterford 3 full participation exercise on March 15, 2022, rather than in CY 2021, places the exercise outside of the required biennium. The licensee provided information in its letter dated October 12, 2021, that since the last biennial EP exercise on November 20, 2019, the licensee has conducted 27 internal tabletop exercises in addition to 3 workshops, 1 evaluated drill, and 38 training sessions that have involved interface with State and/or local authorities. These drills and training sessions did not exercise all of the proposed rescheduled onsite and offsite functions, but they do support the licensee's assertion that it has a continuing level of engagement to ensure that the emergency organization personnel are familiar with their duties, to identify and correct any weaknesses that may exist in the licensee's EP Program, and to test and maintain interfaces among affected State and local authorities and the licensee. The NRC staff has determined that by conducting these tabletop exercises, workshops, drill, and training sessions, the licensee has met the purpose
Additionally, since the November 20, 2019, Waterford 3 exercise, the State of Louisiana Governor's Office of Homeland Security and Emergency Preparedness (GOHSEP) and LDEQ satisfactorily participated in a FEMA evaluated offsite participation only exercise for the River Bend Station on March 31, 2021 (ADAMS Accession No. ML21195A196). Also, on September 2, 2021, FEMA conducted a Disaster Initiated Review (ADAMS Accession No. ML21250A078) of the State of Louisiana and local offsite response organizations” continued capability to respond to an incident at Waterford 3 following landfall of Hurricane Ida. Based on the review of this information, FEMA concluded that offsite radiological EP is adequate to provide reasonable assurance that appropriate measures can be taken to protect the health and safety of the public in the event of a radiological emergency at Waterford 3.
No new accident precursors are created by allowing the licensee to postpone the selected offsite portions of the exercise from CY 2021 until CY 2022. Thus, the probability and consequences of postulated accidents are not increased.
Therefore, there is no undue risk to public health and safety.
The proposed exemption would allow rescheduling of the biennial EP exercise from the previously scheduled date of October 26, 2021, until March 15, 2022. This change to the biennial EP exercise schedule has no relation to security issues. Therefore, the common defense and security is not impacted by the proposed exemption.
In order to grant exemptions in accordance with 10 CFR 50.12, special circumstances must be present. Special circumstances per 10 CFR 50.12 that apply to this exemption request are 10 CFR 50.12(a)(2)(ii) and (v). Special circumstances, per 10 CFR 50.12(a)(2)(ii), are present when: “Application of the regulation in the particular circumstances would not serve the underlying purpose of the rule or is not necessary to achieve the underlying purpose of the rule.” Section IV.F.2.b of Appendix E to 10 CFR Part 50 requires that each licensee conduct a subsequent exercise of its onsite emergency plan every 2 years, which may be included in the full participation biennial exercise required by Section IV.F.2.c. Sections IV.F.2.c of Appendix E to 10 CFR Part 50 require licensees to exercise offsite plans biennially, with full or partial participation by each offsite authority having a role under the plan. The underlying purposes of 10 CFR Part 50, Appendix E, Sections IV.F.2.b and IV.F.2.c are to ensure that the emergency organization personnel are familiar with their duties, to identify and correct any weaknesses that may exist in the licensee's EP Program, and to test and maintain interfaces among affected State and local authorities, and the licensee. No NRC findings were identified for the previous biennial EP exercise conducted on November 20, 2019 (ADAMS Accession No. ML20031E865), nor did FEMA identify any findings as part of its offsite evaluation (ADAMS Accession No. ML20062B335). As previously discussed, the licensee has conducted 27 internal tabletop exercises in addition to 3 workshops, 1 evaluated drill, and 38 training sessions that have involved interface with State and/or local authorities since the previous biennial exercise. The NRC staff has determined that these measures are adequate to satisfy the underlying purpose of the rule. Furthermore, although this one-time exemption in the exercise schedule would increase the interval between biennial exercises, the NRC has allowed licensees the flexibility to schedule their exercises at any time during the biennial calendar year as highlighted in Regulatory Issue Summary (RIS) 2006-003, “Guidance on Requesting an Exemption from Biennial Emergency Preparedness Exercise Requirements,” dated February 24, 2006 (ADAMS Accession No. ML053390039). RIS 2006-003 provides a 13-35-month window to schedule exercises while still meeting the biennial requirement. The licensees request of conducting the postponed exercise on the proposed March 15, 2022, date, falls within the 35-month window from the last exercise, which was conducted on November 20, 2019, thus meeting the intent of the regulation.
Under 10 CFR 50.12(a)(2)(v), special circumstances are present whenever the exemption would provide only temporary relief from the applicable regulation, and the licensee or applicant has made good faith efforts to comply with the regulation. The licensee has made a good faith effort to comply with the regulations in that the biennial exercise was scheduled to be performed on October 26, 2021. However, because of the effects of Hurricane Ida and the widespread flooding and devastation throughout the Waterford 3 facility and the surrounding areas, the Offsite Response Agencies (OROs) informed the licensee that they could not support the originally scheduled Exercise date due to the magnitude of destruction in their respective jurisdictions. Furthermore, the requested exemption to conduct the biennial EP exercise in 2022, instead of 2021, would grant only temporary relief from the applicable regulation. Additionally, the licensee has acknowledged returning to the previous biennial EP exercise schedule of every odd year and conducting the next follow-on biennial EP exercise in CY 2023.
Therefore, since the underlying purpose of 10 CFR Part 50, Appendix E, Sections IV.F.2.b and IV.F.2.c is achieved, the licensee has made a good faith effort to comply with the regulation, and the exemption would grant only temporary relief from the applicable regulation, the special circumstances required by 10 CFR 50.12(a)(2)(ii) and (v) exist for the granting of an exemption.
NRC approval of the requested exemption is categorically excluded under 10 CFR 51.22(c)(25), and there are no extraordinary circumstances present that would preclude reliance on this exclusion. The NRC staff has determined, per 10 CFR 51.22(c)(25)(vi)(G) and (E), that the requirements from which the exemption is sought involve scheduling requirements and also involve education, training, experience, qualification, requalification, or other employment suitability requirements.
The NRC staff also determined that approval of this exemption involves no significant hazards consideration because it does not authorize any physical changes to the facility or any of its safety systems, change any of the assumptions or limits used in the licensee's safety analyses, or introduce any new failure modes. There is no significant change in the types or significant increase in the amounts of any effluents that may be released offsite because this exemption does not affect any effluent release limits as provided in the licensee's technical specifications or by the regulations in 10 CFR Part 20, “Standards for Protection Against Radiation.” There is no significant increase in individual or cumulative public or occupational radiation exposure because this exemption does not affect limits on the release of any radioactive material, or the limits provided in 10 CFR Part 20
There is no significant construction impact because this exemption does not involve any changes to a construction permit. There is no significant increase in the potential for or consequences from radiological accidents because the exemption does not alter any of the assumptions or limits in the licensee's safety analysis. In addition, the NRC staff determined that there would be no significant impacts to biota, water resources, historic properties, cultural resources, or socioeconomic conditions in the region. Therefore, pursuant to 10 CFR 51.22(b), no environmental impact statement or environmental assessment need be prepared in connection with the approval of the requested exemption.
Accordingly, the Commission has determined that, pursuant to 10 CFR 50.12, the exemption is authorized by law, will not present an undue risk to the public health and safety, and is consistent with the common defense and security. Also, special circumstances are present. Therefore, the Commission hereby grants Entergy Operations, Inc., an exemption from the requirements of 10 CFR Part 50, Appendix E, Sections IV.F.2.b and IV.F.2.c. to conduct the Waterford 3 biennial EP exercise required for CY 2021, permitting the exercise to be conducted in coordination with FEMA, NRC Region IV and Waterford 3 schedules by the licensee-provided date of March 15, 2022.
This exemption is effective upon issuance. This exemption expires on March 15, 2022, or when the biennial EP exercise is performed in CY 2022, whichever occurs first.
Dated at Rockville, Maryland, this 21st day of December 2021.
Securities and Exchange Commission (“Commission”).
Notice.
Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (“Act”) for an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c-1 under the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under Section 12(d)(1)(J) of the Act for an exemption from sections 12(d)(1)(A) and 12(d)(1)(B) of the Act.
Capital Group ETF Trust (the “Trust”), Capital Research and Management Company (the “Adviser”), and American Funds Distributors, Inc. (the “Distributor”).
Applicants request an order (“Order”) that permits: (a) The Funds (defined below) to issue shares (“Shares”) redeemable in large aggregations only (“creation units”); (b) secondary market transactions in Shares to occur at negotiated market prices rather than at net asset value; (c) certain Funds to pay redemption proceeds, under certain circumstances, more than seven days after the tender of Shares for redemption; and (d) certain affiliated persons of a Fund to deposit securities into, and receive securities from, the Fund in connection with the purchase and redemption of creation units. The relief in the Order would incorporate by reference terms and conditions of the same relief of a previous order granting the same relief sought by applicants, as that order may be amended from time to time (“Reference Order”).
The application was filed on April 30, 2021, 2021 and amended on June 14, 2021 and August 25, 2021.
An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by emailing the Commission's Secretary at
Secretary, U.S. Securities and Exchange Commission,
Thankam A. Varghese, Senior Counsel or Joseph Toner, Acting Branch Chief (Division of Investment Management, Chief Counsel's Office).
The following is a summary of the application. The complete application may be obtained via the Commission's website by searching for the file number, or for an applicant using the Company name box, at
1. The Trust is a statutory trust organized under the laws of Delaware and will consist of one or more series operating as a Fund. The Trust is registered as an open-end management investment company under the Act. Applicants seek relief with respect to Funds (as defined below), including the Initial Fund (the “Initial Fund”). The Funds will offer exchange-traded shares utilizing active management investment strategies as contemplated by the Reference Order.
2. The Adviser, a Delaware corporation, will be the investment adviser to the Initial Fund. Subject to approval by the Trust's board of trustees, an Adviser (as defined below) will serve as investment adviser to the Funds. The Adviser is, and any other Adviser will be, registered as an investment adviser under the Investment Advisers Act of 1940
3. The Distributor is a California corporation and a broker-dealer registered under the Securities Exchange Act of 1934, as amended, and will act as the principal underwriter of Shares of the Initial Fund. Applicants request that the requested relief apply to any distributor of Shares, whether affiliated or unaffiliated with the Adviser and/or Sub-Adviser (included in the term “Distributor”). Any Distributor will comply with the terms and conditions of the Order.
4. Applicants seek the requested Order under section 6(c) of the Act for an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c-1 under the Act, under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the Act and under Section 12(d)(1)(J) of the Act for an exemption from Sections 12(d)(1)(A) and 12(d)(1)(B) of the Act. The requested Order would permit applicants to offer Funds that operate as contemplated by the Reference Order. Because the relief requested is the same as certain of the relief granted by the Commission under the Reference Order and because the Adviser has entered into a licensing agreement with Fidelity Management & Research Company LLC, or an affiliate thereof, in order to offer Funds that operate as contemplated by the Reference Order,
5. Applicants request that the Order apply to the Initial Fund and to any other existing or future registered open-end management investment company or series thereof that: (a) Is advised by the Adviser or any entity controlling, controlled by, or under common control with the Adviser (any such entity included in the term “Adviser”); (b) offers exchange-traded shares utilizing active management investment strategies as contemplated by the Reference Order; and (c) complies with the terms and conditions of the Order and the terms and conditions of the Reference Order that are incorporated by reference into the Order (each such company or series and each Initial Fund, a “Fund”).
6. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction, or any class of persons, securities or transactions, from any provisions of the Act, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Section 17(b) of the Act authorizes the Commission to exempt a proposed transaction from section 17(a) of the Act if evidence establishes that the terms of the transaction, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned, and the transaction is consistent with the policies of the registered investment company and the general purposes of the Act. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Applicants submit that for the reasons stated in the Reference Order the requested relief meets the exemptive standards under sections 6(c), 17(b) and 12(d)(1)(J) of the Act.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to revise the suite of complimentary products and services offered to listed companies pursuant to Section 902.07 [sic] of the NYSE Listed Company Manual. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
Section 907.00 of the NYSE Listed Company Manual sets forth complimentary products and services that issuers are entitled to receive in connection with their NYSE listing. The Exchange currently offers certain complimentary products and services and access to discounted third-party products and services through the NYSE Market Access Center to currently and newly listed issuers. The Exchange also provides complimentary market surveillance products and services (with a commercial value of approximately $55,000 annually), Web-hosting products and services (with a commercial value of approximately $16,000 annually), Web-casting services (with a commercial value of approximately $6,500 annually), market analytics products and services (with a commercial value of approximately $30,000 annually), and news distribution products and services (with a commercial value of approximately $20,000 annually).
The products and services are offered to Eligible New Listings
The products and services are offered to currently listed companies that meet the eligibility requirements (“Eligible Current Listings”) based on the following tiers:
(1) U.S. issuers that have 160 million to 269,999,999 total shares of common stock issued and outstanding in all share classes, including and in addition to Treasury shares, calculated annually as of September 30
(2) non-U.S. companies that have 160 million to 269,999,999 shares of an equity security issued and outstanding in the U.S., calculated annually as of September 30
In addition to the foregoing, the Exchange provides all listed issuers with complimentary access to whistleblower hotline services (with a commercial value of approximately $4,000 annually) for a period of 24 calendar months.
The Exchange proposes to amend Section 907.00. Once the amendments described herein are approved, Eligible Current Listings will be entitled on a prorated annual basis to a new suite of products and services starting on the first day of the first calendar month after the approval date for the proposed amendments.
Issuers are not required as a condition of listing to utilize the complimentary products and services available to them pursuant to Section 907.00 and issuers may decide to contract themselves for other products and services. Companies receiving products and services as Eligible New Listings or Eligible Transfer Companies
The Exchange proposes to amend the suite of products and services provided under Section 907.00. As amended, the suite of available products and services would be as follows: Market intelligence (with a maximum commercial value of approximately $50,000 annually), market analytics (with a maximum commercial value of approximately $30,000 annually), board of directors platform (with a maximum commercial value of approximately $40,000 annually), virtual event platform (with a maximum commercial value of approximately $30,000 annually), environmental, social and governance tools (collectively “ESG”) (with a maximum commercial value of approximately $30,000 annually), Web-
The proposed services offering includes market intelligence, rather than market surveillance in the current rule. This change reflects a change over time in the scope of the types of service packages offered by the service providers from whom the Exchange purchases these services. Historically, those packages were generally limited to providing surveillance services, which consisted of monitoring an issuer's larger shareholders and how the size of their holdings changed over time. These service providers now also provide additional information that is intended to track investors” views about an issuer and how those views change over time. As this additional service is included in the package provided to listed companies, the Exchange believes it is appropriate to reflect that fact by changing the terminology from market surveillance to market intelligence. The small decrease in the value attributed to this service is a result of pricing competition in a highly competitive market for these services.
The current rule treats Web-hosting and Web-casting services as two separate items in the suite of available services, while the proposed rule amendments aggregate them as a single option. The Exchange is making this change in response to developments over time in how its service providers package their service offerings, as service providers now market these two services together rather than separately. The aggregate value of Web-hosting and Web-casting services would increase slightly due to increased prices charged by service providers.
In certain cases, the proposed rule amendments adopt a different approach from the current rule in how it gives companies the ability to choose the services they receive. The current rule is structured to give listed companies a choice among the various service categories, where choosing a particular service requires the company to forego another service category entirely (for example, a company with Tier One eligibility can choose either market surveillance or market analytics products and services but cannot receive both). The proposed rule amendments adopt a more flexible approach for: (i) Eligible New Listings and Eligible Transfers that qualify for Tier A; and (ii) currently listed companies that qualify for Tier One. In these cases, companies will be eligible to choose different levels of services from the different categories, subject to a maximum overall value of services used. The Exchange believes that this approach will provide companies with appropriate flexibility in choosing the types and levels of service that best meet their needs, while providing that all qualified companies within a tier are entitled to receive the same dollar value of services.
The proposed amended offering of products and services for Eligible New Listings and Eligible Transfers would be as follows:
The methodology used for determining global market value under the proposed amended rule for an Eligible New Listing or Eligible Transfer Company would be the same as is used under the current rule.
The proposed amended offering of products and services for Eligible Current Listings would be as follows:
(1) U.S. issuers that have 160 million to 269,999,999 total shares of common stock issued and outstanding in all share classes, including and in addition to Treasury shares, calculated annually as of September 30 of the preceding year; and
(2) non-U.S. companies that have 160 million to 269,999,999 shares of an equity security issued and outstanding in the U.S., calculated annually as of September 30 of the preceding year.
The methodology used in determining the number of shares issued and outstanding for purposes of eligibility for Tier One or Tier Two would be the same as under the current rule.
The Exchange proposes to grant enhanced eligibility for products and services under Section 907.00 to companies that become eligible during the course of a calendar year. In the event that a U.S. issuer or non-U.S. company completes a corporate action during the course of a calendar year for which its eligibility for services is being determined and that corporate action increases the number of shares it has outstanding, the Exchange would calculate its outstanding shares immediately after such corporate action and determine whether it has become eligible to receive Tier One or Tier Two
The Exchange currently provides all listed issuers with complimentary access to whistleblower hotline services (with a commercial value of approximately $4,000 annually) for a period of 24 calendar months. The Exchange proposes to extend this period of eligibility to 48 months.
The specific tools and services offered to Eligible New Listings and Eligible Transfer Companies and eligible currently listed companies as part of the complimentary offering limited to those categories of issuers under Section 907.00 are provided solely by third-party vendors. In deciding which complimentary products and services to provide, the NYSE considers the quality of competing products and services and the needs of its listed issuers in selecting the vendors. The NYSE may change vendors from time to time based on this ongoing review of the products and services provided by current vendors and its willingness to change vendors is consistent with competition for vendor services.
The Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. In this regard, NYSE notes that it may choose to use multiple vendors for the same type of product or service. The NYSE also notes that, from time to time, issuers elect to purchase products and services from other vendors at their own expense instead of accepting the products and services described above offered by the Exchange.
The Exchange believes that its proposal is consistent with Section 6(b) of the Securities Exchange Act of 1934 (the “Act”) generally.
The NYSE faces competition in the market for listing services, and competes, in part, by offering valuable services to companies. The Exchange believes that it is reasonable to offer complimentary services to attract and retain listings as part of this competition.
The Exchange does not believe that the proposal to modify the suite of complimentary products and services it provides to eligible listed companies harms the market for those products and services in a way that constitutes a burden on competition or an inequitable allocation of fees or fails to promote just and equitable principles of trade, in a manner inconsistent with the Act. The specific tools and services offered to eligible listed companies as part of the complimentary offering under Section 907.00 are provided solely by third-party vendors. As noted above, issuers are not required to utilize the complimentary products and services and some issuers have selected competing products and services. The NYSE believes that its consideration of quality and the needs of its listed issuers in selecting the vendors and its willingness to change vendors is consistent with competition for vendor services. In this regard, the NYSE notes that it may choose to use multiple vendors for the same type of product or service. The NYSE also notes that, from time to time, issuers elect to purchase products and services from other vendors at their own expense instead of accepting the products and services described above offered by the Exchange.
The proposed rule amendments make a number of adjustments in the types and levels of products and services provided to companies. Those adjustments are minor in nature and generally reflect changes in which the service providers on which the Exchange relies package their products and services. Nor is there any significant change in the overall value of the services to which any company would be entitled. Consequently, the Exchange believes that the proposed amendments to the available products and services, and the terms on which they are offered, represent an equitable allocation of the services provided under the rule and is not unfairly discriminatory.
The proposed rule amendments provide that (i) Eligible New Listings and Eligible Transfers that qualify for Tier A; and (ii) currently listed companies that qualify for Tier One will, in each case, be eligible to choose different levels of services from the different categories subject to a maximum overall value of services used. The Exchange believes that this approach is not unfairly discriminatory as it simply provides companies with appropriate flexibility in choosing the types and levels of service that best meet their needs while ensuring that all qualified companies within a tier are entitled to receive the same dollar value of services.
The proposed rule amendments provide for the ability of companies to qualify for Tier One or Tier Two services during the course of a calendar year and receive those services on a prorated basis for the balance of that calendar year. As these companies would only become eligible if they met the same shares outstanding requirements as companies that were already receiving the services of the applicable tier, the Exchange believes that this proposed amendment represents an equitable allocation of the services provided under the rule and is not unfairly discriminatory.
Finally, the Exchange also believes it is reasonable to balance its need to remain competitive with other listing venues, while at the same time ensuring adequate revenue to meet its regulatory responsibilities. The Exchange notes that no other company will be required to pay higher fees because of this proposal, and it represents that providing the proposed services will have no impact on the resources available for its regulatory programs.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. As noted above, the Exchange faces competition in the market for listing services, and competes, in part, by offering valuable services to companies. The proposed rule change reflects that competition, but it does not impose any burden on the competition with other exchanges. Rather, the Exchange believes the proposed changes will enhance competition for listings, as it will increase the competition for new listings and the listing of companies that are currently listed on other exchanges. Other exchanges can also offer similar services to companies, thereby
In addition, the Exchange does not believe that the proposal to modify the suite of complimentary products and services it provides to eligible listed companies will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. In this regard, the NYSE notes that the specific tools and services offered to eligible listed companies as part of the complimentary offering limited to those categories of issuers under Section 907.00 are provided solely by third-party vendors. In addition, the NYSE may choose to use multiple vendors for the same type of product or service. The NYSE also notes that currently listed and newly listed companies would not be required to accept the offered products and services from the NYSE, and an issuer's receipt of an NYSE listing is not conditioned on the issuer's acceptance of such products and services. In addition, the NYSE notes that, from time to time, issuers elect to purchase products and services from other vendors at their own expense instead of accepting the products and services described above offered by the Exchange.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to amend its rules to (1) add new subparagraph (i)(6) to Rule 7.31 (Orders and Modifiers) regarding orders designated with a “retail” modifier and (2) delete current Rule 13 (Retail Modifier). The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries,
The Exchange proposes to amend its rules to (1) add new subparagraph (i)(6) to Rule 7.31 (Orders and Modifiers) regarding orders designated with a “retail” modifier and (2) delete current Rule 13 (Retail Modifiers).
Currently, the Exchange's Rule 13 (Retail Modifiers) permits member organizations to designate an order with a “retail” modifier. Such orders, if properly designated, are eligible for “Retail Modifier” rates available for such orders on the Exchange's Price List.
The Exchange proposes to move the text of Rule 13 to the Exchange's Pillar rules, and specifically, to new subparagraph (i)(6) to Rule 7.31 (Orders and Modifiers), and to make modifications to the rule text to conform it to rules currently in effect on its affiliate exchanges NYSE American LLC (“NYSE American”)
Proposed Rule 7.31(i)(6)(A) would specify that an order designated with a “retail” modifier is an agency order or a riskless principal order that meets the criteria of FINRA Rule 5320.03 that originates from a natural person and is submitted to the Exchange by a member organization, provided that no change is made to the terms of the order with respect to price or side of market and the order does not originate from a trading algorithm or any other computerized methodology. It would also specify that an order with a “retail” modifier is separate and distinct from a “Retail Order” under Rule 7.44. This proposed rule is based on the Exchange's current Rule 13(f)(2)(A) without any differences, except that the cross-reference in Rule 13 to former Rule 107C (Retail Liquidity Program) would be updated to instead cross-reference Rule 7.44 (Retail Liquidity Program).
Proposed Rule 7.31(i)(6)(B) would specify that a member organization would be required to designate an order as “retail” in the form and/or manner prescribed by the Exchange. This proposed rule is based on the Exchange's current Rule 13(f)(2)(B) without any differences, except that the introductory language “ 'Retail' modifier designation” would be deleted.
Proposed Rule 7.31(i)(6)(C) would specify that in order to submit an order with a “retail” modifier, a member organization must submit an attestation, in a form prescribed by the Exchange, that substantially all orders designated as “retail” would meet the requirements set out in paragraph (A) above. This proposed rule is based on the Exchange's current Rule 13(f)(2)(C) without any differences, except that the Exchange proposes to change the phrase “submitted as `retail' ” to “designated as `retail,' ” to conform the rule text to that of NYSE American Rule 7.31E(i)(4)(C) and NYSE National Rule 7.31(i)(4)(C).
Proposed Rule 7.31(i)(6)(D) would specify that a member organization must have written policies and procedures reasonably designed to assure that it will only designate orders as “retail” if all requirements of Rule 7.31(i)(6)(A) are met. Such written policies and procedures must require the member organization to (i) exercise due diligence before entering a “retail” order to assure that entry as a “retail” order is in compliance with the requirements specified by the Exchange, and (ii) monitor whether orders entered as “retail” orders meet the applicable requirements. If a member organization represents “retail” orders from another broker-dealer customer, the member organization's supervisory procedures must be reasonably designed to assure that the orders it receives from such broker-dealer customer that it designates as “retail” orders meet the definition of a “retail” order. The member organization must (i) obtain an annual written representation, in a form acceptable to the Exchange, from each broker-dealer customer that sends it orders to be designated as “retail” orders” that entry of such orders as “retail” orders will be in compliance with the requirements specified by the Exchange, and (ii) monitor whether its broker-dealer customer's “retail” order flow meets the applicable requirements. This proposed rule is based on the Exchange's current Rule 13(f)(2)(D) without any differences.
Proposed Rule 7.31(i)(6)(E) would specify that a member organization that fails to abide by the requirements specified in paragraphs (i)(6)(A)-(D) of Rule 7.31 would not be eligible for the “Retail Modifier” rates for orders it designates as “retail” orders. This proposed rule is based on NYSE American Rule 7.31E(i)(4)(E) and NYSE National Rule 7.31(i)(4)(E) with the following non-substantive differences: The proposed rule (i) would use the term “member organization” instead of “ETP Holder,” and, (ii) because the Exchange operates a Retail Liquidity Provider Program (“RLP”) pursuant to Rule 7.44 that separately defines the term “Retail Order,” the proposed rule would use the terms “order designated as `retail” or “Retail Modifier” instead of the term “Retail Order.”
Because the Exchange is relocating current Rule 13 to proposed Rule 7.31(i)(6) and such subsection would define the term “Retail Modifier” and corresponding requirements, the Exchange proposes to delete Rule 13 in its entirety.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that moving the text described above from Rule 13 to new subparagraph (i)(6) of Rule 7.31 would remove impediments to and perfect the mechanism of a free and open market and a national market system by bringing the Exchange's rule for “retail” modifiers into Rule 7.31, the Exchange's Pillar rule regarding Orders and Modifiers. Relocating the rule text regarding “retail” modifiers into Rule 7.31 and deleting Rule 13 would eliminate any potential confusion among market participants regarding the availability of the “retail” modifier for orders on the Exchange's Pillar trading system.
The Exchange believes that the requirements specified in proposed Rule 7.31(i)(6) regarding the proposed designation of “retail” orders, along with the requirements for member organization attestations and written policies and procedures, would remove impediments to and perfect the mechanism of a free and open market and a national market system because they are substantively identical to the requirements for designating orders as “retail” on NYSE American and NYSE National, and therefore would harmonize the requirements for designating orders as “retail” across the three affiliated exchanges. Such uniformity will enhance market participants' understanding of the process for designating orders as “retail” across the exchanges, and will minimize any potential confusion that could result from having slightly different programs on each exchange.
The Exchange believes that it would remove impediments to and perfect the mechanism of a free and open market and a national market system to omit text from Rule 13(f)(2)(E) and (F) from proposed Rule 7.31(i)(6). The Exchange believes that the proposed change providing that orders that fail to meet the “retail” modifier requirements would be ineligible for such preferential fees would remove impediments to and perfect the mechanism of a free and open market system, because orders failing to meet the requirements of “retail” orders would not receive the corresponding pricing benefits. Orders failing to meet the requirements of “retail” orders would still be eligible to trade pursuant to the non-“retail” prices in the Exchange's Price List.
In accordance with Section 6(b)(8) of the Act,
No written comments were solicited or received with respect to the proposed rule change.
Because the proposed rule change (i) does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) does not become operative prior to 30 days from the date on which it was filed, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
The proposed rule change consists of amendments to the Rules, By-Laws and Organization Certificate (“Rules”) of DTC in order to (i) enhance DTC's capital requirements for Participants, (ii) redefine DTC's Watch List and eliminate DTC's enhanced surveillance list and (iii) make certain other clarifying, technical and supplementary changes in the Rules, including definitional updates, to accomplish items (i) and (ii), as described in greater detail below.
In its filing with the Commission, the clearing agency included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of this proposed rule change is to (i) enhance DTC's capital requirements for Participants, (ii) redefine DTC's Watch List and eliminate DTC's enhanced surveillance list and (iii) make certain other clarifying, technical and supplementary changes in the Rules, including definitional updates, to accomplish items (i) and (ii).
Central securities depositories (“CSDs”) play a key role in financial markets by mitigating counterparty credit risk on transactions of their participants. As a CSD, DTC is exposed to the credit risks of its Participants. The credit risks borne by DTC are mitigated, in part, by the capital maintained by Participants, which serves as a loss-absorbing buffer.
In accordance with Section 17A(b)(4)(B) of the Exchange Act,
In furtherance of this authority, DTC requires applicants and Participants to meet the relevant financial responsibility standards prescribed by the Rules. These financial responsibility standards generally require Participants to have and maintain certain levels of capital, as more particularly described in the Rules and below.
DTC's capital requirements for Participants have not been updated in over 20 years. Since that time, there have been significant changes to the financial markets that warrant DTC revisiting its capital requirements. For example, the regulatory environment within which DTC and its Participants operate has undergone various changes. The implementation of the Basel III standards,
There also have been significant Participant changes over the past 20 years. Numerous mergers, acquisitions, and new market entrants have created a diverse group of Participants that has expanded the credit-risk profiles that DTC must manage.
Moreover, transaction values at DTC have increased significantly over the years.
Although these factors do not directly require DTC to increase capital requirements for Participants (
As for setting the specific capital requirements proposed, again, there is no regulation or formula that requires or calculates a specific amount (
Although the requirements of these FMIs are greater than what DTC proposes, DTC is choosing not to raise the requirement further given that it employs a fully collateralized model, which mitigates the level of risk that its Participants pose to DTC.
In light of these and other developments described below, DTC proposes to enhance its capital requirements for Participants, as described in more detail below.
DTC also proposes to redefine the Watch List, which is a list of Participants that are deemed by DTC to pose a heightened risk to it and its Participants based on credit ratings and other factors. As part of the redefinition of the Watch List, DTC proposes to eliminate the separate enhanced surveillance list and implement a new Watch List that consists of a relatively smaller group of Participants that exhibit heightened credit risk, as described in more detail below.
The current DTC capital requirements for Participants are set forth in DTC's Policy Statements on the Admission of Participants and Pledgees (the “Policy Statement”).
The Policy Statement is divided into three sections. Section 1 of the Policy Statement concerns entities organized in the U.S. (“U.S. entities”) applying to become Participants. Section 2 of the Policy Statement concerns entities organized in a country other than the U.S. and that are not otherwise subject to U.S. federal or state regulation (“non-U.S. entities”) applying to become Participants. Section 3 of the Policy Statement concerns fees and time limits on applications to become a Participant or Pledgee.
As relevant to DTC's proposal to enhance its capital requirements for Participants:
Section 1 of the Policy Statement provides that Rules 2 (Participants and Pledgees) and 3 (Participants Qualifications) set forth the basic standards for the admission of Participants, including that the admission of a Participant is subject to an applicant's demonstration that it meets reasonable standards of financial responsibility, operational capability, and character at the time of its application and on an ongoing basis thereafter.
Section 1 of the Policy Statement provides that any applicant that satisfies the qualifications for eligibility to become a Participant set forth under subsections (d) or (h)(ii) of Section 1 of Rule 3 must comply with minimum financial resource requirements in order to qualify to be admitted, and continue in good standing, as a Participant.
Subsection (d) of Section 1 of Rule 3 provides that a bank or trust company which is subject to supervision or regulation pursuant to the provisions of federal or state banking laws, or any subsidiary of such a bank or trust company or a bank holding company or any subsidiary of a bank holding company, is eligible to become a Participant.
Pursuant to the Policy Statement, any applicant or Participant that satisfies the qualifications of subsection (d) of Section 1 of Rule 3 is required to maintain equity capital in the amount of at least $2 million based on the definition of equity capital provided in the form and instructions of the Consolidated Report of Conditions and Income maintained by the Federal Financial Institutions Examination Council.
Subsection (h)(ii) of Section 1 of Rule 3 provides that a broker-dealer registered under the Exchange Act is eligible to become a Participant.
Pursuant to the Policy Statement, any applicant or Participant that satisfies the qualifications of subsection (h)(ii) of Section 1 of Rule 3 is required to maintain a minimum amount of not less than $500,000 in excess net capital over the greater of (i) the minimum capital requirement imposed on it pursuant to Exchange Act Rule 15c3-1, or (ii) such higher minimum capital requirement imposed by the registered broker-dealer's designated examining authority.
Section 2 of the Policy Statement provides that non-U.S. entities are eligible to become Participants.
Section 2 of the Policy Statement requires that non-U.S. entities applying to become Participants provide to DTC, for financial monitoring purposes, audited financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) or other generally accepted accounting principles that are satisfactory to DTC.
In order to address the risk presented by the acceptance of financial statements not prepared in accordance with U.S. GAAP, Section 2 of the Policy Statement provides that the minimum financial requirements applicable to a non-U.S. entity will be subject to a specified premium, as follows:
i. For financial statements prepared in accordance with International Financial Reporting Standards, the U.K. Companies Act of 1985 (“U.K. GAAP”), or Canadian generally accepted accounting principles—a premium of 1
ii. for financial statements prepared in accordance with a European Union country's generally accepted accounting principles, other than U.K. GAAP—a premium of 5 times the minimum financial requirements; and
iii. for financial statements prepared in accordance with any other type of generally accepted accounting principles—a premium of 7 times the minimum financial requirements.
Accordingly, a non-U.S. entity that does not prepare its financial statements in accordance with U.S. GAAP is required to meet financial requirements between 1
Section 2 of the Policy Statement also provides that a non-U.S. entity must be in compliance with the financial
DTC's Watch List is a list of Participants that are deemed by DTC to pose a heightened risk to it and its Participants based on credit ratings and other factors.
Specifically, the Watch List is the list of Participants with credit ratings derived from DTC's Credit Risk Rating Matrix (“CRRM”)
In addition to the Watch List, DTC also maintains a separate list of Participants subject to enhanced surveillance in accordance with the provisions of Section 10(b) of Rule 2, as discussed below. The enhanced surveillance list is a list of Participants for which DTC has heightened credit concerns, which may include Participants that are already, or may soon be, on the Watch List. As described below, a Participant is subject to the same potential consequences from being subject to enhanced surveillance or being placed on the Watch List.
Rule 2 (Participants and Pledgees) specifies the ongoing participation requirements and monitoring applicable to Participants and Pledgees.
Section 10(b) of Rule 2 provides that a Participant that is (1) a U.S. bank or trust company that files the Consolidated Report of Condition and Income (“Call Report”), (2) a registered broker-dealer that files the Financial and Operational Combined Uniform Single Report (“FOCUS Report”) or the equivalent with its regulator, or (3) a non-U.S. bank or trust company that has audited financial data that is publicly available, will be assigned a credit rating by DTC in accordance with the CRRM. A Participant's credit rating is reassessed each time the Participant provides DTC with requested information pursuant to Section 1 of Rule 2 or as may be otherwise required under the Rules.
Section 10(b) further provides that because the factors used as part of the CRRM may not identify all risks that a Participant assigned a credit rating by DTC may present to DTC, DTC may, in its discretion, override such Participant's credit rating derived from the CRRM to downgrade the Participant. This downgrading may result in the Participant being placed on the Watch List and/or it may subject the Participant to enhanced surveillance based on relevant factors.
Section 10(c) of Rule 2 provides that Participants not assigned a credit rating by DTC will not be assigned a credit rating by the CRRM but may be placed on the Watch List and/or may be subject to enhanced surveillance based on relevant factors.
Section 10(d) of Rule 2 provides that the factors to be considered by DTC in determining whether a Participant is placed on the Watch List and/or subject to enhanced surveillance include (i) news reports and/or regulatory observations that raise reasonable concerns relating to the Participant, (ii) reasonable concerns around the Participant's liquidity arrangements, (iii) material changes to the Participant's organizational structure, (iv) reasonable concerns about the Participant's financial stability due to particular facts and circumstances, such as material litigation or other legal and/or regulatory risks, (v) failure of the Participant to demonstrate satisfactory financial condition or operational capability or if DTC has a reasonable concern regarding the Participant's ability to maintain applicable participation standards, and (vi) failure of the Participant to provide information required by DTC to assess risk exposure posed by the Participant's activity.
Section 10(e) of Rule 2 provides that a Participant being subject to enhanced surveillance or being placed on the Watch List (1) will result in a more thorough monitoring of the Participant's financial condition and/or operational capability, including on-site visits or additional due diligence information requests, and (2) may be required make more frequent financial disclosures to DTC. Participants that are subject to enhanced surveillance are also reported to DTC's management committees and regularly reviewed by DTC senior management.
As noted earlier, as a CSD, DTC is exposed to the credit risks of its Participants. The credit risks borne by DTC are mitigated, in part, by the capital maintained by Participants, which serves as a loss-absorbing buffer.
DTC's financial responsibility standards for Participants generally require Participants to have and maintain certain levels of capital.
As described in more detail below, DTC proposes to enhance its capital requirements for Participants as follows:
In connection with its proposal to enhance capital requirements for Participants, DTC proposes to add to Rule 1 new defined terms of “CET1 Capital,” “Excess Net Capital,” “Tier 1 RBC Ratio” and “Well Capitalized,” as discussed below.
DTC proposes to (1) change the measure of capital requirements for U.S. banks and trust companies that are banks from equity capital to common equity tier 1 capital (“CET1 Capital”),
DTC proposes to change the measure of capital requirements for U.S. banks and trust companies that are banks from equity capital to CET1 Capital and raise the minimum capital requirements for U.S. banks and trust companies that are banks in order to align DTC's capital requirements with banking regulators' changes to regulatory capital requirements over the past several years, which have standardized and harmonized the calculation and measurement of bank capital and leverage throughout the world.
In addition, requiring U.S. banks and trust companies that are banks to be Well Capitalized ensures that Participants are well capitalized while also allowing adjusted capital to be relative to either the risk-weighted assets or average total assets of the bank or trust company. DTC proposes to have the definition of Well Capitalized expressly tied to the FDIC's definition of “well capitalized” to ensure that the proposed requirement that U.S. banks and trust companies that are banks be Well Capitalized will keep pace with future changes to banking regulators' regulatory capital requirements.
Under the proposal, an applicant or Participant that is a U.S. bank or a U.S. trust company that is a bank must have and maintain at all times at least $15 million in CET1 Capital and be Well Capitalized at all times.
DTC does not propose to change the existing capital requirements applicable to an applicant or Participant that is a U.S. trust company that is not a bank, although DTC is proposing to make some clarifying and conforming language changes to improve the accessibility and transparency of these capital requirements, without substantive effect.
DTC treats U.S. trust companies that are banks and non-banks differently because they present different risks based on the attendant risks of their business activities, with trust companies engaging in banking activities (
DTC proposes to increase the minimum excess net capital (“Excess Net Capital”)
As described in more detail below, the proposed minimum Excess Net Capital increase will help ensure DTC's ongoing compliance with regulatory requirements and expectations related to credit risk, such as those addressed in CCAS Rules 17Ad-22(e)(4)(i) and (e)(18).
DTC proposes to require that an applicant or Participant that is a U.S. CSD have and maintain at all times at least $5 million in equity capital. DTC proposes that any clearing corporation would be deemed to be a CSD for the purposes of determining such applicant or Participant's minimum financial requirements. DTC proposes to create a standard capital requirement for Participants that are U.S. CSDs due to the systemic importance of these Participants and the need to hold these Participants to a consistent, high standard to ensure that they have sufficient capital to fulfill their systemically important role.
DTC proposes to require that an applicant or Participant that is a national securities exchange registered under the Exchange Act must have and maintain at all times at least $100 million in equity capital. DTC proposes to create a standard capital requirement for Participants that are national securities exchanges due to the systemic importance of these Participants and the need to hold these Participants to a consistent, high standard to ensure that they have sufficient capital to fulfill their systemically important role.
DTC proposes to require that a Settling Bank or applicant to be a Settling Bank that, in accordance with such entity's regulatory and/or statutory requirements, calculates a Tier 1 RBC Ratio must have a Tier 1 RBC Ratio
For any other U.S. entity applicant or Participant that is not otherwise addressed above, (1) such applicant or Participant must maintain compliance with its regulator's minimum financial requirements at all times and (2) DTC may, based on information provided by or concerning an applicant or Participant, also assign minimum financial requirements to such applicant or Participant based on how closely it resembles another Participant type and its risk profile. Any such assigned minimum financial requirements would be promptly communicated to, and discussed with, the applicant or Participant.
At the end of Section 1 of the Policy Statement, DTC proposes to make explicit that, notwithstanding anything to the contrary in such section, an applicant or Participant must maintain compliance with its regulator's minimum financial requirements at all times.
DTC proposes to require a Participant that is a non-U.S. bank or trust company (including a U.S. branch or agency) to (1) have and maintain at all times at least $15 million in CET1 Capital and comply at all times with the minimum capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any Domestic Systemically Important Banks (“D-SIB”) or Global Systemically Important Bank (“G-SIB”) buffer, if applicable) and capital ratios required by its home country regulator, or, if greater, with such minimum capital requirements or capital ratios standards promulgated by the Basel Committee on Banking Supervision,
As described above, pursuant to Section 2 of the Policy Statement, the current minimum capital requirements for a Participant that does not prepare its financial statements in accordance with U.S. GAAP is subject to a multiplier that requires such Participant to have capital between 1
The multiplier was designed to account for the less transparent nature of accounting standards other than U.S. GAAP. However, accounting standards have converged over the years (namely IFRS and U.S. GAAP).
Accordingly, DTC proposes to delete the language in Section 2 of the Policy Statement providing that the minimum capital requirements for a Participant that does not prepare its financial statements in accordance with U.S. GAAP is subject to a multiplier that requires such Participants to have capital between 1
As described above, DTC also proposes that non-U.S. banks be compliant with the minimum capital requirements and capital ratios in their home jurisdiction. Given the difficulty in knowing and monitoring compliance with various regulatory minimums for various jurisdictions, these Participants would be required to provide DTC with periodic attestations relating to the minimum capital requirements and capital ratios for their home jurisdiction.
DTC proposes to impose a minimum capital requirement of $25 million in total equity capital for applicants or Participants that are non-U.S. broker-dealers.
DTC proposes to require that an applicant or Participant that is a non-U.S. CSD have and maintain at all times at least $5 million in equity capital. DTC proposes that any non-U.S. entity clearing corporation would be deemed to be a CSD for the purposes of determining such applicant or Participant's minimum financial requirements. DTC proposes to create a standard capital requirement for Participants that are non-U.S. CSDs due to the systemic importance of these Participants and the need to hold these Participants to a consistent, high standard to ensure that they have sufficient capital to fulfill their systemically important role.
DTC proposes requiring that an applicant or Participant that is a non-U.S. securities exchange or multilateral trading facility must have and maintain at all times at least $100 million in equity capital. DTC proposes to create a standard capital requirement for Participants that are non-U.S. securities exchanges due to the systemic importance of these Participants and the need to hold these Participants to a consistent, high standard to ensure that they have sufficient capital to fulfill their systemically important role.
For any other non-U.S. entity applicant or Participant that is not otherwise addressed above, (1) such applicant or Participant must maintain compliance with its home country regulator's minimum financial requirements at all times and (2) DTC may, based on information provided by or concerning an applicant or Participant, also assign minimum financial requirements to such applicant or Participant based on how closely it resembles another Participant type and its risk profile. Any such assigned minimum financial requirements would be promptly communicated to, and discussed with, the applicant or Participant.
At the end of Section 2 of the Policy Statement, DTC proposes to make explicit that, notwithstanding anything to the contrary in such section, an applicant or Participant must maintain compliance with its home country regulator's minimum financial requirements at all times.
DTC proposes, without substantive effect, to improve the readability and accessibility of the Policy Statement by (i) adding appropriate headings and sub-headings and renumbering sections as appropriate, (ii) deleting undefined terms and replacing them with appropriate defined terms, including replacing references to “foreign entities” with references to “non-U.S. entities” and (iii) fixing typographical and other errors, in each case throughout the Policy Statement.
In Section 1 of the Policy Statement, DTC proposes to make explicit that following a U.S. entity applicant's admission as a Participant, it will be required to remain in good standing as a Participant, meeting the required qualifications, financial responsibility, operational capability and character described in the Policy Statement and in the Rules.
DTC proposes to move under the newly added heading of “Qualifications” in Section 1.A of the Policy Statement the existing language providing that in the event an organization that is not subject to regulatory oversight desires to become a Participant, DTC may review with such organization the economic and operational implications of direct participation in DTC as well as how its participation could be structured to comply with the Policy Statement.
DTC proposes to provide in Section 2 of the Policy Statement that a non-U.S. entity applicant that satisfies the
DTC proposes to redefine the Watch List and eliminate the separate enhanced surveillance list and instead implement a new Watch List that consists of a relatively smaller group of Participants that pose heightened risk to DTC and its Participants.
DTC believes that the current system of having both a Watch List and an enhanced surveillance list has confused various DTC stakeholders, while the proposed approach, as DTC understands from its experience, will be more consistent with industry practices and understanding of a “Watch List.”
The new Watch List would include Participants with a CRRM rating of 6 or 7, as well as Participants that are deemed by DTC to pose a heightened risk to it and its Participants. The separate enhanced surveillance list would be merged into the new Watch List, and references to the separate enhanced surveillance list would be deleted from the Rules.
In sum, the new Watch List would consist of Participants on the existing enhanced surveillance list, Participants with a CRRM rating of 6 or 7, and any other Participants that are deemed by DTC to pose a heightened risk to it and its Participants.
The proposed change will mean that Participants with a CRRM rating of 5 would no longer automatically be included on the Watch List. Participants with a CRRM rating of 5 represent the largest single CRRM rating category, but DTC does not believe all such Participants present heightened credit concerns.
DTC also proposes to clarify in Section 10(e) of Rule 2 that Participants on the Watch List are reported to DTC's management committees and regularly reviewed by DTC's senior management.
Beginning in June 2019, DTC conducted outreach to various Participants in order to provide them with advance notice of the proposed enhancements to DTC's capital requirements, the proposed redefinition of the Watch List, and the proposed elimination of the enhanced surveillance list. DTC has been in communication with all Participants whose current capital levels are either below the proposed minimum capital requirements or only slightly above the proposed requirements. Any such Participants have been informed of the new requirement that would be in effect 12 months after approval of the proposed changes. Following approval, DTC again would contact any Participants that are either below or only slightly above the new minimum requirement to remind them of their new capital requirement and the 12-month grace period in which to come into compliance with the new requirement.
DTC has not conducted outreach to Participants providing them with advance notice of the proposed clarification changes to the Rules.
DTC has not received any written comments from Participants on the proposal.
Pending Commission approval, DTC would implement the proposed changes to enhance its capital requirements for Participants one year after the Commission's approval of this proposed rule change. During that one-year period, DTC would periodically provide Participants with estimates of their capital requirements, based on the approved changes, with more outreach expected for Participants impacted by the changes. The deferred implementation for all Participants and the estimated capital requirements for Participants are designed to give Participants the opportunity to assess the impact of their enhanced capital requirements on their business profile. All Participants would be advised of the implementation date of these proposed changes through issuance of a DTC Important Notice, posted to its website. DTC also would inform firms applying for participation of the new capital requirements. Participants and applicants should note that the methodology/processes used to set their initial capital requirements would be the same at implementation of the proposed changes as it would be on an ongoing basis.
DTC expects to implement the proposed changes to redefine the Watch List and eliminate the enhanced surveillance list within 90 days of Commission approval. All Participants would be advised of such implementation through issuance of a DTC Important Notice, posted to its website.
DTC believes that the proposed rule change is consistent with the requirements of the Exchange Act, and the rules and regulations thereunder applicable to a registered clearing agency. Specifically, DTC believes that the proposed rule change is consistent with Section 17A(b)(3)(F) of the Exchange Act
Section 17A(b)(3)(F) of the Exchange Act requires, in part, that the Rules be designed to promote the prompt and accurate clearance and settlement of securities transactions.
Rule 17Ad-22(e)(4)(i) under the Exchange Act requires that DTC establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively identify, measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes, including by maintaining sufficient financial resources to cover its credit exposure to each participant fully with a high degree of confidence.
Rule 17Ad-22(e)(18) under the Exchange Act requires that DTC establish, implement, maintain and enforce written policies and procedures reasonably designed to establish objective, risk-based, and publicly disclosed criteria for participation, which permit fair and open access by direct and, where relevant, indirect participants and other financial market utilities, require participants to have sufficient financial resources and robust operational capacity to meet obligations arising from participation in the clearing agency, and monitor compliance with such participation requirements on an ongoing basis.
DTC does not believe the proposed changes to enhance the capital requirements for its Participants will have an impact on competition because Participants largely already meet, and in most cases exceed, the proposed capital requirements. Nevertheless, DTC fully appreciates that for the few Participants that do not already meet the proposed requirements, the proposed rule change could have an impact upon competition because those Participants could be required to maintain capital in excess of their current capital levels. That impact could impose a burden on competition on some of those Participants because they may bear higher costs to raise capital in order to comply with the enhanced capital requirements. However, DTC does not believe the burden on competition would be significant because, again, only a few Participants do not already meet the proposed requirements. In any event, to the extent there would be a burden on competition, DTC believes it would be necessary and appropriate in furtherance of the purposes of the Exchange Act, as permitted by Section 17A(b)(3)(I) thereunder.
DTC believes the enhanced capital requirements are necessary because, in short, the current requirements are outdated. As noted above, the current minimum capital requirements for Participants have not been adjusted in over 20 years. Meanwhile, there have been significant changes to the industry (
There also have been significant Participant changes over the past 20 years. Numerous mergers, acquisitions, and new market entrants have created a diverse group of Participants that has expanded the credit-risk profiles that DTC must manage.
Moreover, as noted above, transaction values at DTC have increased significantly over the years.
There also has been heightened focus on legal, operational, and cyber risk, given the devastating impact that they could have today. Appreciation of these greater risks have manifested into new regulatory requirements for certain industry participants,
While DTC believes Participants must understand the risks that their capitalization presents to DTC and be prepared to monitor their capitalization and alter their behavior in order to minimize that risk, as necessary, DTC also appreciates and understands that Participants must be able to plan for their capital requirements. That is why DTC would not implement the proposed changes to any of the enhanced capital requirements until one year after the Commission's approval of the proposal. During that one-year period, DTC would periodically provide Participants with estimates of their capital requirements. The deferred implementation for all Participants and the estimated capital requirements for Participants are designed to give Participants the opportunity to assess the impact of their enhanced capital requirements on their business profile and make any changes that they deem necessary.
DTC also believes the proposed changes are consistent with and would improve upon DTC's compliance with applicable regulatory requirements, as discussed above, including Section 17A(b)(3)(F) of the Exchange Act and Rules 17Ad-22(e)(4)(i) and (e)(18) promulgated thereunder.
Therefore, DTC believes the proposed changes to enhance the capital requirements for its Participants are appropriate in furtherance of the purposes of the Exchange Act, as permitted by Section 17A(b)(3)(I) thereunder,
DTC does not believe that the proposed changes to redefine the Watch List and eliminate the enhanced surveillance list would impact competition. Redefining the Watch List and eliminating the enhanced surveillance list are simply intended to streamline and clarify these monitoring practices. If anything, by no longer automatically including Participants with a CRRM rating of 5 on the Watch List, as proposed, the change could promote competition for such Participants, as such Participants would no longer automatically be subject to increased scrutiny by DTC, including the possibility of increased financial and reporting obligations.
DTC has not received or solicited any written comments relating to this proposal.
Persons submitting written comments are cautioned that, according to Section IV (Solicitation of Comments) of the Exhibit 1A in the General Instructions to Form 19b-4, the Commission does not edit personal identifying information from comment submissions. Commenters should submit only information that they wish to make available publicly, including their name, email address, and any other identifying information.
All prospective commenters should follow the Commission's instructions on
DTC reserves the right to not respond to any comments received.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
The proposed rule change consists of amendments to the Government Securities Division (“GSD”) Rulebook (the “GSD Rules”) and the Mortgage-Backed Securities Division (“MBSD”) Clearing Rules (the “MBSD Rules,” and together with the GSD Rules, the “Rules”) of FICC in order to (i) enhance FICC's capital requirements for Members of GSD and Members of MBSD (collectively, “members”), (ii) redefine FICC's Watch List and eliminate FICC's enhanced surveillance list, and (iii) make certain other clarifying, technical and supplementary changes in the Rules, including definitional updates, to accomplish items (i) and (ii), as described in greater detail below.
In its filing with the Commission, the clearing agency included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of this proposed rule change is to (i) enhance FICC's capital requirements for Members of GSD and Members of MBSD (collectively, “members”), (ii) redefine FICC's Watch List and eliminate FICC's enhanced surveillance list, and (iii) make certain other clarifying, technical and supplementary changes in the Rules, including definitional updates, to accomplish items (i) and (ii).
Central counterparties (“CCPs”) play a key role in financial markets by mitigating counterparty credit risk on transactions of their participants. CCPs achieve this by providing guaranties to participants and, as a consequence, are typically exposed to credit risks that could lead to default losses.
As a CCP, FICC is exposed to the credit risks of its members. The credit risks borne by FICC are mitigated, in part, by the capital maintained by members, which serves as a loss-absorbing buffer.
In accordance with Section 17A(b)(4)(B) of the Exchange Act,
In furtherance of this authority, FICC requires applicants and members to meet the relevant financial responsibility standards prescribed by the Rules. These financial responsibility standards generally require members to have and maintain certain levels of capital, as more particularly described in the Rules and below.
FICC's capital requirements for its members have not been updated in nearly 20 years.
There also have been significant membership changes over the past 20 years. Numerous mergers, acquisitions, and new market entrants (
Moreover, FICC clearing activity and market volatility, each of which present risk to FICC, also increased significantly over the years.
As for setting the specific capital requirements proposed, again, there is no regulation or formula that requires or calculates a specific amount (
In light of these and other developments described below, FICC proposes to enhance its capital requirements for members, as described in more detail below.
FICC also proposes to redefine the Watch List, which is a list of members that are deemed by FICC to pose a heightened risk to it and its members based on credit ratings and other factors. As part of the redefinition of the Watch List, FICC proposes to eliminate the separate enhanced surveillance list and implement a new Watch List that consists of a relatively smaller group of members that exhibit heightened credit risk, as described in more detail below.
Finally, FICC proposes to make certain other clarification changes in the Rules.
The Rules currently specify capital requirements for members based on their membership type and type of entity. The current FICC capital requirements for Members of GSD are set forth in Section 4(b) of GSD Rule 2A (Initial Membership Requirements)
An applicant for a membership type is required to meet the qualifications, financial responsibility, operational capability and business history requirements applicable to the relevant membership type, which may vary based on the applicant's type of entity (
As relevant to FICC's proposal to enhance its capital requirements for members:
Section 4(b) of GSD Rule 2A requires applicants to become Netting Members to satisfy the following minimum financial requirements:
(A) For applicants whose Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”):
(1) If the applicant is applying to become a Bank Netting Member, it must have a level of equity capital as of the end of the month prior to the effective date of its membership of at least $100 million, and its capital levels and ratios must meet the applicable minimum levels for such as required by its Appropriate Regulatory Agency (or, if the applicant's Appropriate Regulatory Agency does not specify any such minimum levels, such minimum levels as would be required if the Member were a member bank of the Federal Reserve System and the Member's Appropriate Regulatory Agency were the Board of Governors of the Federal Reserve System);
(2) if the applicant is registered with the SEC pursuant to Section 15 of the Exchange Act and is applying to become a Dealer Netting Member, it must have, as of the end of the calendar month prior to the effective date of its membership, (i) Net Worth of at least $25 million and (ii) Excess Net Capital of at least $10 million;
(3) if the applicant is registered with the SEC pursuant to Section 15C of the Exchange Act and is applying to become a Dealer Netting Member, it must have, as of the end of the calendar month prior to the effective date of its membership, (i) Net Worth of at least $25 million and (ii) Excess Liquid Capital of at least $10 million;
(4) if the applicant is applying to become a Futures Commission Merchant Netting Member, it must have, as of the end of the calendar month prior to the effective date of its membership, $25 million in Net Worth and $10 million in Excess Adjusted Net Capital;
(5) if the applicant is registered with the SEC pursuant to Section 15 of the Exchange Act and is applying to become an Inter-Dealer Broker Netting Member, it must have, as of the end of the calendar month prior to the effective date of its membership, (i) Net Worth of at least $25 million and (ii) Excess Net Capital of at least $10 million;
(6) if the applicant is registered with the SEC pursuant to Section 15C of the Exchange Act and is applying to become an Inter-Dealer Broker Netting Member, it must have, as of the end of the calendar month prior to the effective date of its membership, (i) Net Worth of at least $25 million and (ii) Excess Liquid Capital of at least $10 million;
(7) if the applicant is a Foreign Person that is applying to become a Foreign Netting
(8) if the applicant is applying to become an Insurance Company Netting Member, it must have, as of the end of the month prior to the effective date of its membership: (i) An A.M. Best (“Best”) rating of “A−” or better, (ii) a rating by at least one of the other three major rating agencies (Standard & Poor's (“S&P”), Moody's, and Fitch Ratings (“Fitch”)) of at least “A−” or “A3,” as applicable, (iii) no rating by S&P, Moody's, and Fitch of less than “A−” or “A,” as applicable, (iv) a risk-based capital ratio, as applicable to Insurance Companies, of at least 200 percent, and (v) statutory capital (consisting of adjusted policyholders' surplus plus the company's asset valuation reserve) of no less than $500 million; and
(9) if the applicant is applying to become a Registered Investment Company Netting Member, it must have minimum Net Assets of $100 million.
(B) For applicants whose Financial Statements are prepared in accordance with International Financial Reporting Standards (“IFRS”), the U.K. Companies Act of 1985 (“U.K. GAAP”), or Canadian generally accepted accounting principles, the minimum financial requirements shall be one and one-half times the applicable requirements set forth in subsection (A) above.
(C) For applicants whose Financial Statements are prepared in accordance with the generally accepted accounting principles of a European Union country other than U.K. GAAP, the minimum financial requirements shall be five times the applicable requirements set forth in subsection (A) above.
(D) For applicants whose financial statements are prepared in accordance with any other type of generally accepted accounting principles, the minimum financial requirements shall be seven times the requirements set forth in subsection (A) above.
Accordingly, a non-U.S. entity that does not prepare its financial statements in accordance with U.S. GAAP is required to meet financial requirements between 1
Section 2(a) of GSD Rule 3A requires a Bank Netting Member applying to become a Category 1 Sponsoring Member to (i) have a level of equity capital as of the end of the month prior to the effective date of its membership of at least $5 billion, (ii) be “well-capitalized” as defined by the Federal Deposit Insurance Corporation's applicable regulations, and (iii) if it has a bank holding company that is registered under the Bank Holding Company Act of 1956, as amended, have a bank holding company that is also “well-capitalized” as defined by the applicable regulations of the Board of Governors of the Federal Reserve System.
Section 2(b)(ii) of GSD Rule 3A provides that FICC may impose financial requirements on a Netting Member applying to become a Category 2 Sponsoring Member that are greater than financial requirements applicable to the applicant in its capacity as a Netting Member under Section 4(b) of GSD Rule 2A, based upon the level of the anticipated positions and obligations of such applicant, the anticipated risk associated with the volume and types of transactions such applicant proposes to process through FICC as a Category 2 Sponsoring Member, and the overall financial condition of such applicant.
Section 2(a)(ii) of GSD Rule 3B requires an applicant to become a CCIT Member to satisfy the following minimum financial requirements:
(A) Except as otherwise provided in subsection (B), (C) or (D) below, the applicant must have minimum Net Assets of $100 million. FICC, based upon the level of the anticipated positions and obligations of the applicant, the anticipated risk associated with the volume and types of transactions the applicant proposes to process through FICC and the overall financial condition of the applicant, may impose greater standards.
(B) For applicants whose financial statements are prepared in accordance with IFRS, U.K. GAAP or Canadian generally accepted accounting principles, the minimum financial requirements shall be one and one-half times the applicable requirements set forth in subsection (A) above.
(C) For applicants whose financial statements are prepared in accordance with the generally accepted accounting principles of a European Union country other than U.K. GAAP, the minimum financial requirements shall be five times the applicable requirements set forth in subsection (A) above.
(D) For applicants whose financial statements are prepared in accordance with any other type of generally accepted accounting principles, the minimum financial requirements shall be seven times the applicable requirements set forth in subsection (A) above.
Section 2(e) of MBSD Rule 2A requires applicants to become Clearing Members to satisfy the following minimum financial requirements:
(A) For applicants whose Financial Statements are prepared in accordance with U.S. GAAP:
(1) If the applicant is applying to become a Bank Clearing Member, it must have a level of equity capital as of the end of the month prior to the effective date of its membership of at least $100 million, and its capital levels and ratios must meet the applicable minimum levels for such as required by its Appropriate Regulatory Agency (or, if the applicant's Appropriate Regulatory Agency does not specify any such minimum levels, such minimum levels as would be required if the Member were a member bank of the Federal Reserve System and the Member's Appropriate Regulatory Agency were the Board of Governors of the Federal Reserve System);
(2) if the applicant is registered with the SEC pursuant to Section 15 or Section 15C of the Exchange Act and is applying to become a Dealer Clearing Member, it must have, as of the end of the calendar month prior to the effective date of its membership, (i) Net Worth of at least $25 million and (ii) Excess Net Capital of at least $10 million;
(3) if the applicant is registered with the SEC pursuant to Section 15 or Section 15C of the Exchange Act and is applying to become an Inter-Dealer Broker Clearing Member, it must have, as of the end of the calendar month prior to the effective date of its membership, Excess Net Capital of at least $10 million;
(4) if the applicant is applying to become an Unregistered Investment Pool Clearing Member, it must have an investment advisor domiciled in the United States. The Unregistered Investment Pool applicant must have at least $250 million in Net Assets. An Unregistered Investment Pool that does not meet the $250 million Net Asset requirement, but has Net Assets of at least $100 million, shall be eligible for membership if the Unregistered Investment Pool's investment advisor advises an existing Member and has assets under management of at least $1.5 billion. An Unregistered Investment Pool must have an investment advisor registered with the SEC;
(5) if the applicant is applying to become a Government Securities Issuer Clearing Member, it must have at least $100 million in equity capital;
(6) if the applicant is applying to become a Registered Investment Company Clearing Member, it must have minimum Net Assets of $100 million;
(7) if the applicant is applying to become an Insured Credit Union Clearing Member, it
(8) for all other applicants, they must have sufficient net worth, liquid capital, regulatory capital, or Net Assets, as applicable to the particular type of entity as determined by FICC, and subject to approval of such minimum membership standards by the SEC.
If the applicant in sections (1) through (8) above is a Foreign Person that is applying to become a Foreign Clearing Member, it must satisfy the minimum financial requirements: (i) Defined by reference to regulatory capital as defined by the applicant's home country regulator, or (ii) in the case of unregulated entities, as defined by FICC in its discretion, that are applicable to the Clearing System membership category that FICC determines, in its sole discretion, would be applicable to the Foreign Person if it were organized or established under the laws of the United States or a State or other political subdivision thereof, subject to subsections (B), (C) and (D) below if the entity's financial statements are not prepared in accordance with U.S. GAAP. For Unregistered Investment Pools, subsections (B), (C) and (D) shall apply to the following figures cited in subsection (A)(4) above: the $250 million in Net Assets and the $100 million in Net Assets.
(B) For applicants whose Financial Statements are prepared in accordance with IFRS, U.K. GAAP, or Canadian generally accepted accounting principles, the minimum financial requirements shall be one and one-half times the applicable requirements set forth in subsection (A) above.
(C) For applicants whose Financial Statements are prepared in accordance with the generally accepted accounting principles of a European Union country other than U.K. GAAP, the minimum financial requirements shall be five times the applicable requirements set forth in subsection (A) above.
(D) For applicants whose financial statements are prepared in accordance with any other type of generally accepted accounting principles, the minimum financial requirements shall be seven times the requirements set forth in subsection (A) above.
As was the case for GSD Netting Members, a non-U.S. entity that does not prepare its financial statements in accordance with U.S. GAAP is required to meet financial requirements between 1
FICC's Watch List is a list of members that are deemed by FICC to pose a heightened risk to it and its members based on credit ratings and other factors.
Specifically, the Watch List is the list of members with credit ratings derived from FICC's Credit Risk Rating Matrix (“CRRM”)
In addition to the Watch List, FICC also maintains a separate list of members subject to enhanced surveillance in accordance with the provisions of GSD Rule 3 and MBSD Rule 3, as discussed below. The enhanced surveillance list is a list of members for which FICC has heightened credit concerns, which may include members that are already, or may soon be, on the Watch List. As described below, a member is subject to the same potential consequences from being subject to enhanced surveillance or being placed on the Watch List.
GSD Rule 3 (Ongoing Membership Requirements) and MBSD Rule 3 (Ongoing Membership Requirements) specify the ongoing membership requirements and monitoring applicable to members.
Section 7 of GSD Rule 3 and Section 6 of MBSD Rule 3 provide that FICC may review the financial responsibility and operational capability of a member and otherwise require from the member additional reporting of its financial or operational condition in order to make a determination as to whether such member should be placed on the Watch List and/or be subject to enhanced surveillance by FICC consistent with the provisions of Section 12 of GSD Rule 3 and Section 11 of MBSD Rule 3.
Section 12(b) of GSD Rule 3 and Section 11(b) of MBSD Rule 3 provide that a member that is (1) a U.S. bank or trust company that files the Consolidated Report of Condition and Income (“Call Report”), (2) a U.S. broker-dealer that files the Financial and Operational Combined Uniform Single Report (“FOCUS Report”) or the equivalent with its regulator, or (3) a non-U.S. bank or trust company that has audited financial data that is publicly available, will be assigned a credit rating by FICC in accordance with the CRRM. A member's credit rating is reassessed each time the member provides FICC with requested information pursuant to Section 7 of GSD Rule 3, Section 6 of MBSD Rule 3 or as may be otherwise required under the Rules.
Section 12(b) of GSD Rule 3 and Section 11(b) of MBSD Rule 3 further provide that because the factors used as part of the CRRM may not identify all risks that a member assigned a credit rating by FICC may present to FICC, FICC may, in its discretion, override such member's credit rating derived from the CRRM to downgrade the member. This downgrading may result in the member being placed on the Watch List and/or it may subject the member to enhanced surveillance based on relevant factors.
Section 12(c) of GSD Rule 3 and Section 11(c) of MBSD Rule 3 provide that members other than those specified in Section 12(b) of GSD Rule 3 and Section 11(b) of MBSD Rule 3 will not be assigned a credit rating by the CRRM but may be placed on the Watch List and/or may be subject to enhanced surveillance based on relevant factors.
Section 12(d) of GSD Rule 3 and Section 11(d) of MBSD Rule 3 provide that the factors to be considered by FICC in determining whether a member is
Section 12(e) of GSD Rule 3 and Section 11(e) of MBSD Rule 3 provide that FICC may require a member that has been placed on the Watch List to make and maintain a deposit to the Clearing Fund over and above the amount determined in accordance with GSD Rule 4 or MBSD Rule 4, as applicable (which additional deposit shall constitute a portion of the member's Required Fund Deposit) or such higher amount as FICC may deem necessary for the protection of it or other members.
Section 12(f) of GSD Rule 3 and Section 11(f) of MBSD Rule 3 provide that a member being subject to enhanced surveillance or being placed on the Watch List (1) will result in a more thorough monitoring of the member's financial condition and/or operational capability, including on-site visits or additional due diligence information requests, and (2) may be required make more frequent financial disclosures to FICC. Members that are placed on the Watch List or subject to enhanced surveillance are also reported to FICC's management committees and regularly reviewed by FICC senior management.
As noted earlier, as a CCP, FICC is exposed to the credit risks of its members. The credit risks borne by FICC are mitigated, in part, by the capital maintained by members, which serves as a loss-absorbing buffer.
FICC's financial responsibility standards for members generally require members to have and maintain certain levels of capital.
As described in more detail below, FICC proposes to enhance its capital requirements for members as follows:
FICC proposes to (1) change the measure of capital requirements for banks and trust companies from equity capital to common equity tier 1 capital (“CET1 Capital”),
FICC proposes to change the measure of capital requirements for banks and trust companies from equity capital to CET1 Capital and raise the minimum capital requirements for banks and trust companies in order to align FICC's capital requirements with banking regulators' changes to regulatory capital requirements over the past several years, which have standardized and harmonized the calculation and measurement of bank capital and leverage throughout the world.
In addition, requiring U.S. banks and trust companies to be Well Capitalized ensures that members are well capitalized while also allowing adjusted capital to be relative to either the risk-weighted assets or average total assets of the bank or trust company. FICC proposes to have the definition of Well Capitalized expressly tied to the FDIC's definition of “well capitalized” to ensure that the proposed requirement that U.S. banks and trust companies be Well Capitalized will keep pace with future changes to banking regulators' regulatory capital requirements.
Under the proposal, a Bank Netting Member that is a U.S. bank or trust company must have and maintain at least $500 million in CET1 Capital and be Well Capitalized. Under the proposal, a Bank Netting Member that is a bank or trust company established or chartered under the laws of a non-U.S. jurisdiction and applying through its U.S. branch or agency must (i) have CET1 Capital of at least $500 million, (ii) comply with the minimum capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any Domestic Systemically Important Banks (“D-SIB”) or Global Systemically Important Bank (“G-SIB”) buffer, if applicable) and capital ratios required by its home country regulator, or, if greater, with such minimum capital requirements or capital ratios standards promulgated by the Basel Committee on Banking Supervision and (iii) provide an attestation for itself, its parent bank and its parent bank holding company (as applicable) detailing the minimum capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if applicable) and capital ratios required by their home country regulator.
FICC proposes to leave the capital requirements applicable to Dealer Netting Members unchanged, however FICC proposes to (i) consolidate into a single paragraph the capital requirements applicable to Dealer Netting Members, (ii) expressly provide for equivalence among measures of Excess Net Capital, Excess Liquid Capital and Excess Adjusted Net Capital, depending on what the Dealer Netting Member is required to report on its regulatory filings, and (iii) make some clarifying and conforming language changes and add a paragraph heading to improve the accessibility and transparency of the capital requirements, without substantive effect.
FICC also proposes to clarify that an applicant must satisfy its applicable capital requirements when it applies for membership and at all times thereafter, and therefore proposes to delete language requiring that a member satisfy its capital requirements as of the end of the calendar month prior to the effective date of its membership.
FICC proposes to leave the capital requirements applicable to Futures Commission Merchant Netting Members unchanged, however FICC proposes to (i) expressly provide for equivalence among measures of Excess Adjusted Net Capital, Excess Net Capital and Excess Liquid Capital, depending on what the Futures Commission Merchant Netting Member is required to report on its regulatory filings, and (ii) make some clarifying and conforming language changes and add a paragraph heading to improve the accessibility and transparency of the capital requirements, without substantive effect.
FICC also proposes to clarify that an applicant must satisfy its applicable capital requirements when it applies for membership and at all times thereafter, and therefore proposes to delete language requiring that a member satisfy its capital requirements as of the end of the calendar month prior to the effective date of its membership.
FICC proposes to leave the capital requirements applicable to Inter-Dealer Broker Netting Members unchanged, however FICC proposes to (i) consolidate into a single paragraph the capital requirements applicable to Inter-Dealer Broker Netting Members, (ii) expressly provide for equivalence among measures of Excess Net Capital, Excess Liquid Capital and Excess Adjusted Net Capital, depending on what the Inter-Dealer Broker Netting Member is required to report on its regulatory filings, and (iii) make some clarifying and conforming language changes and add a paragraph heading to improve the accessibility and transparency of the capital requirements, without substantive effect.
FICC also proposes to clarify that an applicant must satisfy its applicable capital requirements when it applies for membership and at all times thereafter, and therefore proposes to delete language requiring that a member satisfy its capital requirements as of the end of the calendar month prior to the effective date of its membership.
Under the proposal, a Foreign Person that is a Foreign Netting Member must, at a minimum, satisfy its home country regulator's minimum financial requirements in addition to the following:
(1) In the case of a Foreign Person that is a broker or dealer, it must have total equity capital of at least $25 million; and
(2) in the case of a Foreign Person that is a bank or trust company established or chartered under the laws of a non-U.S. jurisdiction (and not applying to become a Bank Netting Member through a U.S. branch or agency), it must (i) have CET1 Capital of at least $500 million, (ii) comply with the minimum capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if applicable) and capital ratios required by its home country regulator, or, if greater, with such minimum capital requirements or capital ratios standards promulgated by the Basel Committee on Banking Supervision and (iii) provide an attestation for itself and its parent bank holding company detailing the minimum capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if applicable) and capital ratios required by their home country regulator.
FICC may, based on information provided by or concerning an applicant applying to become a Foreign Netting Member, also assign minimum financial requirements for the applicant based on (i) how closely the applicant resembles another existing category of Netting Member and (ii) the applicant's risk profile, which assigned minimum financial requirements would be promptly communicated to, and discussed with, the applicant.
As described above, under Section 4(b) of GSD Rule 2A, the current minimum capital requirements for a member that does not prepare its financial statements in accordance with U.S. GAAP is subject to a multiplier that requires such member to have capital between 1
The multiplier was designed to account for the less transparent nature of accounting standards other than U.S. GAAP. However, accounting standards have converged over the years (namely IFRS and U.S. GAAP).
Accordingly, FICC proposes to delete the language in Section 4(b) of GSD Rule 2A providing that the minimum capital requirements for a member that does not prepare its financial statements in accordance with U.S. GAAP is subject to a multiplier that requires such member to have capital between 1
As described above, FICC also proposes that non-U.S. banks and trust companies be compliant with the minimum capital requirements and capital ratios in their home jurisdiction. Given the difficulty in knowing and monitoring compliance with various regulatory minimums for various jurisdictions, these members would be required to provide FICC with periodic attestations relating to the minimum capital requirements and capital ratios for their home jurisdiction, as described in greater detail below.
In GSD Rule 3, FICC proposes to add a paragraph providing that a Netting Member that is a bank or trust company established or chartered under the laws of a non-U.S. jurisdiction and a Bank Netting Member that is a U.S. branch or agency must (i) provide, no less than annually and upon request by FICC, an attestation for itself, its parent bank and its parent bank holding company (as applicable) detailing the minimum capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if applicable) and capital ratios required by their home country regulator and (ii) notify FICC: (a) Within two Business Days of any of their capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if applicable) or capital ratios falling below any minimum required by their home country regulator; and (b) within 15 calendar days of any such minimum capital requirement or capital ratio changing.
FICC also proposes to require Bank Netting Members that are U.S. branches or agencies of non-U.S. banks or trust companies, in addition to Foreign Netting Members, to provide FICC copies of any regulatory notifications required to be made when an entity does not comply with the financial reporting and responsibility standards set by their home country regulator and to notify FICC in writing within 2 Business Days of becoming subject to a disciplinary action by their home country regulator.
FICC proposes to require that a Government Securities Issuer Netting Member or an applicant to become a Government Securities Issuer Netting Member must have equity capital of at least $100 million. FICC does not currently have a capital requirement for Government Securities Issuer Netting Members or applicants to become a Government Securities Issuer Netting Member.
FICC proposes to leave the capital requirements applicable to Insurance Company Netting Members unchanged, however FICC proposes to (i) specify the calculation of the existing risk-based capital ratio and (ii) correct typographical errors and make some clarifying and conforming language changes and add a paragraph heading to improve the accessibility and transparency of the capital requirements, without substantive effect.
FICC also proposes to clarify that an applicant must satisfy its applicable capital requirements when it applies for membership and at all times thereafter, and therefore proposes to delete language requiring that a member satisfy its capital requirements as of the end of the calendar month prior to the effective date of its membership.
FICC proposes to leave the capital requirements applicable to Registered Investment Company Netting Members unchanged, however FICC proposes to make some clarifying and conforming language changes and add a paragraph heading to improve the accessibility and transparency of the capital requirements, without substantive effect.
For Netting Members not otherwise addressed in Section 4(b)(ii) of GSD Rule 2A, FICC proposes that such Netting Members be in compliance with their regulator's minimum financial requirements. FICC may, based on information provided by or concerning an applicant applying to become a Netting Member, also assign minimum financial requirements for the applicant based on (i) how closely the applicant resembles an existing category of Netting Member and (ii) the applicant's risk profile, which assigned minimum financial requirements would be promptly communicated to, and discussed with, the applicant.
In connection with its proposal to enhance capital requirements for members, FICC proposes to add to GSD Rule 1 new defined terms of “CET1 Capital,” “Tier 1 RBC Ratio” and “Well Capitalized,” as described above.
FICC proposes to revise, without substantive effect, language in Section 1 of GSD Rule 2A to improve readability and accessibility.
FICC proposes to renumber existing Section 3 of GSD Rule 2A as Section 2 and renumber existing Section 2 of GSD Rule 2A as Section 3 in order for the eligibility requirements for Comparison-Only Members set forth in Section 1 of GSD Rule 2A to be immediately followed by the membership qualifications and standards for Comparison-Only Members. In connection therewith, FICC proposes to revise the heading of the newly renumbered Section 2 to clarify that such section specifies the membership qualifications and standards for Comparison-Only Members.
FICC proposes to revise newly renumbered Section 3 to clarify that such section sets forth the eligibility requirements for each category of Netting Member. FICC also proposes to add a heading to the eligibility requirements for each category of Netting Member to improve readability and accessibility.
In Section 3(a)(v), FICC proposes to correct an incorrect reference to a Foreign Netting Member and incorrect references to GSD's rules and procedures.
In Section 3(a)(vi), FICC proposes to clarify that a Government Securities Issuer Netting Member is a Government Securities Issuer or Government Sponsored Enterprise whose membership in the Netting System has not been terminated. As described below, FICC proposes to add a new defined term of Government Sponsored Enterprise to GSD Rule 1 as this term was inadvertently not included in the definition of a Government Securities Issuer Netting Member in Section 3(a)(vi) of GSD Rule 2A or in the defined terms in GSD Rule 1.
FICC proposes to add a new Section 3(a)(vii) describing the eligibility requirements for an Insurance Company Netting Member based on the definition of such category of Netting Member in GSD Rule 1, which has been inadvertently omitted from the list of categories of Netting Members in Section 3. FICC also proposes to renumber the remaining paragraphs of Section 3, as well as any affected cross-references, accordingly.
In Section 3(b), FICC proposes to clarify that a Person may be only one category of Netting Member at a time and that if a Person qualifies for more than one category of Netting Member, FICC, in its sole discretion, may determine the category of Netting Member for which that Person will be considered.
FICC proposes to revise Section 4(a) of GSD Rule 2A to provide that an applicant to be a Netting Member that is already a Comparison-Only Member is required to continue to meet the requirements for becoming a Comparison-Only Member set forth in GSD Rule 2A, and to delete language regarding such requirements that is to be superseded by the proposed revisions to the Netting Member capital requirements set forth in Section 4(b).
At the end of Section 4(b), FICC proposes to clarify its existing policy that the Netting Member financial responsibility standards set forth in Section 4(b) are only the minimum requirements and make explicit that the Board, based upon the level of the anticipated positions and obligations of the applicant, the anticipated risk associated with the volume and types of transactions the applicant proposes to process through FICC, and the overall financial condition of the applicant, may, in its sole discretion, impose heightened or different financial responsibility standards on any applicant.
FICC also proposes to clarify its existing practice that if an applicant
FICC proposes to make Section 4(c) the very end of Section 4 to improve readability and accessibility by not separating the Netting Member financial responsibility standards set forth in Section 4(b) with the above-described statements regarding the Board's existing authority to impose heightened or different financial responsibility standards or to consider the financial resources of a parent company.
FICC proposes to require that any Funds-Only Settling Bank that, in accordance with such entity's regulatory and/or statutory requirements, calculates a Tier 1 RBC Ratio must have a Tier 1 RBC Ratio
FICC proposes to leave the required equity capital for a Bank Netting Member applying to become a Category 1 Sponsoring Member unchanged, however FICC proposes to (i) replace the previous references to such Bank Netting Member or its bank holding company being “well-capitalized” with the new defined term Well Capitalized and (ii) make some clarifying and conforming language changes to improve the accessibility and transparency of the capital requirements, without substantive effect.
FICC also proposes to clarify that an applicant must satisfy its applicable capital requirements when it applies for membership and at all times thereafter, and therefore proposes to delete language requiring that a member satisfy its capital requirements as of the end of the calendar month prior to the effective date of its membership.
FICC proposes to leave the capital requirements for a CCIT Member unchanged, but delete the language in Section 2(a)(ii) of GSD Rule 3B providing that the minimum capital requirements for a CCIT Member that does not prepare its financial statements in accordance with U.S. GAAP is subject to a multiplier that requires such CCIT Member to have capital between 1
As described above, the multiplier was designed to account for the less transparent nature of accounting standards other than U.S. GAAP. However, accounting standards have converged over the years (namely IFRS and U.S. GAAP).
FICC also proposes to revise the heading and introductory sentence of Section 2 of GSD Rule 3B to clarify that, in addition to the eligibility requirements for becoming a CCIT Member, such section also includes qualifications and standards requirements for CCIT Members. FICC also proposes to add a heading of “Minimum Financial Requirements” to Section 2(a)(ii) for consistency with the other subsections in Section 2(a).
In Section 5 of GSD Rule 3B, FICC proposes to fix a typographical error in the heading and clarify existing language that the eligibility, qualifications and standards set forth in respect of an applicant shall continue to be met upon an applicant's admission as a CCIT Member and at all times while a CCIT Member.
FICC proposes to (1) change the measure of capital requirements for banks and trust companies from equity capital to CET1 Capital,
FICC proposes to change the measure of capital requirements for banks and trust companies from equity capital to CET1 Capital and raise the minimum capital requirements for banks and trust companies in order to align FICC's capital requirements with banking regulators' changes to regulatory capital requirements over the past several years, which have standardized and harmonized the calculation and measurement of bank capital and leverage throughout the world.
In addition, requiring U.S. banks and trust companies to be Well Capitalized ensures that members are well capitalized while also allowing adjusted capital to be relative to either the risk-weighted assets or average total assets of the bank or trust company. FICC proposes to have the definition of Well Capitalized expressly tied to the FDIC's definition of “well capitalized” to ensure that the proposed requirement that U.S. banks and trust companies be Well Capitalized will keep pace with future changes to banking regulators' regulatory capital requirements.
Under the proposal, a Bank Clearing Member that is a U.S. bank or trust company must have and maintain at least $500 million in CET1 Capital and be Well Capitalized. Under the proposal, a Bank Clearing Member that is a bank or trust company established or chartered under the laws of a non-U.S. jurisdiction and applying through its U.S. branch or agency must (i) have CET1 Capital of at least $500 million, (ii) comply with the minimum capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if applicable) and capital ratios required by its home country regulator, or, if greater, with such minimum capital requirements or capital ratios standards promulgated by the Basel Committee on Banking Supervision and (iii) provide an attestation for itself, its parent bank and its parent bank holding company (as applicable) detailing the minimum capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if applicable) and capital ratios required by their home country regulator.
FICC proposes to leave the capital requirements applicable to Dealer Clearing Members unchanged, however FICC proposes to (i) expressly provide for equivalence among measures of Excess Net Capital, Excess Liquid Capital
FICC also proposes to clarify that an applicant must satisfy its applicable capital requirements when it applies for membership and at all times thereafter, and therefore proposes to delete language requiring that a member satisfy its capital requirements as of the end of the calendar month prior to the effective date of its membership.
FICC proposes to leave the Excess Net Capital requirement applicable to Inter-Dealer Broker Clearing Members unchanged, however FICC proposes to (i) require Inter-Dealer Broker Clearing Members to have Net Worth of $25 million, (ii) expressly provide for equivalence among measures of Excess Net Capital, Excess Liquid Capital and Excess Adjusted Net Capital, depending on what the Inter-Dealer Broker Clearing Member is required to report on its regulatory filings, and (iii) make some clarifying and conforming language changes to improve the accessibility and transparency of the capital requirements, without substantive effect.
FICC also proposes to clarify that an applicant must satisfy its applicable capital requirements when it applies for membership and at all times thereafter, and therefore proposes to delete language requiring that a member satisfy its capital requirements as of the end of the calendar month prior to the effective date of its membership.
FICC proposes to leave the requirements applicable to Unregistered Investment Pool Clearing Members unchanged, however FICC proposes to (i) consolidate under one heading the requirements applicable to Unregistered Investment Pool Clearing Members and (ii) make some clarifying and conforming language changes to improve the accessibility and transparency of the requirements, without substantive effect.
FICC proposes to leave the capital requirements applicable to Government Securities Issuer Clearing Members unchanged, however FICC proposes to make some clarifying and conforming language changes and add a paragraph heading to improve the accessibility and transparency of the capital requirements, without substantive effect.
FICC proposes to leave the capital requirements applicable to Insured Credit Union Clearing Members unchanged, however FICC proposes to make some clarifying and conforming language changes and add a paragraph heading to improve the accessibility and transparency of the capital requirements, without substantive effect.
FICC proposes to leave the capital requirements applicable to Registered Investment Company Clearing Members unchanged, however FICC proposes to make some clarifying and conforming language changes and add a paragraph heading to improve the accessibility and transparency of the capital requirements, without substantive effect.
Under the proposal, a Foreign Person that is a Clearing Member must, at a minimum, satisfy its home country regulator's minimum financial requirements in addition to the following:
(1) In the case of a Foreign Person that is a broker or dealer (and not applying to become a Dealer Clearing Member or Inter-Dealer Broker Clearing Member), it must have total equity capital of at least $25 million; and
(2) in the case of a Foreign Person that is a bank or trust company established or chartered under the laws of a non-U.S. jurisdiction (and not applying to become a Bank Clearing Member through a U.S. branch or agency), it must (i) have CET1 Capital of at least $500 million, (ii) comply with the minimum capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if applicable) and capital ratios required by its home country regulator, or, if greater, with such minimum capital requirements or capital ratios standards promulgated by the Basel Committee on Banking Supervision and (iii) provide an attestation for itself and its parent bank holding company detailing the minimum capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if applicable) and capital ratios required by their home country regulator.
FICC may, based on information provided by or concerning an applicant that is a Foreign Person, also assign minimum financial requirements for the applicant based on (i) how closely the applicant resembles another existing category of Clearing Member and (ii) the applicant's risk profile, which assigned minimum financial requirements would be promptly communicated to, and discussed with, the applicant.
As described above, under Section 2(e)(ii) of MBSD Rule 2A, the current minimum capital requirements for a member that does not prepare its financial statements in accordance with U.S. GAAP is subject to a multiplier that requires such member to have capital between 1
The multiplier was designed to account for the less transparent nature of accounting standards other than U.S. GAAP. However, accounting standards have converged over the years (namely IFRS and U.S. GAAP).
Accordingly, FICC proposes to delete the language in Section 2(e)(ii) of MBSD Rule 2A providing that the minimum capital requirements for a member that does not prepare its financial statements in accordance with U.S. GAAP is subject to a multiplier that requires such member to have capital between 1
As described above, FICC also proposes that non-U.S. banks and trust companies be compliant with the minimum capital requirements and capital ratios in their home jurisdiction. Given the difficulty in knowing and monitoring compliance with various regulatory minimums for various jurisdictions, these members would be required to provide FICC with periodic attestations relating to the minimum capital requirements and capital ratios for their home jurisdiction, as described in greater detail below.
In MBSD Rule 3, FICC proposes to add a paragraph providing that a Clearing Member that is a bank or trust company established or chartered under the laws of a non-U.S. jurisdiction and a Bank Clearing Member that is a U.S. branch or agency must (i) provide, no less than annually and upon request by FICC, an attestation for itself, its parent bank and its parent bank holding company (as applicable) detailing the minimum capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if applicable) and capital ratios required by their home country regulator and (ii) notify FICC: (a) Within two Business Days of any of their capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if applicable) or capital ratios falling below any minimum required by their home country regulator; and (b) within 15 calendar days of any such minimum capital requirement or capital ratio changing.
FICC also proposes to require Foreign Members that are regulated by their home country regulator and Bank Clearing Members that are U.S. branches or agencies of non-U.S. banks or trust companies to provide FICC copies of any regulatory notifications required to be made when an entity does not comply with the financial reporting and responsibility standards set by their home country regulator and to notify FICC in writing within 2 Business Days of becoming subject to a disciplinary action by their home country regulator.
For Clearing Members not otherwise addressed in Section 2(e)(ii) of MBSD Rule 2A, FICC proposes that such Clearing Members be in compliance with their regulator's minimum financial requirements. FICC may, based on information provided by or concerning an applicant applying to become a Clearing Member, also assign minimum financial requirements for the applicant based on (i) how closely the applicant resembles an existing category of Clearing Member and (ii) the applicant's risk profile, which assigned minimum financial requirements would be promptly communicated to, and discussed with, the applicant.
FICC proposes to revise Section 1 of MBSD Rule 2A to clarify that such section sets forth the eligibility requirements for each category of Clearing Member. FICC also proposes to add a heading to each of the eligibility requirements for each category of Clearing Member to improve readability and accessibility.
In paragraph (d), FICC proposes to clarify that a Person is eligible to apply to become an Unregistered Investment Pool Clearing Member if it is an Unregistered Investment Pool and that an Unregistered Investment Pool Clearing Member is an Unregistered Investment Pool whose membership in the Clearing System has not been terminated.
In paragraph (f), FICC proposes to clarify that a Person is eligible to apply to become an Insurance Company Clearing Member if it is an Insurance Company in good standing with its primary regulator.
In paragraph (g), FICC proposes to clarify that a Person is eligible to apply to become a Registered Clearing Agency Member if it is a Registered Clearing Agency in good standing with its primary regulator.
In the next to last paragraph of Section 1, FICC proposes to correct an incorrect pluralization of the word “category” and a potentially confusing consolidation of two defined terms.
In the last paragraph of Section 1, FICC proposes to correct an incorrect reference to a Clearing Member that is a Foreign Person and incorrect references to MBSD's rules and procedures.
FICC proposes to revise the introductory sentence to Section 2 of MBSD Rule 2A to clarify that the Board's approval of an application to become a Clearing Member is subject to the limitations set forth in MBSD Rule 2A.
At the end of Section 2(e), FICC proposes to clarify its existing policy that the Clearing Member financial responsibility standards set forth in Section 2(e) are only the minimum requirements and make explicit that the Board, based upon the level of the anticipated positions and obligations of the applicant, the anticipated risk associated with the volume and types of transactions the applicant proposes to process through FICC, and the overall financial condition of the applicant, may, in its sole discretion, impose heightened or different financial responsibility standards on any applicant.
FICC also proposes to clarify its existing practice that if an applicant does not itself satisfy the required minimum financial responsibility standards, the Board may include for such purposes the financial resources of the parent company of the applicant (including, in the case of an applicant that is a U.S. branch or agency, its parent bank) if the parent company has delivered to FICC a guaranty, satisfactory in form and substance to the Board, of the obligations of the applicant to FICC.
FICC proposes to make Section 2(e) the very end of Section 2 to improve readability and accessibility by not separating the Clearing Member financial responsibility standards set forth in Section 2(e) with the above-described statements regarding the Board's existing authority to impose heightened or different financial responsibility standards or to consider the financial resources of a parent company.
FICC proposes to require that any Cash Settling Bank Member that, in accordance with such entity's regulatory and/or statutory requirements, calculates a Tier 1 RBC Ratio must have a Tier 1 RBC Ratio
FICC proposes to redefine the Watch List and eliminate the separate enhanced surveillance list and instead implement a new Watch List that consists of a relatively smaller group of members that pose heightened risk to FICC and its members.
FICC believes that the current system of having both a Watch List and an
The new Watch List would include members with a CRRM rating of 6 or 7, as well as members that are deemed by FICC to pose a heightened risk to it and its members. The separate enhanced surveillance list would be merged into the new Watch List and references to the separate enhanced surveillance list would be deleted from the Rules.
In sum, the new Watch List would consist of members on the existing enhanced surveillance list, members with a CRRM rating of 6 or 7, and any other members that are deemed by FICC to pose a heightened risk to it and its members.
The proposed change will mean that members with a CRRM rating of 5 would no longer automatically be included on the Watch List. Members with a CRRM rating of 5 represent the largest single CRRM rating category, but FICC does not believe all such members present heightened credit concerns.
In GSD Rule 1, FICC proposes to update a reference to “members” in the definition of the Watch List to be a reference to the defined term “Members.” In Section 12 of GSD Rule 3, FICC proposes to update references to “members” with the defined term “Members.” FICC also proposes to clarify in Section 12(f) of GSD Rule 3 and Section 11(f) of MBSD Rule 3 that members on the Watch List are reported to FICC's management committees and regularly reviewed by FICC's senior management.
In connection with the above-described changes to the Rules to enhance FICC's capital requirements for members and redefine the Watch List and eliminate the enhanced surveillance list, FICC proposes to make certain other clarification changes in order to improve the accessibility and transparency of the Rules including the following:
In GSD Rule 1, FICC proposes to update cross-references in the definitions of “Bank Netting Member,” “Dealer Netting Member,” “Foreign Netting Member,” “Futures Commission Merchant Netting Member,” “Government Securities Issuer Netting Member,” “Insurance Company Netting Member,” “Inter-Dealer Broker Netting Member,” “Registered Clearing Agency Netting Member” and “Registered Investment Company Netting Member” to reflect the renumbering of Section 2 of GSD Rule 2A as Section 3.
FICC proposes to add a new defined term of “Government Sponsored Enterprise” in GSD Rule 1 which would be used in the revised definition of “Government Securities Issuer Netting Member” in Section 3 of GSD Rule 2A, from which such term was inadvertently omitted. The proposed definition of “Government Sponsored Enterprise” in GSD Rule 1 is the same as the definition of such term in MBSD Rule 1.
FICC also proposes to revise the definition of “Excess Capital Differential” in GSD Rule 1 to replace the reference to “Excess Capital” with a reference to “Netting Member Capital.” FICC previously deleted the defined term “Excess Capital” from GSD Rule 1 and replaced it with the defined term “Netting Member Capital”
In GSD Rule 2, FICC proposes to clarify that FICC would make its services available to applicants that meet the eligibility, qualifications and standards specified in the GSD Rules. FICC also proposes to separate a sentence specifying the GSD Rules governing Sponsored Members and Sponsoring Members, CCIT Members and Funds-Only Settling Bank Members into three separate sentences to improve accessibility and transparency.
In GSD Rule 3, FICC proposes to clarify existing language that the eligibility, qualifications and standards set forth in GSD Rule 2A in respect of an applicant shall continue to be met upon an applicant's admission as a Member and at all times while a Member. FICC also proposes to fix incorrect usages of certain defined terms, incorrect references to certain Exchange Act Rules, a reference to a “domestic” bank or trust company rather than a “U.S.” bank or trust company, as well as make other typographical and clarifying changes.
FICC proposes to revise the existing requirements in Sections 2(e) and (f) of GSD Rule 3 for Members established in the United Kingdom to provide FICC certain financial information and reports submitted to their regulators by expanding such requirement to include Members established in any non-U.S. jurisdiction, any financial information requested by FICC and any reports submitted to such Member's home country regulator.
FICC proposes to revise Sections 2(g) and 8 of GSD Rule 3 to clarify the circumstances when a Member is out of compliance with certain membership standards, and to move a sentence regarding when FICC begins to assess a premium to the Required Fund Deposit of a Member that falls below its minimum financial requirements.
FICC proposes to revise Section 2(h) of GSD Rule 3 to clarify that a parent company that has guaranteed the obligations of its subsidiary to FICC also includes, in the case of a Member that is a U.S. branch or agency, its parent bank.
In Section 7 of GSD Rule 2A, FICC proposes to update a reference to Section 3 of GSD Rule 2A with a reference to Section 2 to reflect the renumbering of such sections.
In MBSD Rule 1, FICC proposes to add a defined term for “Registered Clearing Agency Member,” which was inadvertently not included in the list of defined terms in MBSD Rule 1.
In MBSD Rule 2, FICC proposes to clarify that FICC will make its services available to applicants that meet the eligibility, qualifications and standards specified in the MBSD Rules, and to reflect that FICC, in addition to the Board, has the existing authority to approve certain membership applications.
In MBSD Rule 3, FICC proposes to clarify existing language that the eligibility, qualifications and standards set forth in MBSD Rule 2A in respect of an applicant shall continue to be met upon an applicant's admission as a Member and at all times while a Member. FICC also proposes to fix incorrect usages of certain defined terms, incorrect references to certain Exchange Act Rules, a reference to a “domestic” bank or trust company
FICC proposes to revise the existing requirements in Sections 2(d) and (e) of MBSD Rule 3 for Members established in the United Kingdom to provide FICC certain financial information and reports submitted to their regulators by expanding such requirement to include Members established in any non-U.S. jurisdiction, any financial information requested by FICC and any reports submitted to such Member's home country regulator.
FICC proposes to revise Section 2(g) of MBSD Rule 3 to clarify the circumstances when a Member is out of compliance with certain membership standards and how often a Member is required to provide unaudited financial information to FICC.
FICC proposes to revise Section 2(h) of MBSD Rule 3 to clarify that a parent company that has guaranteed the obligations of its subsidiary to FICC also includes, in the case of a Member that is a U.S. branch or agency, its parent bank, and to correct a grammatical error.
Beginning in June 2019, FICC has conducted outreach to various members in order to provide them with advance notice of the proposed enhancements to FICC's capital requirements for members, the proposed redefinition of the Watch List, and the proposed elimination of the enhanced surveillance list. FICC has not conducted outreach to members providing them with advance notice of the proposed clarification changes to the Rules. FICC has not received any written feedback from members on the proposal. The Commission will be notified of any written comments received.
Pending Commission approval, FICC would implement the proposed changes to enhance its capital requirements for members, as well as the clarification changes to the Rules, one year after the Commission's approval of this proposed rule change. During that one-year period, FICC would periodically provide members with estimates of their capital requirements, based on the approved changes, with more outreach expected for members impacted by the changes. The deferred implementation for all members and the estimated capital requirements for members are designed to give members the opportunity to assess the impact of their enhanced capital requirements on their business profile. All members would be advised of the implementation date of these proposed changes through issuance of an FICC Important Notice, posted to its website. FICC also would inform firms applying for membership of the new capital requirements. Members and applicants should note that the methodology/processes used to set their initial capital requirements would be the same at implementation of the proposed changes as it would be on an ongoing basis.
FICC expects to implement the proposed changes to redefine the Watch List and eliminate the enhanced surveillance list within 90 days of Commission approval. All members would be advised of such implementation through issuance of an FICC Important Notice, posted to its website.
FICC believes that the proposed rule change is consistent with the requirements of the Exchange Act, and the rules and regulations thereunder applicable to a registered clearing agency. Specifically, FICC believes that the proposed rule change is consistent with Section 17A(b)(3)(F) of the Exchange Act
Section 17A(b)(3)(F) of the Exchange Act requires, in part, that the Rules be designed to promote the prompt and accurate clearance and settlement of securities transactions.
Rule 17Ad-22(b)(7) under the Exchange Act requires, in part, that FICC establish, implement, maintain and enforce written policies and procedures reasonably designed to provide a person that maintains net capital equal to or greater than $50 million with the ability to obtain membership at FICC, provided that FICC may provide for a higher net capital requirement as a condition for membership if it demonstrates to the Commission that such a requirement is necessary to mitigate risks that could not otherwise be effectively managed by other measures.
Rule 17Ad-22(e)(4)(i) under the Exchange Act requires that FICC establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively identify, measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes, including by maintaining sufficient financial resources to cover its credit exposure to each participant fully with a high degree of confidence.
Rule 17Ad-22(e)(18) under the Exchange Act requires that FICC establish, implement, maintain and enforce written policies and procedures reasonably designed to establish objective, risk-based, and publicly disclosed criteria for participation, which permit fair and open access by direct and, where relevant, indirect participants and other financial market utilities, require participants to have sufficient financial resources and robust operational capacity to meet obligations arising from participation in the clearing agency, and monitor compliance with such participation requirements on an ongoing basis.
FICC does not believe the proposed changes to enhance its capital requirements for members would have an impact on competition because all of its members already meet, and in most cases exceed, the proposed capital requirements.
Additionally, FICC does not believe that the proposed changes to (i) redefine the Watch List and eliminate the enhanced surveillance list and (ii) make clarification changes to the Rules would impact competition. Redefining the Watch List and eliminating the enhanced surveillance list are simply intended to streamline and clarify these monitoring practices. If anything, by no longer automatically including members with a CRRM rating of 5 on the Watch List, as proposed, the change could promote competition for such members, as such members would no longer automatically be subject to increased scrutiny by FICC, including the possibility of increased financial and reporting obligations. Meanwhile, making clarification changes to the Rules to ensure that they remain accessible and transparent would help facilitate members' understanding of the Rules and provide members with increased predictability and certainty regarding their rights and obligations with respect to FICC's clearance and settlement activities.
FICC has not received or solicited any written comments relating to this proposal. If any written comments are received, FICC will amend this filing to publicly file such comments as an Exhibit 2 to this filing, as required by Form 19b-4 and the General Instructions thereto.
Persons submitting comments are cautioned that, according to Section IV (Solicitation of Comments) of the Exhibit 1A in the General Instructions to Form 19b-4, the SEC does not edit personal identifying information from comment submissions. Commenters should submit only information that they wish to make available publicly, including their name, email address, and any other identifying information.
All prospective commenters should follow the SEC's instructions on
FICC reserves the right to not respond to any comments received.
Within 45 days of the date of publication of this notice in the
(A) by order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Exchange Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The principal purpose of the proposed amendments is for ICE Clear Europe to amend its Delivery Procedures (“Delivery Procedures” or “Procedures”) to add a new Part HH thereto (“Part HH”) to address new ICE Endex French PEG Natural Gas Futures and ICE Endex French PEG Natural Gas Daily Futures (each a “Contract” and together the “Contracts”), natural gas futures contracts that will be traded on ICE Endex and cleared by ICE Clear Europe. The proposed updates would also make certain conforming changes elsewhere in the Delivery Procedures.
In its filing with the Commission, ICE Clear Europe included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. ICE Clear Europe has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of such statements.
ICE Clear Europe is proposing to add a new Part HH as well as make certain conforming changes elsewhere in the Delivery Procedures. Part HH would apply to the Contracts, which are to be traded on ICE Endex and cleared at ICE Clear Europe. The amended Delivery Procedures would provide the delivery specifications and processes related to delivery under such Contracts.
Delivery under the Contracts would be settled by the transfer of rights to Natural Gas at the PEG (the title transfer point in the Transmission System where the Licensed Shipper would exchange daily quantities of energy with other shippers or with one of the operators of the Transmission System in France) from a Transferor nominated by the Seller to the Clearing House and the
The amendments would further specify certain details of the delivery process for the Contracts including denominations of relevant quantity, settlement price, relevant time zones, timing of cessation of trading and certain requirements for exchange of futures for physical and swap transactions under exchange rules.
The amendments would also address the responsibilities of the Clearing House and relevant parties for delivery under Contracts, as well as certain limitations of liability for the Clearing House. Specifically, the Clearing House would not be responsible for the performance or non-performance of GRTgaz, including of its obligations under the GRTgaz Rules. Additionally, neither the Buyer, Seller nor their Transferees or Transferors would have any claim against the Clearing House for any loss, damage, cost or expense incurred as a result of (i) any actions taken by the Clearing House pursuant to the GRTgaz Rules, or (ii) technical issues, technical measures, authorisations, limitations, prohibitions, or failures imposed on, the condition or operation of, or the performance or non-performance of the Transmission System, GRTgaz and the TRANS@actions Platform ties except as expressly provided in the ICE Endex Rules. Each of the Buyer, Seller and their Transferees or Transferors would be required to accept any consequences arising from Trade Nominations made by the Clearing House pursuant to Part HH.
The amendments would provide details related to delivery contact [sic] security, which is the delivery margin to be provided by Buyer and Seller, and which would take into account the possibility of costs or charges arising from the balancing regime under the GRTgaz Rules. The Clearing House would be permitted to alter the calculation of each of the Buyer's Security and the Seller's Security at any time or make adjustments in respect of a specific Seller or Buyer.
The amendments would include delivery timetables with detailed timeframes and descriptions of the delivery processes for delivery under Contracts, and such timetables would detail, among other processes, the time for cessation of trading, provision of Buyer's and Seller's Security, submission of delivery intentions, confirmations of intent to deliver or receive, nominations of parties to delivery [sic] or receive, delivery confirmations, invoicing, release of delivery margin and sales proceeds following completion of delivery, and other matters. The amendments would also include delivery tables with detailed times and processes relating to failed delivery under Contracts. In respect of invoicing, the amendments would detail how amounts included in invoices prepared by the Clearing House would be calculated for confirmed deliveries and failed deliveries of each Contract.
In addition, the amendments would detail the reports produced by the Clearing House in respect of each Contract and made available to Buyers and Sellers electronically.
The amendments would also update Section 5.1 of the Delivery Procedures to include ICE Endex French PEG Natural Gas Futures Contracts and ICE Endex French PEG Natural Gas Daily Futures Contracts in the list of contracts under which, subject to delivery obligations, sellers and buyers can nominate transferors and transferees.
ICE Clear Europe believes that the proposed amendments to the Delivery Procedures are consistent with the requirements of Section 17A of the Act
In addition, Rule 17Ad-22(e)(10)
ICE Clear Europe does not believe the proposed amendments would have any impact, or impose any burden, on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed amendments to the Delivery Procedures are intended to establish a new set of procedures applicable to the delivery and settlement of ICE ENDEX French PEG Natural Gas Futures Contracts and ICE Endex French PEG Natural Gas Daily Futures Contracts in connection with the listing of such contracts for trading on the ICE Endex market. ICE Clear Europe believes that such contracts would provide opportunities for interested market participants to engage in trading activity in the relevant French natural gas market. ICE Clear Europe does not believe the amendments would adversely affect competition among Clearing Members, materially affect the cost of clearing, adversely affect access to clearing for Clearing Members or their customers, or otherwise adversely affect competition in clearing services. Accordingly, ICE Clear Europe does not believe that the amendments would impose any impact or burden on competition that is not appropriate in furtherance of the purpose of the Act.
Written comments relating to the proposed amendments have not been solicited or received by ICE Clear Europe. ICE Clear Europe will notify the Commission of any comments received with respect to the proposed rule change.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission”).
Notice.
Notice of application for an order under sections 17(d) and 57(i) of the Investment Company Act of 1940 (the “Act”) and rule 17d-1 under the Act to permit certain joint transactions otherwise prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.
Applicants request an order to permit certain closed-end management investment companies to co-invest in portfolio companies with each other and with affiliated investment funds and accounts.
Variant Alternative Income Fund (the “VAIF”), Variant Impact Fund (“VIF” and together with VAIF, the “Existing Regulated Funds”), Variant Investments, LLC (“Variant”)
The application was filed on September 21, 2021 and amended on December 22, 2021.
An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by emailing the Commission's Secretary at
The Commission:
Toyin Momoh, Senior Counsel, at (202) 551-3775 or Trace Rakestraw, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
The following is a summary of the application. The complete application may be obtained via the Commission's website by searching for the file number, or for an applicant using the Company name box, at
1. The Applicants request an order of the Commission under sections 17(d) and 57(i) and rule 17d-1 thereunder (the “Order”) to permit, subject to the terms and conditions set forth in the application (the “Conditions”), a Regulated Fund
2. VAIF was organized under the Delaware Statutory Trust Act and is a non-diversified, closed-end management investment company registered under the Act. VAIF's Board
3. VIF was organized under the Delaware Statutory Trust Act and is a non-diversified, closed-end management investment company registered under the Act. VIF's Board will be comprised of a majority of members who are Independent Trustees.
4. Variant, an Oregon limited liability company that is registered under the Advisers Act, serves as the investment adviser to each of the Existing Regulated Funds and either it or another will serve as the investment adviser to any Future Regulated Fund or Future Affiliated Fund.
5. Variant Proprietary Accounts will hold various financial assets in a principal capacity. Variant and its affiliates may operate through wholly- or majority-owned subsidiaries. Currently, there are no Variant Proprietary Accounts or subsidiaries that exist and currently intend to participate in the co-investment program.
6. Applicants state that a Regulated Fund may, from time to time, form one or more Wholly-Owned Investment Subs.
7. Applicants state that the Adviser is presented with a substantial number of investment opportunities each year on behalf of its clients, and that the Adviser must determine how to allocate those opportunities in a manner that, over time, is fair and equitable to all of its clients. Such investment opportunities may be Potential Co-Investment Transactions.
8. Applicants represent that the Adviser has established processes for allocating initial investment opportunities, opportunities for subsequent investment in an issuer and dispositions of securities holdings reasonably designed to treat all clients fairly and equitably. Further, Applicants represent that these processes will be extended and modified in a manner reasonably designed to ensure that the additional transactions permitted under the Order will both (i) be fair and equitable to the Regulated Funds and Affiliated Funds and (ii) comply with the Conditions. In particular, consistent
9. The Adviser to each applicable Regulated Fund will then make an independent determination of the appropriateness of the investment for the Regulated Fund in light of the Regulated Fund's then-current circumstances. If the Adviser to a Regulated Fund deems the Regulated Fund's participation in such Potential Co-Investment Transaction to be appropriate, then it will formulate a recommendation regarding the proposed order amount for the Regulated Fund.
10. Applicants state that, for each Regulated Fund and Affiliated Fund whose Adviser recommends participating in a Potential Co-Investment Transaction, the Adviser will submit a proposed order amount to an internal investment committee which the Adviser will establish to handle the allocation of investment opportunities in Potential Co-Investment Transactions. Applicants state further that, at this stage, each proposed order amount may be reviewed and adjusted, in accordance with the Adviser's written allocation policies and procedures, by the Adviser's investment committee.
11. If the aggregate Internal Orders for a Potential Co-Investment Transaction do not exceed the size of the investment opportunity immediately prior to the submission of the orders to the underwriter, broker, dealer or issuer, as applicable (the “External Submission”), then each Internal Order will be fulfilled as placed. If, on the other hand, the aggregate Internal Orders for a Potential Co-Investment Transaction exceed the size of the investment opportunity immediately prior to the External Submission, then the allocation of the opportunity will be made pro rata on the basis of the size of the Internal Orders.
12. Applicants state that from time to time the Regulated Funds and Affiliated Funds may have opportunities to make Follow-On Investments
13. Applicants propose that Follow-On Investments would be divided into two categories depending on whether the prior investment was a Co-Investment Transaction or a Pre-Boarding Investment.
14. A Regulated Fund would be permitted to invest in Standard Review Follow-Ons either with the approval of the Required Majority under Condition 8(c) or without Board approval under Condition 8(b) if it is (i) a Pro Rata Follow-On Investment
15. Applicants propose that Dispositions
16. A Regulated Fund may participate in a Standard Review Disposition either with the approval of the Required Majority under Condition 6(d) or without Board approval under Condition 6(c) if (i) the Disposition is a Pro Rata Disposition
17. Applicants represent that under the terms and Conditions of the application, all Regulated Funds and Affiliated Funds participating in a Co-Investment Transaction will invest at the same time, for the same price and with the same terms, conditions, class, registration rights and any other rights, so that none of them receives terms more favorable than any other. However, the settlement date for an Affiliated Fund in a Co-Investment Transaction may occur up to ten business days after the settlement date for the Regulated Fund, and vice versa. Nevertheless, in all cases, (i) the date on which the commitment of the Affiliated Funds and Regulated Funds is made will be the same even where the settlement date is not and (ii) the earliest settlement date and the latest settlement date of any Affiliated Fund or Regulated Fund participating in the transaction will occur within ten business days of each other.
18. Under Condition 15, if an Adviser, its principals, or any person controlling, controlled by, or under common control with the Adviser or its principals, and the Affiliated Funds (collectively, the “Holders”) own in the aggregate more than 25 percent of the outstanding voting shares of a Regulated Fund (the “Shares”), then the Holders will vote such Shares in the same percentages as the Regulated Fund's other shareholders (not including the Holders) when voting on matters specified in the Condition.
1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit participation by a registered investment company and an affiliated person in any “joint enterprise or other joint arrangement or profit-sharing plan,” as defined in the rule, without prior approval by the Commission by order upon application. Section 17(d) of the Act and rule 17d-1 under the Act are applicable to Regulated Funds that are registered closed-end investment companies.
2. Similarly, with regard to BDCs, section 57(a)(4) of the Act generally prohibits certain persons specified in section 57(b) from participating in joint transactions with the BDC or a company controlled by the BDC in contravention of rules as prescribed by the Commission. Section 57(i) of the Act provides that, until the Commission prescribes rules under section 57(a)(4), the Commission's rules under section 17(d) of the Act applicable to registered closed-end investment companies will be deemed to apply to transactions subject to section 57(a)(4). Because the Commission has not adopted any rules under section 57(a)(4), rule 17d-1 also applies to joint transactions with Regulated Funds that are BDCs.
3. Co-Investment Transactions are prohibited by either or both of rule 17d-1 and section 57(a)(4) without a prior exemptive order of the Commission to the extent that the Affiliated Funds and the Regulated Funds participating in such transactions fall within the category of persons described by rule 17d-1 and/or section 57(b), as applicable, vis-à-vis each participating Regulated Fund. Each of the participating Regulated Funds and Affiliated Funds may be deemed to be affiliated persons vis-à-vis a Regulated
4. Because the Variant Proprietary Accounts will be controlled by the Adviser or its affiliates and, therefore, may be under common control with the Existing Regulated Funds, any future Adviser, and any Future Regulated Funds, the Variant Proprietary Accounts could be deemed to be persons related to the Regulated Funds (or a company controlled by the Regulated Funds) in a manner described by section 17(d) or section 57(b) and also prohibited from participating in the co-investment program.
5. In passing upon applications under rule 17d-1, the Commission considers whether a company's participation in the joint transaction is consistent with the provisions, policies, and purposes of the Act and the extent to which such participation is on a basis different from or less advantageous than that of other participants.
6. Applicants state that in the absence of the requested relief, in many circumstances the Regulated Funds would be limited in their ability to participate in attractive and appropriate investment opportunities. Applicants state that, as required by rule 17d-1(b), the Conditions ensure that the terms on which Co-Investment Transactions may be made will be consistent with the participation of the Regulated Funds being on a basis that it is neither different from nor less advantageous than other participants, thus protecting the equity holders of any participant from being disadvantaged. Applicants further state that the Conditions ensure that all Co-Investment Transactions are reasonable and fair to the Regulated Funds and their shareholders and do not involve overreaching by any person concerned, including the Adviser. Applicants state that the Regulated Funds' participation in the Co-Investment Transactions in accordance with the Conditions will be consistent with the provisions, policies, and purposes of the Act and would be done in a manner that is not different from, or less advantageous than, that of other participants.
Applicants agree that the Order will be subject to the following conditions:
1.
(a) Each Adviser will establish, maintain and implement policies and procedures reasonably designed to ensure that the Adviser is promptly notified of all Potential Co-Investment Transactions that fall within the then-current Objectives and Strategies and Board-Established Criteria of any Regulated Fund the Adviser manages.
(b) When an Adviser to a Regulated Fund is notified of a Potential Co-Investment Transaction under Condition 1(a), the Adviser will make an independent determination of the appropriateness of the investment for the Regulated Fund in light of the Regulated Fund's then-current circumstances.
2.
(a) If an Adviser deems a Regulated Fund's participation in any Potential Co-Investment Transaction to be appropriate for the Regulated Fund, it will then determine an appropriate level of investment for the Regulated Fund.
(b) If the aggregate amount recommended by an Adviser to be invested in the Potential Co-Investment Transaction by the participating Regulated Funds and any participating Affiliated Funds, collectively, exceeds the amount of the investment opportunity, the investment opportunity will be allocated among them pro rata based on the size of the Internal Orders, as described in Section III.A.1.b. of the application. Each Adviser to a participating Regulated Fund will promptly notify and provide the Eligible Trustees with information concerning the Affiliated Funds' and Regulated Funds' order sizes to assist the Eligible Trustees with their review of the applicable Regulated Fund's investments for compliance with these Conditions.
(c) After making the determinations required in Condition 1(b) above, each Adviser to a participating Regulated Fund will distribute written information concerning the Potential Co-Investment Transaction (including the amount proposed to be invested by each participating Regulated Fund and each participating Affiliated Fund) to the Eligible Trustees of its participating Regulated Fund(s) for their consideration. A Regulated Fund will enter into a Co-Investment Transaction with one or more other Regulated Funds or the Affiliated Funds only if, prior to the Regulated Fund's participation in the Potential Co-Investment Transaction, a Required Majority concludes that:
(i) The terms of the transaction, including the consideration to be paid, are reasonable and fair to the Regulated Fund and its shareholders and do not involve overreaching in respect of the Regulated Fund or its shareholders on the part of any person concerned;
(ii) the transaction is consistent with:
(A) The interests of the Regulated Fund's shareholders; and
(B) the Regulated Fund's then-current Objectives and Strategies;
(iii) the investment by any other Regulated Fund(s) or Affiliated Fund(s) would not disadvantage the Regulated Fund, and participation by the Regulated Fund would not be on a basis different from, or less advantageous than, that of any other Regulated Fund(s) or Affiliated Fund(s) participating in the transaction; provided that the Required Majority shall not be prohibited from reaching the conclusions required by this Condition 2(c)(iii) if:
(A) The settlement date for another Regulated Fund or an Affiliated Fund in a Co-Investment Transaction is later than the settlement date for the Regulated Fund by no more than ten business days or earlier than the settlement date for the Regulated Fund by no more than ten business days, in either case, so long as: (x) The date on which the commitment of the Affiliated Fund and Regulated Funds is made is the same; and (y) the earliest settlement date and the latest settlement date of any Affiliated Fund or Regulated Fund participating in the transaction will occur within ten business days of each other; or
(B) any other Regulated Fund or Affiliated Fund, but not the Regulated Fund itself, gains the right to nominate a director for election to a portfolio company's board of directors, the right to have a board observer or any similar
(iv) the proposed investment by the Regulated Fund will not involve compensation, remuneration or a direct or indirect
3.
4.
5.
6.
(a)
(i) The Adviser to such Regulated Fund or Affiliated Fund
(ii) the Adviser to each Regulated Fund that holds an investment in the issuer will formulate a recommendation as to participation by such Regulated Fund in the Disposition.
(b)
(c)
(i)(A) the participation of each Regulated Fund and Affiliated Fund in such Disposition is proportionate to its then-current holding of the security (or securities) of the issuer that is (or are) the subject of the Disposition;
(ii) each security is a Tradable Security and (A) the Disposition is not to the issuer or any affiliated person of the issuer; and (B) the security is sold for cash in a transaction in which the only term negotiated by or on behalf of the participating Regulated Funds and Affiliated Funds is price.
(d)
7.
(a)
(i) The Adviser to such Regulated Fund or Affiliated Fund will notify each Regulated Fund that holds an investment in the issuer of the proposed Disposition at the earliest practical time;
(ii) the Adviser to each Regulated Fund that holds an investment in the issuer will formulate a recommendation as to participation by such Regulated Fund in the Disposition; and
(iii) each Adviser will provide to the Board of each Regulated Fund that holds an investment in the issuer all information relating to the existing investments in the issuer of the Regulated Funds and Affiliated Fund, including the terms of such investments and how they were made, that is necessary for the Required Majority to make the findings required by this Condition.
(b)
(i) The Disposition complies with Condition 2(c)(i), (ii), (iii)(A), and (iv); and
(ii) the making and holding of the Pre-Boarding Investments were not prohibited by section 57 or rule 17d-1, as applicable, and records the basis for the finding in the Board minutes.
(c)
(i)
(ii)
(iii)
(iv)
(v)
8.
(a)
(i) The Adviser to each such Regulated Fund or Affiliated Fund will notify each Regulated Fund that holds securities of the portfolio company of the proposed transaction at the earliest practical time; and
(ii) the Adviser to each Regulated Fund that holds an investment in the issuer will formulate a recommendation as to the proposed participation, including the amount of the proposed investment, by such Regulated Fund.
(b)
(i)(A) The proposed participation of each Regulated Fund and each Affiliated Fund in such investment is proportionate to its outstanding investments in the issuer or the security at issue, as appropriate,
(ii) it is a Non-Negotiated Follow-On Investment.
(c)
(d)
(i) The amount of the opportunity proposed to be made available to any Regulated Fund is not based on the Regulated Funds' and the Affiliated Funds' outstanding investments in the issuer or the security at issue, as appropriate, immediately preceding the Follow-On Investment; and
(ii) the aggregate amount recommended by an Adviser to be invested in the Follow-On Investment by the participating Regulated Funds and any participating Affiliated Funds, collectively, exceeds the amount of the investment opportunity, then the Follow-On Investment opportunity will be allocated among them
(e)
9.
(a)
(i) The Adviser to each such Regulated Fund or Affiliated Fund will notify each Regulated Fund that holds securities of the portfolio company of the proposed transaction at the earliest practical time;
(ii) the Adviser to each Regulated Fund that holds an investment in the issuer will formulate a recommendation as to the proposed participation, including the amount of the proposed investment, by such Regulated Fund; and
(iii) the Adviser will provide to the Board of each Regulated Fund that holds an investment in the issuer all information relating to the existing investments in the issuer of the Regulated Funds and Affiliated Funds, including the terms of such investments and how they were made, that is necessary for the Required Majority to make the findings required by this Condition.
(b)
(c)
(i)
(ii)
(iii)
(iv)
(d)
(i) The amount of the opportunity proposed to be made available to any Regulated Fund is not based on the Regulated Funds' and the Affiliated Funds' outstanding investments in the issuer or the security at issue, as appropriate, immediately preceding the Follow-On Investment; and
(ii) the aggregate amount recommended by an Adviser to be invested in the Follow-On Investment by the participating Regulated Funds and any participating Affiliated Funds, collectively, exceeds the amount of the investment opportunity, then the Follow-On Investment opportunity will be allocated among them pro rata based on the size of the Internal Orders, as described in Section III.A.1.b. of the application.
(e)
10.
(a) Each Adviser to a Regulated Fund will present to the Board of each Regulated Fund, on a quarterly basis, and at such other times as the Board may request, (i) a record of all investments in Potential Co-Investment Transactions made by any of the other Regulated Funds or any Affiliated Funds during the preceding quarter that fell within the Regulated Fund's then-current Objectives and Strategies and Board-Established Criteria that were not made available to the Regulated Fund, and an explanation of why such investment opportunities were not made available to the Regulated Fund; (ii) a record of all Follow-On Investments in and Dispositions of investments in any issuer in which the Regulated Fund holds any investments by any Affiliated Fund or other Regulated Fund during the prior quarter; and (iii) all information concerning Potential Co-Investment Transactions and Co-Investment Transactions, including investments made by other Regulated Funds or any Affiliated Funds that the Regulated Fund considered but declined to participate in, so that the Independent Trustees, may determine whether all Potential Co-Investment Transactions and Co-Investment Transactions during the preceding quarter, including those investments that the Regulated Fund considered but declined to participate in, comply with the Conditions.
(b) All information presented to the Regulated Fund's Board pursuant to this Condition will be kept for the life of the Regulated Fund and at least two years thereafter, and will be subject to examination by the Commission and its staff.
(c) Each Regulated Fund's chief compliance officer, as defined in rule 38a-1(a)(4), will prepare an annual report for its Board each year that evaluates -z6(and documents the basis of that evaluation) the Regulated Fund's compliance with the terms and Conditions of the application and the procedures established to achieve such compliance.
(d) The Independent Trustees will consider at least annually whether continued participation in new and existing Co-Investment Transactions is in the Regulated Fund's best interests.
11.
12.
13.
14.
15.
For the Commission, by the Division of Investment Management, under delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act” or “Act”),
The proposed rule change would revise OCC's schedule of fees, effective January 1, 2022, to update the maximum contingent Operational Loss Fee listed in OCC's schedule of fees in accordance with OCC's Capital Management Policy. Proposed changes to OCC's schedule of fees are included as Exhibit 5 to File Number SR-OCC-2021-013. Material proposed to be added to OCC's schedule of fees as currently in effect is underlined and material proposed to be deleted is marked in strikethrough text. All capitalized terms not defined herein have the same meaning as set forth in the OCC By-Laws and Rules.
In its filing with the Commission, OCC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. OCC has prepared summaries, set forth in sections (A), (B), and (C) below, of the most significant aspects of these statements.
The purpose of this proposed rule change is to revise OCC's schedule of fees, effective January 1, 2022, to update the maximum aggregate Operational Loss Fee that OCC would charge Clearing Members in equal shares in the unlikely event that OCC's shareholders” equity (“Equity”) falls below certain thresholds defined in OCC's Capital Management Policy. The proposed fee change is designed to enable OCC to replenish capital to comply with Rule 17Ad-22(e)(15) under the Exchange Act, which requires OCC, in pertinent part, to “hold[ ] liquid net assets funded by equity to the greater of either (x) six months . . . current operating expenses, or (y) the amount determined by the board of directors to be sufficient to ensure a recovery or orderly wind-down of critical operations and service”
OCC's Capital Management Policy includes OCC's replenishment plan.
In the unlikely event those thresholds are breached, OCC would charge an Operational Loss Fee in an amount to raise Equity to 110% of OCC's Target Capital Requirement, up to the maximum Operational Loss Fee identified in OCC's schedule of fees less the amount of any Operational Loss Fees previously charged and not refunded.
The RWD Amount and, in turn, the Adjusted RWD Amount are determined annually based on OCC's corporate budget, the assumptions articulated in the RWD Plan, and OCC's projected effective tax rate.
Since the allocation of the Operational Loss Fee is a function of the number of Clearing Members at the time of the charge, the maximum Operational Loss Fee per Clearing Member is subject to fluctuation during the course of the year. However, if the proposed Operational Loss Fee were charged to 107 Clearing Members, the number of Clearing Members as of the date of this filing, the maximum Operational Loss Fee per Clearing Member would be $1,467,290.
OCC would also update the schedule of fees to reflect the levels of Equity at which OCC would charge the Operational Loss Fee according to the thresholds defined in the Capital Management Policy, as well as the level of Equity at which OCC would limit the Operational Loss Fee charged, based on OCC's current Target Capital Requirement.
OCC proposes to make the fee change effective January 1, 2022, because the Board approved the Adjusted RWD Amount upon which the Operational Loss Fee is based for 2022 and the time required to self-certify the proposed change with the Commodity Futures Trading Commission (“CFTC”).
OCC believes the proposed rule change is consistent with the Act
18
OCC also believes that the proposed Operational Loss Fee would result in an equitable allocation of fees among its participants because it would be equally applicable to all Clearing Members. As the Commission has recognized, OCC's designation as a SIFMU and its role as the sole covered clearing agency for all listed options contracts in the U.S. makes it an integral part of the national system for clearance and settlement, through which “Clearing Members, their customers, investors, and the markets as a whole derive significant benefit . . . regardless of their specific utilization of that system.”
In addition, OCC believes that the proposed rule change is consistent with Rule 17Ad-22(e)(15)(iii), which requires that OCC establish, implement, maintain and enforce written policies and procedures reasonably designed to identify, monitor, and manage OCC's general business risk, including by maintaining a viable plan, approved by the Board and updated at least annually, for raising additional equity should its equity fall close to or below the amount required under Rule 17Ad-22(e)(15)(ii).
OCC also believes that the proposed fee change is consistent with Section 19(g)(1) of the Act,
Section 17A(b)(3)(I) of the Act
Written comments on the proposed rule change were not and are not intended to be solicited with respect to the proposed rule change and none have been received.
Pursuant to Section 19(b)(3)(A)(ii)
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Vanessa Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly.
All submissions should refer to File Number SR-OCC-2021-013 and should be submitted on or before January 19, 2022.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On April 23, 2021, NYSE Arca, Inc. (“NYSE Arca” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
On June 22, 2021, pursuant to Section 19(b)(2) of the Exchange Act,
This order disapproves the proposed rule change. The Commission concludes that NYSE Arca has not met its burden under the Exchange Act and the Commission's Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and in particular, the requirement that the rules of a national securities exchange be “designed to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest.”
When considering whether NYSE Arca's proposal to list and trade the Shares is designed to prevent fraudulent and manipulative acts and practices, the Commission applies the same standard used in its orders considering previous proposals to list bitcoin
The standard requires such surveillance-sharing agreements since they “provide a necessary deterrent to manipulation because they facilitate the availability of information needed to fully investigate a manipulation if it were to occur.”
In the context of this standard, the terms “significant market” and “market of significant size” include a market (or group of markets) as to which (a) there is a reasonable likelihood that a person attempting to manipulate the ETP would also have to trade on that market to successfully manipulate the ETP, so that a surveillance-sharing agreement would assist in detecting and deterring misconduct, and (b) it is unlikely that trading in the ETP would be the predominant influence on prices in that market.
Consistent with this standard, for the commodity-trust ETPs approved to date for listing and trading, there has been in
Listing exchanges have also attempted to demonstrate that other means besides surveillance-sharing agreements will be sufficient to prevent fraudulent and manipulative acts and practices, including that the bitcoin market as a whole or the relevant underlying bitcoin market is “uniquely” and “inherently” resistant to fraud and manipulation.
Here, NYSE Arca contends that approval of the proposal is consistent with Section 6(b)(5) of the Exchange Act, in particular Section 6(b)(5)'s requirement that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.
In the analysis that follows, the Commission examines whether the proposed rule change is consistent with Section 6(b)(5) of the Exchange Act by addressing: in Section III.B.1 assertions that other means besides surveillance-sharing agreements will be sufficient to prevent fraudulent and manipulative acts and practices; in Section III.B.2 assertions relating to NYSE Arca's surveillance-sharing agreements related to bitcoin; and in Section III.C assertions that the proposal is consistent with the protection of investors and the public interest. As discussed further below, NYSE Arca repeats various assertions made in prior bitcoin-based ETP proposals that the Commission has previously addressed and rejected—and more importantly, NYSE Arca does not respond to the Commission's reasons for rejecting those assertions but merely repeats them. The Commission concludes that NYSE Arca has not established that other means to prevent fraudulent and manipulative acts and practices are sufficient to justify dispensing with the requisite surveillance-sharing agreement. The Commission further concludes that NYSE Arca has not established that it has a comprehensive surveillance-sharing agreement with a regulated market of significant size related to bitcoin. As a result, the Commission is unable to find that the proposed rule change is consistent with the statutory requirements of Exchange Act Section 6(b)(5).
The Commission again emphasizes that its disapproval of this proposed rule change does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because, as discussed below, NYSE Arca has not met its burden to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5).
As described in more detail in the Notice,
The investment objective of the Trust will be for the Shares to reflect the performance of the value of a bitcoin as represented by the CF Bitcoin U.S. Settlement Price (“Index”), less the Trust's liabilities and expenses.
The Shares of the Trust represent units of fractional undivided beneficial interest in, and ownership of, the Trust. The Trust will only hold bitcoin. The Custodian will establish accounts that hold the bitcoins deposited with the Custodian on behalf of the Trust.
The Administrator will calculate the NAV of the Trust once each Exchange trading day. The Sponsor will publish the NAV and NAV per Share as soon as practicable after their determination and availability, and the NAV will be released after the end of the Core Trading Session (4:00 p.m. E.T.). The NAV of the Trust is not officially struck until later in the day (often by 5:30 p.m. E.T, and usually by 8:00 p.m. E.T.). The Trust's NAV per Share is calculated by taking the current market value of its total assets, less any liabilities of the Trust, and dividing that total by the total number of outstanding Shares. The bitcoin held by the Trust will be valued based on the price set by the Index.
The Trust will provide website disclosure of its bitcoin holdings daily.
The Trust will issue and redeem Shares to authorized participants on an ongoing basis in one or more “Baskets” of 50,000 Shares. The creation and redemption of a Basket requires the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional bitcoins represented by each Basket being created or redeemed.
The Commission must consider whether NYSE Arca's proposal is consistent with the Exchange Act. Section 6(b)(5) of the Exchange Act requires, in relevant part, that the rules of a national securities exchange be designed “to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest.”
The description of a proposed rule change, its purpose and operation, its effect, and a legal analysis of its consistency with applicable requirements must all be sufficiently detailed and specific to support an affirmative Commission finding,
As stated above, the Commission has recognized that a listing exchange could demonstrate that other means to prevent fraudulent and manipulative acts and practices are sufficient to justify dispensing with a comprehensive surveillance-sharing agreement with a regulated market of significant size, including by demonstrating that the bitcoin market as a whole or the relevant underlying bitcoin market is uniquely and inherently resistant to fraud and manipulation.
NYSE Arca asserts that the bitcoin marketplace has matured rapidly in recent years regarding user growth, market capitalization, volume, market participants, and liquidity shifts, such that billion-dollar bitcoin transactions have occurred without significantly distorting the marketplace.
As with the previous proposals, the Commission here concludes that the Exchange's assertions about the nature of the bitcoin market do not constitute other means to prevent fraud and manipulation sufficient to justify dispensing with the requisite surveillance-sharing agreement.
Efficient price arbitrage, moreover, is not sufficient to dispense with surveillance-sharing agreements.
Furthermore, NYSE Arca concedes that the global bitcoin market is not inherently resistant to fraud and manipulation and that concerns exist over whether bitcoin trading platforms “have mechanisms in place to report and remediate price and overall, ensure market integrity.”
NYSE Arca also does not contest the presence of possible sources of fraud and manipulation in the bitcoin spot market generally that the Commission has raised in previous orders, which have included (1) “wash” trading, (2) persons with a dominant position in bitcoin manipulating bitcoin pricing, (3) hacking of the bitcoin network and trading platforms, (4) malicious control of the bitcoin network, (5) trading based on material, non-public information (such as plans of market participants to significantly increase or decrease their holdings in bitcoin; new sources of demand for bitcoin; the decision of a bitcoin-based investment vehicle on how to respond to a “fork” in the bitcoin blockchain, which would create two different, non-interchangeable types of bitcoin), or based on the dissemination of false and misleading information, (6) manipulative activity involving the purported “stablecoin” Tether (USDT), and (7) fraud and manipulation at bitcoin trading platforms.
Instead, NYSE Arca asserts that the methodology and framework of the Index used by the Trust to determine the value of its bitcoin assets and its NAV serve to mitigate against fraud and manipulation.
Second, NYSE Arca argues that the Index's exclusive use of transactions from Constituent Bitcoin Platforms mitigates the effects of potential manipulation of the bitcoin market.
Third, NYSE Arca asserts that the Commodity Futures Trading Commission (“CFTC”) has been successfully exercising its enforcement authority related to fraud and manipulation on the Constituent Bitcoin Platforms.
Finally, NYSE Arca asserts that the oversight of the Index by the Benchmark Administrator and the CME mitigates concerns relating to manipulation.
Based on assertions made and the information provided, the Commission can find no basis to conclude that NYSE Arca has articulated other means to prevent fraud and manipulation that are sufficient to justify dispensing with the requisite surveillance-sharing agreement. First, the record does not demonstrate that the proposed methodology for calculating the Index would make the proposed ETP resistant to fraud or manipulation such that a surveillance-sharing agreement with a regulated market of significant size is unnecessary.
Moreover, the Exchange's assertions that the Index's methodology helps make the Index resistant to manipulation are contradicted by the Registration Statement's own statements. The Sponsor raises, but does not address here, concerns regarding the Index in the Registration Statement, stating that “the [Index] has a limited history and there are limitations with the price of bitcoin reflected there.”
NYSE Arca also has not shown that its proposed use of 12 equally-sized time intervals of five minute length over the observation window between 3:00 p.m. and 4:00 p.m. E.T. to calculate the Index would effectively be able to eliminate fraudulent or manipulative activity that is not transient. Fraud and manipulation in the bitcoin spot market could persist for a “significant duration.”
While the Exchange asserts that the oversight of the Constituent Bitcoin Platforms helps to prevent and detect manipulation, the level of regulation of the Constituent Bitcoin Platforms is not equivalent to the obligations, authority, and oversight of national securities exchanges or futures exchanges and therefore is not an appropriate substitute.
The Constituent Bitcoin Platforms, on the other hand, have none of these requirements (none are registered as a national securities exchange).
NYSE Arca's further assertions regarding CFTC's enforcement authority with respect to the Constituent Bitcoin Platforms also do not establish a level of oversight sufficient to dispense with the requisite surveillance-sharing agreement. While the Commission recognizes that the CFTC maintains some jurisdiction over the bitcoin spot market, under the Commodity Exchange Act, the CFTC does not have regulatory authority over bitcoin spot trading platforms, including the Constituent Bitcoin Platforms.
Further, although NYSE Arca states that the Constituent Bitcoin Platforms must cooperate with inquiries and investigations of regulators and the Benchmark Administrator, it does not describe the scope of such requirements or what authority the Benchmark Administrator or regulators would have to compel the platforms” cooperation. And while NYSE Arca asserts that the CME has in place information-sharing agreements with the Constituent Bitcoin Platforms, it does not provide any information on the scope, terms, or enforcement authority for such agreements. Nor has NYSE Arca put any information in the record as to whether and how it would use or enforce such agreements. Moreover, such agreements are contractual in nature and do not satisfy the regulatory requirements or purposes of national securities exchanges and the Exchange Act. The CME (and the CFTC, as discussed above) does not have regulatory authority over the spot bitcoin trading platforms,
While NYSE Arca asserts the Benchmark Administrator oversees the integrity of the Index, the oversight by the Benchmark Administrator does not represent a unique measure to resist manipulation beyond mechanisms that exist in securities or commodities markets. Other commodity-based and equity index ETPs approved by the Commission for listing and trading utilize reference rates or indices administered by similar benchmark administrators,
Moreover, the Benchmark Administrator does not itself exercise governmental regulatory authority. Rather, the Benchmark Administrator is a registered, privately-held company in England.
Further, the oversight performed by the Benchmark Administrator of the Constituent Bitcoin Platforms is for the purpose of ensuring the accuracy and integrity of the Index.
Finally, the Exchange does not sufficiently explain the significance of the Index's purported resistance to manipulation to the overall analysis of whether the proposal to list and trade the Shares is designed to prevent fraud and manipulation. The Index is used by the Trust to value its bitcoin and to calculate its NAV. However, the Shares would trade at market-based prices in the secondary market, not at NAV.
In sum, none of NYSE Arca's assertions suggests that other means to prevent fraud and manipulation are sufficient to justify dispensing with the requisite surveillance-sharing agreement. Importantly, even if NYSE Arca had provided evidence to establish its assertions addressed above regarding the robustness of the Index methodology and framework and the regulation and oversight of the Constituent Bitcoin Platforms and Index, such assertions would render the proposed ETP no
(2)
As NYSE Arca has not demonstrated that other means besides surveillance-sharing agreements will be sufficient to prevent fraudulent and manipulative acts and practices, the Commission next examines whether the record supports the conclusion that NYSE Arca has entered into a comprehensive surveillance-sharing agreement with a regulated market of significant size relating to the underlying assets. In this context, the term “market of significant size” includes a market (or group of markets) as to which (i) there is a reasonable likelihood that a person attempting to manipulate the ETP would also have to trade on that market to successfully manipulate the ETP, so that a surveillance-sharing agreement would assist in detecting and deterring misconduct, and (ii) it is unlikely that trading in the ETP would be the predominant influence on prices in that market.
However, NYSE Arca does not identify any market as a “market of significant size” and accordingly makes no assertions regarding, and provides no information to establish, either prong of the “market of significant size” determination.
The requirements of Section 6(b)(5) of the Exchange Act apply to the rules of national securities exchanges. Accordingly, the relevant obligation for a comprehensive surveillance-sharing agreement with a regulated market of significant size, or other means to prevent fraudulent and manipulative acts and practices that are sufficient to justify dispensing with the requisite surveillance-sharing agreement, resides with the listing exchange. Because there is insufficient evidence in the record demonstrating that NYSE Arca has satisfied this obligation, the Commission cannot approve the proposed ETP for listing and trading on NYSE Arca.
NYSE Arca contends that, if approved, the proposed ETP would protect investors and the public interest. However, the Commission must consider these potential benefits in the broader context of whether the proposal meets each of the applicable requirements of the Exchange Act.
NYSE Arca asserts that the Trust will provide investors with exposure to bitcoin in a manner that is more efficient and convenient than the purchase of stand-alone bitcoin, while also mitigating some of the risk by reducing the volatility typically associated with the purchase of stand-alone bitcoin and without the uncertain and often complex requirements relating to acquiring and/or holding bitcoin.
In essence, NYSE Arca asserts that the risky nature of a direct investment in the underlying bitcoin compels approval of the proposed rule change. The Commission disagrees. Pursuant to Section 19(b)(2) of the Exchange Act, the Commission must approve a proposed rule change filed by a national securities exchange if it finds that the proposed rule change is consistent with the applicable requirements of the Exchange Act—including the requirement under Section 6(b)(5) that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices—and it must disapprove the filing if it does not make such a finding.
Here, even if it were true that, compared to trading in unregulated bitcoin spot markets, trading a bitcoin-based ETP on a national securities exchange provides some additional protection to investors, the Commission must consider this potential benefit in the broader context of whether the proposal meets each of the applicable requirements of the Exchange Act.
Pursuant to Section 19(b)(2) of the Exchange Act, the Commission must disapprove a proposed rule change filed by a national securities exchange if it does not find that the proposed rule change is consistent with the applicable requirements of the Exchange Act—including the requirement under Section 6(b)(5) that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices.
For the reasons discussed above, NYSE Arca has not met its burden of demonstrating that the proposal is consistent with Exchange Act Section 6(b)(5),
Comment letters address the general nature and value of bitcoin;
For the reasons set forth above, the Commission does not find, pursuant to Section 19(b)(2) of the Exchange Act, that the proposed rule change is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange, and in particular, with Section 6(b)(5) of the Exchange Act.
It is therefore ordered, pursuant to Section 19(b)(2) of the Exchange Act, that proposed rule change SR-NYSEArca-2021-31 be, and hereby is, disapproved.
By the Commission.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to extend the expiration date of the temporary amendments in SR-Phlx-2020-53 from December 31, 2021, to March 31, 2022.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to continue to harmonize Exchange Rule General 3, Section 16 with recent changes by the Financial Industry Regulatory Authority, Inc. (“FINRA”) to its Rule 1015 in response to the COVID-19 global health crisis and the corresponding need to restrict in-person activities.
As set forth in SR-Phlx-2020-53, the Exchange also relies on COVID-19 data and criteria to determine whether the current public health risks presented by an in-person hearing may warrant a hearing by video conference. Based on that data and criteria, the Exchange does not believe the COVID-19-related health concerns necessitating this relief will meaningfully subside by December 31, 2021, and believes that there will be a continued need for this temporary relief beyond that date. Accordingly, the Exchange proposes to extend the expiration date of the temporary rule amendments originally set forth in SR-Phlx-2020-53 from December 31, 2021, to March 31, 2022. The extension of the temporary amendments allowing for specified ERC hearings to proceed by video conference will allow the Exchange's critical adjudicatory functions to continue to operate effectively in these extraordinary circumstances—enabling the Exchange to fulfill its statutory obligations to protect investors and maintain fair and orderly markets—while also protecting the health and safety of hearing participants.
The Exchange has filed the proposed rule change for immediate effectiveness and has requested that the SEC waive the requirement that the proposed rule change not become operative for 30 days after the date of the filing, so the Exchange can implement the proposed rule change immediately.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
The proposed rule change, which extends the expiration date of the temporary amendments to the Exchange rules set forth in SR-Phlx-2020-53, will continue to aid the Exchange's efforts to timely conduct hearings in connection with its core adjudicatory functions. Given the current and frequently changing COVID-19 conditions and the uncertainty around when those conditions will see meaningful, widespread and sustained improvement, without this relief allowing ERC hearings to proceed by video conference, the Exchange might be required to postpone some or almost all hearings indefinitely. The Exchange must be able to perform its critical adjudicatory functions to fulfill its statutory obligations to protect investors and maintain fair and orderly markets. As such, this relief is essential to the Exchange's ability to fulfill its statutory obligations and allows hearing participants to avoid the serious COVID-19-related health and safety risks associated with in-person hearings.
Among other things, this relief will allow the ERC to timely provide members, disqualified individuals and other applicants an approval or denial of their applications. As set forth in detail in SR-Phlx-2020-53, this temporary relief allowing ERC hearings to proceed by video conference accounts for fair process considerations and will continue to provide fair process while avoiding the COVID-19-related public health risks for hearing participants. Accordingly, the proposed rule change extending this temporary relief is in the public interest and consistent with the Act's purpose.
The Exchange does not believe that the temporary proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. As set forth in SR-Phlx-2020-53, the proposed rule change is intended solely to extend temporary relief necessitated by the continued impacts of the COVID-19 outbreak and the related health and safety risks of conducting in-person activities. The Exchange believes that the proposed rule change will prevent unnecessary impediments to its operations, including its critical adjudicatory processes, and its ability to fulfill its statutory obligations to protect investors and maintain fair and orderly markets that would otherwise result if the temporary amendments were to expire on December 31, 2021.
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On April 9, 2021, Cboe BZX Exchange, Inc. (“BZX” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
On June 9, 2021, pursuant to Section 19(b)(2) of the Exchange Act,
This order disapproves the proposed rule change. The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission's Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and in particular, the requirement that the rules of a national
When considering whether BZX's proposal to list and trade the Shares is designed to prevent fraudulent and manipulative acts and practices, the Commission applies the same standard used in its orders considering previous proposals to list bitcoin
The standard requires such surveillance-sharing agreements since they “provide a necessary deterrent to manipulation because they facilitate the availability of information needed to fully investigate a manipulation if it were to occur.”
In the context of this standard, the terms “significant market” and “market of significant size” include a market (or group of markets) as to which (a) there is a reasonable likelihood that a person attempting to manipulate the ETP would also have to trade on that market to successfully manipulate the ETP, so that a surveillance-sharing agreement would assist in detecting and deterring misconduct, and (b) it is unlikely that trading in the ETP would be the predominant influence on prices in that market.
Consistent with this standard, for the commodity-trust ETPs approved to date for listing and trading, there has been in
Listing exchanges have also attempted to demonstrate that other means besides surveillance-sharing agreements will be sufficient to prevent fraudulent and manipulative acts and practices, including that the bitcoin market as a whole or the relevant underlying bitcoin market is “uniquely” and “inherently” resistant to fraud and manipulation.
Here, BZX contends that approval of the proposal is consistent with Section 6(b)(5) of the Exchange Act, in particular Section 6(b)(5)'s requirement that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.
Although BZX recognizes the Commission's focus on potential manipulation of bitcoin ETPs in prior disapproval orders, BZX argues that such manipulation concerns have been sufficiently mitigated, and that the growing and quantifiable investor protection concerns should be the central consideration of the Commission.
Further, BZX believes that the proposal would give U.S. investors access to bitcoin in a regulated and transparent exchange-traded vehicle that would act to limit risk to U.S. investors. According to BZX, the proposed listing and trading of the Shares would mitigate risk by: (i) Reducing premium and discount volatility; (ii) reducing management fees through meaningful competition; (iii) reducing risks associated with investing in operating companies that are imperfect proxies for bitcoin exposure; and (iv) providing an alternative to custodying spot bitcoin.
In the analysis that follows, the Commission examines whether the proposed rule change is consistent with Section 6(b)(5) of the Exchange Act by addressing: In Section III.B.1 assertions that other means besides surveillance-sharing agreements will be sufficient to prevent fraudulent and manipulative acts and practices; in Section III.B.2 assertions that BZX has entered into a comprehensive surveillance-sharing agreement with a regulated market of significant size related to bitcoin; and in Section III.C assertions that the proposal is consistent with the protection of investors and the public interest. As discussed further below, BZX repeats various assertions made in prior bitcoin-based ETP proposals that the Commission has previously addressed and rejected—and more importantly, BZX does not respond to the Commission's reasons for rejecting those assertions but merely repeats them. The Commission concludes that BZX has not established that other means to prevent fraudulent and manipulative acts and practices are sufficient to justify dispensing with the requisite surveillance-sharing agreement. The Commission further concludes that BZX has not established that it has a comprehensive surveillance-sharing agreement with a regulated market of significant size related to bitcoin. As a result, the Commission is unable to find that the proposed rule change is consistent with the statutory requirements of Exchange Act Section 6(b)(5).
The Commission again emphasizes that its disapproval of this proposed rule change does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because, as discussed below, BZX has not met its burden to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5).
As described in more detail in the Notice,
The investment objective of the Trust is to provide exposure to bitcoin at a price that is reflective of the actual bitcoin market where investors purchase and sell bitcoin, less the expense of the Trust's operations.
Each Share represents a fractional undivided beneficial interest in the bitcoin held by the Trust. The Trust's assets will consist of bitcoin held by the Custodian on behalf of the Trust. The Trust generally does not intend to hold cash or cash equivalents. However, there may be situations where the Trust will unexpectedly hold cash on a temporary basis.
The Administrator will determine the NAV and NAV per Share of the Trust on each day that the Exchange is open for regular trading, after 4:00 p.m. E.T. The NAV of the Trust is the aggregate value of the Trust's assets less its liabilities (which include estimated accrued but unpaid fees and expenses). In determining the Trust's NAV, the Administrator will value the bitcoin held by the Trust on the basis of the price of bitcoin as determined by the Reference Rate.
The Trust will provide information regarding the Trust's bitcoin holdings, as well as an Intraday Indicative Value (“IIV”) per Share updated every 15 seconds, as calculated by the Exchange or a third-party financial data provider during the Exchange's Regular Trading Hours (9:30 a.m. to 4:00 p.m. E.T.). The IIV will be calculated by using the prior day's closing NAV per Share as a base and updating that value during Regular Trading Hours to reflect changes in the value of the Trust's bitcoin holdings during the trading day.
When the Trust sells or redeems its Shares, it will do so in “in-kind” transactions in blocks of 50,000 Shares. When creating the Shares, authorized participants will deliver, or facilitate the delivery of, bitcoin to the Trust's account with the Custodian in exchange for the Shares, and, when redeeming the Shares, the Trust, through the Custodian, will deliver bitcoin to such authorized participants.
The Commission must consider whether BZX's proposal is consistent with the Exchange Act. Section 6(b)(5) of the Exchange Act requires, in relevant part, that the rules of a national securities exchange be designed “to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest.”
The description of a proposed rule change, its purpose and operation, its effect, and a legal analysis of its consistency with applicable requirements must all be sufficiently detailed and specific to support an affirmative Commission finding,
As stated above, the Commission has recognized that a listing exchange could demonstrate that other means to prevent fraudulent and manipulative acts and practices are sufficient to justify dispensing with a comprehensive surveillance-sharing agreement with a regulated market of significant size, including by demonstrating that the bitcoin market as a whole or the relevant underlying bitcoin market is uniquely and inherently resistant to fraud and manipulation.
BZX asserts that bitcoin is resistant to price manipulation. According to BZX, the geographically diverse and continuous nature of bitcoin trading render it difficult and prohibitively costly to manipulate the price of bitcoin.
The Sponsor, in a comment letter, states that it agrees with the Exchange's assertion that the bitcoin spot market is resistant to price manipulation. The Sponsor asserts that the trading of bitcoin on hundreds of spot platforms in geographically diverse locations, the dispersed nature of market liquidity, and the level of capital necessarily deployed across these platforms render an attempted manipulation of the global bitcoin spot market “challenging and highly unlikely, if not impossible.”
As with the previous proposals, the Commission here concludes that the record does not support a finding that the bitcoin market is inherently and uniquely resistant to fraud and manipulation. BZX and the Sponsor assert that, because of how bitcoin trades occur, including through continuous means and through fragmented platforms, arbitrage across the bitcoin platforms essentially helps to keep global bitcoin prices aligned with one another, thus hindering manipulation. Neither the Exchange nor the Sponsor, however, provides any data or analysis to support its assertions, either in terms of how closely bitcoin prices are aligned across different bitcoin trading venues or how quickly price disparities may be arbitraged away.
Efficient price arbitrage, moreover, is not sufficient to support the finding that a market is uniquely and inherently resistant to manipulation such that the Commission can dispense with surveillance-sharing agreements.
In addition, the Exchange makes the unsupported claim that bitcoin prices on platforms with wash trades or other activity intended to manipulate the price of bitcoin do not influence the “real” price of bitcoin. The Exchange also asserts that, to the extent that there are bitcoin platforms engaged in or allowing wash trading or other manipulative activities, market participants will generally ignore those platforms.
Additionally, the continuous nature of bitcoin trading does not eliminate manipulation risk, and neither do linkages among markets, as BZX asserts.
BZX also argues that the significant liquidity in the bitcoin spot market and the impact of market orders on the overall price of bitcoin mean that attempting to move the price of bitcoin is costly and has grown more expensive over the past year.
However, the data furnished by BZX regarding the cost to move the price of bitcoin, and the market impact of such attempts, are incomplete. BZX does not provide meaningful analysis pertaining to how these figures compare to other markets or why one must conclude, based on the numbers provided, that the bitcoin market is costly to manipulate. Further, BZX's analysis of the market impact of a mere two sample transactions is not sufficient evidence to conclude that the bitcoin market is resistant to manipulation.
Moreover, BZX does not sufficiently contest the presence of possible sources of fraud and manipulation in the bitcoin spot market generally that the Commission has raised in previous orders, which have included (1) “wash” trading,
In addition, BZX does not address risk factors specific to the bitcoin blockchain and bitcoin platforms, described in the Trust's Registration Statement, that undermine the argument that the bitcoin market is inherently resistant to fraud and manipulation. For example, the Registration Statement acknowledges that the “price of bitcoin as determined by the bitcoin market has experienced periods of extreme volatility and may be influenced by, among other things, trading activity and the closing of bitcoin trading platforms due to fraud, failure, security breaches or otherwise”; that the bitcoin blockchain could be vulnerable to a “51% attack,” in which a bad actor or actors that control a majority of the processing power dedicated to mining on the bitcoin network may be able to alter the bitcoin blockchain on which the bitcoin network and bitcoin transactions rely; that the nature of the assets held at bitcoin platforms makes them appealing targets for hackers, that some bitcoin platforms have been the victim of cybercrimes, subject to cybersecurity breaches, or “hacked,” resulting in losses, and that “[n]o bitcoin [platform] is immune from these risks”; that bitcoin platforms on which bitcoin trade are relatively new and, in some cases, largely unregulated, and, therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments; and that “[o]ver the past several years, a number of bitcoin [platforms] have been closed or faced issues due to fraud, failure, security breaches or governmental regulations.”
BZX also asserts that other means to prevent fraud and manipulation are sufficient to justify dispensing with the requisite surveillance-sharing agreement. The Exchange mentions that the Reference Rate, which is used to value the Trust's bitcoin, is itself resistant to manipulation based on the Reference Rate's methodology.
The Custodian, in a comment letter, agrees that BZX's choice of the Reference Rate, which includes a composite of bitcoin prices from underlying spot bitcoin platforms, including the Custodian's platform, is a further factor in support of the proposed ETP.
Simultaneously with these assertions regarding the Reference Rate, the Exchange also states that, because the Trust will engage in in-kind creations and redemptions only, the “manipulability of the Reference Rate [is] significantly less important.”
The Sponsor, in a comment letter, agrees that the in-kind process by which the Shares will be created and redeemed makes the Shares inherently resistant to manipulation. The Sponsor states that the “creation and redemption of Trust Shares through the in-kind exchange mechanism is solely dependent on the
Based on assertions made and the information provided, the Commission can find no basis to conclude that BZX has articulated other means to prevent fraud and manipulation that are sufficient to justify dispensing with the requisite surveillance-sharing agreement.
First, the record does not demonstrate that the proposed methodology for calculating the Reference Rate would make the proposed ETP resistant to fraud or manipulation such that a surveillance-sharing agreement with a regulated market of significant size is unnecessary.
Moreover, the Exchange's assertions that the Reference Rate's methodology helps make the Reference Rate resistant to manipulation are contradicted by the Registration Statement's own statements. Specifically, the Registration Statement states that “[b]itcoin [platforms] on which bitcoin trades . . . may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments, which could have a negative impact on the performance of the Trust.”
BZX also has not shown that its proposed use of 12 equally-sized time intervals of five minute length over the observation window between 3:00 p.m. and 4:00 p.m. E.T. to calculate the Reference Rate would effectively be able to eliminate fraudulent or manipulative activity that is not transient. Fraud and manipulation in the bitcoin spot market could persist for a “significant duration.”
The Commission thus concludes that the Exchange has not demonstrated that its Reference Rate methodology makes the proposed ETP resistant to manipulation. While the proposed procedures for calculating the Reference Rate using only prices from the Constituent Bitcoin Platforms are intended to provide some degree of protection against attempts to
Second, the Custodian asserts that the growing sophistication of market surveillance tools and strategies used by the Constituent Bitcoin Platforms, as well as the growing proportion of bitcoin activity occurring on “regulated exchanges,” “mollify concerns about price manipulation or other manipulative practices.”
The Constituent Bitcoin Platforms, on the other hand, have none of these requirements (none are registered as a national securities exchange).
Third, the Exchange does not explain the significance of the Reference Rate's purported resistance to manipulation to the overall analysis of whether the proposal to list and trade the Shares is designed to prevent fraud and manipulation. Even assuming that the Exchange's argument is that, if the Reference Rate is resistant to manipulation, the Trust's NAV, and thereby the Shares as well, would be resistant to manipulation, the Exchange has not established in the record a basis for such conclusion. That assumption aside, the Commission notes that the Shares would trade at market-based prices in the secondary market, not at NAV, which then raises the question of the significance of the NAV calculation to the manipulation of the Shares.
Fourth, the Exchange's arguments are contradictory. While arguing that the Reference Rate is resistant to manipulation, the Exchange simultaneously downplays the importance of the Reference Rate in light of the Trust's in-kind creation and redemption mechanism.
Fifth, the Commission finds that neither BZX nor the Sponsor has demonstrated that in-kind creations and redemptions provide the Shares with a unique resistance to manipulation.
Finally, the Sponsor, in a comment letter, cites to the Commission's 2004 approval of the SPDR Gold Trust as evidence that a combination of (1) a deep and liquid spot market, (2) an information-sharing agreement with a commodity futures exchange, and (3) exchange trading rules to govern the trading of ETP shares by liquidity providers, justify dispensing with the requisite surveillance-sharing agreement.
The Commission disagrees. The Commission considered and discussed the Gold Order at length in the Winklevoss Order. While the Gold Order observes that it is “not possible . . . to enter into an information sharing agreement with the OTC gold market,” the order continues: “Nevertheless, the Commission believes that the unique liquidity and depth of the gold market, together with the MOU [Memorandum of Understanding] with NYMEX (of which COMEX is a Division) and NYSE Rules 1300(b) and 1301, create the basis for the [ETP listing exchange] to monitor for fraudulent and manipulative practices in the trading of the Shares.”
As BZX has not demonstrated that other means besides surveillance-sharing agreements will be sufficient to prevent fraudulent and manipulative acts and practices, the Commission next examines whether the record supports the conclusion that BZX has entered into a comprehensive surveillance-sharing agreement with a regulated market of significant size relating to the underlying assets. In this context, the term “market of significant size” includes a market (or group of markets) as to which (i) there is a reasonable likelihood that a person attempting to manipulate the ETP would also have to trade on that market to successfully manipulate the ETP, so that a surveillance-sharing agreement would assist in detecting and deterring misconduct, and (ii) it is unlikely that trading in the ETP would be the predominant influence on prices in that market.
As the Commission has stated in the past, it considers two markets that are members of the ISG to have a comprehensive surveillance-sharing agreement with one another, even if they do not have a separate bilateral surveillance-sharing agreement.
The first prong in establishing whether the CME bitcoin futures market constitutes a “market of significant size” is the determination that there is a reasonable likelihood that a person attempting to manipulate the ETP would have to trade on the CME bitcoin futures market to successfully manipulate the ETP.
BZX notes that the CME began to offer trading in bitcoin futures in 2017.
The Sponsor, in a comment letter, adds that CME trading volume has continued to increase substantially: Increasing by approximately 220 percent in July 2021 versus July 2020; increasing by approximately 156 percent year-to-date July 2021 versus year-to-date July 2020; reaching a record daily notional traded value of $7.33 billion on February 23, 2021, and a record open interest value of $3.17 billion on February 19, 2021; and in the six-month period ending August 13, 2021, reaching an average daily trading volume of $2.20 billion and average open interest of $1.98 billion.
BZX argues that the significant growth in CME bitcoin futures across each of trading volumes, open interest, large open interest holders, and total market participants since the USBT Order was issued is reflective of that market's growing influence on the spot price. BZX asserts that where CME bitcoin futures lead the price in the spot market such that a potential manipulator of the bitcoin spot market (beyond just the Constituent Bitcoin Platforms) would have to participate in the CME bitcoin futures market, it follows that a potential manipulator of the Shares would similarly have to transact in the CME bitcoin futures market.
BZX further states that academic research corroborates the overall trend outlined above and supports the thesis that CME bitcoin futures pricing leads the spot market. BZX asserts that academic research demonstrates that the CME bitcoin futures market was already leading the spot price in 2018 and 2019.
The Sponsor, in a comment letter, also argues that there is a reasonable likelihood that a person attempting to manipulate the Shares would also have to trade on the CME to manipulate the Shares.
The Commission disagrees. The record does not demonstrate that there is a reasonable likelihood that a person attempting to manipulate the proposed ETP would have to trade on the CME bitcoin futures market to successfully manipulate it. Specifically, BZX's and the Sponsor's assertions about the general upward trends from 2018 to August 2021 in trading volume and open interest of, and in the number of large open interest holders and number of unique accounts trading in, CME bitcoin futures do not establish that the CME bitcoin futures market is of significant size. While BZX and the Sponsor provide data showing
Moreover, while the Sponsor asserts that an interrelationship exists between the CME bitcoin futures market and the Trust, on account of the Trust's Reference Rate being based materially on the same methodology as the BRTI and BRR,
Further, the econometric evidence in the record for this proposal also does not support a conclusion that an interrelationship exists between the CME bitcoin futures market and the bitcoin spot market such that it is reasonably likely that a person attempting to manipulate the proposed ETP would also have to trade on the CME bitcoin futures market to successfully manipulate the proposed ETP.
Moreover, BZX does not provide results of its own analysis and does not present any other data supporting its conclusion. BZX's unsupported representations constitute an insufficient basis for approving a proposed rule change in circumstances where, as here, the Exchange's assertion would form such an integral role in the Commission's analysis and the assertion is subject to several challenges.
The Commission accordingly concludes that the information provided in the record does not establish a reasonable likelihood that a would-be manipulator of the proposed ETP would have to trade on the CME bitcoin futures market to successfully manipulate the proposed ETP. Therefore, the
The second prong in establishing whether the CME bitcoin futures market constitutes a “market of significant size” is the determination that it is unlikely that trading in the proposed ETP would be the predominant influence on prices in the CME bitcoin futures market.
BZX asserts that trading in the Shares would not be the predominant force on prices in the CME bitcoin futures market (or spot market) because of the significant volume in the CME bitcoin futures market, the size of bitcoin's market capitalization, which is approximately $1 trillion, and the significant liquidity available in the spot market.
The Commission does not agree. The record does not demonstrate that it is unlikely that trading in the proposed ETP would be the predominant influence on prices in the CME bitcoin futures market. As the Commission has already addressed and rejected one of the bases of BZX's assertion—that CME bitcoin futures leads price discovery
BZX's assertions about the potential effect of trading in the Shares on the CME bitcoin futures market and bitcoin spot market are general and conclusory, repeating the aforementioned trade volume of the CME bitcoin futures market and the size and liquidity of the bitcoin spot market, as well as the market impact of a large transaction, without any analysis or evidence to support these assertions. For example, there is no limit on the amount of mined bitcoin that the Trust may hold. Yet BZX does not provide any information on the expected growth in the size of the Trust and the resultant increase in the amount of bitcoin held by the Trust over time, or on the overall expected number, size, and frequency of creations and redemptions—or how any of the foregoing could (if at all) influence prices in the CME bitcoin futures market. Moreover, in the Trust's Registration Statement, the Sponsor acknowledges that the Trust may acquire large size positions in bitcoin, which would increase the risk of illiquidity in the underlying bitcoin. Specifically, the Sponsor, in the Registration Statement, states that the Trust may acquire large size positions in bitcoin, which will increase the risk of illiquidity by both making the positions more difficult to liquidate and increasing the losses incurred while trying to do so, or by making it more difficult for authorized participants to acquire or liquidate bitcoin as part of the creation and/or redemption of Shares of the Trust.
The Commission also is not persuaded by BZX's assertions about the minimal effect a large market order to buy or sell bitcoin would have on the bitcoin market.
Thus, because BZX has not provided sufficient information to establish both prongs of the “market of significant size” determination, the Commission cannot conclude that the CME bitcoin futures market is a “market of significant size” such that BZX would be able to rely on a surveillance-sharing agreement with the CME to provide sufficient protection against fraudulent and manipulative acts and practices.
The requirements of Section 6(b)(5) of the Exchange Act apply to the rules of national securities exchanges. Accordingly, the relevant obligation for
BZX contends that, if approved, the proposed ETP would protect investors and the public interest. However, the Commission must consider these potential benefits in the broader context of whether the proposal meets each of the applicable requirements of the Exchange Act.
BZX asserts that, with the growth of U.S. investor exposure to bitcoin through OTC bitcoin funds, so too has grown the potential risk to U.S. investors.
According to BZX, OTC bitcoin funds are generally designed to provide exposure to bitcoin in a manner similar to the Shares. However, unlike the Shares, BZX states that “OTC bitcoin funds are unable to freely offer creation and redemption in a way that incentivizes market participants to keep their shares trading in line with their NAV and, as such, frequently trade at a price that is out-of-line with the value of their assets held.”
One commenter expresses support for the approval of bitcoin ETPs because they believe such ETPs would have lower premium/discount volatility and lower management fees than an OTC bitcoin fund.
BZX also asserts that exposure to bitcoin through an ETP also presents advantages for retail investors compared to buying spot bitcoin directly.
The Custodian, in a comment letter, echoes some of the descriptions of the custodial arrangement.
BZX further asserts that a number of operating companies engaged in unrelated businesses have announced investments as large as $1.5 billion in bitcoin.
BZX also states that investors in many other countries, including Canada, are able to use more traditional exchange-listed and traded products to gain exposure to bitcoin, disadvantaging U.S. investors and leaving them with more risky means of getting bitcoin exposure.
In essence, BZX asserts that the risky nature of direct investment in the underlying bitcoin and the unregulated markets on which bitcoin and OTC bitcoin funds trade compel approval of the proposed rule change. The Commission disagrees. Pursuant to Section 19(b)(2) of the Exchange Act, the Commission must approve a proposed rule change filed by a national securities exchange if it finds that the proposed rule change is consistent with the applicable requirements of the Exchange Act—including the requirement under Section 6(b)(5) that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices—and it must disapprove the filing if it does not make such a finding.
Here, even if it were true that, compared to trading in unregulated bitcoin spot markets, trading a bitcoin-based ETP on a national securities exchange provides some additional protection to investors, the Commission must consider this potential benefit in the broader context of whether the proposal meets each of the applicable requirements of the Exchange Act.
Pursuant to Section 19(b)(2) of the Exchange Act, the Commission must disapprove a proposed rule change filed by a national securities exchange if it does not find that the proposed rule change is consistent with the applicable requirements of the Exchange Act—including the requirement under Section 6(b)(5) that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices.
For the reasons discussed above, BZX has not met its burden of demonstrating that the proposal is consistent with Exchange Act Section 6(b)(5),
Comment letters also address the general nature and uses of bitcoin;
For the reasons set forth above, the Commission does not find, pursuant to Section 19(b)(2) of the Exchange Act, that the proposed rule change is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange, and in particular, with Section 6(b)(5) of the Exchange Act.
By the Commission.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend Rule 37 to incorporate standards of conduct for the Exchange's Trading Floor modeled on rules of the Exchange's affiliates NYSE American LLC and NYSE Arca, Inc., and to add amended Rule 37 to the list of minor rule violations in Rule 9217. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend Rule 37 (Visitors) to incorporate standards of conduct for the Exchange's Trading Floor modeled on the rules of the Exchange's affiliates NYSE American LLC (“NYSE American”) and NYSE Arca, Inc. (“NYSE Arca”), and to add amended Rule 37 to the list of minor rule violations in Rule 9217.
Rule 37 currently provides that visitors to the Floor shall not be admitted to the Floor of the Exchange except by permission of the Exchange. Historically, the behavior and conduct of members
NYSE American Rule 902NY (Admission and Conduct on the Options Trading Floor) and NYSE Arca Rule 6.2-O (Admission to and Conduct on the Options Trading Floor) specify standards of conduct and dress for persons to follow while on the NYSE American and NYSE Arca options trading floors as well requirements for trading floor badges. The rules are substantially similar.
NYSE American Rule 902NY(b) and NYSE Arca Rule 6.2-O(b) are titled “Conduct on the Floor” and provide that a permit holder may be fined upon the determination of a Trading Official that the permit holder's conduct on the options trading floor was such as to impair the maintenance of a fair and orderly market, or to impair public confidence in the operations of the exchange. The provisions of NYSE American Rule 902NY(b) and NYSE Arca Rule 6.2-O(b) also apply to a permit holder's failure to adequately supervise an employee to ensure his or her compliance with this rule. Permit holders adversely affected by a determination made under these rules may obtain review thereof consistent with other NYSE American and NYSE Arca rules, as applicable. However, fines imposed by a Trading Official under those rules do not preclude further disciplinary action by the respective exchanges.
Under NYSE American Rule 902NY(c) and NYSE Arca Rule 6.2-O(c) titled “Standards of Dress and Conduct,” all permit holders are required to act in a manner consistent with a fair and orderly market and with the maintenance of public confidence in the respective exchanges. Under the rules, all persons on the options trading floors must comply with certain standards of dress and conduct, as follows. NYSE American Rule 902NY(c)(1) and NYSE Arca Rule 6.2-O(c)(1) provide that all persons on the options trading floor, whether permit holders, employees of permit holders or visitors, shall at all times, whether prior to, during or after trading sessions, be dressed in a manner appropriate for business purposes and in accordance with good taste and professional standards. The rules provide that the term “good taste” shall be interpreted in a conservative manner. In addition, under the rules, the following requirements and prohibitions shall be observed:
• Personal attire must be neat, clean and presentable.
• All persons must wear trading jackets and/or suit or sport coats while present on the options trading floors.
• Each exchange may impose additional standards of dress or otherwise modify these standards of dress by means of a written policy that will be distributed to permit holders.
NYSE American Rule 902NY(c)(2)(A) and NYSE Arca Rule 6.2-O(c)(2)(A) specify that all persons on the trading floors are required to conduct themselves in accordance with a seemly and professional standard of behavior. No person while on the options trading floor shall:
• Engage in any act or practice that may be detrimental to the interest or welfare of the exchange (NYSE American Rule 902NY(c)(2)(A)(i) and NYSE Arca Rule 6.2-O(c)(2)(A)(i)); or
• engage in any act or practice that may serve to disrupt or hinder the ordinary and efficient conduct of business (NYSE American Rule 902NY(c)(2)(A)(ii) and NYSE Arca Rule 6.2-O(c)(2)(A)(ii)); or
• engage in any act or practice that may serve to jeopardize the safety or welfare of any other individual (NYSE American Rule 902NY(c)(2)(A)(iii) and NYSE Arca Rule 6.2-O(c)(2)(A)(iii)); or
• act in a disorderly manner, which includes, but is not limited to, the use of abusive or indecorous language (NYSE American Rule 902NY(c)(2)(A)(iv) and NYSE Arca Rule 6.2-O(c)(2)(A)(iv)).
NYSE American Rule 902NY(c)(2)(B) and NYSE Arca Rule 6.2-O(c)(2)(B) further provide that food or drink may be permitted at the discretion of the exchange and that alcoholic beverages may not be consumed on the trading floor at any time.
Under NYSE American Rule 902NY(c)(2)(C) and NYSE Arca Rule 6.2-O(c)(2)(C), smoking in any form, any kind of tobacco use, or any expectorating on the trading floor is prohibited. The prohibitions NYSE American Rule 902NY(c)(2)(C) and NYSE Arca Rule 6.2-O(c)(2)(C) apply at all times whether or not the floors are in session.
NYSE American Rule 902NY(c)(2)(D) and NYSE Arca Rule 6.2-O(c)(2)(D) prohibit running on the floor, which means any movement at a degree of speed which may disrupt other occupants of the trading floor.
NYSE American Rule 902NY(c)(2)(E) and NYSE Arca Rule 6.2-O(c)(2)(E) prohibit standing on chairs, furniture, booths, ladders, stools and similar items.
NYSE American Rule 902NY(c)(2)(F) and NYSE Arca Rule 6.2-O(c)(2)(F) provides that no object of any kind may be placed in the trading post areas if it could obstruct the flow of people in or out of the trading crowd.
Finally, NYSE American Rule 902NY(d)(1) and NYSE Arca Rule 6.2-O(d)(1) provide that admission to the trading floors is by exchange issued badge only and that, while on the trading floor, all persons must at all times display appropriate badges. The rules further provide that authorized persons seeking admission to the floor without a badge must show proper identification and obtain a temporary badge from the Security Office, and that permit holders may be subject to a processing fee related to the issuance of a temporary access badge. NYSE American Rule 902NY(d)(2) and NYSE Arca Rule 6.2-O(d)(2) govern withdrawal of trading floor badges.
The Exchange proposes to revise Rule 37 to add to NYSE Rules the standards for conduct, dress and trading badges contained in NYSE American Rule 902NY and NYSE Arca Rule 6.2-O, with certain modifications as described below, and to amend Rule 9217 to provide for minor rule fines for violations of those standards. The proposed rule change would align the Exchange's rules with those of its affiliates as it relates to both the standards members accessing and working on the Floor must follow and the application of minor rule fines for violations of those standards.
To effectuate this change, the Exchange proposes the following amendments to Rule 37.
First, Rule 37 would be renamed “Admission and Conduct on the Trading Floor” similar to the NYSE American and NYSE Arca options rules, with a difference to use the term “Trading Floor.”
Second, the existing text of Rule 37 governing admissions would be relocated to a new subsection (a) titled “Admission,” once again along the lines of the NYSE American and NYSE Arca options rules.
Third, the Exchange would adopt a new subsection (b) titled “Conduct on the Trading Floor” that would be substantially similar to NYSE American Rule 902NY(b) and NYSE Arca Rule 6.2-O(b). The proposed rule would provide that while on the Trading Floor, all members are required to act in a manner consistent with a fair and orderly market and with the maintenance of public confidence in the Exchange.
Fourth, the Exchange proposes a new subsection (c) titled “Standards of Dress and Conduct” that is also substantially similar to NYSE American Rule 902NY(c) and NYSE Arca Rule 6.2-O(c).
Proposed Rule 37(c)(1) would be titled “Standards of Dress” and would provide that all persons on the Floor, whether members, employees of member organizations or visitors, must at all times, whether prior to, during or after trading sessions, be dressed in a manner appropriate for business purposes and in accordance with good taste and professional standards. Like the NYSE American and NYSE Arca rules, proposed Rule 37(c)(1) would provide that the term “good taste” will be interpreted in a conservative manner. In addition, proposed Rule 37(c)(1) would set forth the following requirements and prohibitions:
• Proposed Rule 37(c)(1)(A) would provide that personal attire must be neat, clean and presentable.
• Proposed Rule 37(c)(1)(B) would provide that all members and employees of member organizations must wear trading jackets and/or suit or sport coats while present on the Floor.
• Proposed Rule 37(c)(1)(C) would provide that the Exchange may impose additional standards of dress or otherwise modify these standards of dress by means of a written policy that will be distributed to all members and member organizations.
Proposed Rule 37(c)(2) would be titled “Standards of Conduct.” Proposed subsection (A) of Rule 37(c)(2) would provide that all persons on the Floor are required to conduct themselves in accordance with a seemly and professional standard of behavior. Specifically, the proposed Rule would specify that no person while on the Floor shall:
• Engage in any act or practice that may be detrimental to the interest or welfare of the Exchange (proposed Rule 37(c)(2)(A)(i)); or
• engage in any act or practice that may serve to disrupt or hinder the ordinary and efficient conduct of business (proposed Rule 37(c)(2)(A)(ii)); or
• engage in any act or practice that may serve to jeopardize the safety or welfare of any other individual (proposed Rule 37(c)(2)(A)(iii)); or
• act in a disorderly manner, which includes, but is not limited to, use of abusive or indecorous language and the display or circulation of written material or graphic images that are harassing, inappropriate, offensive, and/or lewd (proposed Rule 37(c)(2)(A)(iv)).
Proposed subsection (B) of Rule 37(c)(2) would provide that entry and consumption of food or drink on the Trading Floor may be permitted at the discretion of the Exchange and that food or drink should only be consumed at the booth or post. Finally, proposed Rule 37(c)(2)(B) would provide that alcoholic beverages may not be consumed on the Trading Floor during business hours as defined in Rule 7.1 (Hours of Business). The proposed Rule differs slightly from the NYSE American and NYSE Arca rules, which prohibit consumption of alcoholic beverages at any time.
Proposed subsection (C) of Rule 37(c)(2) would prohibit smoking in any form, any kind of tobacco use, or any expectorating on the Floor and clarify that this prohibition would apply at all times. The proposed Rule is identical to the NYSE American and NYSE Arca versions.
Proposed subsection (D) of Rule 37(c)(2) would prohibit running on the Trading Floor, which the proposed Rule would define as any movement at a degree of speed which may disrupt other occupants of the Floor. Once again, the proposed Rule is identical to the NYSE American and NYSE Arca versions.
Proposed subsection (E) of Rule 37(c)(2) would prohibit standing on chairs, furniture, booths, ladders, stools and similar items. The proposed Rule is the same as NYSE American Rule 902NY(c)(2)(E) and NYSE Arca Rule 6.2-O(c)(2)(E).
Proposed subsection (F) of Rule 37(c)(2) would provide that no object of any kind may be placed in the trading post areas, including all chairs, stools or other furniture, if it could obstruct the flow of people in or out of the Trading Floor. The Exchange determined to exclude the reference to the trading crowd that appears in the NYSE American and NYSE Arca rules.
Fifth and finally, the Exchange proposes a new subsection (d) to Rule 37 titled “Trading Floor Badges.” Rule 303 (Limitation on Access to Floor) currently requires members on the Floor to be provided with a badge that must be worn while on the Floor.
Rule 9217 sets forth the list of rules under which a member organization or covered person may be subject to a fine under Rule 9216(b). Rule 9217 permits the Exchange to impose a fine of up to $5,000 on any member or covered person for a minor violation of an eligible rule.
The Exchange proposes to amend Rule 9217 to add the proposed Rule 37 provisions governing floor decorum, disruptive actions involving physical contact while on the Floor, use of abusive language, rules on visitors, abuse of Exchange property, and misuse of Exchange-issued badge or identification to the list of rules in Rule 9217 eligible for disposition pursuant to a minor fine under Rule 9216(b). Each of these violations of NYSE American Rule 902NY and NYSE Arca Rule 6.2-O are eligible for minor rule fines under those markets' respective versions of Rule 9217.
The Exchange believes that the proposed changes would have the immediate effect of aligning the Exchange's rules regarding Floor conduct and decorum with the rules of its affiliates that also have trading floors. Moreover, the Exchange believes that the proposed rule change will strengthen the Exchange's ability to carry out its oversight and enforcement responsibilities in cases where full disciplinary proceedings are unwarranted in view of the minor nature of the particular violation.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed rule change would remove impediments to and perfect the mechanism of a free and open market and a national market system by adopting the same standards as its affiliates that members accessing and working on a trading floor must follow. By providing greater harmonization between Exchange rules and those of its affiliates that also have trading floors regarding access, conduct and decorum, the proposed rule change will foster cooperation and coordination with persons engaged in facilitating transactions in securities and will remove impediments to and perfect the mechanism of a free and open market and a national market system.
Moreover, by adopting the same applicable minor rule fines for violations of those standards as its affiliates, the Exchange would promote regulatory consistency. Minor rule fines provide a meaningful sanction for minor or technical violations of rules when the conduct at issue does not warrant stronger, immediately reportable disciplinary sanctions. The inclusion of a rule in the Rule 9217 does not minimize the importance of compliance with the rule, nor does it preclude the Exchange from choosing to pursue violations of eligible rules through formal disciplinary action if the nature of the violations or prior disciplinary history warrants more significant sanctions. Rather, the Exchange believes that the proposed rule change will strengthen the Exchange's ability to carry out its oversight and enforcement responsibilities in cases where full disciplinary proceedings are unwarranted in view of the minor nature of the particular violation. The option to impose a minor rule sanction gives the Exchange additional flexibility to administer its enforcement program in the most effective and efficient manner while still fully meeting the Exchange's remedial objectives in addressing violative conduct. The proposed rule change is thus designed to prevent fraudulent and manipulative acts and practices because it will provide the Exchange the ability to issue a minor rule fine for violations of the dress, conduct and decorum requirements set forth in proposed Rule 37 where a more formal disciplinary action may not be warranted or appropriate.
The Exchange further believes that the proposed amendments to Rule 9217 are consistent with Section 6(b)(6) of the Act,
Finally, the Exchange also believes that the proposed changes are designed to provide a fair procedure for the disciplining of members and persons associated with members, consistent with Sections 6(b)(7) and 6(d) of the Act.
In accordance with Section 6(b)(8) of the Act,
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to: Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission”).
Notice.
Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (“Act”) for an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c-1 under the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the Act.
The Commission:
Jessica Shin, Attorney-Adviser, at (202) 551-3685 or Lisa Reid Ragen, Branch Chief, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
The following is a summary of the application. The complete application may be obtained via the Commission's website by searching for the file number, or for an applicant using the Company name box, at
1. The Company is a corporation organized under the laws of the State of Maryland. The Company currently consists of four series, and will consist of one or more series operating as a Fund. The Company is registered as an open-end management investment company under the Act. Applicants seek relief with respect to Funds (as defined below), including an initial Fund (the “Initial Fund”). The Funds will offer exchange-traded shares utilizing active management investment strategies as contemplated by the Reference Order.
2. The Initial Adviser, a Wisconsin corporation, will be the investment adviser to the Initial Fund. Subject to approval by the Funds' board of trustees, an Adviser (as defined below) will serve as investment adviser to each Fund. The Initial Adviser is, and any other Adviser will be, registered as an investment adviser under the Investment Advisers Act of 1940 (“Advisers Act”). The Adviser may enter into sub-advisory agreements with other investment advisers to act as sub-advisers with respect to the Funds (each a “Sub-Adviser”). Any Sub-Adviser to a Fund will be registered under the Advisers Act.
3. The Distributor, a Delaware limited liability company, is a broker-dealer registered under the Securities Exchange Act of 1934, as amended, and will act as the distributor and principal underwriter of Shares of the Funds. Applicants request that the requested relief apply to any distributor of Shares, whether affiliated or unaffiliated with the Adviser and/or Sub-Adviser. Any Distributor will comply with the terms and conditions of the Order.
4. Applicants seek the requested Order under section 6(c) of the Act for an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c-1 under the Act, and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the Act. The requested Order would permit applicants to offer Funds that utilize the NYSE Proxy Portfolio
5. Applicants request that the Order apply to the Initial Fund and to any other existing or future registered open-end management investment company or series thereof that: (a) Is advised by the Initial Adviser or any entity controlling, controlled by, or under common control with the Initial Adviser (any such entity, along with the Initial Adviser, included in the term “Adviser”); (b) offers exchange-traded shares utilizing active management investment strategies as contemplated by the Reference Order; and (c) complies with the terms and conditions of the Order and the terms and conditions of the Reference Order that are incorporated by reference into the Order (each such company or series and the Initial Fund, a “Fund”).
6. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction, or any class of persons, securities or transactions, from any provisions of the Act, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Section 17(b) of the Act authorizes the Commission to exempt a proposed transaction from section 17(a) of the Act if evidence establishes that the terms of the transaction, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned, and the transaction is consistent with the policies of the registered investment company and the general purposes of the Act. Applicants submit that for the reasons stated in the Reference Order the requested relief meets the exemptive standards under sections 6(c) and 17(b) of the Act.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
The proposed rule change consists of amendments to the Rules & Procedures (“Rules”) of NSCC in order to (i) enhance NSCC's capital requirements for Members and Limited Members (collectively, “members”), (ii) redefine NSCC's Watch List and eliminate NSCC's enhanced surveillance list, and (iii) make certain other clarifying, technical and supplementary changes in the Rules, including definitional updates, to accomplish items (i) and (ii), as described in greater detail below.
In its filing with the Commission, the clearing agency included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of this proposed rule change is to (i) enhance NSCC's capital requirements for Members and Limited Members (collectively, “members”), (ii) redefine NSCC's Watch List and eliminate NSCC's enhanced surveillance list, and (iii) make certain other clarifying, technical and supplementary changes in the Rules, including definitional updates, to accomplish items (i) and (ii).
Central counterparties (“CCPs”) play a key role in financial markets by mitigating counterparty credit risk on transactions of their participants. CCPs achieve this by providing guaranties to participants and, as a consequence, are typically exposed to credit risks that could lead to default losses.
As a CCP, NSCC is exposed to the credit risks of its members. The credit risks borne by NSCC are mitigated, in part, by the capital maintained by members, which serves as a loss-absorbing buffer.
In accordance with Section 17A(b)(4)(B) of the Exchange Act,
In furtherance of this authority, NSCC requires applicants and members to meet the relevant financial responsibility standards prescribed by the Rules. These financial responsibility standards generally require members to have and maintain certain levels of capital, as more particularly described in the Rules and below.
NSCC's capital requirements for its members have not been updated in over 20 years. Since that time, there have been significant changes to the financial markets that warrant NSCC revisiting its capital requirements. For example, the regulatory environment within which NSCC and its members operate has undergone various changes. The
There also have been significant membership changes over the past 20 years. Numerous mergers, acquisitions, and new market entrants have created a diverse NSCC membership that has expanded the credit-risk profiles that NSCC must manage. For example, NSCC has seen an increase in less capitalized market participants focusing on niche parts of the market with innovative new business models.
Additionally, trading activity and market volatility, each of which present risk to NSCC, ballooned over the years.
As for setting the specific capital requirements proposed, again, there is no regulation or formula that requires or calculates a specific amount (
In 2013, NSCC considered increasing its minimal capital requirements for members that self-clear and those that clear for others to much higher, fixed amounts than what are proposed here. However, some members expressed concerns that the amounts were too high and rigid, and would present undue burden on less capitalized firms. As such, NSCC then considered lowering the amounts considerably, such that the amounts would more directly reflect inflation but with an adjustment factor related to volume activity. In response, though, members expressed concern over the volume adjustment, which NSCC also determined to be too challenging and costly to implement, and too complex to monitor for both NSCC and members. Ultimately, NSCC settled on the current proposal, which it believes strikes the right balance between continuing to provide access for less capitalized firms and the need to mitigate risk to NSCC and its members, as described in more detail below.
NSCC also proposes to redefine the Watch List, which is a list of members that are deemed by NSCC to pose a heightened risk to it and its members based on credit ratings and other factors. As part of the redefinition of the Watch List, NSCC proposes to eliminate the separate enhanced surveillance list and implement a new Watch List that consists of a relatively smaller group of members that exhibit heightened credit risk, as described in more detail below.
Finally, NSCC proposes to make certain other clarification changes in the Rules.
The Rules currently specify capital requirements for members based on their membership type and type of entity. The current NSCC capital requirements for members are set forth in Addendum B (Qualifications and Standards of Financial Responsibility, Operational Capability and Business History),
Addendum B is divided into 12 sections, one for each NSCC membership type. Each section of Addendum B sets forth the qualifications, financial responsibility, operational capability and business history requirements applicable to the relevant membership type.
An applicant for a membership type is required to meet the qualifications, financial responsibility, operational capability and business history requirements applicable to the relevant membership type, which may vary based on the applicant's type of entity (
As relevant to NSCC's proposal to enhance its capital requirements for members:
Section 1 of Addendum B sets forth the qualifications, financial responsibility, operational capability and business history requirements applicable to Members. The financial responsibility requirements in Section 1 consist of the following capital requirements:
Section 1.B.1 of Addendum B provides that a Registered Broker-Dealer applying to be a Member must have excess net capital (
An applicant that is a Municipal Securities Brokers' Brokers (as defined in Rule 15c3-1(a)(8) under the Exchange Act)
Section 1.B.2 of Addendum B provides that a bank applying to be a Member must (i) have at least $50 million in equity capital (as defined on the Consolidated Report of Condition and Income (“Call Report”)) or (ii) have furnished to NSCC a guarantee of its parent bank holding company respecting the payment of any and all obligations of the bank applicant, and such parent bank holding company must have total consolidated capital of at least $50 million.
In the case of a trust company applying to be a Member that is not a bank but is a member of the Federal Reserve System or is an institution insured under the Federal Deposit Insurance Act, the trust company must have consolidated capital of at least $10 million and that is adequate to the scope and character of the business conducted by such trust company.
Section 1.B.3 of Addendum B provides that an entity applying to be a Member other than a Registered Broker-Dealer, bank or trust company is required to satisfy such minimum standards of financial responsibility as determined by NSCC.
Section 2 of Addendum B sets forth the qualifications, financial responsibility, operational capability and business history requirements applicable to Mutual Fund/Insurance Services Members. The financial responsibility requirements in Section 2 consist of the following capital requirements:
Section 2.B.1 of Addendum B provides that a Registered Broker-Dealer applying to be a Mutual Fund/Insurance Services Member must have excess net capital in the amount of $50,000.
Section 2.B.2 of Addendum B provides that a bank or trust company applying to be a Mutual Fund/Insurance Services Member must (i) have a Tier 1 Risk Based Capital (“RBC”) ratio of 6% or greater or (ii) with respect to trust companies which do not calculate a Tier 1 RBC ratio, have at least $2 million in equity capital.
Section 2.B.3 of Addendum B provides that an Insurance Company applying to be a Mutual Fund/Insurance Services Member must have an RBC ratio, as derived from annual statutory financial statements filed by it with its supervisory or regulatory entity (or, between filings of such annual statutory financial statements, an RBC ratio derived in a similar manner from then-current financial data), of 250% or greater.
Section 2.B.4 of Addendum B provides that an entity applying to be a Mutual Fund/Insurance Services Member other than a Registered Broker-Dealer, bank or trust company or Insurance Company is required to satisfy such minimum standards of financial responsibility as determined by NSCC.
Section 3 of Addendum B sets forth the qualifications, financial responsibility, operational capability and business history requirements applicable to Fund Members. The financial responsibility requirements in Section 3 consist of the following capital requirements:
Section 3.B.1 of Addendum B provides that a Registered Broker-Dealer applying to be a Fund Member must have excess net capital in the amount of $50,000.
Section 3.B.2 of Addendum B provides that a bank or trust company applying to be a Fund Member must (i) have a Tier 1 RBC ratio of 6% or greater or (ii) with respect to trust companies which do not calculate a Tier 1 RBC ratio, have at least $2 million in equity capital.
Section 3.B.3 of Addendum B provides that an investment company applying to be a Fund Member must have at least $100,000 in assets under management.
Section 3.B.4 of Addendum B provides that an investment adviser applying to be a Fund Member must have at least $25,000,000 in assets under management and $100,000 in total net worth.
Section 3.B.5 of Addendum B provides that an Insurance Company applying to be a Fund Member must have an RBC ratio, as derived from annual statutory financial statements filed by it with its supervisory or regulatory entity (or, between filings of such annual statutory financial statements, an RBC ratio derived in a similar manner from then-current financial data), of 250% or greater.
Section 3.B.6 of Addendum B provides that an entity applying to be a Fund Member other than a Registered Broker-Dealer, bank or trust company, investment company, investment adviser or Insurance Company is required to satisfy such minimum standards of financial responsibility as determined by NSCC.
Section 4 of Addendum B sets forth the qualifications, financial responsibility, operational capability and business history requirements applicable to Insurance Carrier/Retirement Services Members. The financial responsibility requirements in Section 4 consist of the following capital requirement:
Section 4.B of Addendum B provides that an Insurance Company applying to be an Insurance Carrier/Retirement Services Member must have an RBC ratio, as derived from annual statutory financial statements filed by it with its supervisory or regulatory entity (or, between filings of such annual statutory financial statements, an RBC ratio derived in a similar manner from then-current financial data), of 250% or greater.
Section 7 of Addendum B sets forth the qualifications, financial responsibility and operational capability requirements applicable to Settling Bank Only Members. The financial responsibility requirements in Section 7 consist of the following capital requirement:
Section 7.B of Addendum B provides that a bank or trust company applying to be a Settling Bank Only Member is required to satisfy such minimum standards of financial responsibility as determined by NSCC.
Addendum O (Admission of Non-U.S. Entities as Direct NSCC Members) provides that an entity that is organized in a country other than the United States and that is not otherwise subject to U.S. federal or state regulation (a “non-U.S. entity”) is eligible to become a Member, Mutual Fund/Insurance Services Member, Fund Member or Insurance Carrier/Retirement Services Member, subject to certain conditions.
One of the conditions for a non-U.S. entity to be admitted as a Member, Mutual Fund/Insurance Services Member, Fund Member or Insurance Carrier/Retirement Services Member is that the entity must provide NSCC, for financial monitoring purposes, audited financial statements prepared in accordance with either U.S. generally accepted accounting principles (“U.S. GAAP”) or other generally accepted accounting principles that are satisfactory to NSCC.
In order to address the risk presented by the acceptance of financial statements not prepared in accordance with U.S. GAAP, Addendum O provides that the minimum financial requirements applicable to a non-U.S. entity will be subject to a specified premium, as follows:
i. For financial statements prepared in accordance with International Financial Reporting Standards, the U.K. Companies Act of 1985 (“U.K. GAAP”), or Canadian generally accepted accounting principles—a premium of 1
ii. for financial statements prepared in accordance with a European Union country's generally accepted accounting principles, other than U.K. GAAP—a premium of 5 times the minimum financial requirements; and
iii. for financial statements prepared in accordance with any other type of generally accepted accounting principles—a premium of 7 times the minimum financial requirements.
Accordingly, a non-U.S. entity that does not prepare its financial statements in accordance with U.S. GAAP is required to meet financial requirements between 1
NSCC's Watch List is a list of members that are deemed by NSCC to pose a heightened risk to it and its members based on credit ratings and other factors.
Specifically, the Watch List is the list of Members with credit ratings derived from NSCC's Credit Risk Rating Matrix (“CRRM”)
In addition to the Watch List, NSCC also maintains a separate list of members subject to enhanced surveillance in accordance with the provisions of Rule 2B, as discussed below. The enhanced surveillance list is a list of members for which NSCC has heightened credit concerns, which may include members that are already, or may soon be, on the Watch List. As described below, a member is subject to the same potential consequences from being subject to enhanced surveillance or being placed on the Watch List.
Rule 2B (Ongoing Membership Requirements and Monitoring) specifies the ongoing membership requirements and monitoring applicable to members.
Section 2.B.(e) of Rule 2B provides that NSCC may review the financial responsibility and operational capability of a Member and otherwise require from the Member additional reporting of its financial or operational condition in order to make a determination as to whether such Member should be placed on the Watch List and/or be subject to enhanced surveillance by NSCC consistent with the provisions of Section 4 of Rule 2B.
Section 4(b) of Rule 2B provides that a Member that is (1) a U.S. bank or trust company that files a Call Report, (2) a U.S. broker-dealer that files the Financial and Operational Combined Uniform Single Report (“FOCUS Report”) or the equivalent with its regulator, or (3) a non-U.S. bank or trust company that has audited financial data that is publicly available, will be assigned a credit rating by NSCC in accordance with the CRRM. A Member's credit rating is reassessed each time the Member provides NSCC with requested information pursuant to Section 2.B.(e) of Rule 2B or as may be otherwise required under the Rules.
Section 4(b) further provides that because the factors used as part of the CRRM may not identify all risks that a Member assigned a credit rating by NSCC may present to NSCC, NSCC may, in its discretion, override such Member's credit rating derived from the CRRM to downgrade the Member. This downgrading may result in the Member being placed on the Watch List and/or it may subject the Member to enhanced surveillance based on relevant factors.
Section 4(c) of Rule 2B provides that Members not assigned a credit rating by NSCC and Limited Members monitored and reviewed by NSCC on an ongoing and periodic basis will not be assigned a credit rating by the CRRM but may be placed on the Watch List and/or may be subject to enhanced surveillance based on relevant factors.
Section 4(d) of Rule 2B provides that the factors to be considered by NSCC in determining whether a member is placed on the Watch List and/or subject to enhanced surveillance include (i) news reports and/or regulatory observations that raise reasonable concerns relating to the member, (ii) reasonable concerns around the member's liquidity arrangements, (iii) material changes to the member's organizational structure, (iv) reasonable concerns about the member's financial stability due to particular facts and circumstances, such as material litigation or other legal and/or regulatory risks, (v) failure of the member to demonstrate satisfactory financial condition or operational capability or if NSCC has a reasonable concern regarding the member's ability to maintain applicable membership standards, and (vi) failure of the member to provide information required by NSCC to assess risk exposure posed by the member's activity.
Section 4(e) of Rule 2B provides that NSCC may require a member that has been placed on the Watch List to make and maintain a deposit to the Clearing Fund over and above the amount determined in accordance with Procedure XV (Clearing Fund Formula and Other Matters) (which additional deposit shall constitute a portion of the member's Required Fund Deposit) or such higher amount as NSCC may deem necessary for the protection of it or other members.
Section 4(f) of Rule 2B provides that a member being subject to enhanced surveillance or being placed on the Watch List (1) will result in a more thorough monitoring of the member's financial condition and/or operational capability, including on-site visits or additional due diligence information requests, and (2) may be required make more frequent financial disclosures to NSCC. Members and Limited Members that are placed on the Watch List or subject to enhanced surveillance are also reported to NSCC's management committees and regularly reviewed by NSCC senior management.
As noted earlier, as a CCP, NSCC is exposed to the credit risks of its members. The credit risks borne by NSCC are mitigated, in part, by the capital maintained by members, which serves as a loss-absorbing buffer.
NSCC's financial responsibility standards for members generally require members to have and maintain certain levels of capital.
As described in more detail below, NSCC proposes to enhance its capital requirements for members as follows:
NSCC proposes increasing minimum excess net capital (“Excess Net Capital”) requirements for Members that are U.S. broker-dealers using a tiered approach.
Unlike the current capital requirements applicable to Registered Broker-Dealers, the proposed enhanced capital requirements for U.S. broker-dealers would result in those Members whose NSCC activity poses greater risk to NSCC being required to have and maintain greater levels of Excess Net Capital in line with the increased risk.
As is the case with the current capital requirements applicable to Registered Broker-Dealers, the enhanced capital requirements for U.S. broker-dealers would depend on whether a Member self-clears or clears for others. A broker-dealer that clears transactions for others has the potential to present different and greater risks to NSCC than a broker-dealer that clears transactions only for itself, and it is therefore appropriate for such broker-dealer to be subject to heightened capital requirements versus a broker-dealer that clears transactions only for itself.
As described in more detail below, the proposed minimum Excess Net Capital increases will help ensure NSCC's ongoing compliance with regulatory requirements and expectations related to credit risk, such as those addressed in CCAS Rules 17Ad-22(e)(4)(i) and (e)(18).
Under the proposal, a Member that is a U.S. broker-dealer must have and maintain at all times minimum Excess Net Capital as follows:
The VaR Tier in the table above is based on the daily volatility component of a Member's Net Unsettled Positions calculated as of the start of each Business Day pursuant to Procedure XV of the Rules
Upon moving to a greater VaR Tier, a Member would then have 60 calendar days from the date of the move to meet the higher required minimum Excess Net Capital for such VaR Tier. If a Member fails to meet its higher required minimum Excess Net Capital within 60 calendar days and maintain it for so long as such higher required minimum Excess Net Capital applies, NSCC may take any and all action against the Member pursuant to the Rules.
Upon moving to a greater VaR Tier, a Member would remain in that greater VaR Tier for no less than one continuous year from the date of the move before being eligible to move to a lesser VaR Tier. This does not in any way preclude a Member from moving to an even greater VaR Tier (if any) in accordance with the requirements of this proposal.
NSCC believes that allowing a Member's daily volatility component to exceed its then-current VaR Tier four times over a rolling 12-month period before the Excess Net Capital requirement would increase provides some flexibility for Members in the
A Member would move to a lesser VaR Tier (if any) when (i) the Member has remained in its then-current VaR Tier for no less than one continuous year, (ii) the Member's daily volatility component did not exceed such lesser VaR Tier on five instances or more over the preceding 12-month period and (iii) if at any time the Member's daily volatility component did exceed such lesser VaR Tier on five instances or more over a rolling 12-month period, the Member has remained in its then-current VaR Tier for no less than one continuous year from the date of each such instance.
For example, if a Member's daily volatility component exceeds the lesser VaR Tier for the fifth time over a rolling 12-month period on February 1, 2021, then the Member would remain in its then-current VaR Tier until at least January 31, 2022. If the same Member's daily volatility component then exceeds the lesser VaR Tier for the sixth time over a rolling 12-month period on February 15, 2021, then the Member would remain in its then-current VaR Tier until at least February 14, 2022. This does not in any way preclude a Member from moving to an even greater VaR Tier (if any) in accordance with the requirements of this proposal.
Newly admitted Members would be placed into the applicable middle VaR Tier in the table above unless NSCC determines, based on information provided by or concerning the Member, that the Member's anticipated VaR Tier for its anticipated trading activity would be the greatest VaR Tier, in which case the Member would be placed into the greatest VaR Tier. Any such determination would be promptly communicated to, and discussed with, the Member. A newly admitted Member would remain in its initial VaR Tier until it moves to a different VaR Tier in accordance with the requirements of this proposal.
Based on its historical experience with the daily volatility components of newly admitted Members, including such Members' own projected trading activity,
NSCC proposes to move the existing capital requirements for Members that are Municipal Securities Brokers' Brokers or Municipal Securities Brokers' Broker sponsored account applicants to the end of Section 1.B.1 of Addendum B with some clarifying changes to improve the accessibility and transparency of these capital requirements, without substantive effect.
NSCC proposes to (1) change the measure of capital requirements for U.S. banks and trust companies from equity capital to common equity tier 1 capital (“CET1 Capital”),
NSCC proposes to change the measure of capital requirements for U.S. banks and trust companies from equity capital to CET1 Capital and raise the minimum capital requirements for U.S. banks and trust companies in order to align NSCC's capital requirements with banking regulators' changes to regulatory capital requirements over the past several years, which have standardized and harmonized the calculation and measurement of bank capital and leverage throughout the world.
In addition, requiring U.S. banks and trust companies to be Well Capitalized ensures that Members are well capitalized while also allowing adjusted capital to be relative to either the risk-weighted assets or average total assets of the bank or trust company. NSCC proposes to have the definition of Well Capitalized expressly tied to the FDIC's definition of “well capitalized” to ensure that the proposed requirement that U.S. banks and trust companies be Well Capitalized will keep pace with future changes to banking regulators' regulatory capital requirements.
Under the proposal, a Member that is a U.S. bank or a U.S. trust company that is a bank must (1) have and maintain at all times at least $500 million in CET1 Capital and be Well Capitalized at all times or (2) have furnished to NSCC a guarantee of its parent bank holding company respecting the payment of any and all obligations of the Member, and such parent bank holding company must have and maintain at all times CET1 Capital of at least $500 million and be Well Capitalized at all times.
NSCC does not propose to change the existing capital requirements applicable to a Member that is a U.S. trust company that is not a bank, although NSCC is proposing to make some clarifying and conforming language changes to improve the accessibility and transparency of these capital requirements, without substantive effect.
NSCC treats U.S. trust companies that are banks and non-banks differently because they present different risks based on the attendant risks of their business activities, with trust companies engaging in banking activities (
NSCC proposes to impose a minimum capital requirement of $25 million in total equity capital for Members that are non-U.S. broker-dealers.
NSCC proposes to require a Member that is a non-U.S. bank (including a U.S. branch or agency) to (1) (A) have and maintain at all times at least $500 million in CET1 Capital and comply at all times with the minimum capital requirements (including, but not limited to, any capital conservation buffer, countercyclical buffer, and any D-SIB or G-SIB buffer, if applicable) and capital ratios required by its home country regulator, or, if greater, with such minimum capital requirements or capital ratios standards promulgated by the Basel Committee on Banking Supervision,
As described above, pursuant to Addendum O (Admission of Non-U.S. Entities as Direct NSCC Members),
The multiplier was designed to account for the less transparent nature of accounting standards other than U.S. GAAP. However, accounting standards have converged over the years (namely International Financial Reporting Standards (“IFRS”) and U.S. GAAP).
Accordingly, NSCC proposes to delete the language in Addendum O providing that the minimum capital requirements for a Member, Mutual Fund/Insurance Services Member, Fund Member or Insurance Carrier/Retirement Services Member that does not prepare its financial statements in accordance with U.S. GAAP is subject to a multiplier that requires such members to have capital between 1
As described above, NSCC also proposes that non-U.S. banks be compliant with the minimum capital requirements and capital ratios in their home jurisdiction. Given the difficulty in knowing and monitoring compliance with various regulatory minimums for various jurisdictions, these Members would be required to provide NSCC with periodic attestations relating to the minimum capital requirements and capital ratios for their home jurisdiction.
NSCC also proposes to make some clarifying language changes to Addendum O to replace references to undefined capitalized terms and improve the accessibility of Addendum O, without substantive effect.
NSCC also proposes that (1) a Member that is (A) a national securities exchange registered under the Exchange Act and/or (B) a non-U.S. securities exchange or multilateral trading facility, must have and maintain at all times at least $100 million in equity capital, (2) a Member that is a broker-dealer that is acting as an Index Receipt Agent must have and maintain at all times minimum Excess Net Capital of $100 million, and (3) for a type of applicant or Member that is not otherwise addressed above, (A) such applicant or Member must maintain compliance with its home country regulator's minimum financial requirements at all times and (B) NSCC may, based on information provided by or concerning an applicant or Member, also assign minimum financial requirements to such applicant or Member based on how closely it resembles another membership type and its risk profile. Any such assigned minimum financial requirements would be promptly communicated to, and discussed with, the applicant or Member.
In the case of Index Receipt Agents, the higher capital requirement for this subset of Members is being proposed in order to reflect the systemic risk presented by the potential failure of an Index Receipt Agent. The failure of an Index Receipt Agent could present systemic risk because such failure could potentially result in disruptions at the exchange-traded funds (“ETFs”) for which the Index Receipt Agent acts. As a result of this systemic risk, Members acting as Index Receipt Agents require a moderately sized capital base to support this business function. Similarly, NSCC proposes to create a standard capital requirement for Members that are securities exchanges due to the systemic importance of these Members and the need to hold these Members to a consistent, high standard to ensure that they have sufficient capital to fulfill their systemically important role.
NSCC proposes that a Mutual Fund/Insurance Services Member, Fund Member or Settling Bank Only Member that is a U.S. bank or trust company that, in accordance with such entity's regulatory and/or statutory requirements, calculates a Tier 1 RBC Ratio must have at all times a Tier 1 RBC Ratio equal to or greater than the Tier 1 RBC Ratio that would be required for such entity to be Well Capitalized. As discussed above, NSCC proposes to have the definition of Well Capitalized expressly tied to the FDIC's definition of “well capitalized” to ensure that the proposed requirement that U.S. banks and trust companies be Well Capitalized will keep pace with future changes to banking regulators' regulatory capital requirements. Similarly, NSCC proposes to add a new defined term of “Tier 1 RBC Ratio” to Rule 1 in order to replace a reference to an undefined term in the Rules with its intended meaning. Under the proposal, Tier 1 RBC Ratio would be defined as the ratio of an entity's tier 1 capital to its total-risk weighted assets, calculated in accordance with such entity's regulatory and/or statutory requirements.
NSCC proposes to clarify existing language providing that a Mutual Fund/Insurance Services Member or Fund Member that is a U.S. trust company that does not calculate a Tier 1 RBC Ratio must have at least $2 million in equity capital, without substantive effect. Relatedly, NSCC proposes to revise the definition of “RBC Ratio,” which is used in the capital requirements for Mutual Fund/Insurance Services Members, Fund Members and Insurance Carrier/Retirement Services Members, in the list of defined terms in Rule 1 for clarity in order to replace a reference to an undefined capitalized term with its intended meaning and to remove unnecessary limitations on the types of entities and legal requirements to which the term RBC Ratio applies.
For a Limited Member that is a non-U.S. entity not described in the section of Addendum B that applies to such type of Limited Member, such entity would be required to satisfy such minimum standards of financial responsibility as determined in accordance with such section of Addendum B.
NSCC proposes to make it clear throughout Addendum B that following an applicant's admission to membership it is required to continue meeting the qualifications, financial responsibility, operational capability and business history requirements as applicable to its membership type.
NSCC also proposes to add the word “requirements” in one place in the introduction to improve readability.
NSCC proposes to clarify, without substantive effect, the existing language in Sections 2.B and 3.B of Addendum B that if a member is not of a type otherwise addressed in such section, it will be required to satisfy such minimum standards of financial responsibility as determined by NSCC. Any such assigned minimum financial requirements would be promptly communicated to, and discussed with, the member.
NSCC also proposes to add a sentence to the end of Sections 5.B and 6.B of Addendum B that any assigned minimum standards of financial responsibility for Municipal Comparison Only Members and Data Services Only Members, respectively, would be promptly communicated to, and discussed with, such members.
At the end of Sections 1.B, 2.B and 3.B of Addendum B, NSCC proposes to make explicit that, notwithstanding anything to the contrary in such section, an applicant or member must maintain compliance with its home country regulator's minimum financial requirements at all times.
NSCC is proposing to revise the headings in Section 1.B referring to a Member's type of entity to read “U.S. Broker-Dealers,” “U.S. Banks and Trust Companies,” “Non-U.S. Broker-Dealers and Banks,” “Securities Exchanges,” “Index Receipt Agents” and “Others,” in conformity with the above-described changes to Member financial responsibility requirements.
NSCC proposes to clarify and simplify the language describing the capital requirement for a Mutual Fund/Insurance Services Member that is a Registered Broker-Dealer or an Insurance Company, without substantive effect.
NSCC proposes to revise the heading “Banks and trust companies” in Section 2.B to read “U.S. Banks and Trust Companies” in conformity with the same change made in Section 1.B.
NSCC proposes to clarify and simplify the language describing the capital requirement for a Fund Member that is a Registered Broker-Dealer, investment company, investment adviser or
NSCC proposes to revise the heading “Banks or trust companies” in Section 3.B to read “U.S. Banks and Trust Companies” in conformity with the same changes made in Sections 1.B and 2.B.
NSCC proposes to clarify and simplify the language describing the capital requirement for an Insurance Carrier/Retirement Services Member, without substantive effect.
As noted above, NSCC proposes to make it clear in Sections 5 through 12 of Addendum B that following an applicant's admission to membership it is required to continue meeting the qualifications, financial responsibility, operational capability and business history requirements as applicable to its membership type.
NSCC proposes to redefine the Watch List and eliminate the separate enhanced surveillance list and instead implement a new Watch List that consists of a relatively smaller group of members that pose heightened risk to NSCC and its members.
NSCC believes that the current system of having both a Watch List and an enhanced surveillance list (which include some of the same members) has confused various NSCC stakeholders, while the proposed approach, as NSCC understands from its experience, would be more consistent with industry practices and understanding of a “Watch List.”
The new Watch List would include Members with a CRRM rating of 6 or 7, as well as members that are deemed by NSCC to pose a heightened risk to it and its members. The separate enhanced surveillance list would be merged into the new Watch List and references to the separate enhanced surveillance list would be deleted from the Rules.
In sum, the new Watch List would consist of members on the existing enhanced surveillance list, Members with a CRRM rating of 6 or 7, and any other members that are deemed by NSCC to pose a heightened risk to it and its members.
The proposed change will mean that Members with a CRRM rating of 5 would no longer automatically be included on the Watch List. Members with a CRRM rating of 5 represent the largest single CRRM rating category, but NSCC does not believe all such Members present heightened credit concerns.
NSCC also proposes to clarify in Section 4(f) of Rule 2B that members on the Watch List are reported to NSCC's management committees and regularly reviewed by NSCC's senior management.
In connection with the above-described changes to the Rules to enhance NSCC's capital requirements for members and redefine the Watch List and eliminate the enhanced surveillance list, NSCC proposes to make certain other clarification changes in order to improve the accessibility and transparency of the Rules, as follows:
NSCC proposes to revise Section 4(g) of Rule 2B to clarify the relationship between NSCC and a parent bank holding company of a Member that has guaranteed the obligations of the Member in accordance with Addendum B, and to delete the unnecessary word “affiliated” when referring to a material banking subsidiary of such parent bank holding company.
NSCC proposes to clarify Rule 7, Section 4
NSCC also proposes to revise Section 1 of Rule 46
Beginning in June 2019, NSCC conducted outreach to various Members in order to provide them with advance notice of the proposed enhancements to NSCC's capital requirements, the proposed redefinition of the Watch List, and the proposed elimination of the enhanced surveillance list. NSCC has been in communication with all Members whose current capital levels are either below the proposed minimum capital requirements or only slightly above the proposed requirements. Any such Members have been informed of the new requirement that would be in effect 12 months after approval of the proposed changes. Following approval, NSCC again would contact any Members that are either below or only slightly above the new minimum requirement to remind them of their new capital requirement and the 12-month grace period in which to come into compliance with the new requirement.
NSCC has received some written feedback from Members on the proposed enhancements to NSCC's capital requirements for certain Members, which are discussed in Item 4 below. The Commission will be notified of any additional written comments received.
NSCC has not conducted outreach to members providing them with advance notice of the proposed clarification changes to the Rules.
Pending Commission approval, NSCC would implement the proposed changes to enhance its capital requirements for members one year after the Commission's approval of this proposed rule change. During that one-year period, NSCC would periodically provide Members with estimates of their capital requirements, based on the approved changes, with more outreach expected for Members impacted by the changes. NSCC would inform a Member that is a U.S. broker-dealer (“BD Member”) if it exceeded its then-current VaR Tier, which may lead to the BD Member moving into a higher VaR Tier and, thus, being subject to a higher capital requirement. Same as the proposed, ongoing practice post-implementation, NSCC would provide the Member with a grace period of 60 days from the date of implementation to comply with the higher requirement.
The deferred implementation for all members and the estimated capital requirements for Members are designed to give members the opportunity to assess the impact of their enhanced capital requirements on their business profile and make any changes that they deem necessary to lower their capital requirement. All members would be advised of the implementation date of these proposed changes through issuance of an NSCC Important Notice,
NSCC expects to implement the proposed changes to redefine the Watch List and eliminate the enhanced surveillance list, as well as the clarification changes to the Rules, within 90 days of Commission approval. All members would be advised of such implementation through issuance of an NSCC Important Notice, posted to its website.
NSCC believes that the proposed rule change is consistent with the requirements of the Exchange Act, and the rules and regulations thereunder applicable to a registered clearing agency. Specifically, NSCC believes that the proposed rule change is consistent with Section 17A(b)(3)(F) of the Exchange Act
Section 17A(b)(3)(F) of the Exchange Act requires, in part, that the Rules be designed to promote the prompt and accurate clearance and settlement of securities transactions.
Rule 17Ad-22(b)(7) under the Exchange Act requires, in part, that NSCC establish, implement, maintain and enforce written policies and procedures reasonably designed to provide a person that maintains net capital equal to or greater than $50 million with the ability to obtain membership at NSCC, provided that NSCC may provide for a higher net capital requirement as a condition for membership if it demonstrates to the Commission that such a requirement is necessary to mitigate risks that could not otherwise be effectively managed by other measures.
Rule 17Ad-22(e)(4)(i) under the Exchange Act requires that NSCC establish, implement, maintain and enforce written policies and procedures reasonably designed to effectively identify, measure, monitor, and manage its credit exposures to participants and those arising from its payment, clearing, and settlement processes, including by maintaining sufficient financial resources to cover its credit exposure to each participant fully with a high degree of confidence.
Rule 17Ad-22(e)(18) under the Exchange Act requires that NSCC establish, implement, maintain and enforce written policies and procedures reasonably designed to establish objective, risk-based, and publicly disclosed criteria for participation, which permit fair and open access by direct and, where relevant, indirect participants and other financial market utilities, require participants to have sufficient financial resources and robust operational capacity to meet obligations arising from participation in the clearing agency, and monitor compliance with such participation requirements on an ongoing basis.
Rule 17Ad-22(e)(19) under the Exchange Act requires that NSCC establish, implement, maintain and enforce written policies and procedures reasonably designed to identify, monitor, and manage the material risks to NSCC arising from arrangements in which firms that are indirect participants in NSCC rely on the services provided by direct participants to access NSCC's payment, clearing, or settlement facilities.
NSCC believes that the proposed rule change to enhance its capital requirements for BD Members could have an impact upon competition because some BD Members could be required to maintain capital in excess of their current capital levels. That impact could impose a burden on competition on some of those BD Members because they may bear higher costs to raise capital in order to comply with the enhanced capital requirements.
Consistent with that belief, NSCC received three written comments from three BD Members arguing that the proposed enhancements to the capital requirements for BD Members (“Proposed BD Requirements”) could negatively affect smaller BD Members.
Two of the commenters argue that the Proposed BD Requirements will unfairly discriminate against small BD Members in favor of the largest BD Members,
Two of the commenters argue that the Proposed BD Requirements will create barriers to entry.
Regarding the proposed VaR Tiers for BD Members, one commenter suggests that the proposed tiering scale should
NSCC values each of its BD Members and does not wish to create a competitive burden on any of them or any of their clients. The Proposed BD Requirements were not designed to discriminate against any BD Members (small, medium, or large), create a barrier to NSCC membership, or force any BD Member to clear through another financial institution or exit the business completely. Rather, as discussed above and below, the Proposed BD Requirements were designed and tailored to help address the specific risks presented by BD Members within the current industry environment.
Nevertheless, NSCC fully appreciates that the Proposed BD Requirements may result in a burden on competition for some BD Members that would need to raise or keep more capital on hand in order to comply with the new requirements, although NSCC does not believe that any such burden on competition would be significant. In any event, to the extent the Proposed BD Requirements would be a burden on competition, NSCC believes that the burden would be necessary and appropriate in furtherance of the purposes of the Exchange Act, as permitted by Section 17A(b)(3)(I) thereunder.
NSCC believes the Proposed BD Requirements are necessary because, in short, the current requirements are outdated. As noted above, the current minimum capital requirements for members have not been adjusted in over 20 years. Meanwhile, there have been significant changes to the industry (
There also have been significant membership changes over the past 20 years. Numerous mergers, acquisitions, and new market entrants have created a diverse NSCC membership that has expanded the credit-risk profiles that NSCC must manage. For example, NSCC has seen an increase in less capitalized market participants focusing on niche parts of the market with innovative new business models.
Additionally, as mentioned above, trading activity and market volatility, each of which present risk to NSCC, ballooned over the years.
Moreover, stress testing has also highlighted that BD Members with smaller capital bases are exposed to the risk of losses exceeding their current Excess Net Capital requirements under a stressed scenario.
Appreciation of these greater risks have manifested into new regulatory requirements for certain industry participants,
Therefore, NSCC believes the Proposed BD Requirements are necessary in furtherance of the purposes of the Exchange Act, as permitted by Section 17A(b)(3)(I) thereunder,
NSCC believes the Proposed BD Requirements are appropriate for a variety of reasons. First, the new requirements are tailored to better reflect the volatility risk presented by BD Members. Currently, the minimum capital requirement for BD Members is simply an amount of Excess Net Capital based on membership type (
In the case of new applicants for NSCC membership, as described above, if the Proposed BD Requirements had been in effect for the past two years, but newly admitted BD Members were not automatically placed in at least the middle VaR Tier, only one BD Member would have belonged in the lowest VaR Tier at admittance, and that firm would have moved to the middle VaR Tier in its second month of membership.
In response to specific comments that the VaR Tiers begin at too low of a level and that they should continue indefinitely,
Second, while NSCC believes members must understand the risks that their capitalization presents to NSCC and be prepared to monitor their capitalization and alter their behavior in order to minimize that risk, as necessary, NSCC also appreciates and understands that members must be able to plan for their capital requirements. That is why NSCC would not implement the proposed changes to any of the enhanced capital requirements until one year after the Commission's approval of the proposal. During that one-year period, NSCC would periodically provide Members with estimates of their capital requirements. The deferred implementation for all members and the estimated capital requirements for Members are designed to give members the opportunity to assess the impact of their enhanced capital requirements on their business profile and make any changes that they deem necessary.
Third, in response to the specific comment that the Proposed BD Requirements are at odds with the goals of the Exchange Act,
Finally, NSCC believes that the Proposed BD Requirements would better align NSCC's capital requirements for members with those of other CCPs, both in the U.S. and abroad.
Therefore, NSCC believes the Proposed BD Requirements are appropriate in furtherance of the purposes of the Exchange Act, as permitted by Section 17A(b)(3)(I) thereunder,
NSCC does not believe the proposed changes to enhance the capital requirements for its other members would impact competition because such members already meet the proposed requirements. Additionally, NSCC does not believe that the proposed changes to (i) redefine the Watch List and eliminate the enhanced surveillance list and (ii) make clarification changes to the Rules would impact competition. Redefining the Watch List and eliminating the enhanced surveillance list are simply intended to streamline and clarify these monitoring practices. If anything, by no longer automatically including Members with a CRRM rating of 5 on the Watch List, as proposed, the change could promote competition for such Members, as such Members would no longer automatically be subject to increased scrutiny by NSCC, including the possibility of increased financial and reporting obligations. Meanwhile, making clarification changes to the Rules to ensure that they remain accessible and transparent would help facilitate members' understanding of the Rules and provide members with increased predictability and certainty regarding their rights and obligations with respect to NSCC's clearance and settlement activities.
All written comments received by NSCC have been summarized and responded to in Item 4 (Self-Regulatory Organization's Statement on Burden on Competition) above. If any additional written comments are received, NSCC will amend this filing to publicly file such comments as an Exhibit 2 to this filing, as required by Form 19b-4 and the General Instructions thereto.
Persons submitting written comments are cautioned that, according to Section IV (Solicitation of Comments) of the Exhibit 1A in the General Instructions to Form 19b-4, the Commission does not edit personal identifying information from comment submissions. Commenters should submit only information that they wish to make available publicly, including their name, email address, and any other identifying information.
All prospective commenters should follow the Commission's instructions on
NSCC reserves the right to not respond to any comments received.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Exchange Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend Sections 902.02, 902.03 and 902.11 of the NYSE Listed Company Manual (the “Manual”) to amend certain of its listing fees. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend certain of its listing fees set forth in Chapter 9 of the Manual. Changes to initial listing fees will take effect immediately and changes to annual fees will take effect from the beginning of the calendar year commencing on January 1, 2022. The proposed amendments only reflect changes in the amounts charged for the initial listing of securities and on an annual basis thereafter and do not reflect any change in the services provided to the issuer in connection with such listing.
Currently, when an issuer first lists a class of common shares (
In addition, the Exchange proposes to change the annual fee set forth in Section 902.03 of the Manual from $0.00113 per share to $0.00117 per share for each of the following: A primary class of common shares (including Equity Investment Tracking Stocks); each additional class of common shares (including tracking stock); a primary class of preferred stock (if no class of common shares is listed); each additional class of preferred stock (whether primary class is common or preferred shares); and each class of warrants. In addition, the minimum annual fee will be increased from $71,000 to $74,000 for each of (i) a primary class of common shares (including Equity Investment Tracking Stocks) and (ii) a primary class of preferred stock (if no class of common shares is listed). The proposed increase in the per share rates and the minimum fees reflect increases in the costs the Exchange incurs in providing services to listed companies on an ongoing basis, as well as increases in the costs of conducting its related regulatory activities. The Exchange does not propose to increase the minimum annual fees charged for additional classes of common shares (including tracking stocks), preferred stocks that are not the primary listed equity security, or warrants. The Exchange believes that the benefits issuers receive in connection with those listings are consistent with the current minimum fee levels, as those types of listings do not generally entitle issuers to the types of services provided in connection with a primary common stock listing or primary preferred stock listing and the Exchange has therefore not incurred the same level of cost increase associated with them.
Section 902.03 includes a paragraph describing the application of the initial listing fee as currently in effect in the situation where a listed real estate investment trust (“REIT”) is structured as an umbrella partnership real estate investment trust (“UPREIT”) and the operating partnership through which the REIT holds its assets is also listed on the Exchange. In such cases, the initial listing fees are applied to those two issuers on a combined basis at the time of initial listing and the bill is divided between the two issuers so that the REIT will be billed an amount equal to the same percentage of the minimum or maximum fee amount as the REIT's ownership interest in the operating partnership represents of the total equity of the operating partnership. Consistent with the adoption of a flat initial listing fee of $295,000, the Exchange proposes to provide that the REIT will be billed an amount equal to the same percentage of the $295,000 flat fee as the REIT's ownership interest in the operating partnership represents of the total equity of the operating partnership.
Section 902.11 of the Manual currently provides for the application to an Acquisition Company's common shares and warrants of annual fees that are the same as fees for common shares set forth in Section 902.03 (with an aggregate annual limit of $85,000) and the fees set forth in Section 902.06 applicable to the warrants. The Exchange proposes to replace these fees for Acquisition Companies with a flat annual fee of $85,000 for calendar years starting on or after January 1, 2022. The flat annual fee would cover both an Acquisition Company's common shares and warrants, if any. Accordingly, an Acquisition Company's common shares and warrants will no longer be subject to the separate annual fee schedules applicable to those classes of securities in Sections 902.03 and 902.06 of the Manual, respectively.
The Exchange proposes to make the aforementioned fee increases in Section 902.03 to better reflect the value of such listing to issuers. In particular, the Exchange believes it is reasonable to apply a flat fee when an issuer first lists a class of common shares as the value to the issuer to listing are the same regardless of the number of shares the issuer has outstanding. The Exchange notes that the substantial majority of issuers that have recently listed on the Exchange paid the $295,000 maximum fee under the Exchange's current fee structure. Therefore, the adoption of a $295,000 flat initial listing fee will not result in an initial fee increase for most issuers. While some issuers would pay a higher initial listing fee under the proposed flat fee than under the current rate, the Exchange believes that this increase is not unfairly discriminatory, as the resources the Exchange expends in connection with the initial listing of those companies are typically consistent with the resources the Exchange expends on many companies that are already subject to the $295,000 maximum fee.
In addition, the Exchange observes that many issuers may not know their share structure or how many shares will ultimately be outstanding at the time they are considering whether to list on the Exchange. Therefore, the Exchange believes that adopting a flat initial fee and eliminating the special one-time charge will provide prospective issuers with greater transparency on the costs associated with initially listing on the Exchange.
The revised annual fees will be applied in the same manner to all issuers with listed securities in the affected categories and the changes will not disproportionately affect any specific category of issuers.
The proposed adoption of a flat annual fee for Acquisition Companies is in response to issuer feedback. Most Acquisition Companies issue a unit that contains a common share and fraction of a warrant. In most cases, the current fee schedules result in Acquisition Companies paying an annual fee equal to the existing $85,000 maximum. Adoption of a flat $85,000 annual fee for an Acquisition Company's common shares and warrants, if any, will therefore not result in an annual fee increase for most Acquisition Companies and will have the benefit of making the fee level easier to implement.
The proposed rule changes would not affect the Exchange's commitment of resources to its regulatory oversight of the listing process, or its regulatory programs.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange operates in a highly competitive marketplace for the listing of the various categories of securities affected by the proposed initial and annual fee adjustments. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS,
The Exchange believes that the ever-shifting market share among the exchanges with respect to new listings and the transfer of existing listings between competitor exchanges demonstrates that issuers can choose different listing markets in response to fee changes. Accordingly, competitive forces constrain exchange listing fees. Stated otherwise, changes to exchange listing fees can have a direct effect on the ability of an exchange to compete for new listings and retain existing listings.
Given this competitive environment, the adoption of a flat initial listing fee and small increase to the annual fees for various categories of equity securities represent a reasonable attempt to address the Exchange's increased costs in servicing these listings while continuing to attract and retain listings.
The Exchange proposes to make the aforementioned fee increases in Section 902.03 to better reflect the value of such listing to issuers. In particular, the Exchange believes it is reasonable to apply a flat fee when an issuer first lists a class of common shares as the value to the issuer to listing are the same regardless of the number of shares the issuer has outstanding. The Exchange notes that the substantial majority of issuers that have recently listed on the Exchange paid the $295,000 maximum fee under the Exchange's current fee structure. Therefore, the adoption of a $295,000 flat initial listing fee will not result in an initial fee increase for most issuers. While some issuers would pay a higher initial listing fee under the proposed flat fee than under the current rate, the Exchange believes that this increase is not unfairly discriminatory, as the resources the Exchange expends in connection with the initial listing of those companies are typically consistent with the resources the Exchange expends on many companies that are already subject to the $295,000 maximum fee. As the one-time charge is currently included in the maximum initial listing fee of $295,000 and all companies will be paying the current maximum fee as a flat fee going forward, the Exchange proposes to eliminate the one-time charge.
The Exchange does not propose to increase the minimum annual fees charged for additional classes of common shares (including tracking stocks), preferred stocks that are not the primary listed equity security, or warrants. The Exchange believes that the benefits issuers receive in connection with those listings are consistent with the current minimum fee levels, as those types of listings do not generally entitle issuers to the types of services provided in connection with a primary common stock listing or primary preferred stock listing.
The proposed adoption of a flat annual fee for Acquisition Companies is in response to issuer feedback. Most Acquisition Companies issue a unit that contains a common share and fraction of a warrant. In most cases, the current fee schedules result in Acquisition Companies paying an annual fee equal to the existing $85,000 maximum. Adoption of a flat $85,000 annual fee for an Acquisition Company's common shares and warrants, if any, will therefore not result in an annual fee increase for most Acquisition Companies and will have the benefit of making the fee level easier to implement. The Exchange does not provide Acquisition Companies with many of the services provided to listed companies that are operating companies until after their business combination is completed. Accordingly, the Exchange does not believe it is appropriate to increase annual fees for Acquisition Companies at this time.
The Exchange believes its proposal equitably allocates its fees among its market participants.
The Exchange believes it is equitable to apply a flat fee when an issuer first lists a class of common shares. Under current rules, because of the existing minimum and maximum initial listing fees, the effective per-share initial listing fee is different for almost every issuer. Applying a flat initial listing fee to each issuer, therefore, equitably allocates fees among issuers.
The Exchange believes that the proposed amendments to the annual fees for equity securities are equitable because they do not change the existing framework for such fees, but simply increase certain of the minimum fees and per unit rates by a small amount to reflect increased operating costs. Similarly, as the fee structure remains effectively unchanged apart from small increases in the rates paid by all issuers, the changes to annual fees for equity securities neither target nor will they have a disparate impact on any particular category of issuer.
The Exchange believes it is equitable to apply a flat initial listing fee to all Acquisition Companies. In most cases, the current fee schedules result in Acquisition Companies paying an annual fee equal to the existing $85,000 maximum. Adoption of a flat $85,000 annual fee for an Acquisition Company's common shares and warrants, if any, will therefore not result in an annual fee increase for most Acquisition Companies and will have the benefit of making the fee level easier to implement.
The Exchange believes that the proposal is not unfairly discriminatory. The proposed fee changes are not unfairly discriminatory because the same fee schedule will apply to all listed issuers. Further, the Exchange operates in a competitive environment and its fees are constrained by competition in the marketplace. Other venues currently list all of the categories of securities covered by the proposed fees and if a company believes that the Exchange's fees are unreasonable it can decide either not to list its securities or to list them on an alternative venue.
For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is designed to ensure that the fees charged by the Exchange accurately reflect the services provided and benefits realized by listed companies. The market for listing services is extremely competitive. Each listing exchange has a different fee
The proposed amended fees will be charged to all listed issuers on the same basis. The Exchange does not believe that the proposed amended fees will have any meaningful effect on the competition among issuers listed on the Exchange.
The Exchange operates in a highly competitive market in which issuers can readily choose to list new securities on other exchanges and transfer listings to other exchanges if they deem fee levels at those other venues to be more favorable. Because competitors are free to modify their own fees in response, and because issuers may change their chosen listing venue, the Exchange does not believe its proposed fee change can impose any burden on intermarket competition.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to extend the expiration date of the temporary amendments in SR-NASDAQ-2020-076 from December 31, 2021, to March 31, 2022.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to continue to harmonize Exchange Rules 1015, 9261, 9524 and 9830 with recent changes by the Financial Industry Regulatory Authority, Inc. (“FINRA”) to its Rules 1015, 9261, 9524 and 9830 in response to the COVID-19 global health crisis and the corresponding need to restrict in-person activities. The Exchange originally filed proposed rule change SR-NASDAQ-2020-076, which allows the Exchange's Office of Hearing Officers (“OHO”) and the Exchange Review Council (“ERC”) to conduct hearings, on a temporary basis, by video conference, if warranted by the current COVID-19-related public health risks posed by an in-person hearing. In August 2021, the Exchange filed a proposed rule change, SR-NASDAQ-2021-067, to extend the expiration date of the temporary amendments in SR- NASDAQ-2020-076 from August 31, 2021, to December 31, 2021.
On November 5, 2020, the Exchange filed, and subsequently extended to December 31, 2021, SR-NASDAQ-2020-076, to temporarily amend Exchange Rules 1015, 9261, 9524 and 9830 to grant OHO and the ERC authority
As set forth in the previous filings, the Exchange also relies on COVID-19 data and the guidance issued by public health authorities to determine whether the current public health risks presented by an in-person hearing may warrant a hearing by video conference.
The Exchange has filed the proposed rule change for immediate effectiveness and has requested that the SEC waive the requirement that the proposed rule change not become operative for 30 days after the date of the filing, so the Exchange can implement the proposed rule change immediately.
The Exchange believes that its proposal is consistent with Section 6(b) of the Act,
The proposed rule change, which extends the expiration date of the temporary amendments to the Exchange rules set forth in SR-NASDAQ-2020-076, will continue to aid the Exchange's efforts to timely conduct hearings in connection with its core adjudicatory functions. Given the current and frequently changing COVID-19 conditions and the uncertainty around when those conditions will see meaningful, widespread, and sustained improvement, without this relief allowing OHO and ERC hearings to proceed by video conference, the Exchange might be required to postpone some or almost all hearings indefinitely. The Exchange must be able to perform its critical adjudicatory functions to fulfill its statutory obligations to protect investors and maintain fair and orderly markets. As such, this relief is essential to the Exchange's ability to fulfill its statutory obligations and allows hearing participants to avoid the serious COVID-19-related health and safety risks associated with in-person hearings.
Among other things, this relief will allow OHO to conduct temporary cease and desist proceedings by video conference so that the Exchange can take immediate action to stop ongoing customer harm and will allow the ERC to timely provide members, disqualified individuals and other applicants an approval or denial of their applications. As set forth in detail in SR-NASDAQ-2020-076, this temporary relief allowing OHO and ERC hearings to proceed by video conference accounts for fair process considerations and will continue to provide fair process while avoiding the COVID-19-related public health risks for hearing participants. Accordingly, the proposed rule change extending this temporary relief is in the public interest and consistent with the Act's purpose.
The Exchange does not believe that the temporary proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. As set forth in SR-NASDAQ-2020-076, the proposed rule change is intended solely to extend temporary relief necessitated by the continued impacts of the COVID-19 outbreak and the related health and safety risks of conducting in-person activities. The Exchange believes that the proposed rule change will prevent unnecessary impediments to its operations, including its critical adjudicatory processes, and its ability to fulfill its statutory obligations to protect investors and maintain fair and orderly markets that would otherwise result if the temporary amendments were to expire on December 31, 2021.
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend the provisions of Rule 7.35B relating to the cancellation of MOC, LOC, and Closing IO Orders before the Closing Auction. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend Rule 7.35B (DMM-Facilitated Closing Auctions). Specifically, the Exchange proposes to modify Rule 7.35B(f)(2), which sets forth rules pertaining to the cancellation of MOC, LOC, and Closing IO Orders before the Closing Auction Imbalance Freeze, and make conforming changes to Rule 7.35B(j)(2)(B).
Rule 7.35B(f) provides that the Auction Imbalance Freeze for the Closing Auction will begin at the Closing Auction Imbalance Freeze Time and specifies how order entry and cancellation will be processed during the Closing Auction Imbalance Freeze.
The Exchange proposes to modify Rule 7.35B(f)(2) to provide that any requests to cancel, cancel and replace, or reduce in size a MOC, LOC, or Closing IO Order that are entered between the beginning of the Auction Imbalance Freeze and the scheduled end of Core Trading Hours would be rejected. That is, requests to cancel, replace, and/or reduce in size a MOC, LOC, or Closing IO Order must be received prior to the beginning of the Auction Imbalance Freeze (
The Exchange proposes conforming changes to Rule 7.35B(j)(2)(B) to reflect the proposed changes to Rule 7.35B(f)(2), described above. Rule 7.35B(j)(2)(B) currently provides that the Exchange may temporarily suspend the prohibition on cancelling an MOC or LOC Order after two minutes before the scheduled end of Core Trading Hours when (1) the cancellation is necessary to correct a Legitimate Error, or (2) the execution of such an MOC or LOC Order would cause significant price dislocation at the close. To make Rule 7.35B(j)(2)(B) consistent with the proposed changes to Rule 7.35B(f)(2), the Exchange proposes to (1) replace the reference to “two minutes before the scheduled end of Core Trading Hours” with “the beginning of the Auction Imbalance Freeze,” and (2) replace the reference to “paragraph (f)(2)(B)” with “paragraph (f)(2).” Thus, Rule 7.35B(j)(2)(B), as amended, will provide that the Exchange may temporarily suspend the prohibition on cancelling an MOC or LOC Order after the beginning of the Auction Imbalance Freeze (as such prohibition will be set forth in Rule 7.35B(f)(2), as amended).
The proposed rule change is consistent with Section 6(b) of the Securities Exchange Act of 1934,
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and to remove impediments to and perfect the mechanism of a free and open market and, in general, protect investors and the public interest because it would streamline the Exchange's processing of MOC, LOC, and Closing IO Orders in connection with the Auction Imbalance Freeze. Specifically, rather than permitting MOC, LOC, and Closing IO Orders to be cancelled, replaced, and/or reduced in size for the limited purpose of correcting a Legitimate Error up until two minutes before the scheduled end of Core Trading Hours, the Exchange proposes to modify Rule 7.35B(f)(2) to provide that requests to cancel, cancel and replace, or reduce in size such orders would be rejected after the beginning of the Auction Imbalance Freeze. The Exchange notes that, since August 2021, it has not received any requests to cancel, cancel and replace, or reduce in size an MOC, LOC, or Closing IO Order between the beginning of the Auction Imbalance Freeze and two minutes before the scheduled end of Core Trading Hours. Accordingly, the Exchange believes that the proposed rule change would also remove impediments to and perfect the mechanism of a free and open market by providing greater determinism of the Closing Auction Imbalance Information because MOC, LOC, and Closing IO Orders would not be eligible to be cancelled once the Auction Imbalance Freeze begins for any reason. The proposed change would also eliminate a provision in Exchange rules that is not used by Members, thereby simplifying the Exchange's rules and better aligning its rules with the behavior of its Members.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change would apply to the processing of all MOC, LOC, and Closing IO Orders during the Auction Imbalance Freeze and thus would not create any undue burden on competition. Moreover, as described above, the Exchange has not received any requests to cancel, cancel and replace, or reduce in size a MOC, LOC, or Closing IO Order between the beginning of the Auction Imbalance Freeze and two minutes before the scheduled end of Core Trading Hours since August 2021 and thus believes that modifying Rule 7.35B(f)(2) and making conforming changes to Rule 7.35B(j)(2)(B) to permit such requests only up until the beginning of the Auction Imbalance Freeze would not impose any burden on competition.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
U.S. Small Business Administration.
Notice.
This is a Notice of the Presidential declaration of a major disaster for the State of Alabama (FEMA-4632-DR), dated 12/21/2021.
Issued on 12/21/2021.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
Notice is hereby given that as a result of the President's major disaster declaration on 12/21/2021, applications for disaster loans may be filed at the address listed above or other locally announced locations.
The following areas have been determined to be adversely affected by the disaster:
The Interest Rates are:
The number assigned to this disaster for physical damage is 17289 B and for economic injury is 17290 0.
U.S. Small Business Administration.
Notice.
This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the Confederated Tribes of the Colville Reservation (FEMA—4631—DR), dated 12/21/2021.
Issued on 12/21/2021.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.
Notice is hereby given that as a result of the President's major disaster declaration on 12/21/2021, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications at the address listed above or other locally announced locations.
The following areas have been determined to be adversely affected by the disaster:
The Interest Rates are:
The number assigned to this disaster for physical damage is 17291 5 and for economic injury is 17292 0.
Notice is hereby given that NewSpring Mezzanine Capital IV, L.P. located at 555 East Lancaster Avenue, 3rd Floor, Radnor, PA, 19087, a Federal Licensee under the Small Business Investment Act of 1958, as amended (“the Act”), in connection with a financing involving small concern Radius GMR, LLC located at 120 Fifth Avenue, New York, NY 10011, has sought an exemption under Section 312 of the Act and 13 CFR 107.730—Financings which constitute conflicts of interest.
This financing falls under 13 CFR 107.730(a)(4) because proceeds from the financing will be used discharge obligations owed to NewSpring Mezzanine Capital III L.P., an Associate of NewSpring Mezzanine Capital IV, L.P. Therefore, this transaction requires a prior written exemption from the U.S. Small Business Administration.
Notice is hereby given that any interested person may submit written comments on the transaction within fifteen days of the date of this publication to the Associate Administrator, Office of Investment and Innovation, U.S. Small Business Administration, 409 Third Street SW, Washington, DC 20416.
Pursuant to the authority granted to the United States Small Business Administration under the Small Business Investment Act of 1958, as amended, under Section 309 of the Act and Section 107.1900 of the Small Business Administration Rules and Regulations to function as a small business investment company under the Small Business Investment Company License No. 05/05-0293 issued to Convergent Capital Partners II, L.P., said license is hereby declared null and void.
60-Day notice and request for comments.
The Small Business Administration (SBA) intends to request approval, from the Office of Management and Budget (OMB) for the collection of information described below. The Paperwork Reduction Act (PRA) requires federal agencies to publish a notice in the
Submit comments on or before February 28, 2022.
Email all comments to: Teresa Rodriguez, Office of Financial Program Operations, Small Business Administration, at
Adrienne Grierson, Deputy Director Office of Financial Program Operations, 202-205-6573,
SBA Form 1050, Settlement Sheet is used in SBA's 7(a) Loan Program to collect information from lenders and borrowers regarding the disbursement of loan proceeds. SBA relies on this information during the guaranty purchase review process as a component in determining whether to honor a loan guaranty. The current form includes 1050 Settlement Sheet instructions for the lender. The currently approved form primarily requires the lender and borrower to certify to whether they complied with a series of loan requirements. The current form also requires submission of documentation (
The form will be divided into several sections to clearly identify the information to be submitted. The revised form will continue to collect the same basic identifying information such as loan amount, loan number and lender's name. In addition, the form will continue to require certifications from both the lender and borrower regarding compliance with the disbursement requirements and accuracy of information submitted. In the section for “Authorized Use of Proceeds,” the revised 1050 Settlement Sheet will include “Land Acquisitions with or without improvements”, “Leasehold Improvements to property owned by applicant or owned by others”, “Export Working Capital (EWCP or Export Express)”, “Support Standby Letter of Credit (EWCP or Export Express)”, Refinance Existing (EWCP) or Export LOC (EWCP)”, “Business Acquisition/Change of Ownership”, “Pay off SBA Loan, SID or Other Lender”, ” Pay Notes Payable, SID or Other Lender”, “Pay Accounts Payable.” These changes will allow the lender to document all the sources and uses of funds at the time of loan closing more clearly. This additional information will better allow both lenders and SBA staff to ensure that the necessary information is collected at the time of loan origination.
SBA is requesting comments on (i) Whether the collection of information is necessary for the agency to properly perform its functions; (ii) whether the burden estimates are accurate; (iii) whether there are ways to minimize the burden, including using automated techniques or other forms of information technology; and (iv) whether there are ways to enhance the quality, utility, and clarity of the information.
By virtue of the authority vested in the Assistant Secretary of State for Educational and Cultural Affairs, including by Delegation of Authority No. 236-3 (August 28, 2000), and to the extent permitted by law, I hereby delegate to the Principal Deputy Assistant Secretary for Educational and Cultural Affairs the authorities and functions in section 102 of the Mutual Educational and Cultural Exchange Act of 1961 (22 U.S.C. 2452), relating to the provision by grant, contract or otherwise for educational and cultural exchanges.
Any authorities covered by this delegation may also be exercised by the Secretary, the Deputy Secretary, the Deputy Secretary for Management and Resources, the Under Secretary for Public Diplomacy and Public Affairs, and the Assistant Secretary for Educational and Cultural Affairs.
This Delegation of Authority does not revoke or otherwise affect any other delegation of authority currently in effect.
Any reference in this Delegation of Authority to any statute or delegation of authority shall be deemed to be a reference to such statute or delegation of authority as amended from time to time.
This Delegation shall be published in the
By virtue of the authority vested in the Assistant Secretary of State for Educational and Cultural Affairs, including by Delegation of Authority No. 236-3 (August 28, 2000), and to the extent permitted by law, I hereby authorize the Principal Deputy Assistant Secretary for Educational and Cultural Affairs and the Deputy Assistant Secretary for Professional and Cultural Exchanges, as the designees of the Assistant Secretary, to exercise the functions and authorities in 22 U.S.C. 2459, concerning immunity from judicial seizure for cultural objects imported into the United States for temporary storage, conservation, scientific research, exhibition or display.
Any functions and authorities covered by this delegation may also be exercised by the Secretary, the Deputy Secretary, the Deputy Secretary for Management and Resources, the Under Secretary for Public Diplomacy and Public Affairs, and the Assistant Secretary for Educational and Cultural Affairs.
This Delegation of Authority does not revoke or otherwise affect any other delegation of authority currently in effect.
Any reference in this Delegation of Authority to any statute or delegation of authority shall be deemed to be a reference to such statute or delegation of authority as amended from time to time.
This Delegation shall be published in the
BNSF Railway Company (BNSF), a Class I rail carrier, has filed a verified notice of exemption under 49 CFR 1180.2(d)(7) for its acquisition of restricted, local, trackage rights over two rail lines owned by Union Pacific Railroad Company (UP) between: (1) UP mileposta 93.2 at Stockton, Cal., on UP's Oakland Subdivision, and UP milepost 219.4 at Elsey, Cal., on UP's Canyon Subdivision, a distance of 126.2 miles; and (2) UP milepost 219.4 at Elsey and UP milepost 280.7 at Keddie, Cal., on UP's Canyon Subdivision, a distance of 61.3 miles (collectively, the Lines).
Pursuant to a written temporary trackage rights agreement, UP has agreed to grant restricted trackage rights to BNSF over the Lines. The purpose of this transaction is to permit BNSF to move empty and loaded unit ballast trains to and from the ballast pit at Elsey, which is adjacent to the Lines. The agreement provides that the trackage rights are temporary in nature and are scheduled to expire on December 31, 2022.
The transaction may be consummated on or after January 12, 2022, the effective date of the exemption (30 days after the verified notice was filed).
As a condition to this exemption, any employees affected by the acquisition of the trackage rights will be protected by the conditions imposed in
If the verified notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Petitions for stay must be filed no later than January 5, 2022 (at least seven days before the exemption becomes effective).
All pleadings, referring to Docket No. FD 36377 (Sub-No. 4), should be filed with the Surface Transportation Board via e-filing on the Board's website. In addition, a copy of each pleading must be served on BNSF's representative, Peter W. Denton, Steptoe & Johnson LLP, 1330 Connecticut Avenue NW, Washington, DC 20036.
According to BNSF, this action is categorically excluded from environmental review under 49 CFR 1105.6(c)(3) and from historic preservation reporting requirements under 49 CFR 1105.8(b)(3).
Board decisions and notices are available at
By the Board, Scott M. Zimmerman, Acting Director, Office of Proceedings.
Susquehanna River Basin Commission.
Notice.
This notice lists the projects approved by rule by the Susquehanna River Basin Commission during the period set forth in
November 1-30, 2021.
Susquehanna River Basin Commission, 4423 North Front Street, Harrisburg, PA 17110-1788.
Jason E. Oyler, General Counsel and Secretary to the Commission, telephone: (717) 238-0423, ext. 1312; fax: (717) 238-2436; email:
This notice lists the projects, described below, receiving approval for the consumptive use of water pursuant to the Commission's approval by rule process set forth in 18 CFR 806.22 (e) and 18 CFR 806.22 (f) for the time period specified above:
1. Seneca Resources Company, LLC; Pad ID: Schildt 259; ABR-20091027.R2; Jackson Township, Tioga County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 9, 2021.
2. Rockdale Marcellus, LLC; Pad ID: Heyler 748; ABR-201008031.R2; Morris Township, Tioga County, Pa.; Consumptive Use of Up to 4.9900 mgd; Approval Date: November 9, 2021.
3. Coterra Energy, Inc.; Pad ID: LippincoffF P1; ABR-201110014.R2; Brooklyn Township, Susquehanna County, Pa.; Consumptive Use of Up to 5.0000 mgd; Approval Date: November 9, 2021.
4. Coterra Energy, Inc.; Pad ID: ShieldsG P2; ABR-20091023.R2; Dimock Township, Susquehanna County, Pa.; Consumptive Use of Up to 5.0000 mgd; Approval Date: November 9, 2021.
5. Seneca Resources Company, LLC; Pad ID: Gamble Pad J; ABR-201511001.R1; Gamble Township, Lycoming County; Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 12, 2021.
6. Repsol Oil & Gas USA, LLC; Pad ID: Haralambous (03 074) G; ABR-201108037.R2; Columbia Township, Bradford County; Pa.; Consumptive Use of Up to 6.0000 mgd; Approval Date: November 12, 2021.
7. EQT ARO LLC; Pad ID: COP Tract 731 Pad C; ABR-201109016.R2; Cummings Township, Lycoming County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 12, 2021.
8. BKV Operating, LLC.; Pad ID: Henninger Pad; ABR-201110017.R2; Jessup Township, Susquehanna County, Pa.; Consumptive Use of Up to 5.0000 mgd; Approval Date: November 12, 2021.
9. Blackhill Energy LLC; Pad ID: PRUYNE 1H Pad; ABR-201110034.R2; Smithfield Township, Bradford County, Pa.; Consumptive Use of Up to 4.9900 mgd; Approval Date: November 12, 2021.
10. Blackhill Energy LLC; Pad ID: WOLFE Pad; ABR-201110033.R2; Smithfield Township, Bradford County, Pa.; Consumptive Use of Up to 4.9900 mgd; Approval Date: November 12, 2021.
11. Chesapeake Appalachia, L.L.C.; Pad ID: Bartholomew; ABR-201111012.R2; Franklin Township, Bradford County, Pa.; Consumptive Use of Up to 7.5000 mgd; Approval Date: November 15, 2021.
12. Chesapeake Appalachia, L.L.C.; Pad ID: Dulcey; ABR-201111020.R2; Franklin Township, Bradford County, Pa.; Consumptive Use of Up to 7.5000 mgd; Approval Date: November 15, 2021.
13. Repsol Oil & Gas USA, LLC; Pad ID: REINFRIED (02 113) C; ABR-201109004.R1; Ward Township, Tioga County, Pa.; Consumptive Use of Up to 6.0000 mgd; Approval Date: November 15, 2021.
14. Seneca Resources Company, LLC; Pad ID: Burleigh 508; ABR-20091019.R2; Rutland Township, Tioga County; Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 15, 2021.
15. Pennsylvania General Energy Company, L.L.C.; Pad ID: COP Tract 293 Pad I; ABR-201111014.R2; Cummings Township, Lycoming County; Pa.; Consumptive Use of Up to 3.5000 mgd; Approval Date: November 16, 2021.
16. Seneca Resources Company, LLC; Pad ID: Hungerford 458; ABR-20091019.R2; Lawrence Township, Clearfield County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 16, 2021.
17. Chief Oil & Gas, LLC; Pad ID: Beirne Green Hills Farms A Drilling Pad #1; ABR-201111024.R2; Asylum and Monroe Townships, Bradford County; Pa.; Consumptive Use of Up to 2.0000 mgd; Approval Date: November 19, 2021.
18. Diversified Production, LLC; Pad ID: Turkey; ABR-201107040.R2; Huston Township, Clearfield County; Pa.; Consumptive Use of Up to 1.0000 mgd; Approval Date: November 19, 2021.
19. Range Resources—Appalachia, LLC; Pad ID: Red Bend B Unit #1H—#8H; ABR-201111006.R2; Cogan House Township, Lycoming County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 22, 2021.
20. Range Resources—Appalachia, LLC; Pad ID: Red Bend C Unit #1H—#5H; ABR-201111007.R2; Cogan House Township, Lycoming County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 22, 2021.
21. Range Resources—Appalachia, LLC; Pad ID: Bobst Unit #34H—#37H; ABR-201111004.R2; Cogan House Township, Lycoming County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 22, 2021.
22. Seneca Resources Company, LLC; Pad ID: Starks 461; ABR-20091108.R2; Richmond Township, Tioga County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 23, 2021.
23. Seneca Resources Company, LLC; Pad ID: Yungwirth 307; ABR-20091110.R2; Charleston Township, Tioga County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 23, 2021.
24. Seneca Resources Company, LLC; Pad ID: Barrett 410; ABR-20091107.R2; Jackson Township, Tioga County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 23, 2021.
25. Seneca Resources Company, LLC; Pad ID: Button 402; ABR-20091113.R2; Jackson Township, Tioga County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 23, 2021.
26. Chesapeake Appalachia, L.L.C.; Pad ID: Gestewitz; ABR-201111002.R2; North Towanda Township, Bradford County, Pa.; Consumptive Use of Up to 7.5000 mgd; Approval Date: November 29, 2021.
27. Chesapeake Appalachia, L.L.C.; Pad ID: LW; ABR-201111027.R2; Cherry Township, Sullivan County, Pa.; Consumptive Use of Up to 7.5000 mgd; Approval Date: November 29, 2021.
28, Chesapeake Appalachia, L.L.C.; Pad ID: Rossi; ABR-201111011.R2; Litchfield Township, Bradford County, Pa.; Consumptive Use of Up to 7.5000 mgd; Approval Date: November 29, 2021.
29. EQT ARO, LLC; Pad ID: David O Vollman Pad A; ABR-201011069.R2; Cogan House Township, Lycoming County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 29, 2021.
30. Range Resources—Appalachia, LLC;; Pad ID: Gulf USA 40H—42H;
31. Inflection Energy (PA), LLC; Pad ID: Ultimate Warrior; ABR-201111036.R2; Upper Fairfield Township, Lycoming County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 30, 2021.
32. Inflection Energy (PA), LLC; Pad ID: Stunner; ABR-201111037.R2; Gamble Township, Lycoming County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 30, 2021.
33. Inflection Energy (PA), LLC; Pad ID: Nature Boy; ABR-201111035.R2; Upper Fairfield Township, Lycoming County, Pa.; Consumptive Use of Up to 4.0000 mgd; Approval Date: November 30, 2021.
34. Coterra Energy, Inc.; Pad ID: HessR P1; ABR-201111034.R2; Dimock Township, Susquehanna County, Pa.; Consumptive Use of Up to 5.0000 mgd; Approval Date: November 30, 2021.
Susquehanna River Basin Commission.
Notice.
This notice lists Grandfathering Registration for projects by the Susquehanna River Basin Commission during the period set forth in
November 1-30, 2021.
Susquehanna River Basin Commission, 4423 North Front Street, Harrisburg, PA 17110-1788.
Jason E. Oyler, General Counsel and Secretary to the Commission, telephone: (717) 238-0423, ext. 1312; fax: (717) 238-2436; email:
This notice lists GF Registration for projects, described below, pursuant to 18 CFR 806, subpart E for the time period specified above:
1. Roaring Spring Municipal Authority—Public Water Supply System, GF Certificate No. GF-202111192, Roaring Spring Borough, Blair County, Pa.; Roaring Spring; Issue Date: November 23, 2021.
2. Scotch Valley Country Club, Inc.—Scotch Valley Country Club, GF Certificate No. GF-202111193, Frankstown Township, Blair County, Pa.; consumptive use; Issue Date: November 23, 2021.
3. Pennsy Supply, Inc.—Mt. Holly Springs Quarry, GF Certificate No. GF-202111194, Dickinson Township, Cumberland County, Pa.; Well 1 (West Well) and Well 2 (East Well); Issue Date: November 30, 2021.
4. City of Binghamton—Public Water Supply System, GF Certificate No. GF-202111195, City of Binghamton, Broome County, N.Y.; Susquehanna River and Olmstead Well; Issue Date: November 30, 2021.
Susquehanna River Basin Commission.
Notice.
As part of its regular business meeting held on December 17, 2021, Harrisburg, Pennsylvania, the Commission approved the applications of certain water resources projects, and took additional actions, as set forth in the
December 17, 2021.
Susquehanna River Basin Commission, 4423 N Front Street, Harrisburg, PA 17110-1788.
Jason E. Oyler, General Counsel and Secretary, telephone: (717) 238-0423, ext. 1312, fax: (717) 238-2436; email:
In addition to the actions taken on projects identified in the summary above and the listings below, the following items were also acted upon at the business meeting: (1) Adoption of a policy, Fee Incentives for the Withdrawal and Consumptive Use of AMD Impacted Waters & Treated Wastewater; (2) adoption of the 2022 Regulatory Program Fee Schedule, including waiving inflationary increases to fees; (3) approval of two grant amendments and one grant agreement; (4) approval to enter into a Letter of Understanding regarding program coordination between SRBC and Pennsylvania Department of Environmental Protection.
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Federal Motor Carrier Safety Administration (FMCSA), Department of Transportation (DOT).
Notice of renewal of exemptions; request for comments.
FMCSA announces its decision to renew exemptions for 14 individuals from the requirement in the Federal Motor Carrier Safety Regulations (FMCSRs) that interstate commercial motor vehicle (CMV) drivers have “no established medical history or clinical diagnosis of epilepsy or any other condition which is likely to cause loss of consciousness or any loss of ability to control a CMV.” The exemptions enable these individuals who have had one or more seizures and are taking anti-seizure medication to continue to operate CMVs in interstate commerce.
Each group of renewed exemptions were applicable on the dates stated in the discussions below and will expire on the dates stated in the discussions below. Comments must be received on or before January 28, 2022.
You may submit comments identified by the Federal Docket Management System (FDMS) Docket No. FMCSA-2006-25854, Docket No.FMCSA-2010-0203, Docket No. FMCSA-2013-0106, Docket No. FMCSA-2013-0107, Docket No. FMCSA-2013-0108, Docket No. FMCSA-2015-0117, Docket No. FMCSA-2015-0119, Docket No. FMCSA-2017-0178, Docket No. FMCSA-2017-0181, Docket No. FMCSA-2017-0251, or Docket No. FMCSA-2018-0052 using any of the following methods:
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•
•
•
To avoid duplication, please use only one of these four methods. See the “Public Participation” portion of the
Ms. Christine A. Hydock, Chief, Medical Programs Division, (202) 366-4001,
To submit your comment online, go to
If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8
FMCSA will consider all comments and material received during the comment period.
To view comments go to
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its regulatory process. DOT posts these comments, without edit, including any personal information the commenter provides, to
Under 49 U.S.C. 31136(e) and 31315(b), FMCSA may grant an exemption from the FMCSRs for no longer than a 5-year period if it finds such exemption would likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved absent such exemption. The statute also allows the Agency to renew exemptions at the end of the 5-year period. FMCSA grants medical exemptions from the FMCSRs for a 2-year period to align with the maximum duration of a driver's medical certification.
The physical qualification standard for drivers regarding epilepsy found in 49 CFR 391.41(b)(8) states that a person is physically qualified to drive a CMV if that person has no established medical history or clinical diagnosis of epilepsy or any other condition which is likely to cause the loss of consciousness or any loss of ability to control a CMV.
In addition to the regulations, FMCSA has published advisory criteria
The 14 individuals listed in this notice have requested renewal of their exemptions from the epilepsy and seizure disorders prohibition in § 391.41(b)(8), in accordance with FMCSA procedures. Accordingly, FMCSA has evaluated these applications for renewal on their merits and decided to extend each exemption for a renewable 2-year period.
Interested parties or organizations possessing information that would otherwise show that any, or all, of these drivers are not currently achieving the statutory level of safety should immediately notify FMCSA. The Agency will evaluate any adverse evidence submitted and, if safety is being compromised or if continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136(e) and 31315(b), FMCSA will take immediate steps to revoke the exemption of a driver.
In accordance with 49 U.S.C. 31136(e) and 31315(b), each of the 14 applicants has satisfied the renewal conditions for obtaining an exemption from the epilepsy and seizure disorders prohibition. The 14 drivers in this notice remain in good standing with the Agency, have maintained their medical monitoring and have not exhibited any medical issues that would compromise their ability to safely operate a CMV during the previous 2-year exemption period. In addition, for Commercial Driver's License (CDL) holders, the Commercial Driver's License Information System and the Motor Carrier Management Information System are searched for crash and violation data. For non-CDL holders, the Agency reviews the driving records from the State Driver's Licensing Agency. These factors provide an adequate basis for predicting each driver's ability to continue to safely operate a CMV in interstate commerce. Therefore, FMCSA concludes that extending the exemption for each renewal applicant for a period of 2 years is likely to achieve a level of safety equal to that existing without the exemption.
In accordance with 49 U.S.C. 31136(e) and 31315(b), the following groups of drivers received renewed exemptions in the month of December and are discussed below.
As of December 16, 2021, and in accordance with 49 U.S.C. 31136(e) and 31315(b), the following 11 individuals have satisfied the renewal conditions for obtaining an exemption from the epilepsy and seizure disorders
The drivers were included in docket number FMCSA-2010-0203, FMCSA-2013-0106, FMCSA-2013-0107, FMCSA-2015-0117, FMCSA-2015-0119, FMCSA-2017-0178, FMCSA-2017-0181, FMCSA-2017-0251, or FMCSA-2018-0052. Their exemptions were applicable as of December 16, 2021 and will expire on December 16, 2023.
As of December 23, 2021, and in accordance with 49 U.S.C. 31136(e) and 31315(b), the following three individuals have satisfied the renewal conditions for obtaining an exemption from the epilepsy and seizure disorders prohibition in the FMCSRs for interstate CMV drivers:
Gary Freeman (WI); Aaron Gillette (SD); and David Kestner (VA)
The drivers were included in docket number FMCSA-2006-25854 and FMCSA-2013-0108. Their exemptions are applicable as of December 23, 2021 and will expire on December 23, 2023.
During the period the exemption is in effect, no State shall enforce any law or regulation that conflicts with this exemption with respect to a person operating under the exemption.
Based on its evaluation of the 14 exemption applications, FMCSA renews the exemptions of the aforementioned drivers from the epilepsy and seizure disorders prohibition in § 391.41(b)(8). In accordance with 49 U.S.C. 31136(e) and 31315(b), each exemption will be valid for 2 years unless revoked earlier by FMCSA.
Federal Motor Carrier Safety Administration (FMCSA), Department of Transportation (DOT).
Notice of renewal of exemptions; request for comments.
FMCSA announces its decision to renew exemptions for 23 individuals from the hearing requirement in the Federal Motor Carrier Safety Regulations (FMCSRs) for interstate commercial motor vehicle (CMV) drivers. The exemptions enable these hard of hearing and deaf individuals to continue to operate CMVs in interstate commerce.
The exemptions are applicable on December 26, 2021. The exemptions expire on December 26, 2023. Comments must be received on or before January 28, 2022.
You may submit comments identified by the Federal Docket Management System (FDMS) Docket No. FMCSA-2017-0058, Docket No.
FMCSA-2018-0136, Docket No. FMCSA-2018-0138, Docket No. FMCSA-2018-0139, Docket No. FMCSA-2019-0109, or Docket No. FMCSA-2019-0110 using any of the following methods:
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•
•
•
To avoid duplication, please use only one of these four methods. See the “Public Participation” portion of the
Ms. Christine A. Hydock, Chief, Medical Programs Division, (202) 366-4001, fmcsamedical@dot.gov, FMCSA, DOT, 1200 New Jersey Avenue, SE, Room W64-224, Washington, DC 20590-0001. Office hours are from 8:30 a.m. to 5 p.m., ET, Monday through Friday, except Federal holidays. If you have questions regarding viewing or submitting material to the docket, contact Dockets Operations, (202) 366-9826.
If you submit a comment, please include the docket number for this notice (Docket No. FMCSA-2017-0058, Docket No. FMCSA-2018-0136, Docket No.
FMCSA-2018-0138, Docket No. FMCSA-2018-0139, Docket No. FMCSA-2019-0109, or Docket No. FMCSA-2019-0110), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. FMCSA recommends that you include your name and a mailing address, an email address, or a phone number in the body of your document so that FMCSA can contact you if there are questions regarding your submission.
To submit your comment online, go to www.regulations.gov/, insert the docket number, FMCSA-2017-0058, FMCSA-2018-0136, FMCSA-2018-0138, FMCSA-2018-0139, FMCSA-2019-0109, or FMCSA-2019-0110 in the keyword box, and click “Search.” Next, sort the results by “Posted (Newer-Older),” choose the first notice listed, click the “Comment” button, and type your comment into the text box on the following screen. Choose whether you are submitting your comment as an individual or on behalf of a third party and then submit.
If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8
FMCSA will consider all comments and material received during the comment period.
To view comments go to
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its regulatory process. DOT posts these comments, without edit, including any personal information the commenter provides, to
Under 49 U.S.C. 31136(e) and 31315(b), FMCSA may grant an exemption from the FMCSRs for no longer than a 5-year period if it finds such exemption would likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved absent such exemption. The statute also allows the Agency to renew exemptions at the end of the 5-year period. FMCSA grants medical exemptions from the FMCSRs for a 2-year period to align with the maximum duration of a driver's medical certification.
The physical qualification standard for drivers regarding hearing found in 49aCFRa391.41(b)(11) states that a person is physically qualified to drive a CMV if that person first perceives a forced whispered voice in the better ear at not less than 5 feet with or without the use of a hearing aid or, if tested by use of an audiometric device, does not have an average hearing loss in the better ear greater than 40 decibels at 500 Hz, 1,000 Hz, and 2,000 Hz with or without a hearing aid when the audiometric device is calibrated to American National Standard (formerly ASA Standard) Z24.5-1951.
This standard was adopted in 1970 and was revised in 1971 to allow drivers to be qualified under this standard while wearing a hearing aid, 35 FR 6458, 6463(Apr. 22, 1970) and 36 FR 12857 (July 3, 1971).
The 23 individuals listed in this notice have requested renewal of their exemptions from the hearing standard in § 391.41(b)(11), in accordance with FMCSA procedures. Accordingly, FMCSA has evaluated these applications for renewal on their merits and decided to extend each exemption for a renewable 2-year period.
Interested parties or organizations possessing information that would otherwise show that any, or all, of these drivers are not currently achieving the statutory level of safety should immediately notify FMCSA. The Agency will evaluate any adverse evidence submitted and, if safety is being compromised or if continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136(e) and 31315(b), FMCSA will take immediate steps to revoke the exemption of a driver.
In accordance with 49a U.S.C. 31136(e) and 31315(b), each of the 23 applicants has satisfied the renewal conditions for obtaining an exemption from the hearing requirement. The 23 drivers in this notice remain in good standing with the Agency. In addition, for Commercial Driver's License (CDL) holders, the Commercial Driver's License Information System and the Motor Carrier Management Information System are searched for crash and violation data. For non-CDL holders, the Agency reviews the driving records from the State Driver's Licensing Agency. These factors provide an adequate basis for predicting each driver's ability to continue to safely operate a CMV in interstate commerce. Therefore, FMCSA concludes that extending the exemption for each of these drivers for a period of 2 years is likely to achieve a level of safety equal to that existing without the exemption.
As of December 26, 2021, and in accordance with 49 U.S.C. 31136(e) and 31315(b), the following 23 individuals have satisfied the renewal conditions for obtaining an exemption from the hearing requirement in the FMCSRs for interstate CMV drivers:
The drivers were included in docket number FMCSA-2017-0058, FMCSA-2018-0136, FMCSA-2018-0138, FMCSA-2018-0139, FMCSA-2019-0109, and FMCSA-2019-0110. Their exemptions are applicable as of December 26, 2021 and will expire on December 26, 2023.
During the period the exemption is in effect, no State shall enforce any law or regulation that conflicts with this exemption with respect to a person operating under the exemption.
Based upon its evaluation of the 23 exemption applications, FMCSA renews the exemptions of the aforementioned drivers from the hearing requirement in § 391.41(b)(11). In accordance with 49 U.S.C. 31136(e) and 31315(b), each exemption will be valid for two years unless revoked earlier by FMCSA.
Federal Railroad Administration (FRA), Department of Transportation (DOT).
Notification of determination.
This notification of determination announces FRA's minimum annual random drug and minimum annual random alcohol testing rates for covered service and maintenance-of-way (MOW) employees for calendar year 2022.
This determination takes effect December 29, 2021.
Gerald Powers, FRA Drug and Alcohol Program Manager, by email:
FRA is announcing the 2022 minimum annual random drug and alcohol testing rates for covered service and MOW employees. For calendar year 2022, the minimum annual random testing rates for covered service employees will continue to be 25 percent for drugs and 10 percent for alcohol, while the minimum annual random testing rates for MOW employees will be lowered to 25 percent for drugs and will continue to be 10 percent for alcohol. Because these rates represent minimums, railroads and railroad contractors may conduct FRA random testing at higher rates.
To set its minimum annual random testing rates for each year, FRA examines the last two complete calendar years of railroad industry drug and alcohol program data submitted to its Management Information System (MIS). FRA has also, however, reserved the right to consider factors other than MIS-reported data before deciding whether to lower annual minimum random testing rates. See 85 FR 81265 (Dec. 15, 2020).
The rail industry's random drug testing positive rate for covered service employees (employees subject to the Federal hours of service laws and regulations) remained below 1.0 percent for 2019 and 2020. The Deputy Administrator has therefore determined the minimum annual random drug testing rate for covered service employees will remain at 25 percent for the period January 1, 2022, through December 31, 2022. The industry-wide random alcohol testing violation rate for covered service employees remained below 0.5 percent for 2019 and 2020. Therefore, the Deputy Administrator has determined the minimum random alcohol testing rate for covered service employees will remain at10 percent for the period January 1, 2022, through December 31, 2022.
MOW employees became subject to FRA random drug and alcohol testing in June 2017.
FRA now has MIS data for three full, consecutive years (2018-2020) for the industry-wide performance rates for MOW employees. The random drug testing violation rate for MOW employees has remained below 1.0 percent for the past two consecutive years, and has never been above 1.0 percent. The random drug testing violation rate for MOW employees also trended downwards in 2020, decreasing from 0.8 percent in 2019 to 0.59 percent in 2020, which is the lowest since FRA started collecting MIS data for MOW employees in 2017. Taking these factors into consideration, the Deputy Administrator has determined that the minimum annual drug testing rate for MOW employees will be lowered to 25 percent for the period January 1, 2022, through December 31, 2022. If the random drug testing violation rate for MOW employees increases to 1.0 percent or higher, FRA will raise the minimum annual drug testing rate back to 50 percent.
Because the random alcohol testing violation rate for MOW employees remained below 0.5 percent for 2019 and 2020, the Deputy Administrator has determined that the minimum annual random alcohol testing rate for MOW employees will continue to be10 percent for the period January 1, 2022, through December 31, 2022.
Issued in Washington, DC
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Notice and request for comments on a request for extension of a currently approved information collection.
In compliance with the Paperwork Reduction Act of 1995 (PRA), this notice announces that the Information Collection Request (ICR) summarized below will be submitted to the Office of Management and Budget (OMB) for review and approval. This ICR describes NHTSA's information collection for incident reporting requirements for Automated Driving Systems (ADS) and Level 2 Advanced Driver Assistance Systems (ADAS) and its expected burden. NHTSA recently requested emergency review of its request for approval of this information collection and received a six-month approval. To start the normal clearance procedures and request OMB's approval for a three-year extension of this currently approved information collection, NHTSA published a
Comments must be submitted on or before January 28, 2022.
Written comments and recommendations for the proposed information collection, including suggestions for reducing burden, should be submitted to the Office of Management and Budget at
For additional information or access to background documents, contact Jeff Eyres, Office of Chief Counsel, telephone (202) 913-4307, or email at
Under the PRA (44 U.S.C. 3501
NHTSA requested and received emergency review and approval of this information collection. NHTSA submitted the request on June 29, 2021. On June 30, 2021, OMB granted NHTSA a six-month approval for this information collection and assigned the collection the OMB control number 2127-0754. NHTSA is publishing this document to seek an extension of this information collection.
NHTSA is seeking approval to extend its currently approved information collection requiring certain manufacturers of motor vehicles and equipment and operators of motor vehicles to submit incident reports for certain crashes involving Automated Driving Systems (ADS) and Level 2 Advanced Driver Assistance Systems (ADAS). These crash reporting obligations are set forth in NHTSA's Standing General Order 2021-01 (General Order) (as amended on August 5, 2021), which requires those manufacturers and operators named in and served with the General Order to report crashes that meet specified criteria to NHTSA.
Specifically, the General Order requires the named manufacturers and operators (the reporting entities) to submit reports if they receive notice of certain crashes involving an ADS or Level 2 ADAS equipped vehicle that occur on publicly accessible roads in the United States. To be reportable, the vehicle, the ADS, or the Level 2 ADAS must have been manufactured by the reporting entity or the vehicle must have been operated by a reporting entity at the time of the crash, and the ADS or Level 2 ADAS must have been engaged at the time of or immediately before (≤30 seconds) the crash. In the event that a reporting entity receives notice of a reportable crash, the General Order requires the reporting entity to submit an incident report electronically to NHTSA. The required report includes basic information sufficient for NHTSA to identify those crashes that warrant follow-up. The reporting obligations are limited to those entities named in and served with the General Order. The General Order imposes no reporting obligations on any other companies and likewise imposes no reporting obligations on any individual consumers.
The agency has received incident reports for the past five months under its 6-month emergency clearance. Based on the agency's experience in reviewing these reports, and on the public comments received in response to the notice it published in the
Under the National Traffic and Motor Vehicle Safety Act, as amended (the Safety Act), 49 U.S.C. Chapter 301, NHTSA is charged with authority “to reduce traffic accidents and deaths and injuries resulting from traffic accidents.” To carry out this statutory mandate, NHTSA has broad information gathering authority, including authority to obtain information on vehicle crashes, potential defects related to motor vehicle safety, and compliance with legal requirements to timely identify and conduct recalls for safety
NHTSA's statutory mandate includes the exercise of its authority to proactively ensure that motor vehicles and motor vehicle equipment, including those with novel technologies, perform in ways that protect the public against unreasonable risk of accidents occurring because of the design, construction, or performance of a motor vehicle, and against unreasonable risk of death or injury in an accident. 49 U.S.C. 30102. Both ADS and ADAS are “motor vehicle equipment” subject to the requirements of the Safety Act. Given the rapid evolution of these technologies and increasing testing of new technologies and features on publicly accessible roads, it is critical for NHTSA to exercise its oversight over potential safety defects in vehicles operating with ADS and Level 2 ADAS. The Safety Act is preventive, and the identification of safety defects does not and should not wait for injuries or deaths to occur.
ADS and Level 2 ADAS are new technologies that fundamentally alter the task of driving a motor vehicle. Crashes involving vehicles equipped with these technologies have resulted in multiple fatalities and serious injuries, and NHTSA anticipates that the number of these crashes will continue to grow in the near future given the increased number of these vehicles on the road and the increased number of vehicle and equipment manufacturers in the market. The General Order provides the agency with critical and timely crash data, which assists the agency in identifying potential safety issues resulting from the operation of advanced technologies on public roads. Access to this crash data may show whether there are common patterns in vehicle crashes or systematic problems with specific vehicles or systems, any of which may reflect a potential safety defect.
NHTSA intends to evaluate whether specific manufacturers (including manufacturers of prototype vehicles and equipment) are meeting their statutory obligations to ensure that their vehicles and equipment are free of defects that pose an unreasonable risk to motor vehicle safety, or are recalled if such a safety defect is identified. NHTSA's oversight of potential safety defects in vehicles operating on publicly accessible roads using ADS or Level 2 ADAS requires that NHTSA have timely information on incidents involving those vehicles. In carrying out the Safety Act, NHTSA may “require, by general or special order, any person to file reports or answers to specific questions.” 49 U.S.C. 30166(g)(1)(A).
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NHTSA received comments that both supported NHTSA's intention to seek approval for a three-year approval from OMB and comments that were not supportive of the information collection or expressed concerns about the current requirements. In general, comments from safety and consumer advocate groups were more supportive and comments from the industry and industry groups expressed more criticism of the information collection. Specifically, NHTSA received comments regarding the definitions of “notice” and “crash,” the reporting requirements under Request No. 1, the reporting requirements under Request No. 2, the reporting requirements under Request No. 3, the reporting Requirements under Request No. 4, the Incident Report Form, the requirement that each reporting entity with notice of a reportable crash file a separate report, the burden placed by the General Order on “vehicle suppliers,” the requirements for submitting confidential business information (CBI), and the hourly burden estimates and associated labor cost estimates. A summary of the major comments and NHTSA's responses is provided below.
A reporting entity's duty to submit an incident report under the General Order is triggered by notice of facts meeting the criteria for different types of reports. It is the reporting entity's receipt of notice of these facts, and not the existence of a crash, that triggers the duty to report.
The General Order includes the following definition of the term “Notice”:
“Notice” is defined more broadly than in 49 CFR § 579.4 and means information you have received from any internal or external source and in any form (whether electronic, written, verbal, or otherwise) about an incident that occurred or is alleged to have occurred; including, but not limited to vehicle reports, test reports, crash reports, media reports, consumer or customer reports, claims, demands, and lawsuits. A manufacturer or operator has notice of a crash or a specified reporting criterion (
Multiple commenters submitted comments stating that this definition is overly broad and creates an unnecessary burden on the reporting entities. The agency received comments on this issue from the U.S. Chamber of Commerce-Technology Engagement Center (“C_TEC”), the Consumer Technology Association (“CTA”), the Self-Driving Coalition for Safer Streets (“the Self-Driving Coalition”), the Alliance for Automotive Innovation (“Auto Innovators”), the Motor and Equipment Manufacturers Association (“MEMA”), and Aurora Operations, Inc. (“Aurora”).
Many of these comments focus on the fact that notice can come in the form of any information from any source. These commenters suggest that this definition should be narrowed to information intentionally directed to the reporting entity, information directed to a specified group of individuals, information in the form of a written claim or notice, or to exclude media reports.
The agency disagrees with these comments. The agency has found, through its own experience, that media reports are a valuable source of initial
Other comments focused on the fact that the definition of notice includes any information received by the reporting entity and is not limited to specific individuals or employees within a specific department, employees of a certain seniority level, or employees with responsibilities relating to the review of and response to safety-related information. These comments suggest that the definition of notice should be limited to information received by those persons who normally receive information regarding crash reports and potential safety issues. Several comments include hypotheticals in which a production line employee or other employee with no specific responsibility for safety is told or reads about a crash (perhaps even while the employee is not working) that triggers a reporting requirement.
The agency disagrees with these comments, which appear to be largely based on theoretical hypotheticals rather than actual experience. As explained, the definition of notice is intentionally broad to ensure that the agency receives timely notice of all crashes that meet the reporting criteria. The list of reporting entities includes companies of different sizes and structures, which makes it difficult to identify a limited group of persons for purposes of this definition. The agency also notes that, despite the theoretical hypotheticals, none of the comments includes a real word example of actual situations that resulted in confusion or excessive burden. The agency is likewise unaware of any reports that have been submitted based on notice received in a manner similar to those suggested by these hypotheticals.
The agency need not, for the purposes of responding to these comments, engage in a legal analysis of whether information received, for example, by a production line worker, janitorial staff, or a marketing intern constitutes information received by the company. The agency expects that each reporting entity already has or will put into place internal reporting processes and implement training that reflect the size, nature, and business of that entity. Nonetheless, the agency also states that, if faced with a potential enforcement issue involving, as the hypotheticals suggest, an employee far removed from any responsibility for receiving, reporting, or analyzing potential safety-related information, the agency will consider any appropriate enforcement discretion warranted by the circumstances.
Other comments focus on that portion of the definition providing that a company has notice of facts when those facts are alleged, regardless of whether the reporting entity has verified those facts. These comments argue that including facts that have not yet been verified by the reporting entity substantially decreases the value of the reported information and increases the burden on the reporting entities.
The agency disagrees with these comments. The purpose of the General Order is to provide the agency with timely notice of crashes and circumstances that may reflect a safety-related defect with ADS or Level 2 ADAS equipped subject vehicles. The agency needs notice of these crashes and allegations before a reporting entity takes some indeterminate amount of time to investigate and try to verify the allegations, and the agency needs notice of these allegations regardless of whether they are disputed or have been verified by the reporting entities. The agency's own experience likewise counsels against limiting the scope of the reporting obligation to those facts that the reporting entity has verified or does not dispute. To the extent a reporting entity disputes the alleged facts, considers the alleged facts implausible, or even simply has not had time to investigate, it is able to provide that information and context in the narrative section of the incident report.
Other comments attempt to draw analogies with reporting requirements that apply to manufacturers under the agency's EWR (also referred to as TREAD) regulations.
A reporting entity's reporting obligation under the General Order is limited to “crashes” that meet the specified criteria. The General Order includes the following definition of the term “Crash”:
“Crash” means any physical impact between a vehicle and another road user (vehicle, pedestrian, cyclist, etc.) or property that results or allegedly results in any property damage, injury, or fatality. For clarity, a subject vehicle is involved in a crash if it physically impacts another road user or if it contributes or is alleged to contribute (by steering, braking, acceleration, or other operational performance) to another vehicle's physical impact with another road user or property involved in that crash.
MEMA, Aurora, Auto Innovators, the Self-Driving Coalition, and C_TEC each submitted comments stating that the definition of “crash” is overly-broad and creates unnecessary burden because it includes those impacts that result in “any property damage.” As the comments note, “any property damage” could include a slight paint scratch from a minor impact or other damage that might otherwise be considered
The agency disagrees with these comments. The agency notes first that notice of an incident that meets the definition of a crash, by itself, does not trigger the obligation to submit an incident report. To be reportable, the crash must also meet the criteria
To be reportable under Request No. 1, which applies to both Level 2 ADAS and ADS equipped vehicles, the crash must also involve, among other criteria, a fatality, a hospital treated injury, an air bag deployment, a vehicle tow-away, or a vulnerable road user (VRU). The agency is unaware of any crash involving one of these criteria that resulted in only a minor paint scratch or other
In contrast, under Request No. 2, which applies to ADS equipped vehicles, minor damage could result in a reporting obligation under Request No. 2, if the ADS system was engaged 30 seconds or less prior to the start of the crash. The concern expressed by these comments is therefore limited to a small subset of crashes involving ADS-equipped vehicles rather than the reporting obligations under the General Order as a whole.
At this time, there are no ADS equipped vehicles available for consumer purchase or use. Instead, these vehicles are typically operated as test vehicles or for limited commercial purposes such as taxi or delivery services under special use permits from State or local authorities and often under exemptions granted by and/or conditions imposed by the agency. As NHTSA noted in the General Order, “ADS present new and unique risks to motor vehicle safety because they fundamentally alter the nature of motor vehicles and their operation.” The General Order therefore requires that reporting entities submit incident reports for all crashes involving ADS equipped vehicles that meet the reporting criteria under Request No. 2, regardless of the extent or cost to repair any resulting damage. The agency believes that this reporting requirement is necessary and appropriate and that it does not create unnecessary or excessive burden for operators and manufacturers of ADS equipped vehicles and equipment.
The agency also disagrees that a reporting threshold based on the cost to repair any resulting property damage would have any material effect on the burden imposed on the reporting entities. To determine whether the cost to repair resulting damage exceeds a specific dollar value, the reporting entity would have to engage in an entirely different analysis that could involve repair estimates and differing cost structures depending on whether the repair was performed internally or by a third-party or whether parts were valued at wholesale or retail cost. A crash involving a vehicle owned by a large vehicle manufacturer with internal repair facilities might therefore not be reportable, while the same crash with the same damage might be reportable to a small developer that uses a third-party repair facility. Enforcement issues could likewise turn on whether the repair cost of the damage was $75.00 or $1,025.00 rather than the simpler question of whether there was any property damage. The agency therefore declines to amend the definition of crash to include a threshold amount of damage.
Several comments also focus the clarifying statement in the definition stating that a vehicle is involved in a crash if it contributes or is alleged to contribute to the crash and argue that this statement makes the definition ambiguous with respect to when a vehicle is involved in a crash. The agency disagrees with these comments. The verb “contribute,” when used in its intransitive form (as it is in the definition of crash), has a commonly understood meaning—“to play a significant part in making something happen.”
Under Request No. 1 of the General Order, a reporting entity must report any crash involving an ADS or Level 2 ADAS equipped vehicle that occurs on publicly accessible roads in the United States, where the ADS or Level 2 ADAS was engaged at any time during the period 30 seconds prior to the crash through the end of the crash, and the crash results in any individual being transported to a hospital for medical treatment, a fatality, a vehicle tow-away, or an air bag deployment or involves a vulnerable road user. Under these circumstances, the reporting entity must submit a report within one calendar day after the reporting entity receives notice of the crash, and an updated report is due 10 calendar days after receiving notice.
The 10-day report utilizes the same form and requests the same information as the one-day report. The 10-day report is a required follow up to the one-day report because it is anticipated that, for some (if not many) of these reportable crashes, the reporting entity will have minimal information one calendar day after it first receives notice. The General Order therefore requires both the one-day report, to give the agency prompt notice of a crash that may justify immediate follow up, and the 10-day report, to provide the agency with additional information regarding the crash about which the reporting entity may later receive notice. Reporting entities use the same incident report form for 1-day and 10-day crashes, and no different or incremental information is required for the 10-day report.
Multiple commenters, including C_TEC, Auto Innovators, CTA, Tesla, Inc. (“Tesla”), the Self-Driving Coalition, and MEMA, submitted comments stating that the requirement in Request No. 1 that an initial report be submitted within one calendar day is unnecessarily burdensome, provides no meaningful benefit to the agency, and increases the likelihood of inaccurate information being submitted to the agency. These comments focus on both the 1-day deadline for submitting the incident report, which requires reporting entities to report quickly following the receipt of notice, and the fact that the 1-day deadline is one calendar day rather than one business day, which requires reporting entities to monitor information and, if the criteria are met, to submit incident reports on weekends and holidays when the deadline falls on these days. These comments contend that the 1-day deadline creates unnecessary burden because a reporting entity has limited time to evaluate the notice it receives, determine whether a reporting obligation exists, and to prepare and submit an incident report if the crash is determined to be reportable. Because notice of a crash may come on a Friday afternoon or on a weekend and because the reports may need to be submitted on a weekend or holiday (or during a manufacturer's shut-down period), there is burden resulting from the need to have employees working or at least “on-call” to review information and file any required reports during these periods.
Many of these same comments suggest that the requirement of a 10-day updated incident report under Request No. 1 creates unnecessary burden and provides minimal information of value to the agency. These same comments
The agency understands the burden imposed by the 1-day and 10-day reporting requirements under Request No. 1. The agency also explained in its 60-day notice that the 1-day deadline is necessary to ensure that the agency has timely notice of those crashes reportable under Request No. 1 and the ability to timely respond to and investigate crashes reportable under Request No. 1. A later deadline could impede the agency's ability to respond or investigate, for example, by deploying a Special Crash Investigation (SCI) team to inspect the accident scene or vehicle, and a later deadline also could result in the loss of valuable information that is not properly preserved. The agency's experience since it issued the General Order has confirmed the importance of timely notice. The agency also has seen that prompt notice is most valuable for a subset of more serious crashes, specifically those for which the agency is most likely to send a team to investigate. In order to maintain timely notice with respect to these more serious incidents and, at the same time, reduce the resulting burden on respondents, NHTSA has decided to amend Request No. 1 of the General Order to create a new 5-day reporting category for some of these crashes.
Request No. 1 will be amended in a manner that keeps the 1-day and 10-day reporting sequence for any crash that involves a fatality, a hospital treated injury, or a vulnerable road user. For those crashes reportable under Request No. 1 that do not involve any of those criteria but involve an air bag deployment or a vehicle tow-away, the reporting requirement will be amended to a single incident report that must be submitted no later than 5 calendar days after the reporting entity receives notice. If the fifth calendar day falls on a weekend or holiday, the reporting entity may file this 5-day report early (
Based on its experience with 5 months of reporting since the General Order was issued, the agency estimates that only 8% of the reports required under Request No. 1 will involve a fatality, a hospital treated injury, or a vulnerable road user and therefore need to be submitted under the 1-day and 10-day sequence. The remaining reports, those not involving any of those three criteria but involving an air bag deployment or vehicle tow-away, which NHTSA estimates to be 92% of the reports required under Request No. 1, will require a single report within 5 calendar days of receiving notice. The burden estimates set forth below have been adjusted to reflect this forthcoming amendment to the General Order.
Aurora also submitted comments suggesting that Request No. 1 should be amended to reduce the starting point for the period during which the ADS or Level 2 ADAS system must have been engaged from 30 seconds prior to the initiation of a crash to 5 seconds prior to the initiation of a crash. The agency declines to amend Request No. 1 in this manner because it believes the proposed amendment could prevent the agency from receiving information relating to a potential safety defect and because the proposed amendment would not result in any meaningful reduction in burden.
Under Request No. 2 of the General Order, a reporting entity must report any crash involving an ADS equipped vehicle that is not reportable under Request No. 1, but nonetheless occurs on a publicly accessible road in the United States while the ADS system was engaged at any time during the period 30 seconds prior to the crash through the conclusion of the crash. As a practical matter, therefore, the differences between Request No. 1 and Request No. 2 are that Request No. 2 is limited to ADS equipped vehicles (and does not include Level 2 ADAS equipped vehicles) and that crashes reportable under Request No. 2 do not involve a fatality, hospital treated injury, an air bag deployment, a vehicle tow-away, or a vulnerable road user. Upon receipt of notice of a crash reportable under Request No. 2, a reporting entity must submit a report regarding the crash on the fifteenth day of the month after the reporting entity receives notice.
CTA and the Self-Driving Coalition submitted comments suggesting that Request No. 2 should be eliminated from the General Order because the reported incidents, which do not involve any of the criteria included in Request 1.C, involve less serious crashes that are unlikely to include any meaningful data. These same commenters suggested that, if Request No. 2 is not removed from the General Order, it should be modified to include a minimum amount of crash damage as a reporting threshold.
NHTSA disagrees with these comments. For the same reasons discussed above with respect to comments regarding the definition of “crash,” the agency declines to amend Request No. 2.
The Self-Driving Coalition's comments also suggested that Request No. 2, which is limited to crashes involving subject vehicles equipped with ADS (and does not include subject vehicles equipped with Level 2 ADAS), places a disproportionate burden on ADS manufacturers and operators. The agency disagrees with these comments. Given the unique nature of ADS and the lack of ADS equipped vehicles for consumer use and purchase, the agency believes that the reporting requirements in Request No. 2 are appropriate and are not unduly burdensome.
Request No. 3 requires reporting entities to submit a supplemental report on a previously reported incident the month after it receives notice of any material new or materially different information about the incident. This reporting obligation continues throughout the duration of the General Order.
Auto Innovators submitted comments stating that the reporting obligations under Request No. 3 are overly burdensome, especially due to the continuing nature of this obligation. These comments state that, pursuant to this obligation, reporting entities are required to separately review every incident for which a report was previously filed in each subsequent month to determine whether a supplemental report is due. For reports filed during the early months of the General Order, this obligation will continue throughout the three-year requested extension, and, with the passage of time, the number of prior incidents that need to be reviewed each
The agency disagrees with these comments and believes they overstate the burden resulting from Request No. 3. The General Order does not require each reporting entity to review each prior report each month throughout the duration of the General Order. Instead, it requires a reporting entity that receives material new or materially different information regarding a crash for which it previously filed a report to file a supplemental report on the fifteenth day of the month after it receives notice of that information. The agency expects that, in the months immediately following the filing of an initial incident report, the reporting entity may need to carefully review whether it has received notice of information that triggers the obligation to submit a supplemental report under Request No. 3. With the passage of time, however, the agency believes that the burden resulting from Request No. 3 will diminish significantly. Nonetheless, the agency will continue to review reports submitted under Request No. 3 and evaluate the benefit of this information compared to the resulting burden. If the agency determines that this information is of little use and that an amendment is appropriate, it will have the benefit of the comments submitted and the solutions proposed.
Request No. 4 of the General Order requires any reporting entity that has not submitted a monthly incident report under Request No. 2 or a monthly supplemental report under Request No. 3 to submit a report under Request No. 4 confirming that lack of reportable information under Requests Nos. 2 and 3.
The Association for Unmanned Vehicle Systems International (“AUVSI”), MEMA, and the Self-Driving Coalition submitted comments expressing the view that these reports, which contain no substantive crash information, are unnecessary, serve no useful function, and are therefore unnecessarily burdensome. The agency disagrees with these comments. The General Order is drafted in a manner to require that each reporting entity submit at least one monthly report (
This requirement assists the agency in determining whether all the reporting entities are complying with their reporting requirements. Absent the reports required under Request No. 4, the agency would not know, for example, whether a reporting agency had nothing to report or was simply ignoring its reporting obligations. The agency also believes that, for some reporting entities, the obligation to file a monthly report in the absence of any reportable information under Request Nos. 2 and 3 provides an important reminder of the continuing obligation to report crashes that meet the specified criteria.
The burden associated with the reports required under Request No. 4 is minimal. A reporting entity should know, at the end of each calendar month, whether it is required to submit a report under Request No. 2 or Request No. 3. If a reporting entity has determined that is required to file such a report, there is no additional burden in determining that no report is required under Request No. 4. If the reporting entity has determined that it need not submit a report under Request No. 2 or Request No. 3, then the reporting entity need only fill in the month and the year for which the report is submitted under Request No. 4, which the agency estimates should not take more than 15 minutes per month. The agency therefore declines to amend the reporting requirements set forth in Request No. 4.
The General Order requires that reporting entities submit incident reports using a standard Incident Report Form, an image of which is attached to the General Order as Appendix C. Pursuant to an August 5, 2021 amendment to the General Order, the Incident Report Form was converted into an interactive web-based form, and all incident reports are now required to be submitted through a dedicated portal. Reporting entities use the same 1-page Incident Report Form for filing reports required to be submitted under Request Nos 1, 2, 3, and 4. To minimize the burden associated with this 1-page form, much of the information is entered through drop down menus, and the interactive form eliminates the need to submit information that is unnecessary or not applicable due to the nature of the report or a prior answer. A “narrative” section requires a free text description of the accident and also permits the reporting entity to enter any additional information it believes is important for context.
Several comments were submitted that suggested changes to the form. The agency likewise has made minor clarifying changes to the form, none of which is expected to impact the burden associated with completing the form.
The current version of the form includes a question about whether the subject vehicle was, at the time of the incident, operating within its operating design domain (ODD) and the highest level of automation (SAE Levels 2, 3, 4, or 5) with which the vehicle was equipped. To avoid any confusion, this question will be divided into three separate questions: (1) Whether the vehicle was operating within its ODD at the time of the crash; (2) whether the vehicle was equipped with ADS; and (3) whether the ADS was engaged at the time of or immediately prior to the crash. Each reporting entity will be required to answer each of these questions via a drop-down menu. Reporting entities will have the option of designating their response to the first question as confidential business information, but they will not be able to designate their response to the second or third questions as confidential business information.
The Self-Driving Coalition submitted comments suggesting that the incident report form should be modified to change the question regarding “Highest Injury Severity” to “Highest Injury Severity Alleged” to reflect the unverified nature of this information. The agency agrees with this comment and intends to modify the form to incorporate this change.
AUVSI submitted comments suggesting that the incident report form should be amended to permit reporting entities to designate reportable crashes as preventable or not-preventable and that data from crashes designated as not-preventable should not be included in any aggregate data that is publicly released by the agency. The agency disagrees with this suggested change, which is contrary to the nature and purpose of the General Order.
The General Order requires each reporting entity with notice of a crash meeting the specified criteria to submit an incident report. Because the General Order includes vehicle manufacturers, vehicle operators, and ADS and Level 2 ADAS developers (equipment manufacturers), the agency expects that, for certain crashes, multiple entities may be required to submit incident reports. For example, both a third-party operator and an ADS developer are likely to have notice of a crash involving a vehicle from the developer's test fleet that is being operated by the operator. Likewise, in other circumstances, both an ADS developer and a vehicle manufacturer are likely to receive notice of a crash due to commercial relationships. The agency established these reporting requirements intentionally, both because there is value in collecting information from different entities with different perspectives relating to a crash and because, under some circumstances, one entity might receive notice of a crash before the other entity.
Multiple commenters, including the Self-Driving Coalition, MEMA, CTA, Auto Innovators, and C_TEC were submitted suggesting that these “duplicate” reports are unnecessary and unduly burdensome. These comments state that there is no incremental value to collecting the same information from multiple sources and that coordinating the filing of these reports among multiple entities is unnecessarily burdensome. These comments further state that this burden could be lessened by permitting multiple entities to designate a “primary” report filer or by permitting one entity to “tag” others in its report to eliminate the need for these other reporting entities to file separate reports.
The agency does not believe, as some of these comments assert, that the General Order's current reporting requirements are “unnecessarily duplicative of information otherwise reasonably accessible to the agency.” 5 CFR 1320.9(b). Instead, these reporting requirements reflect the reality that one reporting entity may have different information than another reporting entity or receive notice of that information at a different time than another reporting entity. The fact that some or even all this information may be the same for multiple entities with respect to a given crash does not make the reporting requirements unnecessarily duplicative.
The agency is concerned that any modification of these reporting requirements that allows one reporting entity to tag others or allows multiple reporting entities to designate a primary reporting entity would, for the reasons explained above, frustrate the objectives of these reporting requirements. Any such modification could also create significant enforcement issues if, for example, the agency learned that crash information about which one reporting entity had notice was not included in the incident report filed by another reporting entity that tagged the others or had been designated by others as primary.
The agency also believes that the burden concerns expressed in the comments on this issue are over-stated and that the proposed modifications would not materially reduce the resulting burden. If, as these comments suggest, multiple reporting entities are coordinating the review, analysis, and reporting of crash information about which they receive notice prior to filing their respective reports, all of this activity would still be necessary even if one of these reporting entities tagged others or was designated as primary by others. Under these circumstances, the only reduction in burden would be that the tagged or non-primary reporting entities would no longer have to complete the administrative task of filling out and submitting the 1-page incident report form. The current reporting structure is likewise appropriate for the reporting entities that are not coordinating their efforts to ensure the agency receives timely and complete information. Nonetheless, the agency will continue to review this issue and consider ways to reduce resulting burdens as appropriate. The agency has the benefit of these comments if it determines that any changes to the existing reporting requirements are appropriate.
The list of responsible parties included with the General Order includes several “vehicle suppliers,” companies that supply various components that are then integrated into completed vehicles, ADS, or Level 2 ADAS, by other vehicle or equipment manufacturers. Comments submitted by MEMA and Auto Innovators suggested that the General Order places unique and excessive burdens on these companies because, according to these comments, they are required to conduct an ongoing search for reportable crashes involving vehicles, ADS, or Level 2 ADAS that might involve a component or system they supplied and then investigate at length to determine whether they have a reporting obligation. These comments suggest that this alleged disproportionate burden on these vehicle suppliers can and should be reduced by limiting their reporting obligations to vehicles in their own test fleet, by amending the definition of “vehicle equipment” to eliminate any reference to software or components, and by clarifying the definition of “Level 2 ADAS.”
The agency first notes that it did not include any of these companies in the General Order because they supply components that are incorporated into completed vehicles, ADS, or Level 2 ADAS. Instead, the agency included these companies in the General Order because the agency understands that each of them is already or shortly will be actively involved in the development of ADS and/or Level 2 ADAS, including testing that involves vehicles equipped with these systems being driven on publicly-accessible roads in the United States.
The agency also disagrees with these comments, which appear to be based on
There is no general or specific requirement that a reporting entity that is a manufacturer or supplier of brake pads, wiring harnesses, or lidar sensors actively search outside the company for potentially reportable crashes. Likewise, there is no requirement that any such reporting entity that learns of a crash involving a vehicle that includes a component it supplied actively investigate the crash to determine whether the other criteria have been met. Instead, a vehicle supplier (like every other reporting entity) that receives notice of information meeting each of the criteria must file a report. The agency expects that it would be extremely rare for any vehicle supplier to receive such notice unless it was significantly involved in developing, testing, or supplying an ADS or Level 2 ADAS, in which case the agency believes that the reporting requirement is appropriate.
The agency also notes that Level 2 ADAS (and perhaps, in the future, ADS) currently enter the consumer market in different forms, including after-market software and hardware components, which are then integrated with other existing vehicle components. Changing the definition of motor vehicle equipment as the comments suggests would, contrary to the agency's intent, eliminate these after-market systems from the scope of the General Order. For all these reasons, the agency therefore declines to modify the reporting requirements as suggested by these comments.
Under the terms of the General Order, a reporting entity that claims information it is submitting to the agency in an incident report form constitutes confidential business information is required to follow the agency's standard procedures for making such a claim.
The procedures for filing CBI designations are established by the agency's regulations rather than the General Order.
With respect to the comments regarding aggregated CBI requests or utilizing the portal to submit CBI requests, the agency is continually reviewing various procedures under the General Order to determine whether the resulting burden can be reduced. The agency will have the benefit of these comments as it considers whether any such changes are appropriate with respect to CBI requests.
Multiple commenters submitted comments stating that the agency should expand the General Order to also require reporting of incidents other than the specified crashes (
In the 60-day Notice, NHTSA made various estimates regarding the number of incidents about which the reporting entities would be required to submit reports on an annual basis. Although those estimates were made based on the best information available to the agency at the time, the agency now has over five months of reporting data and history and is therefore able to substantially refine those estimates.
In its 60-day Notice, NHTSA estimated that “it will receive responses from 20 respondents reporting Level 2 ADAS crashes each year,” “that each respondent will submit, on average, 170 incident reports per year,” and that it “will receive, on average 3,400 Level 2 ADAS incident reports each year.” The agency explained that this was “a high-end estimate” that would later be refined.
Although the agency received no comments directly addressing the estimate of 3,400 incident reports per year, several commenters used this estimate (without providing any alternative estimate) in support of arguments that the burden associated with these reports is excessive. With the benefit of actual reporting history and data, the agency is now able to substantially revise this estimate to 1,000 reports per year under Request No. 1 for Level 2 ADAS incidents.
As explained in more detail above, the agency also has decided to amend the reporting requirements in Request No. 1 to require that a report be filed within 1 calendar day only with respect to those crashes involving a fatality, a hospital-treated injury, or a vulnerable road user. Based on data of reported incidents through December 1, 2021, the agency estimates that only 8% of the reports required under Request No. 1 will meet one of these criteria. Accordingly, NHTSA now estimates it will receive 80 1-day Level 2 ADAS
As discussed above, NHTSA is now allowing some of the reports that were previously required to be submitted within one calendar day to instead be submitted within 5 calendar days. The agency estimates that 92% of all Level 2 ADAS crashes will be submitted in 5-day incident reports. Accordingly, the agency now estimates that of the 1,000 Level 2 ADAS incident reports submitted each year, approximately 920 will be 5-day Level 2 ADAS incident reports.
Under the current terms of the General Order, a reporting entity submitting an initial report within 1 calendar day under Request No. 1 is also required to submit an updated report on the tenth calendar day after notice of the crash. In its 60-day Notice, NHTSA therefore estimated the number of 10-day updated reports to be equal to the number of 1-day reports. As explained above, the agency has decided to amend Request No. 1 of the General Order to limit the 1-day and 10-day reporting sequence to crashes involving a fatality, a hospital treated injury, or a vulnerable road user. The agency estimates that 8% of the reports required under Request No. 1 will meet one of these criteria. No 10-day updated report therefore will be required for the remaining reports required under Request No. 1, an estimated 92% of those reports.
Based on its revised volume estimates and the forthcoming amendment to Request No. 1, the agency revises its estimate of the number of 10-day reports to 80 reports each year.
In its 60-day Notice, NHTSA estimated that it would receive 200 incident reports per year involving ADS equipped vehicles. The agency further estimated that half of these reports (100) would be filed pursuant to the 1-day and 10-day sequence under Request No. 1 and that the remaining half of these ADS incident reports (100) would be submitted under Request No. 2 as monthly incident reports. With the benefit of five months of reporting experience and data, the agency is able to refine these estimates. NHTSA estimates that it will receive 150 ADS incident reports annually under Request No. 1. However, as a result of the amendment discussed above, not all of those reports will be required to be submitted within one calendar day. Based on the discussed criteria and the incident reports the agency has received thus far, NHTSA estimates that 20% of the reports will be required to be submitted within one calendar day. Accordingly, the agency now estimates that it will receive 30 1-day reports each year. Reporting entities would be required to submit the remainder of the reports within five calendar days of receiving notice.
As discussed above, NHTSA estimates that it will receive 150 ADS crash reports under Request No. 1 each year and that 20% of the reports will need to be submitted within one day and 80% will be required to be submitted within five calendar days. Accordingly, the agency estimates that it will receive 120 5-day ADS incident reports each year.
In its 60-day Notice, NHTSA estimated that the annual volume of 10-day updated ADS reports would be the same as the volume of 1-day ADS Reports because the General Order requires a 10-day updated report for each 1-day report. Based on the revised estimates and amendment discussed above, the agency revises its estimate of annual 10-day reports to 30 (the same number as the estimated annual 1-day ADS incident reports described above).
In its 60-day Notice, NHTSA estimated that it would receive 100 ADS monthly incident reports per year under Request No. 2. Based on the revised estimates described above, the agency revises this estimate to 200 ADS monthly incident reports per year.
A reporting entity is required to file a monthly supplemental report under Request No. 3 only if it receives notice of new material or materially different information regarding a crash for which a report was previously submitted under Request Nos. 1 or 2. In its 60-day Notice, NHTSA estimated that it would receive 25 ADS and 170 Level 2 ADAS monthly supplemental reports per year. With the benefit of 5 months of reporting experience, the agency revises this estimate to 40 ADS and 75 Level 2 ADAS supplemental reports each month.
In the absence of any new or supplemental reports due under Request No. 2 and Request No. 3, each reporting entity is required to submit an Incident Report confirming the lack of any reportable information under those requests on the fifteenth (15th) calendar day of each month. In its 60-day Notice, NHTSA estimated that 80% of the reporting entities each month will submit a report under Request No. 4. Based on an average of 110 total reporting entities per year, the agency estimates that it will receive 1,056 reports annually under Request No. 4.
The total burden and cost estimates set forth below have been revised consistent with these revised annual volume estimates.
NHTSA received three comments, from Auto Innovators, MEMA, and the Self-Driving Coalition, stating that the agency underestimated the burden hours associated with the different reporting requirements. These comments and the agency's responses to these comments are discussed in more detail in the section below explaining NHTSA's burden calculations.
In its 60-day Notice, NHTSA explained that it had estimated the total labor costs associated with burden hours by looking at the average wage for architectural and engineering managers in the motor vehicle manufacturing industry (Standard Occupational Classification # 11-9041). The Bureau of Labor Statistics (BLS) estimates that the average hourly wage for this occupational classification is $65.62 and estimates that private industry workers” wages represent 70.4% of total labor compensation costs. Therefore, the agency estimated the hourly labor costs to be $93.21.
Auto Innovators submitted comments stating that the agency, as part of its burden analysis, had underestimated the hourly cost of the labor required to meet the reporting obligations in the order. This same commenter suggested that, given the managerial and legal review and oversight involved in this information collection, a more realistic hourly labor cost is $120.00. In response to this comment, NHTSA is revising its estimate of the labor costs associated with burden hours, as discussed in the section discussing NHTSA's burden estimates.
As discussed above, NHTSA is making changes to the General Order that will affect the total burden hours. The agency also has acquired new information that allows the agency to estimate burdens more accurately. To estimate the burden associated with this information collection, the agency separated the requirements of the General Order into thirteen components: (1) Incident reports under Request No. 1 involving Level 2 ADAS that must be submitted within one calendar day; (2) updates under Request No. 1 to 1-day incident reports involving Level 2 ADAS that must be submitted within ten calendar days; (3) incident reports under Request No. 1 involving Level 2 ADAS that must be submitted within five calendar days; (4) incident reports under Request No. 1 involving ADS that must be submitted within one calendar day; (5) updates under Request No. 1 to incident 1-day reports involving ADS that must be submitted within ten calendar days; (6) incident reports under Request No. 1 involving ADS that must be submitted within five calendar days; (7) monthly incident reports under Request No. 2 involving ADS that must be submitted on the fifteenth of the following month; (8) monthly supplemental reports under Request No. 3 involving Level 2 ADAS incidents that must be submitted on the fifteenth of the following month; (9) monthly supplemental reports under Request No. 3 involving ADS that must be submitted on the fifteenth of the following month; (10) monthly reports under Request No. 4 confirming the lack of reportable information under Requests No. 2 and No. 3, (11) additional time for screening incoming information; (12) training employees on the requirements; and (13) time to set up an account to submit the reports. The burden associated with categories (12) and (13) are one-time start-up burdens that will be incurred during the proposed extension only to the extent that new reporting entities are added to the General Order during this period. For the 108 reporting entities currently named in the General Order, this burden has already been and was accounted for under the currently approved information collection request.
NHTSA estimates that there will be an average of 110 reporting entities during each year of the proposed extension. Currently, there are 108 reporting entities named in the General Order. The agency believes that additional reporting entities will be added to the General Order during the proposed extension as new companies enter the market and begin developing and manufacturing ADS and ADAS technology and vehicles equipped with these technologies. The agency also believes that some existing reporting entities will be removed from the General Order due to the cessation of operations or market consolidation.
To estimate the burden associated with submitting Level 2 ADAS crash reports, NHTSA first looked to the category of crashes that must be reported. As explained above, the agency has decided to amend the General Order to only require reporting of Level 2 ADAS crashes within one business day when (1) the crash occurred on a publicly accessible road in the United States (including any of its territories); (2) the Level 2 ADAS was engaged at any time during the period from 30 seconds immediately prior to the commencement of the crash through the conclusion of the crash; and (3) the crash resulted in a fatality, a hospital treated injury, or involved a vulnerable road user. Incidents meeting the first two criteria and also involving a vehicle tow-away or an air bag deployment, but not involving a fatality, hospital treated injury, or vulnerable road user will be required to be reported within five calendar days.
As discussed above and based on five months of incident reporting under the existing clearance, NHTSA estimates that it will receive approximately 80 1-day Level 2 ADAS incident reports each year. Based on the number of manufacturers that manufacture vehicles equipped with Level 2 ADAS systems, the agency estimates that it will receive responses from 20 respondents reporting Level 2 ADAS crashes each year.
In the 60-day Notice, NHTSA estimated that it would take respondents approximately 2 hours to compile and submit each crash report. The agency received comments from Auto Innovators, MEMA, and the Self-Driving Coalition stating that NHTSA had underestimated the burden hours for the reporting requirements. Specifically, Auto Innovators stated that a more accurate estimate would be 8 hours for each 1-day incident report. The Self-Driving Coalition also provided estimates of the burden hours for 1-day reports (between 5 and 12 hours), but since the estimates were provided for ADS 1-day reports, NHTSA is using the estimate provided by Auto Innovators. NHTSA now estimates that 1-day reports takes, on average, 8 hours. Therefore, the agency estimates the total annual burden hours for submitting Level 2 ADAS 1-day crash reports to be 640 hours (8 hours × 80 crash reports) for all manufactures. Therefore, the average burden for the estimated 20 manufacturers submitting 1-day ADAS incident reports is estimated to be 32 hours.
As discussed above, in addition to submitting information on certain Level 2 ADAS crashes within one day, reporting entities must also submit updated information within ten days. NHTSA has decided to only require 10-day update reports for incidents required to be reported within one calendar day. In the 60-day notice, NHTSA estimated that providing updated crash reports would take approximately 1 hour per report. However, both Auto Innovators and the Self-Driving Coalition submitted comments stating that NHTSA underestimated the burden for submitting the reports. Auto Innovators stated that a reasonable mid-point in the burden estimates from members would be 20 hours to submit these updates and the Self-Driving Coalition stated that it would take between 3 and 24 hours, depending on the complexity of the incident. Since the Self-Driving Coalition's comments were specific to ADS reporting, NHTSA is revising its estimate based on the Auto Innovators” comment and now estimating that providing an updated 10-day report will take 20 hours. Therefore, the agency estimates that the total burden for submitting 10-day update reports for Level 2 ADAS incidents will take 1,600 hours (20 hours × 80 reports), for an average of 80 hours for each of the 20 reporting entities expected to submit reports each year.
To estimate the burden associated with submitting Level 2 ADAS 5-day crash reports, NHTSA first looked to the category of crashes that must be reported. As explained above, the agency has decided to amend the General Order to require 5-day reporting of Level 2 ADAS crashes when (1) the crash occurred on a publicly accessible
In the 60-day notice, NHTSA estimated that it would take respondents approximately 2 hours to compile and submit each 1-day crash report. The agency received comments from Auto Innovators, MEMA, and the Self-Driving Coalition stating that NHTSA had underestimated the burden hours for the reporting requirements. Specifically, Auto Innovators stated that the average submission would take 8 hours for each 1-day incident report. The Self-Driving Coalition also provided estimates of the burden for 1-day incident reports (between 5 and 12 hours) for ADS 1-day reports. NHTSA also received comments from Auto Innovators and the Self-Driving Coalition that stated that updated reports may take longer to submit than initial reports.
Because reporting entities will not be required to submit 10-day update reports for incidents required to be submitted to NHTSA within five business days, and because after five days more information may be available for review, the agency is basing its estimate of burden for 5-day reports off the burden estimates provided by commenters for the 10-day update report. Auto Innovators stated that a reasonable mid-point in the burden estimates from members would be 20 hours to submit updates and the Self-Driving Coalition stated that it would take between 3 and 24 hours, depending on the complexity of the incident. Because the Self-Driving Coalition's comments regarding burden were specifically for ADS crash reporting, NHTSA believes it is appropriate to use different burden estimates for Level 2 ADAS reporting and ADS reporting. Based on the comments, it appears that larger manufacturers reporting on Level 2 ADAS reports will require more time to submit 5-day reports than smaller entities submitting 5-day reports for ADS crashes. Therefore, NHTSA has decided to change its estimate based on the mid-point estimate provided by Auto Innovators. Accordingly, the agency estimates that 5-day reports takes, on average, 20 hours. Therefore, the agency estimates the total annual burden hours for submitting Level 2 ADAS 5-day crash reports to be 18,400 hours (20 hours × 920 crash reports) for all reporting entities for an average of 920 hours for each of the estimated 20 reporting entities submitting 5-day incident reports.
As discussed above, NHTSA now estimates that it will receive 30 ADS 1-day incident reports each year. In the 60-day notice, NHTSA estimated that it would take respondents approximately 2 hours to compile and submit each crash report. The agency received comments from Auto Innovators, MEMA, and the Self-Driving Coalition stating that the agency had underestimated the burden hours for the reporting requirements. Specifically, Auto Innovators stated that a more accurate estimate would be 8 hours for each 1-day incident report and the Self-Driving Coalition stated that 1-day reports take between 5 and 12 hours. Based on these comments, the agency now estimates that 1-day reports takes, on average, 8 hours. Therefore, the agency estimates the total annual burden hours for submitting ADS 1-day crash reports to be 240 hours (8 hours × 30 crash reports) for all manufactures. Based on the five months of reporting experience, the agency believes that some respondents with ADS 1-day reports will file multiple reports. At this time, the agency estimates that the 30 1-day reports will be submitted by 20 manufacturers, for an average of 12 hours per respondent.
As discussed above, NHTSA now estimates that it will receive 120 ADS 1-day incident reports each year. In the 60-day notice, NHTSA estimated that it would take respondents approximately 2 hours to compile and submit each 1-day crash report. The agency received comments from Auto Innovators, MEMA, and the Self-Driving Coalition stating that NHTSA had underestimated the burden hours for the reporting requirements. Specifically, Auto Innovators stated that a more accurate estimate would be 8 hours for each 1-day incident report and the Self-Driving Coalition stated that 1-day reports take between 5 and 12 hours. The agency also received comments from Auto Innovators and the Self-Driving Coalition stating that updated reports may take longer to submit than initial reports. Because reporting entities will not be required to submit 10-day update reports for incidents required to be submitted to the agency within five business days, and because after five days more information may be available for review, the agency is basing its estimate of burden for 5-day reports off the burden estimates provided by commenters for the 10-day update report. Auto Innovators stated that it would take 20 hours to submit updates and the Self-Driving Coalition stated that it would take between 3 and 24 hours, depending on the complexity of the incident. Because the agency estimates that information will be more readily accessible to reporting entities for incidents involving ADS, NHTSA estimates that 5-day reports take, on average, 14 hours (based on the mid-point between 3 and 24 hours). Therefore, the agency estimates the total annual burden hours for submitting ADS 5-day crash reports to be 1,680 hours (14 hours × 120 crash reports) for all reporting entities. Based on the number of respondents that have submitted ADS reports under the General Order thus far, the agency estimates that it will receive ADS 5-day reports from an average of 40 entities each year. Therefore, the average annual burden per reporting entity is estimated to be 42 hours.
As discussed above, in addition to submitting information on certain ADS crashes within one day, reporting entities must also submit updated information within ten days. NHTSA has decided to only require 10-day update reports for incidents required to be reported within one calendar day. In the 60-day notice, NHTSA estimated that providing updated crash reports would take approximately 1 hour per report. However, both Auto Innovators and the Self-Driving Coalition submitted comments stating that the agency underestimated the burden for submitting the reports. Auto Innovators stated that it would take 20 hours to submit updates and the Self-Driving Coalition stated that it would take between 3 and 24 hours, depending on the complexity of the incident. Because the agency estimates that information will be more readily accessible to reporting entities for incidents involving ADS, NHTSA estimates that 5-day reports take, on average, 14 hours (based on the mid-point between 3 and 24 hours). Therefore, the agency estimates
As described above, NHTSA now estimates that there will be 200 ADS crash reports required to be submitted on the fifteenth of the month following the month in which notice of the crash was received. In the 60-day notice, NHTSA estimated that preparing and submitting monthly reports that contain crash reports takes, on average, 2 hours to prepare and submit. However, the agency received a comment from the Self-Driving Coalition stating that the actual burden for this can be between 2 and 24 hours. Based on this comment, NHTSA now estimates that the burden associated with preparing and submitting initial ADS crash report information that will be submitted in monthly reports to be 14 hours per report, for a total of 2,800 hours (14 hours × 200 reports). Based on the number of respondents that have submitted ADS crash report information, the agency estimates that it will receive reports from approximately 50 entities each year, for an average of 56 hours per entity.
In addition to submitting information about new ADS crashes in monthly reports, respondents also are required to submit updated information in the following month if any new material or materially different information about any Level 2 ADAS incident is received. In its 60-day notice, NHTSA estimated that it would receive 170 ADAS monthly supplemental reports per year. With the benefit of 5 months of reporting experience, the agency revises this estimate to 75 supplemental ADAS reports each year. In the 60-day notice, NHTSA estimated that providing updated information within a monthly report would take 1 hour. The agency received comments indicating that it had underestimated burden, but it did not receive specific comments on the time spent submitting a supplemental report on the fifteenth of the month following the month in which it received any material new or materially different information. The agency believes that submitting a supplemental report should take less time that submitting an initial report or a ten-day update report. However, the agency concedes that reporting entities may require more time for internal review than 1 hour. Accordingly, the agency now estimates that preparing and submitting supplemental reports takes, on average, 5 hours. Therefore, the agency estimates the burden for monthly reports with updated information to be 375 hours (75 monthly reports × 5 hours). The agency estimates that it will receive, on average, supplemental Level 2 ADAS monthly reports from 20 respondents each year, for an average of 18.75 hours per respondent.
In addition to submitting information about new ADS crashes in monthly reports, respondents also are required to submit updated information in the following month if any new material or materially different information about any ADS incident is received. In its 60-day notice, NHTSA estimated that it would receive 25 ADS monthly supplemental reports per year. With the benefit of 5 months of reporting experience, the agency revises this estimate to 40 supplemental ADS reports each year. In the 60-day notice, NHTSA estimated that providing updated information within a monthly report would take 1 hour. The agency received comments indicating that it had underestimated burden, but it did not receive specific comments on the time spent submitting a supplemental report on the fifteenth of the month following the month in which it received any material new or materially different information. The agency believes that submitting a supplemental report should take less time than submitting an initial report or a ten-day update report. However, the agency concedes that reporting entities may require more time for internal review than 1 hour. Accordingly, the agency now estimates that preparing and submitting supplemental reports takes, on average, 5 hours. Therefore, the agency estimates the burden for monthly reports with updated information to be 200 hours (40 monthly reports × 5 hours). The agency estimates that it will receive, on average, monthly reports from 25 respondents each year, for an average of 8 hours per respondent.
A reporting entity that determines it has no information reportable under Request Nos. 2 and 3 is required to submit a report confirming the lack of any such reportable information. The hourly burden associated with submitting a monthly report under Request No. 4 is minimal. The reporting entity need only select the proper type of report, identify the date and month for which the report is being submitted, and then submit the report.
In the 60-day notice, NHTSA estimated that the burden for ADS manufacturers and operators associated with preparing and submitting any monthly reports to be 15 minutes. The agency received one comment from the Self-Driving Coalition that confirmed that 15 minutes was accurate for its members. The agency estimated that burden for ADAS manufacturers associated with preparing and submitting any monthly reports would be 2 hours. The agency received a comment from Auto Innovators stating that monthly reports under Request No. 4 take respondents 20 hours to prepare and submit.
NHTSA does not agree that submitting a report under Request No. 4 (confirming the lack of information reportable under Request Nos. 2 and 3) will take 20 hours. The agency believes that reporting entities should not have any additional burden associated with confirming that they do not have reportable information. Instead, NHTSA believes that respondents have screening processes to ensure they are meeting their requirements to submit reports under Requests Nos. 1, 2, and 3 under the General Order. NHTSA believes that adequate screening processes should ensure that there is no additional burden associated with monthly reports under Request 4. However, as mentioned by some of the commenters, the agency did not estimate any ongoing burden for enhanced screening processes. In response, NHTSA is creating a new category of burden to account for any screening that is incurred in response to the General Order and is not part of reporting entities' standard operating practices.
In its 60-day Notice, NHTSA estimated that 80% of the reporting entities each month will submit a report under Request No. 4. Based on five months of reporting under the General Order, NHTSA continues to estimate that 80% of reporting entities will submit a report under Request No. 4 each month. Based on an average of 110 total reporting entities per year, the agency estimates that it will receive 1,056 reports annually under Request No. 4.
Accordingly, NHTSA estimates that preparing and submitting a monthly report under Request No. 4 will take 15
As discussed above, and in response to comments, NHTSA is adding a new category for screening. NHTSA received comments from both the Self-Driving Coalition and Auto Innovators regarding uncounted burden. Specifically, Auto Innovators stated that NHTSA had not counted burden for monitoring for new crashes and the Self-Driving Coalition stated that NHTSA had not included time spent reviewing incidents that occur but are not reportable. In response to these comments, NHTSA is adding a new burden category for additional time spent screening incoming information. The additional time allotted for screening accounts for any additional processes reporting entities have needed to put in place to ensure that they are meeting their reporting requirements under the General Order. This time does not account for screening of incidents that reporting entities conducted as part of its standard business practices prior to the General Order. Although NHTSA did not receive comments about the amount of additional burden respondents will incur, NHTSA believes that the Auto Innovator's comment regarding burden for “no reportable information” monthly reports provides an indication of the additional time some entities spend each month ensuring that they are meeting their reporting obligations. Specifically, Auto Innovators provided a monthly average estimate of 20 burden hours. Since manufacturers and operators of ADS-equipped vehicles and equipment already had robust processes for identifying and analyzing crashes that might occur with these vehicles, NHTSA estimates that the additional screening burden will only be incurred by entities reporting on Level 2 ADAS crashes, as those reports largely involve crashes in the consumer fleet. Accordingly, the agency estimates that the estimated 20 entities reporting on Level 2 ADAS incidents have, on average, 20 hours of additional screening time per month, for a total of 4,800 hours a year (20 hours × 12 months × 20 respondents), or 240 hours per reporting entity.
In addition to the burden associated with preparing and submitting reports, any new reporting entities added to the General Order are also expected to incur burden associated with training employees on the reporting requirements. As explained above, the existing 108 reporting entities named in the General Order will not incur this burden during the requested extension because they have already trained their employees. NHTSA estimates that there will be an average of seven new reporting entities added to the General Order each year during the proposed extension, that an average of five of these new reporting entities will be ADS manufacturers or operators and that an average of two of these new reporting entities will be Level 2 ADAS manufacturers.
The agency expects that ADS manufacturers and operators normally monitor all crashes and, therefore, will not need to train personnel on how to respond to this new information collection. NHTSA does expect, however, that some Level 2 ADAS manufacturers may need to spend time training personnel on the requirements. Although the amount of time may vary by manufacturer, NHTSA estimates that, on average, the two Level 2 ADAS manufacturers will spend 40 hours on training. Therefore, NHTSA estimates the total annual burden for training to be 80 hours (2 manufacturers × 40 hours).
NHTSA also estimates that new responding entities added to the General Order during the proposed extension period will need to set up a new account with the agency to allow them to submit reports. NHTSA estimates that each of the estimated average of 10 responding entities added to the General Order annually need to set up new accounts with the agency. NHTSA estimates that setting up an account will take 2 hours. Therefore, the agency estimates the total annual burden to be 20 hours.
NHTSA estimates the total annual burden hours for the thirteen components of this ICR to be 31,319 hours (640 hours for initial one-day Level 2 ADAS reports, 1,600 hours for updated one-day Level 2 ADAS reports, 18,400 hours for five-day Level 2 ADAS reports, 240 hours for initial one-day ADS reports, 420 hours for updated ADS reports, 1,680 hours of five-day ADS reports, 2,600 hours for monthly initial ADS reports, 375 hours for monthly supplemental Level 2 ADAS reports, 200 hours for monthly supplemental ADS reports, 264 hours for “no reportable information” monthly reports, 4,800 for additional screening, 80 hours for training, and 20 hours for setting up accounts). This revised estimate reflects five months of crash reporting experience under the existing clearance, which allows the agency to refine and better estimate the annual volumes of different types of reports it will receive. This revised estimate also reflects the agency's adoption of commenters’ estimates of the hours required for individual burden tasks. Although the agency believes that the commenters’ estimates may represent the high end of the range of burden hours for respondents, and not the average, the commenters’ estimates are the best data currently available to the agency. Table 1 provides a summary of the estimated burden hours.
In the 60-day notice, NHTSA calculated the burden associated with the labor hours using the average wage for architectural and engineering managers in the motor vehicle manufacturing industry (Standard Occupational Classification # 11-9041). NHTSA received one comment, from Auto Innovators, stating that the labor cost estimate was too low, and that a labor cost of at least $120 per hour was more realistic. In response to this comment, NHTSA has reexamined its estimate and adjusted its estimates recognizing that there are multiple wage categories involved with the labor hours. Specifically, NHTSA is now allocating the burden hours across four labor categories: Architectural and engineering managers in the motor vehicle manufacturing industry (Standard Occupational Classification # 11-9041); engineers (Standard Occupational Classification # 17-2000); Computer and Information Systems Managers (Standard Occupational Classification # 11-3021); and Lawyers (Standard Occupational Classification # 23-1000).
To calculate the labor cost associated with preparing and submitting crash reports and monthly reports, training, and setting up new accounts, NHTSA looked at wage estimates for the type of personnel involved with these activities. NHTSA estimates the total labor costs associated with these burden hours by looking at the seventy-fifth percentile wage for architectural and engineering managers, computer and information systems managers, and engineers in the motor vehicle manufacturing industry and the seventy-fifth percentile wage for lawyers.
Using the hourly labor cost estimates above, NHTSA estimates that the total labor costs associated with the 31,319 hours is $3,290,351.24.
Table 3 provides a summary of the estimated labor costs.
In the 60-day notice, NHTSA stated that it did not know whether manufacturers would incur additional costs, nor did it have a basis for estimating these costs. In the notice, NHTSA sought comment on whether manufacturers will incur any additional costs associated with complying with the new reporting requirements, such as investing in new IT infrastructure. In response, NHTSA received one comment from Auto Innovators, which stated that “in addition to the cost of labor associated with the handling of the crash information, there are also fiscal burdens associated with the hardware and software infrastructure to monitor and manage crash reporting.” They further stated that reporting entities have already invested significant resources into setting up internal processes for the handling of crash information, which often include IT systems that come at a financial cost. The comment, however, did not provide sufficient information for NHTSA to estimate additional annual costs to reporting entities. Until NHTSA has more information on additional costs, NHTSA continues to estimate that annual costs to respondents is $0.
Department of the Treasury.
Notification.
This notification announces that the U.S. Department of the Treasury (Treasury) has revised its guidance regarding the Coronavirus Relief Fund (CRF) for States, Tribal governments, and certain eligible local governments and made this revision available on its website,
Katharine Richards, Senior Advisor, Office of Recovery Programs, Department of the Treasury, (844) 529-9527.
Treasury has revised its previously issued CRF guidance regarding the requirement in the CARES Act that payments from the CRF may only be used to cover costs that were incurred during the period that begins on March 1, 2020, and ends on December 31, 2021.
Departmental Offices, U.S. Department of the Treasury.
Notice.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other federal agencies to comment on the proposed information collections listed below, in accordance with the Paperwork Reduction Act of 1995.
Written comments must be received on or before February 28, 2022.
Send comments regarding the burden estimate, or any other aspect of the information collection, including suggestions for reducing the burden, by the following method:
•
For questions related to this program, please contact Jeremy Turret by emailing
Departmental Offices, U.S. Department of the Treasury.
Notice.
The Department of the Treasury will submit the following information collection requests to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. The public is invited to submit comments on these requests.
Comments should be received on or before January 28, 2022 to be assured of consideration.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Copies of the submissions may be obtained from Spencer W. Clark by emailing
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Final rule.
This document finalizes NHTSA's proposal to repeal in full “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule Part One: One National Program,” published September 27, 2019 (SAFE I Rule), in which NHTSA codified regulatory text and made additional pronouncements regarding the preemption of state and local laws related to fuel economy standards. NHTSA originally proposed to repeal the SAFE I Rule in a Notice of Proposed Rulemaking entitled “Corporate Average Fuel Economy Preemption,” which was published on May 12, 2021. After evaluating all public comments submitted for this Proposal, the Agency is finalizing the Proposal. As such, the Agency is repealing all regulatory text and appendices promulgated in the SAFE I Rule. In doing so, the Agency underscores that any positions announced in preambulatory statements of prior NHTSA rulemakings, including in the SAFE I Rule, which purported to define the scope of preemption under the Energy Policy and Conservation Act (EPCA), do not reflect the Agency's reconsidered understanding of its proper role in matters of EPCA preemption. Through this final rule, NHTSA makes clear that no prior regulations or positions of the Agency reflect ongoing NHTSA views on the scope of preemption of states or local jurisdictions under EPCA.
This action is effective on January 28, 2022.
Any petitions for reconsideration should refer to the docket number of this document and be submitted to: Deputy Administrator, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE, West Building, Fourth Floor, Washington, DC 20590.
Hunter B. Oliver, Office of Chief Counsel, NHTSA, telephone (202) 366-5263, facsimile (202) 366-3820, 1200 New Jersey Ave. SE, Washington, DC 20590.
On May 12, 2021, NHTSA published in the
On January 20, 2021, President Biden signed Executive Order 13990, “Protecting Public Health and the Environment and Restoring Science To Tackle the Climate Crisis,” which, among other actions, directed DOT, NHTSA, and EPA to immediately review and consider suspending, revising, or rescinding their respective portions of the SAFE I Rule. NHTSA's resulting comprehensive assessment of the SAFE I Rule identified potential problems relating to both the legal authority claimed by NHTSA for the rulemaking and the degree to which the categorical prohibitions announced by the Agency failed to appropriately account for the substantial and often nuanced state interests in the measures purportedly preempted by the SAFE I Rule. As a result of these considerations, NHTSA published the NPRM, to propose a repeal of the SAFE I Rule and to solicit public comment on the Agency's concerns about the legality and prudence of the rulemaking. On April 28, 2021, EPA outlined its own review of the EPA aspects of the SAFE I joint agency action, publishing a Notice of Opportunity for Public Hearing and Comment that proposed a reconsideration of EPA's withdrawal of California's waiver under the Clean Air Act.
In the CAFE Preemption NPRM, NHTSA proposed to repeal the SAFE I Rule for several independent reasons. First, the Agency repeatedly expressed substantial doubts regarding the legal validity of the Rule. As the NPRM explained, NHTSA became concerned about whether the Agency possesses the authority to define the scope of EPCA through rulemaking. Accordingly, NHTSA proposed to repeal and withdraw the codified regulations and appendices, as well as any associated interpretations or views on EPCA preemption contained in the SAFE I Rule, including in the regulatory text of Sections 531.7, 533.7, and appendices B to Parts 531 and 533.
In the Proposal, NHTSA recognized that the statutory preemption provision in EPCA, Section 32919, was self-executing. In this respect, Section 32919 is able to preempt state or local laws directly, without the need for a DOT or NHTSA regulation that further implements either EPCA preemption or this particular statutory provision. As such, the statutory provision is both standalone and fails to articulate any role for the Agency in further dictating a preemptive scope. Accordingly, the NPRM proposed that Section 32919 and EPCA were more appropriately read as indicating that Congress did not intend to empower NHTSA to define preemption in this manner. As a result, NHTSA's Proposal expressed concern that in the SAFE I Rule, the Agency acted outside of its delegated authority by publishing regulations and pronouncements that sought to do just such a thing. Accordingly, the NPRM proposed to repeal the SAFE I Rule.
In addition, the Proposal also articulated a separate basis for repealing the entirety of the SAFE I Rule, which rested upon the inappropriateness of such a sweeping pronouncement of preemption. Even if EPCA had imbued NHTSA with power to dictate preemption through regulations, the expansive manner in which this authority was wielded in the SAFE I rulemaking failed to appropriately account for a variety of important considerations. These include legally relevant factors, such as the substantial federalism interests of states and local jurisdictions who had long relied on programs to address environmental hazards in their local communities or comply with other federal air pollution requirements. In addition, the categorical and generally applicable scope of the SAFE I Rule also precluded consideration of other fact-specific attributes of particular programs, many of which represent diverse characteristics that bear upon the application of EPCA preemption and the accuracy of any ensuing preemption analysis. Many of these factors—some of which were not even discussed in the SAFE I rulemaking—strongly suggest that a more considered and circumscribed dispensation of any preemption authority would more narrowly tailor any preemptive pronouncements to better account for the diverse, nuanced, and relied upon federalism interests of the preempted state governments and their constituents. As described further below, these concerns were raised and expressed by a significant number of public comments, especially from those local jurisdictions most affected by the rulemaking. These jurisdictions described numerous unique considerations regarding their programs that the SAFE I Rule's absolute proclamation of preemption did not fully contemplate. These considerations reflected the Agency's similar concerns in the NPRM, which proposed to repeal the SAFE I Rule in its entirety in order to establish a “clean slate,” that restores NHTSA's longstanding practice of undertaking a more careful and particularized role in the EPCA preemption discourse.
Finally, even apart from the lack of rulemaking authority and the overly broad manner of the SAFE I Rule's prohibitions, the NPRM also proposed a repeal of the SAFE I Rule in order to remove the regulation that overcomplicated or potentially confused an otherwise direct application of Section 32919's statutory standards. In connection with a proposed repeal of the regulatory text from the SAFE I Rule, the NPRM also proposed to clarify that, to the extent prior statements from rulemaking preambles (from the SAFE I Rule or otherwise) discussed aspects of EPCA preemption or could be read as interpretative views on the subject, those statements should not be read as continuing views of the Agency. While this clarification was not legally necessary, NHTSA still considered it worthwhile because the inconsistent nature of many of the Agency's prior statements on EPCA preemption and the oftentimes imperative language utilized in such statements—especially during the SAFE I rulemaking—risked a confusing landscape in which regulated entities and the public were unsure of the precise legal effect of Agency statements that purported to control EPCA's preemptive reach. Moreover, NHTSA felt that many of those statements, particularly in the preambles of the SAFE I Rule, contained sweeping and definitive language on preemption, which left no room for nuance or further deliberation about particular programs, and obscured the Agency's ongoing internal consideration of whether EPCA actually enacted a narrower scope of preemption than claimed in the rulemaking. In light of these considerations, the NPRM proposed to expressly disclaim any of these prior statements to make clear they no longer accurately reflected the Agency's position on the issue.
The public docket opened for this rulemaking following the
NHTSA closely reviewed each of the comments posted to the docket for this Proposal. While NHTSA is responding to the particular comments in further detail in the substantive analysis in the following sections of this final rule, at a high level, the public comments spanned a diverse array of state and local jurisdictions, regulated entities and trade associations for regulated industries, public interest groups and other nonprofit organizations, and individual members of the public. The Agency appreciates the time and effort dedicated by these parties in submitting their comments and is grateful for the diversity and depth of views, both for and against the Proposal, expressed by the commenters.
Overall, the Agency received comments spanning the entire spectrum of perspectives with respect to the Proposal. The vast majority of comments from the entities most immediately affected by the rulemaking,
The Agency also received several institutional comments that expressly opposed the Proposal. While these comments are discussed in depth later in this final rule, in a general sense, these comments urged the Agency to retain the SAFE I Rule in its entirety. Many of these comments defended the substantive validity of the preemption scope announced in the SAFE I Rule, and construed NHTSA's governing authorities as delegating to the Agency the power to regulate preemption in the manner attempted in that rulemaking. Several of these comments also questioned the sufficiency of NHTSA's proposed justifications to repeal the SAFE I Rule, essentially arguing that NHTSA could not reasonably repeal a substantive position on preemption without replacing it with an alternative substantive view. While a number of individuals commented in support of the Proposal, the Agency recognizes that many individual members of the public also opposed a repeal of the SAFE I Rule.
Finally, a significant portion of the comments raised, either in full or in part, issues beyond the narrow scope on which NHTSA proposed to repeal the SAFE I Rule. Such topics, which appeared in comments both supportive of and opposed to the Proposal, tended to focus on the substantive aspects of the CAFE program, such as the appropriate levels of fuel economy stringency, the effect of any particular state programs on the environment or vehicle fleets, or specific vehicle technologies, such as electrification. Likewise, as anticipated in the NPRM, many of the commenters also articulated substantive views on the appropriate scope of EPCA preemption.
Today's final rule finalizes the proposal set forth in the CAFE Preemption NPRM. As such, this final rule repeals all aspects of the SAFE I Rule, both the codified regulatory text and the accompanying pronouncements about the scope of CAFE preemption. Specifically, the final rule repeals 49 CFR Sections 531.7 (“Preemption”) and 533.7 (“Preemption”), as well as each Appendix B in 49 CFR part 531 (“APPENDIX B TO PART 531—PREEMPTION”) and Part 533 (“APPENDIX B TO PART 533—PREEMPTION”). In doing so, NHTSA's regulations will return to the same state for which they existed throughout the nearly 50-year history of the Agency's CAFE program—in which no regulation existed to purport to broadly define the scope of EPCA preemption.
In finalizing this Proposal, NHTSA concludes that it lacked authority to dictate the scope of EPCA preemption enacted in Section 32919. The plain language of Section 32919 establishes a clearly executable preemptive framework that can be applied by any reviewing court in the absence of an Agency regulation purporting to further dictate EPCA's preemptive scope. This conclusion is not simply presupposition, but as NHTSA's Proposal referenced and many commenters subsequently emphasized, the self-sufficiency of Section 32919 is a straightforward historical observation demonstrated by the provision's repeated application by Federal courts across the country—both to uphold and to preempt various state and local laws. The text of Section 32919 does not mention any role for NHTSA in codifying binding preemption requirements, nor does it state that the Agency is conferred with preemption rulemaking authority. Instead, the statute is self-executing and suffices to control the preemption analysis. The courts retain their authority to decide preemption questions; furthermore, the Agency may, consistent with law, provide interpretations of CAFE preemption questions other than by legislative rule. Thus, repeal of the SAFE I Rule is not simply appropriate, but a necessary measure to ensure that NHTSA is acting within the appropriate scope of its authority under EPCA.
In addition, today's final rule also concludes that a repeal of the SAFE I Rule is appropriate irrespective of whether NHTSA had legal authority for the SAFE I rulemaking. Through both its regulations and preambulatory language, the SAFE I Rule sweepingly preempted expansive categories of state and local motor vehicle emissions regulations. In doing so, the SAFE I Rule imposed immutable preemption requirements of general applicability, while ignoring the substantially important federalism interests affected by such prohibitions. Many of the comments from states and local jurisdictions underscored this position, identifying specific state programs affected by the SAFE I Rule that those states had previously relied on to protect their citizens from environmental hazards and to meet federal obligations, such as attainment goals for National Ambient Air Quality Standards for criteria pollutants.
Moreover, by purporting to preempt abstract categories of regulation, the SAFE I Rule's prohibitions were both categorical and anticipatory—largely precluding entire subjects of state regulations without analyzing important factual questions or variables, such as the particulars of state programs, their specific manners of implementation, or possible scientific developments that may affect the relevant technologies. Therefore, even if the SAFE I Rule constituted a legitimate exercise of the Agency's authority, it represented an overly broad attempt to preempt state and local laws that precluded more detailed, and therefore potentially more accurate, considerations of specific programs. As such, NHTSA considers the SAFE I Rule's categorical and anticipatory scope to express an inappropriately broad and restrictive view on EPCA preemption. Accordingly, independent from the authority question, the SAFE I Rule conflicts with the need for a more focused consideration of preemption issues and, as such, must be repealed.
Finally, as part of today's notice, NHTSA is also expressly emphasizing that language in the preambulatory statements of other rulemakings, including the SAFE I Rule, which purport to dictate the scope of EPCA preemption, should no longer be viewed as the position of the Agency.
As emphasized in the Proposal, NHTSA, like any other Federal agency, is afforded an opportunity to reconsider prior views and, when warranted, to adopt new positions. Indeed, as a matter of good governance, agencies
The need for an ongoing reconsideration of prior positions applies to both reevaluations of an agency's statutory authority, as well as reassessments of policy decisions. Overwhelmingly, commenters to this Proposal did not question the general discretion of NHTSA, as a Federal agency, to reconsider either statutory or policy-based decisions. Indeed, most commenters expressly supported NHTSA's reconsideration efforts and articulated numerous reasoned justifications for the undertaking. The few commenters who opposed the reconsideration tended to focus on the adequacy of the
Several commenters contended that the Agency lacks a sufficient legal basis to withdraw the SAFE I Rule, arguing that no legal or factual circumstances changed between the issuance of the SAFE I Rule and the Proposal.
This reconsideration exemplifies the types of reassessments for which a change in facts is not required or even particularly pertinent. As described throughout this notice, NHTSA's repeal of the SAFE I Rule is especially necessary because the Agency no longer reads EPCA as providing NHTSA the authority to dictate the scope of preemption through regulations. This is principally a narrow legal determination, which focuses on whether Congress intended to provide the requisite rulemaking authority to the Agency. Such a question does not turn upon factual circumstances, but instead depends upon a statutory construction of Section 32919. Further, as discussed below, even if the prior rule was a valid exercise of its authority, NHTSA concludes that the SAFE I Rule was overly broad and restrictive as it ignored important reliance interests and distinctions within state and local laws.
Even so, NHTSA notes that new factual developments since the SAFE I Rule's 2019 promulgation have
Several other commenters opposed the Proposal by arguing that any repeal of the SAFE I Rule that did not announce a new substantive position on EPCA preemption was arbitrary and capricious. These comments especially criticized aspects of the Proposal, such as footnote 8, that expressly clarified that any new substantive conclusions on EPCA preemption were “outside the scope of this Proposal.”
NHTSA understands that many commenters feel strongly about the important policy dynamics underlying the scope of EPCA preemption. This applies both to commenters such as CEI, who support sweeping EPCA preemption and seek to defend the substance of the SAFE I Rule's scope,
However, by advancing directly to substantive policy questions, such comments skip a critical step in the rulemaking analysis. As an agency, NHTSA's exercise of rulemaking authority is bound by specific statutory and legal frameworks that govern not only the substantive scope of available policies, but also the manner in which such policies may be articulated.
As described throughout this Final Rule, NHTSA has concluded that the SAFE I Rule exceeded the Agency's authority by attempting to dictate the scope of EPCA preemption through regulations. Upon such a determination, the most responsible and legally essential course of action is for the Agency to exercise its reconsideration authority to rectify the overstep. The importance of the policy interests underlying the EPCA preemption issue do not compel a different approach. Instead, they only underscore the need for NHTSA to ensure that when it attempts to speak to these notable policy issues, it only does so as properly authorized and through an appropriate scope.
Moreover, now that NHTSA has determined that the SAFE I Rule exceeded the Agency's authority for the reasons expressed in Part II.B.i. below and also impermissibly ignored important federalism interests without regard for the availability of a more circumscribed approach instead, as explained in Part II.B.ii. below, it would be problematic to delay a repeal of the
Finally, it is worth emphasizing that EPCA does not state that NHTSA
Such comments recognize, as they must, that EPCA is totally silent as to any role for NHTSA in further defining EPCA preemption. They simply disagree on what that silence means. But even construing this silence permissively, as commenters such as NADA urged,
Therefore, regardless of the authority question, EPCA at most only afforded NHTSA discretion to decide how or even whether to speak on matters of preemption. Thus, even if Section 32919 is construed as commenters such as NADA urge, EPCA still must be read to permit NHTSA to remain silent on EPCA preemption. This includes neither codifying regulations on preemption nor making broadly applicable statements on EPCA preemption where the Agency has valid reason not to do so. And here, as discussed in Section II.B., NHTSA has identified multiple clear grounds to repeal the SAFE I Rule. Such silence remains a viable option because, as commenters across the board recognized, the self-executing language of Section 32919 is fully capable of controlling the preemption question without the presence of Agency regulations.
The narrow legal scope of this rulemaking renders many of the substantive issues raised in the comments irrelevant to NHTSA's reconsideration and repeal of the SAFE I Rule. Comments on both sides of the spectrum—both for and against the Proposal—fall outside of this narrow scope. The Agency carefully evaluated such comments, both to identify any nuances that may yet bear upon this rulemaking and to cultivate a greater understanding of how the public views broader issues associated with the CAFE program. Nevertheless, NHTSA does not consider such issues as informing the narrow legal focus of today's repeal of the SAFE I Rule. Several categories of such comments are identified below, along with an explanation of how they fail to intersect with the specific grounds that motivated this reconsideration.
Many commenters, both supportive of the Proposal and opposed to a repeal of the SAFE I Rule, advanced their views about the proper scope of EPCA preemption and, in particular, how “related to” in Section 32919 should be
While all of these comments raise the important questions of how far EPCA's scope extends and which state programs may be affected by such a scope, as the Agency explained both in the Proposal and in today's final rule, those issues are distinct from the narrow legal considerations that factor into this rulemaking. NHTSA's statutory authority to codify standalone requirements for EPCA preemption is a separate question from whether the substance of those requirements exceeds the scope of Section 32919. Likewise, even if the Agency had authority for the SAFE I Rulemaking, it remains possible for NHTSA to have wielded this authority in an inappropriately broad or inattentive manner, irrespective of the ultimate substantive preemption scope propounded in such an action. Consequently, none of the grounds invoked in this rulemaking for a repeal of the SAFE I Rule depend upon a particular interpretation of EPCA's preemptive scope. As such, as NHTSA explained elsewhere in this notice, finalizing this rulemaking without delving into those issues presents the most responsible option, which best satisfies the need for a swift repeal of the SAFE I Rule while preserving space for an ongoing thoughtful consideration of these complex substantive issues.
In a similar vein, several comments opposing the NPRM argued that NHTSA's Proposal was inadequately justified because the proposed repeal of the SAFE I Rule was not accompanied by a detailed economic analysis, such as a regulatory impact statement. These commenters, such as the American Fuel and Petrochemical Manufacturers (AFPM), contended that NHTSA could not repeal the SAFE I Rule without “fully analyz[ing] the impacts” or “examin[ing] the relevant data” behind economic impacts from this rulemaking.
To the extent commenters articulated these positions as reasons NHTSA failed to satisfy various Executive Orders, the National Environmental Policy Act (NEPA), and other broadly applicable requirements, those aspects of the arguments are addressed in Section III (Rulemaking Analyses and Notices).
As explained throughout this final rule, NHTSA has concluded that the SAFE I Rule was legally flawed in a manner that legally necessitates a repeal. First, as Section II.B.i. of the final rule concludes, NHTSA issued the SAFE I Rule in excess of its authority. Accordingly, the Agency believes that the only legally appropriate course of action is to repeal the SAFE I Rule in order to undo the legally invalid action. Similarly, as Section II.B.ii. of this notice explains, NHTSA also ignored significant and legally relevant factors when promulgating the SAFE I Rule. Overlooking these considerations also renders the SAFE I Rule legally invalid and in need of repeal. Each of these grounds is governed by a legal determination, such as the legal standards and questions of statutory construction applicable to an agency's delegation of authority. These principles of law dictate a repeal of the SAFE I Rule irrespective of the policy concerns or impacts asserted by such commenters, which cannot cure the legal deficits in the SAFE I Rule. Therefore, the concerns raised by such commenters do not alter either the legal frameworks or the legally necessitated outcomes described in Sections II.B.ii. and II.B.iii. of this notice.
Moreover, such commenters also fail to account for the fact that, through this repeal, NHTSA's regulations are simply returning to the status quo as it existed prior to the legally invalid action of the SAFE I Rule. Thus, in this rulemaking, NHTSA is not taking a position on
In addition, because the Agency does not consider an analysis of those programs in the abstract or aggregate appropriate, doing so here for purposes of analyzing impacts would risk the same sort of sweeping and overly broad preemption conclusions characteristic of the SAFE I Rule. As described in Section II.B.ii., the Agency has determined that the SAFE I Rule was both far too broad and too restrictive and did not take into account a host of legally relevant considerations, such as reliance interests, the important reasons for the state and local laws it sought to preempt, and, most importantly, the actual details of those laws. Accordingly, hypothesizing about the substantive scope of EPCA preemption for purposes of a cost-benefit analysis would undermine one of the principal goals of this rulemaking, which seeks to defer assessments of programs until the times and places in which they can be more particularly and thoroughly considered. Moreover, hypothesizing as such also further diminishes the extent to which the results of a cost-benefit analysis could inform this rulemaking because those programs are more appropriately and accurately considered in more particular contexts where it is not necessary to make abstract projections or theorize about programs or technologies that may not even exist yet.
Furthermore, in this repeal, the Agency is not declaring any particular program preempted or not preempted. Instead, this repeal simply makes the point that any such preemption analysis should be undertaken more narrowly and carefully and does not seek to alter the preemption landscape already established by Section 32919. In contrast, it was the SAFE I Rule that marked a departure from the Agency's longstanding practice of refraining from issuing EPCA preemption rules. In reality, as both the Proposal and this final rule have stressed, EPCA preemption is properly governed by the self-executing statutory language of Section 32919. That language remains in place, unchanged, irrespective of this rulemaking. The courts, of course, retain their usual authority to decide matters of EPCA preemption. In turn, the Agency may also at some point offer interpretations as guidance on its views on questions of EPCA preemption, though not through the mechanism of a legislative rule. Nevertheless, the preemption framework established by the statutory language in Section 32919 continues to govern the ultimate preemption analysis.
Moreover, it is worth noting that the SAFE I Rule itself did not include a quantitative analysis of the costs or benefits that these commenters now argue should accompany its repeal, but rather only provided a “qualitative discussion of the impacts” of the preemption regulations it promulgated.
Various commenters raised other issues that are clearly outside the scope of this rulemaking. A joint comment submitted by the State of Ohio along with several other states did not explicitly support or oppose the Proposal, but simply expressed the view that by permitting California to seek a waiver, Section 209 of the Clean Air Act unconstitutionally violates the equal sovereignty doctrine by affording preferential treatment to the State of California.
In addition, several commenters raised a variety of issues relating to the administration of the CAFE program, which do not inform the legal bases pertinent to today's repeal of the SAFE I Rule. These range from comments advocating for a particular stringency of any fuel economy standards later promulgated by NHTSA
Finally, NHTSA received over four hundred comments from individual commenters who expressed perspectives on the Proposal. The vast majority of these comments from individuals did not speak to the particular legal issues implicated in this rulemaking, but raised broader policy issues instead. A large number of these comments expressed opposition to the rulemaking. While submitted individually, by and large, these opposition comments appeared to be form comments or part of an unspecified letter writing campaign, as they frequently employed verbatim language. Specifically, an overwhelming number of the comments started with the exact same phrase: “California should not be deciding what kind of cars the rest of the country can buy, and here is why . . .”
Apart from these form comments, several individual commenters expressed support for the Proposal. Their comments also focused on substantive policy issues or matters more connected to a California waiver under the Clean Air Act. Examples of such comments include expressions of hope that the Proposal would enable states to set stronger pollution control standards or beliefs that the proposed rule offered potential health-related benefits and opportunities to mitigate climate change.
Overall, the concerns expressed by these individual commenters were not about the merits of NHTSA returning to its longstanding approach to EPCA preemption, but rather about substantive issues connected to hypothetical state programs or policy goals which the commenters felt could possibly arise at some point in the future. For instance, a number of commenters suggested that a repeal of the SAFE I Rule would result in the proliferation of electric vehicles, and therefore expressed various concerns with vehicle electrification, such as an inability to satisfy unique or specific vehicle needs (
Finally, even though many of the individual commenters expressly opposed the Proposal, NHTSA notes that many of these same comments frequently invoked reasons that actually support the rationale for the rulemaking. By far the most common theme developed in the individual comments opposing the Proposal was a concern for states' rights and skepticism of any approach that imposed an overgeneralized restriction on the ability of local jurisdictions to respond to the diverse needs of their respective communities.
These commentors opposed the Proposal based on a faulty assumption that NHTSA's rulemaking proposed to delegate the authority to California to set legally binding standards on the rest of the United States.
After evaluating the public's input regarding the Proposal and further assessing the Agency's concerns regarding the SAFE I Rule, NHTSA is finalizing its proposed approach of repealing the SAFE I Rule in its entirety, including both the regulatory text and the other pronouncements that the Agency made in the document about EPCA preemption. The Agency concludes that this approach is both legally required and appropriate for several distinct reasons. First, as described further in Section II.B.i., the Agency lacked the authority to promulgate regulations on preemption, as the SAFE I Rule attempted to do. Second, as described in Section II.B.ii., regardless of whether NHTSA actually had authority for the SAFE I Rule, the Rule was still promulgated without regard for legally relevant and important considerations that should have informed the preemption analysis. Instead of accounting for those issues before fundamentally altering relied-upon federalism interests, the SAFE I Rule instituted a rigid and categorical preemption framework without regard for whether a narrower approach was available. Third, irrespective of a lack of authority or the Rule's overly broad scope, the SAFE I Rule still warrants repeal in order to mitigate the unnecessary complexity and potential confusion the SAFE I Rule injected into the EPCA preemption framework. By repealing this erroneous framework and refocusing the preemption analysis on the original statutory language, this final rule also provides space for the Agency to more carefully and appropriately
In all of these matters, the Agency remains mindful that EPCA does not require NHTSA to speak substantively on EPCA preemption, and certainly not through the promulgation of legislative rules. Under the unambiguous language of EPCA, the Agency could indefinitely remain silent as to Section 32919 without running afoul of any congressional directive or statutory mandate. As such, even if the SAFE I Rule's supporters have policy preferences for wanting the Rule to remain, there is indisputably no statutory requirement for the Rule. Thus, upon reconsideration, NHTSA concludes that a rule of this kind, which suffers from legal deficiencies and was imprudent for the Agency to issue, is particularly appropriate for repeal.
NHTSA concludes that a repeal of the SAFE I Rule is legally required because the Agency lacked the requisite authority to codify the standalone regulations promulgated by the SAFE I Rule. The Agency maintains the Proposal's view that in promulgating the SAFE I Rule, NHTSA attempted to exercise a legislative rulemaking function by establishing binding, express preemption requirements, which sought to control, rather than advise, the public (including states and local jurisdictions). In order to set these regulatory mandates, Congress would have had to first provide authority to NHTSA to act in such a manner. However, the Agency has determined that Congress did not intend for Section 32919 to provide NHTSA authority to institute additional express preemption terms, or to codify the scope of EPCA preemption through legislative rulemaking.
Before describing the limitations on NHTSA's authority, the Agency first confirms the Proposal's understanding of the SAFE I Rule as codifying legislative rules, which sought to institute binding preemption requirements. NHTSA recognizes that although numerous commenters agreed with the Proposal on this issue, several commenters opposing the Proposal contested either the legislative status of the SAFE I Rule or whether the distinction even matters for this reconsideration. To be clear, NHTSA considers a repeal of the SAFE I Rule both appropriate and necessary for the reasons described throughout this final rule, irrespective of whether one considers the Rule to be legislative, interpretative, or any other form of agency statement. Nevertheless, NHTSA still views the SAFE I Rule as displaying the hallmarks of a legislative regulatory action. As such, the Agency starts the authority discussion with this issue.
In this respect, the Agency distinguishes between a legislative rule, “which is a rule that is intended to have and does have the force of law,” and an interpretative rule, which “does not have the force of law and is not binding on anyone.”
Within this backdrop, NHTSA views the SAFE I Rule as clearly intending to establish binding preemption requirements, which affirmatively prohibited programs of states and local jurisdictions. As described further below, both the regulatory text and the manner in which NHTSA contemporaneously described its rulemaking lead to the conclusion that the SAFE I Rule was not an effort to inform, but an effort to issue binding, prescriptive requirements with the force and effect of law. This conclusion is supported by multiple facets of the rulemaking, many of which were illustrated through the comments.
Several commenters to the Proposal disagreed that the SAFE I Rule was a legislative rule or that the distinction between a legislative and interpretive rule mattered. Although the Agency responds more specifically to such detailed concerns below, NHTSA nevertheless considers the legislative status of the SAFE I Rule ultimately a straightforward outgrowth of the regulatory background and applicable law. While courts and legal scholars have set forth numerous multi-part tests or thresholds for trying to find the demarcation point between interpretative and legislative rules, they all overwhelmingly seek to answer a question much different, and frequently more complicated, than that presented in this rulemaking. In the typical fact pattern, encountered by many courts, an agency seeks to characterize its own action as interpretative and valid absent the undertaking of notice-and-comment procedures, while challengers (often the regulated entities most affected by the action) argue that the rule alters their substantive obligations and necessitates notice-and-comment procedures before promulgation.
None of these circumstances apply to the SAFE I Rule or this Proposal. In the Proposal, NHTSA, as the agency that promulgated the regulations in question in the SAFE I Rule (after notice-and-comment), expressed its
This is an understandable expectation, as both NHTSA and EPA also contemporaneously treated the SAFE I Rule as binding and effectuating change. The SAFE I Rule even expressly described the rulemaking action as “
This view was echoed by many other commenters who supported this Proposal.
The SAFE I Rule, thus, was widely viewed as establishing new legal restrictions intended to broadly alter the pre-existing EPCA preemption landscape. As described in the Proposal, in the SAFE I Rule, NHTSA codified four provisions in the CFR, each of which purported to directly regulate the scope of preemption under EPCA. Specifically, NHTSA promulgated 49 CFR 531.7 and 533.7, both of which were nearly verbatim codifications of the statutory text, and an identical appendix B to both Parts 531 and 533, which included a description of certain state regulations also described as preempted. None of these provisions instituted any new compliance or enforcement standards relating to NHTSA's CAFE program. Instead, the provisions, by their own terms, solely sought to codify into NHTSA's regulations a binding framework to govern the scope of EPCA preemption.
As both the Proposal and many commenters pointed out, the imperative and mandatory language of the SAFE I Rule illustrates the degree to which the SAFE I Rule imposed demands upon regulated entities (and expected compliance) rather than helpfully advised them of a possible construction of pre-existing statutory language. As the Preamble to the SAFE I Final Rule described, these provisions sought to “ma[ke] explicit that state programs to limit or prohibit tailpipe GHG emissions or establish ZEV mandates are preempted.”
A few commenters sought to diminish the importance of such mandatory language, contending, for instance, that “nothing” would have practically changed had the Agency employed more permissive or advisory language in the SAFE I Rule instead of the imperative language used throughout both the codified text and preamble.
More fundamentally though, discounting the importance of the Agency's own language in the precise rulemaking record in question too narrowly focuses the legislative rule inquiry. Even the cases cited by opposing commenters on this issue, such as
Here, the SAFE I Rule clearly—and explicitly—expressed an understanding that the new rules created legal obligations that would bind states and local jurisdictions, as described above. Moreover, even the mechanics of the SAFE I Rule's promulgation demonstrate NHTSA's awareness that it was codifying legislative rules that instituted legal requirements. Commenters defending the SAFE I Rule stressed that the rulemaking undertook all of the procedural steps required by the APA for a legislative (but not an interpretative) rule.
Finally, a joint comment submitted by the Urban Air Initiative, among others, raised an issue that highlights one of the most telling aspects of the SAFE I Rule's legislative character.
Ultimately, the Agency believes such comments erroneously comingled the substantive question about the scope of EPCA's preemption requirements with the unrelated question of whether the SAFE I Rule's regulations sought to codify prescriptive requirements that implemented Section 32919 in a legislative manner. The Urban Air Initiative's joint comment characterized these questions as one and the same, arguing that as long as the substance of Section 32919 supported the preemption requirements promulgated in the SAFE I Rule, the legislative versus interpretative distinction was “irrelevant” because either way NHTSA was simply elucidating requirements that already existed under EPCA.
Rather than comparing the substantive scope of the underlying statute and the agency's subsequent action, the legislative rule inquiry instead looks to the degree to which the standard announced by the agency went “beyond a process reasonably described as interpretation” by turning the original statutory standard into a rigid threshold that prescribed specific conduct.
Importantly, this legislative rule inquiry is wholly distinct from the question about whether the legislative rules would be a permissible reading of the underlying statute or regulation. In fact, courts conducting these analyses often expressly make clear that the legislative rule determination does not require them to reach the question of whether those rules would have been subsumed within the respective scopes of the statutes or any other existing regulations that the agencies had already promulgated. For instance, through this legislative rule inquiry “[w]e may assume, without deciding, that the [requirements] are an extension” of the statute and “consistent” with existing regulatory provisions.
Applying this same framework, even assuming for purposes of discussion (like those courts) that the SAFE I Rule's regulations imposed a substantive obligation that was consistent with the “related to” standard in Section 32919, the regulations still undeniably prescribed conduct in a way that was legislative rather than interpretative. Specifically, the SAFE I Rule's regulations turned the baseline standard of Section 32919, “related to,” into an entire list of specifically enumerated conduct that created a prescriptive threshold for EPCA preemption.
Under Section 32919, “a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards for automobiles covered by an average fuel economy standard under [Chapter 329].”
For example, Appendix B to Parts 531 and 533 expressly declares the preemption of “any law or regulation of a State or a political subdivision of a State”
While Section II.B.ii. below explains how this inflexible standard inappropriately precludes individualized considerations, the self-contained nature of the standard also demonstrates how the SAFE I Rule's regulations operate as prohibitions that turn a broader statutory standard into a set of rules that states and local jurisdictions must follow. This process of fashioning a set of specific and prescriptive requirements out of an underlying statutory standard involves a legislative function of the agency and the rules that emerged from this process are legislative in nature. And the law is clear that an agency may prescribe conduct and issue such legislative rules only if provided the authority to do so by Congress.
Once the SAFE I Rule's regulations are properly understood as seeking to impose binding legal requirements, it becomes clear that the Rule is premised on the need for NHTSA to possess the requisite authority to validly set such mandates. The Proposal generated a number of comments on this authority issue. A large number of those comments agreed with the Proposal's concerns about a lack of authority for the rulemaking, while several commenters defended the legitimacy of the Rule. But while these comments may have disagreed on the existence of authority or the extent to which NHTSA's authorities extended, they did not generally dispute the Proposal's recognition of the fundamental principle that an agency must possess authority to issue legislative rules.
As the Proposal explained, the regulatory authority of federal agencies extends only insofar as Congress permits.
Ultimately, as the Proposal expressed, since an agency lacks plenary authority, the delegation of one power to an agency does not necessarily include other powers, even if they are related.
The need for sufficient authority does not fade when an agency seeks to promulgate regulations expressly dictating preemption. In fact, as the Proposal expressed, the legitimacy of an agency's exercise of preemption power through legislative rulemaking is principally a question of the extent of authority delegated to the agency. As such, “in a situation where state law is claimed to be pre-empted by Federal regulation, a narrow focus on Congress' intent to supersede state law [is] misdirected.”
a federal agency may pre-empt state law only when and if it is acting within the scope of its congressionally delegated authority. This is true for at least two reasons. First, an agency literally has no power to act, let alone pre-empt the validly enacted legislation of a sovereign State, unless and until Congress confers power upon it. Second, the best way of determining whether Congress intended the regulations of an administrative agency to displace state law is to examine the nature and scope of the authority granted by Congress to the agency.
In response to the Proposal, many commenters repeatedly expressed a concern that NHTSA lacked the authority for the SAFE I Rule.
These comments reinforce the Proposal's substantial doubts about NHTSA's authority to promulgate the SAFE I Rules, which the Agency crystalizes in this final rule into a firm conclusion that the requisite authority does not exist. The lack of legal authority is most clearly illustrated by the inadequacy of the two grounds articulated by the SAFE I Rule (and comments who supported that position here) for the proposition that NHTSA enjoys authority to promulgate the regulations: (1) The general rulemaking authority of the Secretary of Transportation; and (2) more generalized inferences from the spirit of EPCA. The Agency finalizes its view that neither of these grounds suffices.
First, NHTSA finalizes the view expressed in the Proposal that no direct statutory source exists for the Agency to derive authority to conduct the SAFE I rulemaking. In this respect, NHTSA focuses, in particular, on the two statutory provisions that commenters supporting the SAFE I Rule especially relied upon to argue that such authority existed: 49 U.S.C. 322 and 49 U.S.C. 32919. Neither of these provisions enables a legislative rulemaking action to establish new binding preemption requirements.
This analysis starts with Section 322 because that is the only source of statutory authority invoked in the SAFE I Rule. Notably, even though EPCA speaks directly to the fuel economy preemption issue in Section 32919, in the SAFE I rulemaking, NHTSA did not invoke Section 32919 to claim the authority to issue preemption regulations.
NHTSA concludes that the general authority for the Secretary to “carry out” his responsibilities across the entire Department of Transportation cannot supplant the otherwise strong indication that legally binding regulations on EPCA preemption exceed the scope of the Agency's authority. Nothing in the comments undermines the Proposal's straightforward recognition that Section 322 contains statutory language of broad applicability that extends well beyond the CAFE program and, indeed, well beyond NHTSA. It continues to seem especially peculiar to derive preemption authority from Section 322 when EPCA already contains an express preemption provision, which does not provide NHTSA with a role in further defining that preemption with the force and effect of law. Since Congress already crafted a specific provision to describe EPCA preemption in Section 32919, the more general terms of Section 322 would seem of much clearer applicability if Section 32919 had otherwise delegated NHTSA certain authorities or responsibilities to carry out. But as discussed below, Congress did not, in EPCA, appear to charge NHTSA with any authority or responsibility with respect to preemption regulations. Construing Section 322's general terms to independently provide NHTSA with the authority to issue legislative rules on EPCA preemption that override Section 32919's notable silence as to any role for NHTSA would require an extraordinarily expansive reading of Section 322, which neither Section 322 nor EPCA could support.
Moreover, inserting Section 322 into EPCA in such a manner would require a strained reading of EPCA, which contradicts the specific approach Congress consistently employed throughout EPCA to provide authority to the various agencies targeted by the statute. Unlike some other enactments, which are primarily aimed at enabling a particular agency or creating a specific program, EPCA sought to establish an interagency framework for energy independence, which spanned a host of agencies and their respective jurisdictions. For instance, at various points, Congress directs portions of EPCA to a variety of agencies, including but not limited to the Department of Transportation, the Environmental Protection Agency, the Department of Justice, the Federal Trade Commission, the Federal Maritime Commission,
• Section 501(1) specifies that “[t]he Secretary may prescribe such rules as may be necessary to implement this paragraph,” which concerns the definitions of an automobile.
• Section 501(2) links the term passenger automobile to that “which the Secretary determines by rule.”
• Section 502 describes the circumstances, in detail, by which “the Secretary shall prescribe, by rule, average fuel economy standards.”
• Section 505(a)(3) requires that “the Secretary shall prescribe rules setting forth the form and content of the reports required under” the Section.
• Section 505(b)(1) describes the specific actions that the Secretary of Transportation and the EPA Administrator may take, such as conducting hearings, “for the purpose of carrying out the provision of this part.”
• Section 506(a)(3) requires that “the form and content” of labeling requirements “shall be prescribed by the EPA Administrator by rule.”
• Section 508(a)(3)(D) permits that “the Secretary may prescribe rules for purposes of carrying the provisions of this paragraph,” which pertains to civil penalties.
The remainder of EPCA is replete with similar examples of Congress specifically—
This is also consistent with the manner in which Congress has provided preemption authority to the Department of Transportation in other contexts. The Proposal identified several of such examples, recognizing that, other DOT statutes expressly provide a regulatory, or even adjudicatory, role for the Department in the preemption analysis. For instance, in the transportation of hazardous materials context, 49 U.S.C. 5125 directs the Secretary to adjudicate applications on whether a particular state standard is “substantially the same” as Federal law and, as such, exempted from statutory preemption.
A few comments disputed the salience of these other preemption examples, with a joint comment submitted by CEI especially delving into the particulars of these preemption schemes. After analyzing each of these preemption statutes in turn, CEI concluded that those statutory preemption provisions in which Congress explicitly prescribed an agency's role all “have one thing in common:” A limited preemption scope that necessitates an agency's subsequent involvement, oftentimes through adjudication, to “fine tune the scope of preemption.”
CEI's comment also argues that the examples from those other statutory provisions cannot inform this rulemaking because in those enactments Congress contemplated an adjudicatory role for the agencies rather than the rulemaking action undertaken in the SAFE I Rule. NHTSA does not believe this distinction negates the comparative value of those provisions. Of course, the SAFE I Rule was a generally applicable rule, not an adjudication or even simply an administrative enforcement action against any particular party. Even so, the preemption statutes described both in the NPRM and herein remain relevant comparisons even when they provide adjudicatory rather than rulemaking roles for an agency. In either case, the Agency is still exercising a core administrative decision-making function to implement the preemption statute in a legally binding way—adjudication just does that on a case-by-case basis whereas a rulemaking does
To the extent the differences in rulemaking and adjudication are pertinent to today's rulemaking, such differences only further support NHTSA's conclusions. For instance, CEI's comment stresses that these other statutory examples only articulate a role for agencies because “subsequent regulatory adjudication” is needed to implement their preemption frameworks (in contrast to Section 32919, which CEI characterizes as “clear”).
Commenters' other efforts to explain away Section 32919's silence are similarly unavailing. In particular, CEI's joint comment proffers two “alternative explanations” for the statute's silence. In the first, the comment argues that in enacting EPCA, Congress was simply naïve, unable “in 1975 to anticipate the brazenness of 21st century `climate ambition,' ” so presumably unaware of what CEI deems an eventual need for NHTSA to legally intercede on EPCA preemption.
Moreover, CEI's comment suggests that Congress perhaps intentionally eschewed a more precise description of delegated authority, preferring instead to tacitly provide authority through silence to avoid “foster[ing] confusion and uncertainty.” This position is both counterintuitive and disproved by EPCA's express text. First, it strains credulity to read EPCA's silence as Congress' concerted effort to still provide authority to the agency, but just in a more clear and unambiguous way than if it had done so expressly. As the rest of EPCA demonstrates, Congress understood how to carve out a legal role for an agency in a multitude of matters, including preemption, even when that role involved a complicated adjudicatory scheme. Moreover, since an agency's rulemaking actions must always fall within the scope of statutory authority, if Congress had any concerns about how that authority could be misapplied, it could have easily enacted language that set the parameters for any implementing agency regulations (as it did in Section 327 of EPCA).
Finally, at least one other commenter sought to diminish this contrast in statutory approaches by focusing not on the actual statutory language in question, but instead, on the legal doctrines underpinning administrative law. Specifically, a joint comment by the Urban Air Initiative argued at length that the Proposal's doubts about the delegation of statutory authority for the SAFE I Rule contradicted the Supreme Court's application of administrative law principles in
NHTSA views this concern as unfounded and depending upon a protracted reading of
The Urban Air Initiative's joint comment contends that, in light of
Moreover, even the broader holding of
Similarly,
This is evident because, as the Proposal recognized, both the Agency and courts have repeatedly understood Section 32919 as self-executing and capable of direct application to state regulatory activity.
The self-executing nature of Section 32919 formed one of the most widely agreed-upon propositions in the Proposal. Commenters on all sides of the issue expressly confirmed their own understanding of Section 32919 as self-executing and capable of direct enforcement and application against preempted programs. For instance, commenters in support of the Proposal expressly agreed that “[i]n the absence of the Preemption Rule, any state law or regulation `relating to fuel economy standards' can be challenged in a proper case, allowing for full evaluation of both the state law and the express statutory preemption in Section 32919,”
Although commenters widely agreed on Section 32919's self-executing status, a small number of comments opposing the Proposal tried to argue that this status did not preclude the SAFE I Rule. For instance, a joint comment submitted by CEI argued that Section 32919 still “has no practical effect unless someone interprets and implements it.”
To the extent that CEI means that Section 32919 has no practical effect unless it is
Ultimately, the self-executing nature of Section 32919 demonstrates that Congress did not establish a rulemaking role for NHTSA in EPCA preemption. Instead, Congress enacted a statutory provision that operates fully on its own, without any discernable responsibility for the Agency in further implementing the scope of Section 32919 through regulations.
Both the SAFE I Rule and commenters to the Proposal defending that Rule also argued that the spirit of EPCA hints at the need for such rulemaking authority. NHTSA continues to find this argument unavailing and, as such, is finalizing the Proposal's view that generalized inferences drawn from EPCA cannot sustain the provisions codified in the SAFE I Rule. Moreover, NHTSA views many of the themes and inferences that commenters invoked for this proposition inapposite, as they mischaracterize the nature of the SAFE I Rule. As such, nothing from these purported inferences changes NHTSA's conclusion that the SAFE I Rule was an
The SAFE I Rule sought to justify the rulemaking on predominantly policy grounds, characterizing the express preemption measure as necessary to fulfill other CAFE responsibilities delegated to the Agency. In particular, the SAFE I Rule argued that the regulation was needed to resolve a perceived irreconcilable conflict between state GHG emissions regulations and ZEV mandates and EPCA's delegation of authority to NHTSA to set national fuel economy standards.
In particular, the SAFE I Rule suggested that the rulemaking was essential to guard against states or local jurisdictions undermining the CAFE program. For instance, the Agency repeatedly expressed that the regulations targeted “State requirements that
A large number of the comments supporting the SAFE I Rule expressed this same idea. This theme is illustrated, for example, by a joint comment from CEI, which stresses that without the SAFE I Rule, California (through CARB) would be positioned to “balkanize auto markets unless it gets its way” in dictating motor vehicle emissions and fuel economy standards.
The idea that the SAFE I Rule is necessary to prevent states and local jurisdictions from frustrating EPCA or NHTSA's national CAFE program is inconsistent with a properly applied preemption framework. In the absence of the SAFE I Rule, two fundamental preemption mechanisms still exist to guard against state or local programs that sufficiently conflict with CAFE to render EPCA's purposes a nullity.
As such, it is not necessary for NHTSA to codify new express preemption provisions in order to “carry out” EPCA. All NHTSA needs to do is fulfill the substantive task enumerated in Section 32919: Ensuring “an average fuel economy standard prescribed under this chapter is in effect.”
More fundamentally though, even after today's repeal of the SAFE I Rule, judicial concepts of implied preemption will remain available to perform their traditional function of guarding against state law that sufficiently interferes with the supremacy of federal law. In fact, the concepts used by the SAFE I Rule (and commenters defending it) to justify rulemaking authority were actually more appropriately applied to an implied preemption analysis instead.
Moreover, as a judicial doctrine intended for application in a particular case, principles of implied preemption do not support NHTSA claiming authority to conduct a rulemaking of general applicability.
In addition, even if the Agency either had sufficient authority to issue the SAFE I Rule as a legislative rule or, alternatively, if the prior Rule was simply an interpretation, the Agency nevertheless continues to consider a repeal justified by other considerations as well. Specifically, the SAFE I Rule purported to preempt an entire segment of emissions regulations from state and local jurisdictions without fully considering a number of variables pertinent to the preemption determination. By ignoring these factors, the Rule was still legally flawed because it ignored legally relevant considerations that should have informed both the nature and scope of the Agency's preemption determination. Likewise, in overlooking such important considerations, the SAFE I Rule also improvidently imposed preemption in absolute terms when a more narrowly tailored approach was available instead.
In the Proposal, the Agency expressed a concern that the categorical preemption views announced in the SAFE I Rule were insufficiently tailored to account for state federalism interests because they labeled an entire segment of state and local regulation as preempted, irrespective of the precise contours of any particular programs, regulations, or technological developments that may arise. This alarm especially arose from the SAFE I Rule's declaration of preemption through terms that were incontrovertible or absolute in a way that would not account for the nuanced and careful consideration of program-specific facts called for in preemption analyses. The comments to this Proposal substantiated these concerns. In particular, the majority of states and local jurisdictions who commented on the Proposal provided tangible examples of the types of nuances and federalism hardships that the SAFE I Rule failed to consider.
NHTSA continues to consider the federalism concerns in this arena as constituting substantial interests of states and local jurisdictions, who oftentimes seek to address pivotal matters of public health and welfare through the programs impinged by the SAFE I Rule. In this respect, the Agency remains mindful that an “administrative interpretation [which] alters the federal-state framework by permitting federal encroachment upon a traditional state power” merits particularly careful consideration to fully account for the significant federalism interests of states.
For instance, in the Proposal, the Agency expressed a concern that in a number of cases, the policies preempted by the SAFE I Rule also served as components of the states' compliance with air pollution mitigation requirements delegated to states under the Federal Clean Air Act.
Commenters made clear that these reliance interests were tied to programs in place at the time of the SAFE I Rule's promulgation. For instance, California's South Coast Air Quality Management District described how the SAFE I Rule invalidated “state pollution control standards which have been previously approved into State Implementation Plans (SIPs).”
In addition, states and local jurisdictions similarly feared that by losing the state regulatory programs on which they had relied, the jurisdictions faced substantial detrimental consequences if they failed to meet required NAAQS levels. For example, a comment from a collective of municipal entities stressed that “vehicle emissions impact air quality and a community's ability to meet required ozone levels. Falling outside of required ozone levels can have negative impacts on cities, potentially disqualifying them from federal funding opportunities for highway and transit infrastructure.”
In the SAFE I Rule, NHTSA expressly “reject[ed] the notion that California has valid reliance interests” in preexisting state regulations and programs, largely because the Rule labeled those programs broadly preempted under the framework announced in the rulemaking.
A few commenters that objected to the Proposal touched upon federalism issues, which the Agency do not believe persuasively argue for continuing the approach in the SAFE I Rule. First, the American Fuel & Petrochemical Manufacturers (AFPM) stated that “it [was] impractical to provide informed comment” on the extent of federalism at stake in the Proposal because the Proposal spoke about preemption broadly rather than by reference to the status of specific state or local programs.
AFPM's comment also concludes that states have a diminished federalism interests in this area because “Congress has clear authority to regulate mobile sources that move in interstate commerce” and “EPCA expressly and clearly establishes that federal law preempts state laws `related to' fuel economy.”
Similarly, comments such as AFPM's seek to minimize the SAFE I Rule's effect on federalism interests by stressing that the “SAFE I Rule has no impact on states' abilities to adopt emissions regulations that are not related to fuel economy, or to establish vehicle registration fees, taxes and other” such policies.
These federalism interests are especially illustrated by the degree to which many of the state and local programs in question seek to address critical matters of health and welfare within local communities. The Proposal outlined a concern that a categorical preemption scope inappropriately foreclosed potential opportunities to address localized health and safety hazards facing states and communities by preventing local governments from identifying solutions needed for their individual citizens. This concern arose from the Proposal's recognition that states have indicated that the standards at issue were developed to protect the states' residents from dangerous air pollution and the states' natural resources from the threats posed by climate change. The comments to this Proposal continued to reiterate a prevailing concern that the SAFE I Rule inappropriately and unnecessarily deprived states and local jurisdictions of an important regulatory tool to address hazards facing their local communities.
Commenters opposing a repeal contested this point, arguing instead that “the self-described purposes” of any individual state program are irrelevant to the EPCA preemption analysis, which is solely concerned with the relationship between the state regulation in question and fuel consumption.
In contrast, the SAFE I Rule prohibited all state policies in a vacuum, without any knowledge of even the most fundamental questions about those policies, such as whose regulations are at issue, what motor vehicle technologies are being regulated, which compliance paths may be available, or what technological or policy breakthroughs may occur in the future to alter the preemption analysis. Comments to the Proposal indicate that, when a more thorough and nuanced consideration of preemption is permitted, programs enveloped by the sweeping scope of the SAFE I Rule potentially relate to important goals of protecting health and welfare of local populations.
For instance, the State of California commented, noting that affected state programs were originally devised as a means of mitigating unique environmental challenges facing the state: “California's greenhouse gas standards were first adopted 16 years ago in response to the prospect of disruptions in the states' water supply, increases in `catastrophic wildfires,' damage to the State's extensive coastline and ocean ecosystems, aggravation of existing and severe air quality problems and related adverse health impacts, and more.”
Despite such a diverse array of challenges, commenting states and local jurisdictions consistently agreed that the inflexibility of the SAFE I Rule's broad preemption determination foreclosed opportunities for them to develop innovative policy solutions to the unique issues they faced that were still consistent with Federal law. This need to allow for more innovative policy flexibility than permitted by the expansive terms in the SAFE I Rule but still potentially allowed under the more general terms of EPCA was echoed expressly by multiple commenters, such as the Connecticut Department of Transportation,
Finally, commenters that opposed the Proposal (and thus were supportive of the SAFE I Rule) argued that this latest rulemaking was a change in position by the Agency, in an effort to single it out as a departure from precedent. These commenters that opposed the Proposal, such as NADA and CEI, sought to minimize any significance of the SAFE I Rule's unprecedented exertion of preemption authority, with CEI's joint comment noting in particular that “unprecedented violations call for unprecedented corrections.”
Thus, until 2019, the self-executing express preemption provisions in the governing fuel economy statute, Section 32919, had always provided the sole codified language on CAFE preemption. Since this statutory language is self-executing, Federal courts, as well as Federal agencies, states, and local governments, had come to understand the fundamental operation of CAFE preemption and applied it on a case-by-case basis, resulting in the development of a significant body of case law, without the need for any corresponding regulations from NHTSA. As such, the SAFE I Rule was neither the natural evolution of NHTSA's prior positions nor an expected outgrowth of the regulatory landscape. Thus, to the extent this rulemaking is a change in position, it is simply a course correction that returns the Agency's regulations to
Commenters that opposed the Proposal argued that this history of regulatory silence is irrelevant, pointing, for instance, to Supreme Court cases upholding agencies who promulgated regulations long after the enactment of the antecedent statutory language.
In the Proposal, the Agency expressed concern that the SAFE I Rule improperly neglected to consider the nuances of the federalism interests affected by the rule.
Finally, NHTSA believes it is worth making clear that repealing the SAFE I Rule does not itself undermine any reliance interests. In this respect, the Agency is mindful that neither states, nor local jurisdictions, the entities potentially subject to any preemption, nor motor vehicle manufacturers, the entities producing the vehicles potentially subject to any state or local regulation, articulated a reliance interest in the SAFE I Rule in their comments to this Proposal.
The substantial federalism and reliance interests discussed above support a narrowly tailored preemption analysis that considers preemption on a particularized basis rather than through sweeping proclamations that categorically eliminate the interests. Addressing EPCA preemption in a more particularized setting also promotes a more thorough and informed preemption assessment of any specific state or local programs at issue. This is because the nature of the EPCA preemption analysis frequently requires an understanding of fact-specific variables or diverse characteristics of the programs in question, such as the relevant technologies, compliance paths, and particular activities pertinent to those programs. Forming abstract or generally applicable EPCA preemption conclusions precludes an understanding of those program-specific attributes and, like the SAFE I Rule, results in a sweeping proclamation that cannot possibly account for the diverse array of programs (some of which likely have not even been formulated yet) potentially affected by the analysis. For instance, in order to announce a generally applicable scope for EPCA preemption, the SAFE I Rule drew assumptions about compliance technologies and program characteristics that would regulate GHG emissions from motor vehicles or involve ZEV mandates in the near-term. In turn, the Rule extrapolated those assumptions to the entire realm of regulatory possibilities, both now and in the future. The SAFE I Rule's rigid and generally applicable scope foreclosed any opportunity to evaluate specific
Numerous commenters also identified multiple other considerations relating to potential state motor vehicle emissions regulations that would be foreclosed for consideration by the sweeping rigidity of the SAFE I Rule. By rigidly restricting policy developments and precluding avenues for innovation, the SAFE I Rule ultimately implemented a rigid and permanent prohibition based on, at most, a limited understanding of a particular snapshot of the regulatory landscape. Comments further underscored a concern that the regulatory landscape upon which the SAFE I Rule imposed is dynamic and evolving. This view was particularly developed in a comment from the South Coast Air Quality Management District, which criticized the SAFE I Rule for neglecting to “consider how pollution control technology changes over time,” “fail[ing] to acknowledge that some technologies may not have any measurable relationship with fuel economy standards at all,” and ignoring that “state-set standards may be met by means other than increasing fuel economy.”
A few comments that opposed the Proposal disagreed with this concern, such as a comment from NADA that argued the “physics and chemistry involved with fuel economy and GHG emissions standards” are intrinsically intertwined such that a regulation of one regulates the other.
Ultimately, if NADA or any other parties oppose the state and local programs that the SAFE I Rule sought to preempt, they remain free to challenge those programs in Federal court, as they have been able to do since the inception of those programs. The repeal of the SAFE I Rule does not change that ability or the underlying “related to” standard in Section 32919. To the extent NADA considers this point a process flaw, NHTSA responds that NADA's focus is too narrow, as the Agency has explained above that there exists no need to replace its positions on preemption in the SAFE I Rule with new generally applicable positions. The SAFE I Rule sought to preempt, in a generally applicable manner, all state and local GHG emissions regulations for motor vehicles. Continuing this approach from the SAFE I Rule would improperly only focus upon a snapshot of the regulatory landscape: The
In light of the foregoing, upon reconsideration, NHTSA finalizes its view that the SAFE I Rule's categorical scope was an inappropriate approach. The preemption framework established by the Rule necessarily could not account for legally relevant considerations and, in any event, imprudently and unnecessarily imposed preemption in absolute terms, foreclosing any outlet for a more narrowly tailored approach instead and precluding opportunities to account for program-specific variables that could affect the accuracy or nature of a preemption analysis.
In light of the foregoing, NHTSA maintains the Proposal's concern that the Agency's preceding discourse on EPCA preemption paints a circuitous regulatory landscape, which convolutes the proper application of legal principles on important questions of preemption. Such confusion culminated in the SAFE I Rule, which as described throughout herein, misapplied the governing legal principles, articulated an impermissible legal role for the Agency, and failed to identify the legally relevant factors that bore on an EPCA preemption determination. In doing so, the SAFE I Rule also purported to synthesize a variety of Agency statements and positions that predated that rulemaking. And, even though the SAFE I Rule represented a marked departure from the Agency's longstanding historical practice of not codifying express EPCA preemption requirements, the SAFE I Rule (including its preambles that accompanied the rulemaking) still
Accordingly, NHTSA is finalizing its proposed approach of refining the discourse on EPCA preemption by repealing the SAFE I Rule. The Agency considers this basis for a repeal applicable regardless of whether NHTSA possessed authority for the SAFE I rulemaking because, either way, the SAFE I Rule introduced confusion that undermined a properly scoped preemption analysis. In this respect, as described before, the Agency remains cognizant that Congress has not required NHTSA to speak substantively on EPCA preemption. Thus, anything NHTSA says on this subject is, at most, elective and unnecessary for Section 32919 to function as Congress intended. Consequently, if NHTSA's regulations on EPCA preemption raise the possibility of confusion or otherwise convolute the discourse on the subject, it would be better to reset those statements entirely than allow them to linger.
NHTSA finalizes the Proposal's view that a repeal of the SAFE I Rule helpfully elucidates the proper standards to apply when conducting an EPCA preemption analysis. This is not simply because the SAFE I Rule promulgated requirements for which no authority existed, as described above. Even apart from their unsustainable legal status, the SAFE I Rule also introduced entirely new and largely undefined concepts into the preemption analysis. In doing so, the SAFE I Rule diverted attention from the statutory standards of Section 32919, which were traditional standards long applied by regulated entities and courts. By layering additional uncharted and undefined regulatory standards on top of this longstanding statutory language, the SAFE I Rule introduced new uncertainty into the EPCA preemption regulatory landscape. As such, today's repeal of the Rule removes this superfluous layer thereby restoring the focus on the original statutory standards, which are capable of direct application.
On balance, the comments to the Proposal illustrated the degree to which a repeal of the SAFE I Rule promoted a clearer and more direct application of the governing statutory preemption standards. Several commenters opposing a repeal expressed concern that this step would undo what they viewed as the SAFE I Rule's clarification of EPCA preemption. To reach this conclusion, such comments generally argued that by categorically preempting states and local jurisdictions, the SAFE I Rule established a clear brightline for preemption, whereas a repeal would fail to provide any guidance on the subject or potentially result in overlapping requirements.
However, commenters by no means agreed on the proposition that the SAFE I Rule clarified the regulatory landscape. In fact, a large number of commenters supporting a repeal specifically expressed the opposite concern: That the SAFE I Rule introduced more uncertainty. Many of these commenters were states and local entities who especially need to understand the contours of EPCA preemption in order to formulate their own policies and assess their viability. Such commenters pointed to tangible examples of how aspects of the SAFE I Rule convoluted the EPCA preemption analysis by introducing new regulatory requirements and standards that produced more uncertainty than the underlying statutory standards in Section 32919.
Ultimately, NHTSA finalizes the Proposal's view that refocusing the governing preemption spotlight back on Section 32919's statutory terms is ideal because the SAFE I Rule did not elucidate the regulatory landscape, and in some cases, may have even added confusion by introducing unfamiliar and uncharted terms into the preemption analysis. Permitting the regulations of the SAFE I Rule to linger enhances the potential that these regulations may only add regulatory confusion to the statutory standards long in place under EPCA. As described throughout this final rule, EPCA preemption is governed by the express preemption provision in Section 32919, which has employed substantially the same language throughout the history of the CAFE program. Multiple commenters noted that the “related to” language enacted in Section 32919 has also been used by Congress in other enactments beyond EPCA and has the benefit of extensive jurisprudence analyzing the meaning of the term.
In contrast, the unprecedented approach of the SAFE I Rule confused this framework and, as described above, purported to introduce new prescriptive standards into the preemption analysis by way of the codified regulations. The SAFE I Rule substituted this long-applied statutory standard for new regulatory phrases that lacked any jurisprudential history or further definition. The resulting ambiguity introduced many unknowns into the EPCA preemption landscape, such as what those new standards mean or how NHTSA may seek to construe its new standards in the future. In addition, because Section 32919 can also support a private right of action, in the past, private parties have undertaken litigation seeking to enforce the terms of EPCA preemption. As such, any new
Many of the comments raised concerns associated with such uncertainties. For instance, a joint comment submitted by California along with numerous other states and local jurisdictions expressed concern that the new regulations from the SAFE I Rule introduced new—and undefined—legal standards into the preemption framework, pointing to new concepts or phrases such as “direct or substantial effect” or “in-use” regulations.
Other aspects of the SAFE I Rule's regulatory text exacerbated the uncertainty surrounding the SAFE I Rule's unprecedented preemption framework. For instance, the Proposal highlighted that the codified text of the SAFE I Rule was potentially perplexing because Sections 531.7 and 533.7 merely parroted the statutory text in Section 32919. As such, the Proposal expressed a concern that the verbatim recitation of the statutory language in the CFR could even be confusing to some, who assume some subtle difference must exist in the statutory and regulatory provisions. One commenter defending the SAFE I Rule rejected this reasoning, arguing that “such concerns would be immediately dispelled upon comparing the statutory and regulatory text and realizing the provisions were identical.”
In any event, whether or not such a parroting regulation is actually confusing need not be dispositive because, at the very least, such a parroting regulation is superfluous and unnecessary. As such, it is not unreasonable for NHTSA to conclude that the superfluous and potentially confusing provisions in Sections 531.7 and 533.7 should no longer remain codified and if they were to remain so, would only overcomplicate the EPCA preemption analysis. Accordingly, NHTSA finalizes its view that a repeal of the SAFE I Rule is independently warranted in order to restore the focus to EPCA's governing statutory standards and remove an unnecessary and potentially confusing layer of regulatory haze that risks obscuring the proper preemption analysis.
Finally, NHTSA reiterates the Proposal's view that, to the extent prior rulemaking statements from the Agency discuss matters of EPCA preemption, they should not be read inconsistently with the reconsidered views that NHTSA now expresses in this final rule. Throughout the SAFE I rulemaking, NHTSA sought to portray the
In this respect, NHTSA fully agrees with several commenters who expressed that this clarification is not formally necessary because this final rule clearly contains the current views of the Agency and upon the repeal of the SAFE I Rule, “any preambular statements justifying or explaining the Preemption Rule's regulatory provisions or appendices will be a `legal nullity.' ”
Therefore, to the extent the Proposal referred to this clarification as a “repeal” or “clean slate,” the Agency simply means that any statements NHTSA has made in past rulemaking discussions (in the SAFE I Rule or otherwise) that seek to impose a scope for EPCA preemption or suggest NHTSA has the authority to do so should no longer be read as current NHTSA positions.
NHTSA has considered the impact of this rulemaking action under Executive Order 12866, Executive Order 13563, and the Department of Transportation's regulatory policies and procedures. Only one commenter raised any of these issues during the comment process. This commenter argued that the Proposal conflicted with Executive Order 12866 because the NPRM “failed to evaluate whether the action is a significant regulatory action.”
The same commenter also argued that NHTSA failed to comply with Executive Order 12866 because the Proposal did not “assess all costs and benefits of its proposed action and available regulatory alternatives.”
Executive Order 13990, “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis” (86 FR 7037, Jan. 25, 2021), directed the immediate review of “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule Part One: One National Program,” 84 FR 51310 (September 27, 2019), by April 2021.” The Proposal followed the review directed in this Executive Order and this Final Rule concludes the review. As noted in the Proposal and reiterated again today, the Agency continues to deliberate further about the complex substantive issues surrounding EPCA preemption and may elect to undertake further action in the future, if warranted, to exercise NHTSA's interpretative and policymaking discretion with respect to such issues. Nevertheless, as the Agency's review under Executive Order 13990 identified other independent and dispositive problems with the SAFE I Rule, these grounds suffice for NHTSA to conclude its reconsideration of the Rule by repealing the SAFE I Rule in full.
Executive Order 14008, “Tackling the Climate Crisis at Home and Abroad” (86 FR 7619) expressly recognizes that “[t]he United States and the world face a profound climate crisis.” Accordingly, the Order describes a multitude of
One commenter opposing the Proposal and defending the SAFE I Rule argued that by repealing the SAFE I Rule without a technical analysis of any impacts of state electric vehicle mandates on “low-income car buyers,” NHTSA failed to comply with the environmental justice provisions of Executive Order 14008.
Moreover, NHTSA notes that both the nature and application of this rulemaking are consistent with the climate and environmental justice goals expressed in Executive Order 14008. While NHTSA's repeal does not depend upon substantive issues, as described throughout, the Agency notes that commenters delving into the substantive issues surrounding the SAFE I Rule widely viewed the original rule as undermining efforts to “address[ ] climate change and improv[e] equity.”
Finally, Executive Order 14008 makes clear that pursuing environmental justice often entails understanding policies from the perspective of local communities, “to address the disproportionately high and adverse human health, environmental, climate-related and other cumulative impacts on disadvantaged communities” from those policies.
Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601
NHTSA has considered the impacts of this document under the Regulatory Flexibility Act and certifies that this rulemaking will not have a significant economic impact on a substantial number of small entities. The following provides the factual basis for this certification under 5 U.S.C. 605(b). This final rule only concerns the question of preemption; the action does not set CAFE or emissions standards themselves. The preemption regulations repealed in this action have no direct effect on any private entities, regardless of size, because the rules do not regulate private entities. Further, unlike the SAFE I Rule, this rulemaking takes no position on whether any particular State or local law is preempted and has no impact, let alone a significant impact, on any small government jurisdiction. Thus, NHTSA confirms in this final rule that this rule would have no significant impact on any small entities.
Executive Order 13132 requires NHTSA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.”
While this final rule concerns matters of preemption, it does not entail either type of regulation covered by Executive Order 13132's consultation requirements. Rather, the action in this final rule merely repeals regulations and positions that sought to preempt State law. Thus, this final rule does not implicate the consultation procedures that Executive Order 13132 imposes on agency regulations that would either preempt state law or impose substantial direct compliance costs on states.
The Unfunded Mandates Reform Act of 1995, Public Law 104-4, requires agencies to prepare a written assessment of the cost, benefits and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million annually. Because this rulemaking does not include a Federal mandate, no unfunded mandate assessment was prepared.
The National Environmental Policy Act of 1969)
In the Proposal, NHTSA emphasized that one consideration is whether the action is a non-discretionary action to which NEPA may not apply.
This is consistent with the position described in the Proposal, which also considered NEPA inapplicable due to the legally required nature of the repeal. Only two comments even raised NEPA issues, with one supporting the Agency's position and the other challenging it. Notably, the supporting comment was submitted on behalf of twelve public interest organizations, many of which consisted of environmental interest organizations. This joint comment expressly agreed with NHTSA that “if NHTSA definitively concludes that the Preemption Rule exceeds its statutory authority, it need not analyze the environmental impacts of a repeal under the National Environmental Policy Act.”
The sole comment opposing the Proposal's approach to NEPA was a joint comment submitted by the Urban Air Initiative. This comment argued that a repeal of the SAFE I Rule was a major action that required an environmental impact statement.
Moreover, as in the Proposal, the Agency also reiterates that the Supreme Court has characterized an express preemption statute's scope as a legal matter of statutory construction, in which “the purpose of Congress is the ultimate touchstone of pre-emption analysis.”
In light of this background, as both this rulemaking and the SAFE I Rule itself consistently made clear, the statutory text of Section 32919 ultimately governs express preemption through self-executing terms. The SAFE I Rule even relied on this to conclude that NEPA was not required for that rulemaking because NHTSA could not change the scope of EPCA preemption. As described in this rulemaking, the SAFE I Rule was confused and contradictory in this respect because,
The express preemption provision of Section 32919 remains enacted, in full and unchanged, irrespective of the SAFE I Rule or this final rule. As almost all commenters agreed, this provision is self-executing and governing of the EPCA preemption issue irrespective of any Agency regulations that purport to do so as well. Therefore, in repealing the SAFE I Rule, NHTSA is not actually
Pursuant to Executive Order 12988, “Civil Justice Reform,”
In accordance with the Paperwork Reduction Act of 1980, NHTSA states that there are no requirements for information collection associated with this rulemaking action.
In accordance with 5 U.S.C. 553(c), NHTSA solicited comments from the public to better inform the rulemaking process. These comments are posted, without edit, to
Pursuant to Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996, also known as the Congressional Review Act (5 U.S.C. 801
Fuel economy.
For the reasons stated in the preamble, the National Highway Traffic Safety Administration amends 49 CFR parts 531 and 533 as set forth below.
49 U.S.C. 32902; delegation of authority at 49 CFR 1.95.
49 U.S.C. 32902; delegation of authority at 49 CFR 1.95.
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Final rule.
NHTSA is issuing this final rule to establish Federal Motor Vehicle Safety Standard (FMVSS) No. 227, “Bus rollover structural integrity,” to enhance the rollover structural integrity of over-the-road buses (motorcoaches), and other buses with a gross vehicle weight rating (GVWR) greater than 11,793 kilograms (kg) (26,000 pounds (lb)). This final rule, issued pursuant to the Moving Ahead for Progress in the 21st Century Act (MAP-21), requires the buses to provide a “survival space” in a rollover test to protect occupants from possible collapse of the bus structure around them. In addition, to reduce the likelihood of ejection, this final rule prohibits emergency exits from opening in the rollover test. This final rule ensures that bus roofs and side wall panels will resist deformation and intrusion into the occupant space in rollover crashes, and reduces the risk of emergency exits becoming ejection portals in a crash.
The effective date of this final rule is: December 30, 2024. Optional early compliance is permitted.
Petitions for reconsideration of this final rule must refer to the docket number set forth above and be submitted to the Administrator, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE, Washington, DC 20590. Note that all petitions received will be posted without change to
For non-legal issues, you may contact James Myers, NHTSA Office of Crashworthiness Standards, telephone 202-493-0031, fax 202-493-2990. For legal issues: Deirdre Fujita, NHTSA Office of Chief Counsel, telephone 202-366-2992, fax 202-366-3820. Address: National Highway Traffic Safety Administration, U.S. Department of Transportation, 1200 New Jersey Avenue SE, West Building, Washington, DC 20590.
This final rule substantially improves motorcoach safety. It establishes an FMVSS to improve the resistance of motorcoach roofs and side wall panels to deformation and intrusion into the occupant compartment in rollover crashes, and fulfills a mandate in section 32703(b)(1) of MAP-21. This final rule also accords with section 32703(b)(2) of MAP-21 by requiring emergency exits to remain closed in a rollover to prevent partial and complete ejection of passengers.
This final rule achieves longstanding NHTSA and Departmental goals to enhance motorcoach safety. NHTSA identified four priority areas in which to improve the safety of motorcoaches and other large buses: Requiring passenger seat belts, improved rollover structural integrity, improved emergency evacuation, and fire safety.
Congress also focused on these and other areas in incorporating the Motorcoach Enhanced Safety Act of 2012 into MAP-21 (Pub. L. 112-141). Among other matters, MAP-21 directed NHTSA (as delegated by the Secretary of Transportation) to require seat belts in “motorcoaches,” a term, Congress stated, that has the same meaning given the term “over-the-road bus” in section 3038(a)(3) of the Transportation Equity Act for the 21st Century (49 U.S.C. 5310 note). An over-the-road bus (OTRB) is a bus characterized by an elevated passenger deck located over a baggage compartment.
Section 32703(b)(1) of MAP-21 also directed NHTSA to pursue rulemaking for OTRBs to establish improved roof and roof support standards that substantially improve the resistance of bus roofs to deformation and intrusion in rollovers. MAP-21 requires NHTSA to adopt a final rule if NHTSA determines that such standards meet the requirements and considerations in subsections (a) and (b) of section 30111 of the National Traffic and Motor Vehicle Safety Act.
This final rule complements the November 2013 seat belt rule. With all new large buses manufactured since 2016 required to have lap and shoulder seat belts for passengers, increasing numbers of passengers can be belted. This final rule establishing FMVSS No. 227 will ensure that these belted passengers will be significantly protected against unreasonable risk of injury in frontal crashes and significantly protected against the risk of ejection in rollovers. Hand-in-hand with the seat belt rule, this final rule enhances the safety of these belted passengers by providing a “survival space” in a rollover, a space where the belted occupants are protected from intruding structures such as a collapsing roof or a detached luggage rack. The new standard's improvements to the roof and sidewall strength of the buses will also protect unbelted occupants against structural failure of the bus compartment. This final rule improves transportation safety for the most vulnerable in our society since more than half of motorcoach trips are made by children and senior citizens.
This final rule applies to all new large buses, with limited exceptions. The standard does not apply to school buses, prison buses, buses with perimeter seating, or to transit buses that are not OTRBs. School buses already meet an FMVSS for roof strength, which is FMVSS No. 220, “School bus rollover protection” (49 CFR 571.220). In response to comments, NHTSA has also decided not to apply the standard to “school bus derivative buses,” which this final rule defines as buses built on a school bus platform. These vehicles may not have school bus lights and stop arms meeting FMVSS No. 108 and No. 131, respectively, or seating systems meeting FMVSS No. 222, “School bus seating and passenger protection,” but the buses have safety systems that are otherwise identical to school buses regarding their emergency exits, rollover protection (FMVSS No. 220), bus body joint strength, and fuel system integrity. The vehicles could be certified as meeting the FMVSSs for “school buses” if they had school bus lights meeting FMVSS No. 108, stop arms meeting FMVSS No. 131, and seating systems meeting FMVSS No. 222. Because school bus derivative buses already meet the roof crush resistance requirements in FMVSS No. 220, it would be redundant to require the buses to meet Standard No. 227 established by this final rule.
The test for the large buses adopted by this final rule is the complete vehicle rollover test of United Nations Economic Commission for Europe (ECE) Regulation 66, “Uniform Technical Prescriptions Concerning the Approval for Large Passenger Vehicles with Regard to the Strength of their Superstructure,” (ECE R.66).
The “survival space” requirement ensures at least a minimum level of structural integrity for the buses by prohibiting intrusions into the occupant space that can cause harm. It establishes “improved roof and roof support standards” that substantially improve the resistance of the roof to deformation and intrusion, in accordance with MAP-21. It ensures that buses are constructed so that structures outside of the survival space, such as luggage racks and large pieces of glazing, do not enter the survival space in the rollover.
The requirement that emergency exits remain shut during and after the rollover test reduces the likelihood of emergency exits becoming ejection portals during rollovers, which is a goal consistent with MAP-21. Section 32703(b)(2) of MAP-21 requires NHTSA to consider requiring advanced glazing
The most noteworthy differences between this final rule and the NPRM
1. This final rule adopts the NPRM's proposed ECE R.66 full vehicle test to improve the roof and structural integrity of OTRBs (except for a few buses with unique configurations), and non-OTRBs with a GVWR greater than 11,793 kg (26,000 lb)). The agency proposed to exclude non-OTRBs with perimeter seating from the standard. After evaluation of the comments received, this final rule excludes all perimeter seating buses, as there is not a sufficient reason to distinguish between buses just based on the location of a luggage compartment. Further, all prison buses are excluded due to the unique interior configuration of the buses, as are school bus derived buses, as the latter vehicles already meet NHTSA's school bus roof crush resistance standard.
2. This final rule adopts the NPRM's proposed prohibition that no part of the bus that is outside the survival space shall intrude into the survival space, both during movement of the tilting platform or resulting from impact of the bus on the impact surface. However, given the high force applications imparted to the bus structure in the rollover test, this final rule permits debris caused by the impact to fall into the survival space, such as small glazing pebbles or bolts and screws. The objects must not weigh more than 15.0 grams.
3. This final rule does not adopt the NPRM's proposal that each anchorage of an interior overhead luggage rack or other compartment must not completely separate from its mounting structure during movement of the tilting platform or resulting from impact of the bus on the impact surface. This final rule also does not adopt the NPRM's proposal that seat anchorages must not become dislodged during the test. Under the NPRM, those proposed prohibitions would have applied even if the luggage rack does not enter the survival space, or the seat anchorages dislodged within the survival space. NHTSA has decided that the primary purpose of this rulemaking is to establish a roof strength and crush resistance standard that improves the resistance of roofs to deformation and intrusion,
4. This final rule does not adopt the proposed provision that each side window glazing opposite the impacted side of the vehicle must remain attached to its mounting structure so as not to allow the passage of a 102 mm (5-inch) diameter sphere. The sphere test was proposed to ensure that, after the rollover test, the glazing remain firmly attached to its mounting. Because the primary purpose of this rulemaking is to provide a necessary survival space to occupants in rollovers, the purpose is achieved by prohibiting panes of glazing from falling into the survival space. The proposed requirement that the glazing not form openings is not germane to the survival space specification and unnecessarily complicates this rulemaking.
These changes and others are discussed in this preamble.
This final rule accords with the following National Transportation Safety Board (NTSB) recommendations that NTSB issued to NHTSA to improve motorcoach safety.
In an NTSB Highway Special Investigation Report (1999), Bus Crashworthiness Issues,
“H-99-50 (MW): In 2 years, issue performance standards for motorcoach roof strength that provide maximum survival space for all seating positions and that take into account current typical motorcoach window dimensions.”
“H-99-51: Once performance standards have been developed for motorcoach roof strength, require newly manufactured motorcoaches to meet those standards.”
In November 2009, after investigating an August 2008 Sherman, Texas bus crash,
“H-09-23: Develop performance standards for newly manufactured motorcoaches to require that overhead luggage racks remain anchored during an accident sequence.”
“H-09-24: Develop performance standards for newly manufactured motorcoaches that prevent head and neck injuries from overhead luggage racks.”
This final rule is consistent with the above NTSB recommendations. NHTSA is issuing performance standards for motorcoach roof strength that provide a survival space for all seating positions and is requiring new motorcoaches to meet those requirements. The standard established by this final rule requires that overhead luggage racks remain anchored during a rollover such that they do not enter the requisite survival space and injure passengers in the survival space.
NHTSA has examined the benefits and costs of this final rule to ensure that the agency adopts only those amendments that contribute to improved safety and that are consistent with the directives of MAP-21 and the principles for regulatory decision-making set forth in Executive Order 12866,
NHTSA has determined this rulemaking to be cost beneficial.
The agency estimates the annual cost of this final rule to be between $4.81 million and $11.84 million (see Table 1 below). The countermeasures may include stronger roof structure, support pillars, side walls, shock resistant latches for emergency exits, and improved window mounting, resulting in material costs for each bus covered under this final rule ranging from $325 to $591. We estimate the total weight increase will range from 181 to 356 kilograms (kg) (399 to 784 pounds (lb)) for each of these buses and cost an additional $1,862 to $4,790 in fuel per vehicle over the lifetime of the vehicle.
We estimated the benefits of this rule taking into account the benefits attributable to the agency's final rules on seat belts and electronic stability control (ESC), as those rules also applied to this universe of vehicles. We estimate that requiring the subject buses to meet the rollover structural integrity performance criteria will save approximately 2-3 lives annually. In addition, we expect that the rule will reduce the number of seriously injured occupants by 4 annually. Thus, we estimate that approximately 3.12 equivalent lives are saved annually if 15 percent of occupants use seat belts, and approximately 2.45 equivalent lives are saved annually (undiscounted) if 90 percent of occupants use seat belts (see Table 2 below).
The cost per equivalent life saved is estimated to be $2.48 million to $4.99 million when belt use is estimated to be 15 percent, and $3.17 million to $6.38 million when belt use is estimated to be 90 percent (see Table 3 below). The net cost/benefit impact ranges from a net benefit of $13.09 million to $23.31 million if seat belt usage is 15 percent. If the seat belt usage rate is 90 percent, the estimated net cost/benefit impact ranges from a net benefit of $8.25 million to a net benefit of $16.97 million (see Table 4 below). While the cost and benefits of this rule will vary depending on the material/fuel costs per vehicle and on the belt use rate, per all available information this final rule will be cost beneficial.
Section 32703(b) and (b)(1) of MAP-21 direct NHTSA: (a) To establish improved roof and roof support standards for motorcoaches that substantially improve the resistance of motorcoach roofs to deformation and intrusion to prevent serious occupant injury in rollover crashes involving motorcoaches; if (b) NHTSA determines that such standards meet the requirements and considerations set forth in subsections (a) and (b) of section 30111 of the Safety Act. In addition, section 32703(b)(2) directs NHTSA to consider portal improvements to prevent partial and
NHTSA has determined that the standard issued by this final rule meets the requirements and considerations of section 30111(a) and (b) of the Safety Act.
The provision at 49 U.S.C. 30111(a) of the Safety Act authorizes the Secretary (NHTSA, by delegation) to prescribe Federal motor vehicle safety standards that are practicable, meet the need for motor vehicle safety, and are stated in objective terms. “Motor vehicle safety” is defined in the Safety Act as “the performance of a motor vehicle or motor vehicle equipment in a way that protects the public against unreasonable risk of accidents occurring because of the design, construction, or performance of a motor vehicle, and against unreasonable risk of death or injury in an accident, and includes nonoperational safety of a motor vehicle.”
NHTSA has determined that the standard issued by this final rule meets the requirements and considerations of section 30111(a) of the Safety Act. The standard is practicable, since it is based on the 2006 ECE R. 66 complete vehicle rollover test. New buses sold in Europe and other countries have been designed to meet the ECE R.66 rollover test requirements for over a decade. Further, NHTSA has conducted the vehicle rollover test of ECE R.66 in developing the NPRM. The three bus rollover tests the agency conducted using the ECE R.66 complete vehicle rollover test procedure showed that the test is feasible and practical for evaluating how well a bus structure maintains occupant survival space in a rollover. The standard is also cost beneficial, and thus is economically practicable.
Standard No. 227 meets the need for safety. Two of the real-world rollover crashes examined for this rule involved buses that had complete roof separation during the rollovers.
This final rule meets the need for safety on many fronts. NHTSA's Motorcoach Safety Action Plan targeted safety improvements for buses to reduce the incidence of fatalities and serious injuries caused by bus rollover accidents. The seat belt requirements in FMVSS No. 208
The available information shows this final rule is cost beneficial. NHTSA estimates that requiring the subject buses to meet the performance criteria in this final rule will save approximately 2-3 lives and prevent 4 serious injuries annually. NHTSA estimates the net benefits range from $8.3 million to $23.3 million.
Standard No. 227 is stated in objective terms. The residual survival space is well defined, based upon a specified boundary at each transverse cross-section of the vehicle, with the cross-sections bounded by specified forwardmost and rearmost vehicle landmarks. Potential intrusion into the residual survival space may be objectively measured using standard test measurement methodologies-such as templates representing the outline of the residual survival space and high-speed video. The FMVSS No. 227 test procedure matches the full vehicle test procedure of ECE R.66. Studies have shown the ECE R.66 full vehicle rollover test to be a relatively severe loading condition replicating real-world bus rollover crashes.
The provision at 49 U.S.C. 30111(b) specifies that, when prescribing such standards, the Secretary must consider all relevant, available motor vehicle safety information, consult with the states as appropriate, consider whether a standard is reasonable, practicable, and appropriate for the types of motor vehicles or motor vehicle equipment for which it is prescribed, and consider the extent to which the standard will carry out the statutory purpose of section 30101 of the Act. Section 30101 states that the purpose of the statute is to reduce traffic accidents and deaths and injuries resulting from traffic accidents, and that it is therefore necessary to prescribe FMVSS, and to carry out needed safety research and development.
NHTSA has issued this final rule in accordance with section 30111(b). As discussed throughout this document, the agency concludes, after comprehensive reviews of relevant available safety information that includes over 15 years of crash data and development of a NHTSA plan for motorcoach safety,
NHTSA has decided not to require existing large buses to meet the requirements adopted today for new buses. None of the commenters supported a retrofitting requirement. Based on its tests of older buses, the agency believes that many existing buses may need major structural changes to the vehicle's sidewall and roof structure to meet the requirements adopted in this document. Such structural changes are likely to be cost-prohibitive, making retrofitting impracticable.
Over the 15-year period between 2004 and 2018, data from NHTSA's Fatality Analysis Reporting System (FARS) indicate there were 122 fatal crashes involving large buses. These crashes resulted in 326 occupant fatalities (274 passenger and 52 driver fatalities). During this period, on average 22 fatalities occurred annually to occupants of these buses.
Data indicate that rollover crashes are a particular safety problem for these buses. Among the 122 fatal crashes, 56 were rollover crashes resulting in 189 fatalities. While fatal rollover crashes constitute about 43 percent of all fatal crashes involving these bus types, they represent about 58 percent of all the occupant fatalities. Further, 56 percent of the rollover crash fatalities were attributable to occupant ejections (106 ejection fatalities out of the total of 189 fatalities in bus rollover crashes).
Congress was especially concerned about motorcoach rollover crashes in passing provisions of MAP-21 relevant to this final rule. MAP-21 requires DOT to “establish improved roof and roof support standards for motorcoaches that substantially improve the resistance of motorcoach roofs to deformation and intrusion to prevent serious occupant injury in rollover crashes involving motorcoaches” if such standards meet the requirements and considerations set forth in subsections (a) and (b) of section 30111 of title 49, United States Code.
In accordance with MAP-21 and the Safety Act, we have issued this rollover-specific rule to apply to buses associated with an unreasonable risk of fatal rollover involvement. Thus, this final rule applies to OTRBs, and to all non-OTRBs with a GVWR greater than 11,793 kg (26,000 lb) (large buses), with some exceptions. The final rule excludes school buses, prison buses, non-OTRB transit buses, and buses with perimeter seating.
NHTSA is enhancing the safety of large buses in rollovers both by providing a survival space in the occupant compartment, and by reducing the likelihood of emergency exits opening during bus rollovers and becoming ejection portals. NHTSA achieved an important first step enhancing the safety of the buses in rollovers by the November 25, 2013 final rule that requires lap/shoulder belts for all passengers in large capacity buses.
NHTSA is issuing this final rule pursuant to and in accordance with its authority under the National Traffic and Motor Vehicle Safety Act and the relevant provisions of MAP-21.
Under 49 United States Code (U.S.C.) Chapter 301, Motor Vehicle Safety (49 U.S.C. 30101
NHTSA is issuing this final rule in accordance with MAP-21, which incorporates the “Motorcoach Enhanced Safety Act of 2012” into Subtitle G.
There are two subsections of section 32703(b) that are particularly relevant to this final rule. Subsection (b)(1) specifies that the Secretary is to establish improved roof and roof support standards that “substantially improve the resistance of motorcoach roofs to deformation and intrusion to prevent serious occupant injury in rollover crashes involving motorcoaches.” Subsection (b)(2) directs the Secretary to “consider advanced glazing standards for each motorcoach portal and [to] consider other portal
MAP-21 contains other provisions pertaining to this rulemaking. Section 32702 states that “motorcoach” has the meaning given to the term “over-the-road bus” in section 3038(a)(3) of the Transportation Equity Act for the 21st Century (TEA-21).
MAP-21 further directs the Secretary to apply any regulation prescribed in accordance with section 32703(b) to all motorcoaches manufactured more than 3 years after the date on which the regulation is published.
This rulemaking is conducted pursuant to the requirements of the Safety Act and MAP-21. It investigates whether there are unreasonable safety risks associated with rollover crashes in OTRB transportation, and if there are such risks, whether those safety risks can be reasonably reduced by having at least minimum levels of performance specified for rollover structural integrity and portal improvements.
This rulemaking improves occupant safety in large bus rollover crashes. While developing the November 25, 2013 seat belt final rule, NHTSA found that most fatalities in OTRB crashes are attributable to rollovers. Because more than half of the rollover fatalities are attributable to ejections, NHTSA issued a seat belt requirement to mitigate those ejections.
Enhancing the structural integrity of the interior of these buses works together with the seat belt rule. More occupants will be able to be retained in the bus compartment because of the belts, so it makes sense to require a survival space that protects these restrained occupants in a rollover. Moreover, regardless of whether occupants are belted, data
After the August 6, 2014 NPRM, NHTSA re-analyzed FARS data files for the years 2004 to 2018 to assess the impacts of this rulemaking.
To assess the benefits and costs of this rule, the agency selected buses of body type “over-the-road bus (OTRB)” regardless of GVWR
For the 15-year period from 2004 to 2018, there were a total of 326 bus occupant fatalities in the bus types covered by of FMVSS No. 227 (see Table 5). Among these fatalities, 230 were occupants of OTRBs with a GVWR greater than 26,000 lb, 15 were occupants of OTRBs with GVWR <26,000 lb, and 81 were occupants in buses coded as “other bus,” “unknown bus,” and “van-based bus” with a GVWR greater than 26,000 lb. In this 15-year period, fatalities among occupants of OTRBs account for 75 percent of the 326 fatalities.
The bus occupant fatalities were further classified by the type of crash (rollover, front, side, rear). FARS also coded fatal bus events “other” that could not be classified into one of the four crash types. The bus occupant fatalities in these “other” bus crash types were further analyzed and found to result from occupants jumping or falling off the bus, bus fire, explosion inside the bus, heavy object falling on an occupant, and fatal injuries to an occupant that are not crash related. Because these fatalities were not crash related, we did not include them in the count of bus crash fatalities.
In the 15-year period from 2004 to 2018, there were 122 fatal bus crashes of bus types covered by FMVSS No. 227, among which 71 involved OTRBs with a GVWR greater than 26,000 lb (Table 6). Among the 122 crashes, 56 were rollover events, 59 were frontal crashes, 7 were side crashes, and 0 were rear crashes.
The 122 fatal bus crashes (involving bus types covered under FMVSS No. 227) resulted in 326 bus occupant fatalities (52 drivers and 274 passengers), as shown in Table 7. Among these fatalities, 189 persons (11 drivers, 178 passengers) died in 56 rollover crashes. In contrast, 116 persons (40 drivers, 76 passengers) died in 59 frontal crashes. Bus rollover crashes accounted for 58 percent of the total bus occupant fatalities and 65 percent of the passenger fatalities.
These data show the devastating nature of bus rollover events, where a significant number of fatal or serious injuries can occur in a single bus rollover event. Among the 189 fatalities in bus rollover events, 149 fatalities (79 percent) were in OTRBs with a GVWR greater than 26,000 lb.
NHTSA also examined bus rollover events by the ejection status of occupants, among bus types covered by FMVSS No. 227 (see Table 8). Among the 178 passenger fatalities in bus rollover events, 98 were to occupants ejected or partially ejected from the bus.
These data show that while transportation by OTRBs (and other similar large buses) is an overall safe form of transportation, given the high occupancy of these vehicles, a significant number of fatal or serious injuries can occur in a single crash. This is especially true in bus rollover crashes that result in occupant ejections.
The NPRM underlying this final rule published August 6, 2014 (79 FR 46090). The agency proposed adoption of a new FMVSS No. 227 to set performance requirements that large buses must meet when tested using the full vehicle ECE R.66 test.
In support of the NPRM, the agency researched two existing roof crush/rollover standards: FMVSS No. 220, “School bus rollover protection,” and ECE R.66, “Uniform Technical Prescriptions Concerning the Approval of Large Passenger Vehicles with Regard to the Strength of their Superstructure.”
NHTSA proposed FMVSS No. 227 to apply to: (a) All new OTRBs, regardless of GVWR; and (b) all new buses other than OTRBs with a GVWR greater than 11,793 kg (26,000 lb), including prison buses and double-decker buses.
The NPRM proposed performance requirements that the buses must meet when subjected to a dynamic rollover test. The proposed test procedure replicated a rollover crash in a controlled manner. In the proposed test, the bus is placed on a tilting platform that is 800 mm (31.50 inches) above a smooth and level concrete surface. One side of the tilting platform along the length of the vehicle is raised at a steady rate of not more than 5 degrees/second until the vehicle becomes unstable, rolls off the platform, and impacts the concrete surface below with its roof leading edge. The rollover structural integrity test is illustrated below in Figure 1.
NHTSA proposed that the agency could position the bus such that either side (right or left) of the vehicle may be tested for compliance, at the agency's option. The NPRM proposed that a mass of up to 68 kg (150 lb) (ballast) be secured in each designated seating position (DSP) equipped with a seat belt.
The main proposed performance requirements were as follows:
(1) Intrusion into the survival space by any part of the vehicle outside the survival space would be prohibited;
(2) Each anchorage of all seats and interior overhead luggage racks and compartments would be prohibited from completely separating from its mounting structure during movement of the tilting platform or from impact of the bus on the impact surface;
(3) Emergency exits would be required to remain shut during the test, and, after the test, be operable in the manner required under FMVSS No. 217, “Bus emergency exits and window retention and release”; and,
(4) Each side window glazing on the non-impacted side and roof of the vehicle would be required to remain attached to its mounting such that there is no opening that allows the passage of a 102 mm (4 inch) diameter sphere when a force of no more than 22 Newtons (N) is applied to the sphere at any vector in a direction from the interior to the exterior of the vehicle.
The proposed requirements described in paragraphs (2), (3) and (4) are beyond those specified in ECE R.66. The ECE regulation mainly assesses the strength of the “superstructure”
NHTSA received 19 comments on the NPRM from commenters that included large bus manufacturers producing large buses domestically and abroad (Van Hool, TEMSA, Prevost, MCI, Daimler EvoBus, Daimler Trucks/Thomas Built Buses, IC Bus), small (final-stage) manufacturers (Hemphill Brothers (Hemphill), NiteTrain Coach (NiteTrain)), a bus industry group (American Bus Association (ABA)), a
There was almost unanimous support for an FMVSS on large bus structural integrity, but differing views on what that standard should require. European bus manufacturers Van Hool and TEMSA opposed the proposed requirements and test procedures that differed from ECE R.66, believing that the ECE R.66 test was appropriate for assessing the strength of the bus superstructure and that subsystems such as seats, overhead racks, emergency exits, and glazing should not be assessed under the proposed standard. ABA concurred with this view. Daimler Trucks/Thomas Built Buses and IC Bus generally supported the intent and requirements of the NPRM but supported incorporating the test procedure of FMVSS No. 220, “School bus rollover protection” (49 CFR 571.220), rather than the test of ECE R.66, for school bus derived buses.
Hemphill and NiteTrain expressed concern about the test burdens on small manufacturers and suggested, as did ABA and Prevost, excluding entertainer buses from the standard. MCI and Van Hool suggested excluding prison transport buses and double-decker buses, respectively.
Consumers and consumer groups believed the proposal was not stringent enough or sufficiently representative of a high speed motorcoach rollover crash involving a bus sliding down an embankment. There were concerns expressed about the sphere test not representing the force imposed by an unbelted passenger thrown against the bus window. EPGAA believed that the proposed requirements should have accounted more for the potential use of advanced glazing as an ejection-mitigation countermeasure.
NTSB and CIAL believed the proposed standard should apply to all non-OTRBs with a GVWR greater than 4,536 kg (10,000 lb), rather than just to non-OTRBs with a GVWR greater than 11,793 kg (26,000 lb). NTSB also suggested the proposed performance requirements should apply to “moon roofs” and to side emergency doors.
No commenter supported a retrofit requirement.
NHTSA proposed in the NPRM that the scope of FMVSS No. 227 would be to establish performance requirements for bus rollover structural integrity, and that the purpose of the standard would be to reduce death and injuries resulting from the structural collapse of the bus body structure, the unintended opening of emergency exits, and the detachment of window glazing, seats, and overhead luggage racks.
Van Hool, TEMSA, and the ABA opposed the scope of the proposed requirements and test procedures. The commenters believed that the ECE R.66 test was appropriate for assessing the strength of the bus “superstructure” but that subsystems such as seats, overhead racks, emergency exits, and glazing should not be assessed under FMVSS No. 227. Those commenters, and Prevost, believed that the ECE R.66 rollover test is only designed for, and is capable only of, providing an evaluation of the bus superstructure strength.
ECE R.66 defines “superstructure” as “the load-bearing components of the bodywork as defined by the manufacturer, containing those coherent parts and elements which contribute to the strength and energy absorbing capability of the bodywork, and preserve the residual space in the rollover test.” ECE R.66 requires that the superstructure of the bus must have sufficient strength to ensure that, during and after the rollover test, no part of the vehicle that is outside the survival space at the start of the test intrudes into the survival space during the test.
This final rule adopts the NPRM's proposed prohibition that no part of the bus that is outside the survival space shall intrude into the survival space, both during movement of the tilting platform or resulting from impact of the bus on the impact surface.
Under the NPRM, those proposed prohibitions would have applied even if the luggage rack does not enter the survival space, or the seat anchorages dislodge within the survival space. NHTSA has decided that the primary purpose of this rulemaking is to establish a roof strength and crush resistance standard that improves the resistance of the bus superstructure to deformation and intrusion,
NHTSA has decided against adopting the NPRM's proposal that seat anchorages must not become dislodged during the test. The agency believes the seat anchorage provision is not necessary to achieve a survival space for occupants. NHTSA proposed the requirement for the retention of seat anchorages because of the agency's test of the MY 1991 Prevost LeMirage bus.
However, after considering the comments and other information, NHTSA concludes a specific requirement in FMVSS No. 227 for seat anchorages to remain completely attached is unnecessary for several reasons. First, the seat anchorages in the MY 1991 Prevost LeMirage separated from the bus because the seat was bolted to unreinforced sheet metal of the bus sidewall. In NHTSA's test of the newer MY 2000 MCI bus Model 102-EL3, none of the seats anchorages failed—despite the fact that certain seats were ballasted with either a 150 lb anthropomorphic ballast or with 150 lb steel weights. That is, the seats remained attached even while tested under highly demanding conditions, with the ballasts attached to the seats. This test of the MY 2000 MCI bus demonstrates that bus seat anchorage designs have improved since the MY 1991 and 1992 buses NHTSA tested in its test program.
Second, it is likely the connectivity strength of seat anchorage designs have improved even more since the design of the MY 2000 bus because of the agency's 2013 final rule requiring lap/shoulder belts on all large buses. The final rule requires the lap/shoulder belts to be integral to the bus seats, and that the belt anchorage, together with the seat anchorage to the bus, meet the rigorous strength requirements of FMVSS No. 210, “Seat belt assembly anchorages” (49 CFR 571.210). FMVSS No. 210 requires seat anchorages, attachment hardware, and attachment bolts to withstand loads of 13,345 N (3,000 lb) applied simultaneously to the lap belt portion and the shoulder belt portion of the Type 2 restraint system. The seat anchorages of new large buses meeting FMVSS No. 210 will be reinforced over and beyond the design of a MY 2000 bus, which reduces the risk even further that the seats will detach from the bus structure in a rollover as had been observed in the tests of the MY 1991 and 1992 buses. Thus, adding a specific requirement in FMVSS No. 227 for the seat anchorages to remain completely attached duplicates the seat anchorage retention requirements of FMVSS No. 210.
The agency's bus rollover tests found that glazing panels vacated their window mountings during the rollover. In adopting the proposal that items outside of the survival space must not enter the survival space, this final rule prohibits large panes of glazing falling into the survival space from the non-struck side of the bus and injuring occupants. Strengthening the structure of the bus and glazing mountings to resist the rollover crash forces that act to pop out window glazing is an important “portal improvement” to prevent partial and complete ejection of motorcoach passengers,” as directed by MAP-21 section 32703(b)(2). Further, strengthening the frames is critical to rollover safety if the subject buses employ advanced glazing that mitigate the risk of occupant ejection in rollovers. NHTSA research into advanced glazing as a means of mitigating occupant ejection
This final rule adopts the requirement for emergency exits to remain closed. This requirement is beyond ECE R.66 but is needed to address concerns relevant to the U.S. NHTSA's bus rollover tests found that emergency exit windows and roof hatches opened during the rollover. NHTSA considers open emergency exits potential safety hazards, as open emergency exits create unsafe ejection portals during a rollover crash. Approximately two-thirds of the fatalities in bus rollover crashes in this country involve occupants ejected from the bus. Reducing the likelihood of ejections through these portals by upgrading latches and hinges will reduce the fatality risk in rollovers and conform to the mandate of MAP-21 section 32703(b)(2).
ABA states that NHTSA placed too much emphasis on preventing unbelted passenger ejection rather than on ensuring the integrity of the body structure. It also states that the FMVSS No. 227 requirements that are not in ECE R.66 replicate the benefits already achieved through the bus seat belt rule.
NHTSA does not agree that FMVSS No. 227 overemphasizes unbelted passengers. Passengers using seat belts, and those that do not, will benefit from the standard by being protected from collapsing bus structures or contact with loose heavy objects. The requirements of FMVSS No. 227 supplement, and do not replicate, the agency's final rule on passenger seat belts. With belted passengers more likely to be retained in the bus interior because of the belts, FMVSS No. 227 improves the protective attributes of the occupant compartment in which they are retained. FMVSS No. 227 will benefit unbelted occupants by helping retain glazing in window frames and providing at least a minimum level of protection against dangerous structural collapse into the occupant compartment. The requirement that emergency exits remain closed during the rollover test increases the likelihood that emergency exits do not become ejection portals during rollover crashes, including crashes involving more than a quarter turn. These requirements will benefit belted and unbelted occupants, as keeping side window exits closed protects against partial ejection of belted occupants and partial and complete ejections of unbelted occupants, including children.
NHTSA proposed to apply FMVSS No. 227 to high-occupancy vehicles with an unreasonably high involvement in fatal rollovers, and on which Congress focused in MAP-21.
The agency received a number of comments relating to the proposed applicability of FMVSS No. 227. Two commenters requested us to include medium-size buses (buses with a GVWR between 4,536-11,793 kg (10,000-26,000 lb), two suggested excluding
In the NPRM, NHTSA proposed not applying FMVSS No. 227 to medium-size buses. NHTSA based the decision on an analysis of crash data for medium-size buses. The agency examined 2000-2009 FARS data showing 42 occupant fatalities in buses with a GVWR between 4,536-11,793 kg (10,000-26,000 lb), of which 24 fatalities were a result of 13 rollover crashes. Over the ten-year period between 2000-2009, medium-size buses were associated with an average of 1.3 rollover crashes per year and 2.4 fatalities per year. In contrast, there was an average of 3.2 rollover crashes annually among large buses (OTRBs and non-OTRBs with a GVWR greater than 11,793 kg (26,000 lb)). These large bus rollover crashes resulted in an average of 11.4 fatalities per year. Among all fatalities occurring in rollover crashes in buses coded in FARS as “cross-country,” “other,” and “unknown” with a GVWR greater than 4,536 kg (10,000 lb), 83 percent were in buses with a GVWR greater than 11,793 kg (26,000 lb).
Two commenters (NTSB, CIAL) disagreed with the agency and commented that NHTSA should include medium-sized buses in the applicability of FMVSS No. 227.
NTSB commented that medium-size buses are often used in a similar fashion as motorcoaches with GVWRs over 11,793 kg (26,000 lb). It disagreed with the data analysis in the NPRM showing that medium-size buses do not have the same crash involvement as OTRBs and non-OTRBs with a GVWR over 11,793 kg (26,000 lb). NTSB stated that FARS has coding issues that may result in undercounting fatalities for the medium-size bus type. It references several crashes that it believes were not counted in the FARS database and suggest that the University of Michigan's Buses Involved in Fatal Accidents (BIFA) database has a more accurate classification of crashes.
NTSB correctly pointed out that we had not included the data that NTSB discussed in its comment. We have updated our FARS data analysis on medium-size buses to include these data. Even with the adjustment, however, our analyses find that medium-size buses do not pose a sufficient safety need to warrant application of FMVSS No. 227 to the buses.
After NTSB commented, NHTSA carefully reexamined and updated FARS data to determine whether the agency under-counted the medium-size bus fatalities. We specifically used FARS data from 2004 to 2018 to ascertain the fatalities attributable to medium-size buses.
FARS has five relevant categories for medium-size buses that are non-OTRBs: “other bus,” “unknown bus,” “van-based bus,” “school bus,” and “transit bus.” Due to the intended scope of this rulemaking, NHTSA focused on only the first three categories.
To assure the dataset was complete, NHTSA also reexamined the FARS body types to check to make sure all medium-size buses were included in the analysis. There had been a change in FARS body codes in 2010. Prior to 2010, van-based buses with GVWRs less than or equal to 10,000 lb were coded as body type code 21, “large van.” In 2010, body code 55 was added to the FARS coding manual (van-based bus with a GVWR greater than 4,536 kg (10,000 lb)). With that change, NHTSA considered whether, for the FARS data files before 2010, it was possible that some van-based buses with a GVWR greater than 4,536 kg (10,000 lb) were classified under body code 21. Consequently, NHTSA searched for crashes involving body code 21 with a GVWR greater than 10,000 lb and with a bus use codes of “intercity,” “charter/tour,” “transit/commuter,” “shuttle”
Table 9 below shows the number of medium-size bus crashes with a fatality, over a fifteen-year period.
The data show that there were 79 fatal medium-size bus crashes between 2004 and 2018, of which 22 of the 79 crashes were rollover crashes. For the purposes of determining the safety need of applying FMVSS No. 227 to medium-size buses, NHTSA will focus only on rollover crashes, as the harm the standard is intended to address, and the countermeasures that will be installed pursuant to that harm, only result from rollovers.
Table 10, below, shows the total number of medium-size bus fatalities attributable to various crash types.
For the three relevant medium-size bus types and the large vans used as buses, there were 45 total fatalities (6 driver fatalities and 39 passenger fatalities) in rollover crashes for the fifteen-year period. Over the 15-year period 2004-2018, there were an average of 1.5 fatal medium-size bus rollover crashes, with an average of 3.0 bus occupant fatalities per year.These values are small compared to those of large buses. According to data from FARS 2004-2018, there was an average of 3.7 fatal rollover crashes involving large buses (GVWR greater than 11,793 kg (26,000 lb)) (including OTRBs), resulting in an average of 11.7 occupant fatalities per year. There are significantly higher average rates of annual fatal crashes and fatalities for large buses compared to medium-size buses.
While the average rates of annual fatal crashes and fatalities for large buses are significantly higher than those of medium-size buses, the fleet size of large buses is significantly smaller than that of medium-size buses. There are an estimated 2,200 large buses (GVWR greater than 11,793 kg (26,000 lb)) (including OTRBs) produced annually, compared to approximately 15,000 buses with a GVWR between 4,536-11,793 kg (10,000-26,000 lb) produced annually.
These data mean that there is a considerable disparity between the fatal rollover crash involvement for large buses versus medium-size buses. Not only are large buses involved in more than twice as many rollover crashes on average annually, they also have about four times the number of occupant fatalities annually in rollover crashes than medium-size buses. Further, taking into consideration the almost seven-fold difference in annual production between large buses and medium-size buses (the annual production of large buses is about 1/7th of the annual production of medium-size buses), the safety need for FMVSS No. 227 is substantially higher for large buses than for medium-size buses.
With regard to the question whether there is a safety need to apply FMVSS No. 227 to medium-size buses, NHTSA's answer is no, the data do not show such a need at this time. The difference between the fatal rollover crash involvement between large and medium-size buses may be attributable to medium-size bus designs (
NHTSA does not concur with NTSB's view that the BIFA database provides more relevant statistics than NHTSA's database. The BIFA database only includes data up to 2010, and so more recent crash data are not available. Since 2010, NHTSA has improved the accuracy of its crash data collection on buses and has expanded the bus category to include van-based buses. NHTSA's updated analysis using the FARS data files more accurately includes the mid-size bus crash information.
NTSB stated that the statistics from BIFA indicate that 128 medium-size buses were involved in fatal crashes, resulting in 58 occupant fatalities between 2000-2009. This information does not show whether these crashes were rollover crashes (the crashes relevant to this rulemaking), or whether the 58 occupants were killed in rollovers. Despite the lack of specific data about the nature and severity of the crashes, NHTSA undertook an analysis assuming that all the crashes NTSB referenced were rollover crashes, and that all 58 fatalities were attributable to rollovers. NHTSA found that, even with this assumption, the data still show a large disparity between the rollover crashes associated with large buses versus medium-size buses. Even if all 58 fatalities were attributable to rollover crashes, such crashes would contribute
For the reasons above and in the NPRM, NHTSA declines to extend FMVSS No. 227 to medium-size buses.
CIAL argued that the proposed standard should apply to medium-size paratransit buses because buses meeting the proposed standard would be safer for passengers. It indicated it has been researching medium-size paratransit buses designed to meet FMVSS No. 220
NHTSA declines to make the suggested change. CIAL's comment did not provide a basis to conclude there is a safety need to adopt the FMVSS No. 227 test for medium-size buses. (See response, above, to NTSB on this issue.) CIAL states that its evaluation using finite element models of medium-size paratransit buses shows that paratransit buses meeting FMVSS No. 220 failed to meet a “survival space” criterion of a Florida state vehicle standard. While CIAL's comparison of the performance of paratransit buses under the requirements in FMVSS No. 220 and ECE R.66 was based on simulations, NHTSA conducted the physical tests specified in the two standards on the same large bus models. NHTSA's rollover testing of motorcoaches indicated that large buses that did not meet the ECE R.66 survival space requirement also failed the FMVSS No. 220 requirements.
Additionally, as noted earlier, over the 15-year period 2004-2018, there were an average of 1.5 fatal medium-size bus rollover crashes, with an average of 3 bus occupant fatalities per year. These data apply to all medium-size buses and therefore, the average annual number of rollover crashes and fatalities associated with medium-size paratransit buses would be extremely small. The fact that the vehicles did not meet the survival space criterion is not commensurate with a need to apply FMVSS No. 227 to the vehicle type at the FMVSS level. We decline to make the requested change, for the reasons provided above and in the NPRM.
NHTSA proposed to apply FMVSS No. 227 to all OTRBs as they were defined in MAP-21. In doing so, NHTSA intended to cover all the buses Congress directed the agency to address in MAP-21, regardless of GVWR.
Hemphill and NiteTrain, manufacturers and operators of over-the-road entertainer buses, expressed concern about the test burdens on small final-stage manufacturers of these vehicles, and suggested excluding entertainer buses from the standard. Prevost, a manufacturer of both complete motorcoaches and incomplete vehicles (“shells”), also commented in favor of excluding entertainer buses. According to Hemphill and NiteTrain, their entertainer buses are built from incomplete bus shells purchased from Prevost. The shells consist of the window exits, roof exits, sidewall, and roof structure.
NiteTrain and Hemphill stated that since they do not alter the safety structure of their purchased motorcoach shells, any compliance with the new standard should be the responsibility of the shell manufacturer. ABA commented that NHTSA should consider entertainer buses a distinct type of motor vehicle and decide “on a case-by-case basis, the extent to which each element of the motorcoach safety requirements should be made applicable.”
NHTSA has decided not to apply FMVSS No. 227 to over-the-road perimeter-seating buses. The agency's decision to scale back the scope of FMVSS No. 227 is based on an analysis of safety need, and not on a finding that small manufacturers cannot certify compliance with the standard. There are ways small manufacturers may certify to FMVSS No. 227 that would not impose undue burdens on the manufacturers. For a discussion of those options, see the August 6, 2014 NPRM preceding this final rule (79 FR 46116-46117), and the Regulatory Flexibility Act analysis below in this final rule.
Instead, NHTSA has reassessed the need to apply FMVSS No. 227 to OTRBs with perimeter seating after considering that non-OTRBs with perimeter seating are excluded from the standard. NHTSA does not find a reason to distinguish between OTRB with perimeter seating and non-OTRB with perimeter seating, when the safety data indicate no relevant differences between the vehicles based on safety need. OTRB with perimeter seating do not present a greater risk of injury due to the failure of the structural integrity of the buses compared to non-OTRBs with perimeter seating.
Section 32703(a) of MAP-21 mandated NHTSA to prescribe a seat belt rule for lap/shoulder belts for motorcoaches (
NHTSA drafted the FMVSS No. 227 NPRM preceding this final rule to apply the proposed structural integrity requirements to the buses that were subject to the lap/shoulder belt requirements adopted by the 2013 MAP-21 final rule. The agency believed that there was a need to ensure enhanced structural integrity of the interior of buses subject to the seat belt rule, to better protect the restrained occupants who, due to the belts, will be retained in the bus interior.
However, after considering the comments, NHTSA has decided not to apply FMVSS No. 227 to perimeter-seating buses as a class. In the seat belt final rule, NHTSA applied the belt requirement to OTRBs with perimeter seating, and not to non-OTRB with perimeter seating, because of a statutory mandate to require the seat belts in
NHTSA developed its motorcoach safety plan to protect the public against unreasonable risk of death or injury in high-occupancy vehicles.
It should be noted that Hemphill and NiteTrain indicate that they obtain a bus “shell” from an incomplete vehicle manufacturer, such as Prevost.
The NPRM proposed to apply FMVSS No. 227 to prison transport buses (78 FR 70416). MCI, a manufacturer of prison transport buses, disagreed with this proposal. MCI expressed concern about the need to partition these buses to provide cells, believing that each customer's unique cell configuration could affect the test results of the standard. MCI states it would not be practicable to fulfill a one-of-a-kind bus order by building a second bus for testing to meet MCI's certification responsibilities.
NHTSA agrees to exclude prison buses from FMVSS No. 227 but not for the reason given by MCI. Due to the nature of the vehicle type, prison vehicle interior configurations/partitions may vary considerably. However, NHTSA does not require the kind of certification burden MCI describes. A manufacturer does not have to build a replicate vehicle to test to enable the manufacturer to certify compliance with the standard. A discussion of various certification methods available to manufacturers can be found in the August 6, 2014 NPRM preceding this final rule (79 FR 46116-46117), and in the Regulatory Flexibility Act analysis below in this final rule.
NHTSA is excluding prison buses because the FMVSS No. 227 is not appropriate for the bus type. The agency does not know how many prison buses are manufactured each year, but does not believe there is a substantial number of such vehicles produced. Regardless of the number of vehicles produced, bus superstructures sold in the U.S. are likely to be strengthened to meet FMVSS No. 227 after this final rule becomes effective. With the strengthened superstructures, there will be less deformation of the bus structure and reduced torsional loads on interior structures, such as partitions. Thus, the agency has not found justification to apply FMVSS No. 227 to prison buses, as minor modifications to the vehicle structure, such as by installation of partitions, are unlikely to affect the structural integrity of the vehicles.
The NPRM proposed to apply FMVSS No. 227 to double-decker buses. Buses with open-roof sections would not have the open section assessed for compliance but the closed-roof sections would be. Double-decker buses with closed-roof sections on the lower and top levels would have both levels assessed for compliance. Since we saw no difference in the potential safety risks of double-decker buses and other large buses covered under our proposal, we proposed applying FMVSS No. 227 to the bus type.
NTSB and Coach USA (a large motorcoach operator) supported applying FMVSS No. 227 to double-decker buses. NTSB stated it would be appropriate to test the portions of the bus where bus structure could intrude on the vehicle occupants. Coach USA supported applying the same requirements to lower/enclosed sections of open-top double-decker buses, and stated that its double-decker buses already comply with the ECE R.66 test. In contrast, Van Hool stated that in Europe ECE R.66 can be applied to double-deckers only at the request of the manufacturer and referenced a document to argue that the number of fatalities that are attributable to double-decker buses is lower than those attributable to other buses.
This final rule applies FMVSS No. 227 to double-decker buses as proposed. Double-decker buses are being used for intercity/interstate transport of large numbers of passengers.
We do not concur with Van Hool that there should not be a safety concern with double-decker buses. The document that Van Hool referenced to support its view consists only of meeting notes from a UN ECE informal working group meeting on ECE R.66.
Further, we believe that the design characteristics and physics of double-decker buses suggest that double-decker buses are at least as susceptible to the rollover crash risk as the other buses covered under this final rule. Double-decker buses can have GVWRs fifteen to twenty percent greater than single-deck OTRBs.
The height of a double-deck vehicle may be 60-80 [centimeters] higher than a corresponding single deck vehicle. In case of a rollover with a double-deck vehicle, the greater [the] distance from the [center] of gravity in the upper compartment[,] the greater [the] increase of the rotation velocity. This, in turn, will increase the [ground] impact [leading to] greater risk for injuries as a consequence.
Thus, the available information does not support Van Hool's contention that there is little crash risk associated with double-decker buses. While the agency seeks to harmonize with ECE regulations to the extent possible, we believe applying FMVSS No. 227 to double-decker buses will meet a safety need in this country. According to Coach USA, its double-decker buses already meet the ECE R.66 requirements, which illustrates the practicability of the buses” meeting FMVSS No. 227.
This final rule makes a slight clarification in the regulatory text of FMVSS No. 227 relating to double-decker buses. The standard would not apply to a level of a bus that does not have a permanent roof over the level, such as the upper level of a double-decker bus that does not have a permanent roof over the upper level. However, a double-decker bus that is open-top in the rear half of the bus but permanently closed-top for the front half of the bus is subject to the requirements of FMVSS No. 227 for the front half of the top of the bus (as well as for the entire enclosed lower section of the bus).
Daimler Trucks North America (DTNA)
We agree with the commenters and have excluded school bus derivative buses from FMVSS No. 227. This is because the buses already provide a survival space by meeting FMVSS No. 220, “School bus rollover protection,” and do not need to meet the requirements of FMVSS No. 227.
FMVSS No. 227 defines “school bus derivative buses” in a manner reflecting that the buses are built on a school bus platform for sale in the U.S. The buses have safety systems that are identical to school buses regarding their fuel systems, bus body joint strength, emergency exits and roof crush resistance. The vehicles could be certified as meeting the FMVSSs for “school buses” if they had seating systems meeting FMVSS No. 222, “School bus seating and passenger protection” (49 CFR 571.222), and school bus lights and stop arms meeting FMVSS No. 108 and No. 131, respectively. NHTSA is excluding the buses to avoid redundancy in the FMVSSs. Thus, the definition is designed to exclude only vehicles that could be certified to the school bus FMVSSs and not other large buses.
DTNA and IC Bus argue that their school bus derived commercial buses operate under conditions more similar to those of school buses than OTRBs. The “applications” in which the commercial buses are used are described by DTNA as “church activity, retirement community, college campus, boys and girls club, parks and recreation department and airport shuttles.” IC Bus echoes that description and adds “support of emergency responders.” NHTSA agrees that these applications describe usage that is more local in nature than that of intercity OTRBs. NHTSA recognizes, however, that once purchased, operators of the vehicles could use school bus-derivative buses in ways other than that described by DTNA and IC Bus, so in analyzing the commenters” suggestion NHTSA must consider the likelihood that the buses may not be used like school buses.
It is a fact that FMVSS No. 220 has a record of rollover safety in school buses. The standard has been applied to school buses since 1977. School bus derivative buses are already manufactured to meet the school bus roof crush resistance
The agency is not permitting buses other than school bus derivative buses to meet FMVSS No. 220. Buses other than school bus derivative buses have been designed such that they have a higher center of gravity and/or utilize larger windows than school buses. These characteristics can lead to a higher incidence of occupant ejections during rollovers. Thus, the dynamic rollover test in ECE R.66 affords the agency an opportunity to set a minimum level of performance for the ejection-mitigating features of non-school bus derivative buses, such as emergency exits closure and side window glazing retention during a rollover crash.
The NPRM proposed performance requirements that buses must meet when subjected to a tilt rollover test. In the proposed test, the bus is placed on a tilting platform that is 800 mm (31.50 inches) above a smooth and level concrete surface. One side of the tilting platform along the length of the vehicle is raised at a steady rate of not more than 5 degrees/second until the vehicle becomes unstable, rolls off the platform, and impacts the concrete surface below with its roof leading edge. The major points of this testing method involve a quarter-turn roll of the bus onto its side (so that it strikes the top corner of the bus superstructure on a rigid surface) and ballasting the vehicle to simulate the load that the bus would be carrying in a rollover crash. This test creates a high-severity test condition that encompasses the majority of real-world bus rollovers.
EPGAA, Advocates, the families of bus crash victims (the families), and Ms. Stoos, express concern that the proposed test evaluation is not severe enough to replicate the conditions of real-world bus rollovers. The families and Advocates state that the rollover test should include: Vehicle rollovers greater than 90 degrees (one quarter roll); high vehicle speed prior to rollover; embankments; and impacts that may occur after the rollover. Advocates references a 2007 glazing retention test development study commissioned by NHTSA and Transport Canada to illustrate its point (“Motor Coach Glazing Retention Test Development For Occupant Impact During A Rollover,” Martec Technical Report # TR-06-16, Rev 4, August 2006 (“Martec study”)
NHTSA does not agree with the commenters' argument that FMVSS No. 227's test is not a reasonable representation of a severe rollover crash. As discussed below, research papers, test reports, simulation analyses, and reports on the efficacy of the ECE R.66 test support the implementation of the test.
FMVSS No. 227's test is highly stringent, accounting for the potential real-world rollover crash forces that are imparted on the bus superstructure in a rollover crash. The test creates a force near the top corner of the bus in the transition from the sidewall to the roof. This application of force is representative of a bus rolling over into a drainage ditch along a highway; however, in the FMVSS No. 227 test, the bus strikes a hard surface that is more rigid than the typical earthen drainage ditches along the roadside. The hard surface results in the energy from the rollover being absorbed by the bus and not shared between the bus and the ground. This hard surface contact makes FMVSS No. 227's rollover test more stringent than similar rollovers into earthen embankments. Matolcsy, M. (2007), “The Severity of Bus Rollover Accidents,” 20th International Technical Conference for the Enhanced Safety of Vehicles, Paper 989, Lyon, France.
It can appear to the eye that crashes involving multiple quarter-turn rolls along the ground are more severe than a single quarter-turn rollover onto rigid pavement that ends instantly, all other things being equal. The significant difference is that the multiple quarter-turn roll loads an entire side, then the roof, then the other side, next the wheels/suspension/floor, and so on until the bus comes to a rest. The multiple quarter-turn rollover dissipates the crash energy across major portions of the vehicle structure over a relatively long duration. The vehicle structure in a multiple quarter-turn crash is not managing or absorbing all of the crash energy at once. Single quarter-turn rollovers, in which the crash forces are reacted over a short duration by relatively weak localized components of the vehicle structure, require the entire vehicle structure to be stronger. Therefore, the more stringent rollover test is one in which the energy of the crash is applied instantaneously, such that the vehicle needs to manage and absorb all the energy applied at the same time.
The demanding nature of the ECE R.66 test incorporated into FMVSS No. 227 is discussed at length in the 2007 report, which evaluated the sufficiency of the test for adoption into R.66.
Figure 3, below, shows the three rollover tests that were analyzed during development of ECE R.66.
The study
NTSB and Advocates request that the agency consider a test involving more than a quarter-turn rollover. The commenters did not elaborate on how many more turns of a vehicle rollover they would like the agency to adopt. The agency has no data on the number of quarter-turns that occur in a bus rollover since the FARS database does not capture that crash detail. Nonetheless, the Matolcsy report,
The Matolcsy report provides additional examples of real-world improvements manufacturers have made to buses in response to ECE R.66 requirements, including photographs of how bus interior compartments looked post-crash before and after application of ECE R.66 to the vehicles. A bus that was not designed to comply with ECE R.66 experienced structural collapse in a rollover crash with one and a half full 360 degree rolls down a 6-meter embankment similar to the one depicted above in Figure 3(b). In contrast, a bus designed to meet ECE R.66 requirements was able to maintain adequate survival space in a rollover crash with two and a quarter full 360 degree rolls down a 9-10 meter embankment similar to the crash depicted in Figure 3(b) above.
In its comments, Advocates references a research project on motorcoach window glazing in which the research used finite element (FE) models to compare the loads on the bus structure in different simulation tests where the bus carried different lateral speeds into its crash with the impact surface.
Advocates refers to a statement by the researchers that the ECE R.66 test is not the most stringent test condition. NHTSA notes that the statement reflected only a preliminary finding of Phase I of the study and was later corrected.
When
Advocates also discuss a crash variation where the bus may hit an embankment or other “vertical surface” type object. This crash variation may or may not increase the total energy to be dissipated during the crash, but the load concentration may change. However, even with different potential objects loading the structure, we believe that the loads to which the superstructure is subjected might be similar in some respects to the loading to which the superstructure is exposed when tested under FMVSS No. 227. While no embankment or other “vertical surface”-type object is a part of the test, the vehicle superstructure's loading during the test is akin to the concentrated force that is applied when striking a “vertical surface.” The test involves loading the entirety of the energy in the test onto a concentrated section of the structure (
For the above reasons, NHTSA concludes that the ECE R.66-based test adopted in this final rule is an effective high-stringency test. The test substantially increases the likelihood that large buses will withstand the crash forces in a real-world rollover crash and provide a survival space to occupants.
The NPRM proposed to prohibit intrusion into the “survival space,” demarcated in the vehicle interior from approximately the rear wall of the bus to 600 mm (24 inches) in front of the front surface of the seat back of the front row seats, by any part of the vehicle outside the survival space.
The purpose of the proposal is to guard against inadequate survival provided to occupants, especially belted ones, due to collapsing sidewalls, roof structure, or other objects. We intended the requirement to complement our standard requiring seat belts for passengers on the subject buses, to ensure that passengers retained in their seats will have a survival space protecting them from collapsing vehicle structure. Our research found structural intrusions into the survival space in the tested MY 1991, MY 1992, and MY 2000 buses. The NPRM proposed to define the vehicle survival space in a specific manner (see S4 of the proposed standard, 79 FR 46119-46120). The NPRM also proposed use of “survival space templates” in the compliance test.
Overall, commenters concurred with the survival space concept, suggesting small changes to the proposal.
MCI suggested that the survival space requirements should account for variations in vehicle floor heights so that the same height space can be provided in each vehicle segment. MCI requested survival space be defined relative to the forward and rear floor height of each segment of the vehicle.
NHTSA does not believe there is a need to change the survival space definition in response to MCI. The survival space definition already accounts for variations in interior compartment floor height front-to-rear and side-to-side in the vehicle.
However, the agency does believe it should clarify two ambiguities in the survival space definition. First, the “survival space” definition is clarified by defining “occupant compartment” to mean a space within the vehicle interior intended for driver and passenger use, excluding any space occupied by fixed appliances such as bars, kitchenettes, or toilets. Second, the definition of “survival space” is made clearer with regard to a forward-most seat that is not forward-facing. The specification of the centerline used to locate the reference point for the transverse vertical plane was not entirely clear in the NPRM. The “longitudinal” centerline should be
MCI expresses concern that small glass shards falling from a window into the survival space may be a failure per the language of S5.1
That was not NHTSA's intent in issuing this rule, but the agency agrees the proposed language could be read to produce such an outcome. NHTSA's intent in maintaining a survival space was to “set a minimum level of structural integrity for these buses, to help prevent dangerous structural intrusions into the occupant survival space.”
NHTSA is providing in FMVSS No. 227 that objects of a minute size may intrude into the survival space. As to the size of the objects, the commenters do not provide a suggested definition for “small glass shards.” NHTSA thus turned to analyzing the Federal glazing standard to determine how the standard describes acceptably “small” glass shards regarding occupant safety. Glazing material used in motor vehicles must meet the requirements of FMVSS No. 205, “Glazing materials” (49 CFR 571.205). FMVSS No. 205 specifies that “[g]lazing materials for use in motor vehicles must conform to ANSI/SAE Z26.1-1996”
ANSI/SAE Z26.1-1996 allows “small particles” to disengage from the glazing material during some of the laminated glazing
The ANSI/SAE Z26.1-1996 maximum glazing separation size of 1935 mm
However, NHTSA further considered MCI's comment that “a failure of a single fastener (such as a rivet) that is part of the attachment of the parcel rack assembly could be deemed a failure of the test.” The agency decided that small items other than glazing pieces (
As to what that mass should be, we again turned to ANSI/SAE Z26.1-1996 and glazing characteristics to start. The ANSI standard permits pieces of laminated glazing of 1935 mm
As discussed above in this preamble, the NPRM proposed to prohibit any anchorage of an interior overhead luggage rack or compartment or anchorage of a vehicle seat from completely separating from its mounting structure during the movement of the tilting platform or resulting from impact of the bus on the impact surface. After reviewing the comments, NHTSA has decided not to adopt the proposed requirements.
Under the NPRM, those proposed prohibitions would have applied even if the luggage rack does not enter the survival space, or the seat anchorages dislodged within the survival space. NHTSA has decided that the primary purpose of this rulemaking is to establish a roof strength and crush resistance standard that improves the resistance of roofs to deformation and intrusion,
NHTSA has decided against adopting the NPRM's proposal that seat anchorages must not become dislodged during the test. The agency believes the seat anchorage provision is not necessary to achieve a survival space for occupants. NHTSA proposed the requirement for the retention of seat anchorages because of the agency's test of the MY 1991 Prevost LeMirage bus.
However, after considering the comments and other information, NHTSA concludes a requirement that the seat anchorages remain completely attached is unnecessary. In NHTSA's test of the MY 2000 MCI bus Model 102-EL3, all of the seats remained attached to their original anchorages. The seats were ballasted with either a 150 lb anthropomorphic ballast or with 150 lb steel weights, which is to say the seats remained attached even while tested under highly demanding conditions. This test of the MY 2000 MCI bus demonstrates that bus seat designs have improved since the MY 1991 and 1992 buses NHTSA tested in its test program.
Second, NHTSA believes the seat anchorage designs are likely to have improved even more since the design of the MY 2000 bus because of the agency's 2013 final rule requiring lap/shoulder belts on all large buses. The final rule requires the lap/shoulder belts to be integral to the bus seats, and that the belt anchorage, together with the seat anchorage, meet the rigorous strength requirements of FMVSS No. 210, “Seat belt assembly anchorages” 49 CFR 571.210. FMVSS No. 210 requires seat anchorages, attachment hardware, and attachment bolts to withstand loads of 13,345 N (3,000 lb) applied simultaneously to the lap belt portion and the shoulder belt portion of the Type 2 restraint system. Thus, the seat anchorages of new large buses meeting FMVSS No. 210 will be reinforced over and beyond the design of a MY 2000 bus, which reduces the likelihood even further that the seats will detach from the bus structure in a rollover as observed in the tests of the MY 1991 and 1992 buses. Thus, the proposed seat anchorage provision is not necessary to achieve a survival space for occupants.
The NPRM proposed that emergency exits must remain shut during the rollover test. The agency was concerned about emergency exits opening during a rollover, as NHTSA had observed this to happen in the tests conducted prior to the NPRM. The NPRM also proposed that roof and rear door emergency exits must be operable in the manner required under FMVSS No. 217, “Bus emergency exits and window retention and release,” after the test.
EvoBus commented that the proposal that roof exits remain closed is unnecessary, as it did not know that any passenger has been ejected through the roof exit. TEMSA requested that NHTSA move the requirement that side emergency exits remain closed to proposed FMVSS No. 217a. NTSB requested that side emergency exit doors also be required to meet FMVSS No. 227. Advocates suggested the requirement should apply to all side exits.
In response to EvoBus, NHTSA has observed roof exits opening in the FMVSS No. 227 tests conducted in support of the NPRM. Their opening posed an ejection safety risk that this final rule now addresses. Crash data do not identify the portals through which occupants were ejected, so data records” not indicating ejections through roof exits does not mean such ejections did not or will not occur. The final rule adopts a simple requirement that will reduce an ejection risk from open portals in the chaotic and unpredictable phases of a rollover. The cost of improved emergency latches is minor—$10 per coach for a total annual new bus fleet cost of $22,000. Congress, in enacting MAP-21, also wanted NHTSA to address the ejection risk from portals, and an opening in the bus roof caused by an open emergency exit poses an unreasonable risk of ejection of a child's head, limb or body, or those of an adult, in a rollover. NHTSA does not understand why design changes to the roof exits to enable them to meet the FMVSS No. 227 requirements would “cause opening failures,” nor did EvoBus explain its statement.
NHTSA does not agree with TEMSA that the requirements should be moved to FMVSS No. 217 or to the proposed FMVSS No. 217a. Both 217 and the proposed 217a do not address the dynamic torsional loads a bus structure transmits to the emergency exits during the rollover test in the manner FMVSS No. 227 does. Potential actuation of emergency exit latches due to inertial loading, assessed by FMVSS No. 227, is not assessed under current FMVSS No. 217 or proposed Standard No. 217a.
NTSB requests that FMVSS No. 227's requirements should also apply to side emergency exit doors.
Further, there are challenges to requiring exits on the non-struck side to open with the bus on its side after the test.
The NPRM proposed that each side window glazing on the non-struck side of the vehicle would have to remain attached to its mounting such that there is no opening that will allow the passage of a 102 mm (4 inch) diameter sphere when a force of no more than 22 N is applied.
This final rule does not adopt this provision. The sphere test was proposed to ensure that, after the rollover test, the glazing remain securely attached to its mounting. Because the primary purpose of this rulemaking is to provide a necessary survival space to occupants in rollovers, the purpose is achieved by prohibiting harmful panes of glazing from intruding into the survival space. The proposed requirement that the glazing remain securely attached to its mounting is redundant to the survival space specification and unnecessarily complicates this rulemaking.
EPGAA, Greyhound and Advocates requested that the agency require advanced glazing material in bus windows, while Prevost, Van Hool, and EvoBus suggest that tempered glass should be permitted. Prevost expresses that “there is a small possibility that some glazing could shatter when submitted to the proposed testing.” Prevost and EvoBus request an exclusion of tempered glazing from the rule, or that shattered glazing not be considered a failure of the FMVSS No. 227 requirements.
The agency is not distinguishing among glazing types in FMVSS No. 227 or providing exclusions of tempered glazing. The standard is generally performance-oriented and technology neutral, requiring window glazing and surrounding window frame structures on the non-struck sides of the bus to be manufactured so as not to unsafely intrude into the survival space in the rollover test. As discussed above, this final rule accommodates intrusion of small pebbles of tempered glass into the survival space. This final rule makes allowances for minute objects weighing less than 15.0 grams to enter the survival space, in recognition that it may be difficult, and unnecessary, to keep more miniscule pieces of glazing and other items from entering the survival space in the FMVSS No. 227 rollover event.
The requirement in FMVSS No. 227 preventing bus components from intruding into the survival space is critical to rollover safety if the subject buses employ advanced glazing that mitigate the risk of occupant ejection in rollovers. NHTSA's research
NTSB requested NHTSA consider including “moon roofs” in the glazing retention requirements of FMVSS No. 227. We agree with NTSB that “moon roofs” should be subject to the requirements of FMVSS No. 227, as there is a risk of passenger ejection through glass roofs during a bus rollover. Rather than use the term “moon roofs” however, hereinafter we use the term “roof panel/windows” since the latter term is more descriptive and inclusive of the components we seek to address.
Ejections through the roof occur in real-world crashes. From 2000-2009, two-thirds of the rollover fatalities in the subject buses were ejected occupants.
MAP-21
Several commenters (Advocates, Greyhound, NTSB, the families, and Ms. Stoos) request that the agency evaluate windows on the struck side as well as the non-struck side of the bus.
Under FMVSS No. 227, the agency can roll either side of the bus. Thus, manufacturers must ensure that vehicles can resist the torsional loads imparted into the structure on either side of the bus. To the extent the commenters suggest the sphere test should be conducted on the struck-side windows
To simulate a real-world rollover incorporating foreseeable conditions that are challenging to the vehicle, NHTSA proposed to subject the vehicle to the forces resulting from the mass of restrained occupants. To achieve this, the NPRM proposed (in S6.2.5 of the regulatory text) that a mass up to 68 kg (150 lb) (ballast) be secured in each designated seating position (DSP) equipped with a seat belt.
The agency indicated in the NPRM that it did not believe the method of ballasting or type of ballast used were of importance, as those factors will not significantly alter the forces imposed on the vehicle structure or the seat anchorages during compliance testing, so long as the ballast is 68 kg (150 lb) at each DSP. NHTSA noted in the NPRM that the NPRM differed from ECE R.66 on this issue of ballasting. ECE R.66 specifies the option of two different methods of securing occupant ballast to the passenger seats.
Several bus manufacturers commented on the proposal, all requesting that we adopt the ballasting approach of ECE R.66 (
In support of their view that a 50 percent weight is appropriate for fixed ballasts, the commenters argue that ECE R.66 considers a 75-lb weight for fixed steel ballasts equivalent to the 150-lb anthropomorphic ballast secured with the seat belt. Van Hool cites an ECE Ad Hoc Expert Group document that puts the load transferred by belted occupants to the vehicle structure as between 0 and 100 percent of the standard passenger mass of 68 kg (150 lb).
NHTSA is adopting the provision to use the 68 kg (150 lb) ballast in NHTSA's compliance test. NHTSA does not concur that a 75-lb (50 percent lighter weight) fixed ballast would simulate a similar amount of force on the seat anchorages and bus structure as a 150-lb occupant.
Prevost's and Daimler's comments reflect the state of knowledge in 2001, a time early in the development of ECE R.66. According to their cited analysis, there were no experimental data available at the time to evaluate the percentage of mass that should be included in the test. At that time, it was then theorized that 50 percent of the occupant weight was an appropriate estimate for the weight that a restrained occupant would transfer to the bus structure. However, subsequent published studies have found that the 50 percent value grossly underestimates the amount of force imparted by restrained bus occupants.
As discussed in the NPRM (79 FR 46106), an Australian study that utilized bus section testing and computer simulations
Since the NPRM, NHTSA has learned about additional studies that corroborate the Australian and ECE findings. An
For the above reasons, we are adopting the proposed language from the NPRM on ballasting. Using lower weight ballast for the fixed ballast, as suggested by some commenters, would not adequately simulate the loading conditions of the average restrained occupant.
NHTSA specified that all fluids in the vehicle, including fuel, would be at maximum capacity during the test. For environmental and test personnel safety, NHTSA proposed to use substitute fluids to conduct the test if the weight of the original fluid was maintained.
Van Hool commented that NHTSA should not include vehicle fluid specifications and should permit manufacturers to replace parts of the bus representative masses. The commenter believed that manufacturers should be able to decide on these conditions and determine them for their bus if “the basic features and behaviour [sic] of the superstructure are not influenced by it.” Van Hool recommends that the agency use the ECE R.66 definition of cg to determine whether the manufacturer's selected vehicle conditions are appropriate for testing.
We have changed the regulatory text so that vehicle fluid fill levels are now specified as a percentage range of the maximum capacity rather than only as maximum capacity. FMVSS No. 227 specifies that the agency will test the bus with all fluids (or replacement fluids) at 90 to 95 percent of the maximum level for each of the fluids.
In specific response to Van Hool, NHTSA does not believe the requested change is necessary. Van Hool requested that NHTSA use manufacturer-defined test conditions for items such as the vehicle fluid levels and representative masses for expensive vehicle parts, if the manufacturer-specified conditions maintain a specified cg. As NHTSA explained in the NPRM, in the U.S., manufacturers self-certify their products” compliance with the FMVSSs. The test conditions specified in an FMVSS specify the conditions under which NHTSA will assess compliance. The purpose of specifying these conditions is to give manufacturers notice of how NHTSA will test, not to prescribe the testing methods that manufacturers must use to certify compliance.
To illustrate, FMVSS No. 227 specifies that the agency will test the bus with all fluids (or replacement fluids) at 90 to 95 percent of the maximum level for each of the fluids. The standard does not require manufacturers to conduct the test under the same conditions. Manufacturers may use different testing methods to certify compliance with the FMVSSs. They must reasonably conclude that their vehicles will pass the FMVSS test when tested by NHTSA as specified in the FMVSS. It is not incumbent on NHTSA to specify in the FMVSSs all the possible testing methods a manufacturer might use as a basis for its certification.
Van Hool suggested that additional evaluation tools be permitted as supplemental or alternatives to the proposed survival space template, to simplify testing. It stated that high-speed photography, video, deformable templates, electrical contact sensors, and other suitable evaluation and techniques should be permitted as part of the standard.
After considering the comment, NHTSA has decided to change some of the language in the regulatory text of FMVSS No. 227 to provide more flexibility in the tools the agency will use to measure compliance. As stated in the NPRM, we intended that “[o]ther tools could also be used to help determine whether there was intrusion into the survival space, such as deformable templates, high speed video, photography, or a combination of means. NHTSA could use templates and/or other means of determining whether intrusion occurred.”
The rollover test in this final rule is based on the complete vehicle test from ECE R.66. NHTSA is not adopting ECE R.66's four alternative options for complying with ECE R.66 requirements.
Bus manufacturers already producing vehicles subject to ECE R.66 (Van Hool, TEMSA, Prevost, EvoBus) asked NHTSA to adopt the alternatives of ECE R.66. TEMSA believed that computer
This final rule adopts the complete vehicle test of ECE R.66 into FMVSS No. 227. By doing so, NHTSA is specifying the test procedure NHTSA will use to assess a vehicle's compliance with FMVSS No. 227. The standard will not provide for NHTSA's use of Alternatives 1 through 4 to determine compliance. However, this does not mean that manufacturers must use the complete vehicle test to certify their vehicles. To the contrary, the Safety Act requires manufacturers to ensure their vehicle meet all applicable FMVSSs, and that they certify the compliance of their vehicle with applicable FMVSS. The Safety Act specifies that manufacturers may not certify if in exercising reasonable care the manufacturer has reason to know the certificate is false or misleading. This means a manufacturer may use the alternative compliance methods of ECE R.66 to certify its vehicles if it can do so in exercising reasonable care. While manufacturers must ensure that their vehicles will meet the requirements of FMVSS No. 227 when NHTSA tests the vehicles in accordance with the test procedures specified in the standard, they do not have to conduct the test described in FMVSS No. 227 to certify that compliance.
NHTSA considered ECE R.66's alternative compliance methods but determined that they would not be practical for the agency's compliance program. (See explanation in the NPRM, 79 FR 46111-46112.) The agency has considered the comments but has not changed its mind.
Alternatives 1 and 2 involve testing body sections. To obtain a body section, NHTSA could procure it from the manufacturer, but that raises questions about how representative the sample would be of buses in actual production. Some manufacturers might make a more conscientious effort to produce the specimen, and so the specimen might not be representative of a typical mass-produced bus. NHTSA could section a bus itself, but that would be impractical and a waste of resources.
Alternatives 1 and 2 require that the body-sections be representative of the entire vehicle. Determining the representativeness of a body-section would require input and analysis from the manufacturer, and even with that, determining what is “representative” could be subjective and difficult for NHTSA to verify. (
Testing an entire vehicle rather than body sections is preferable to NHTSA because it better ensures all body sections will be able to conform to FMVSS No. 227, including representative as well as worse-case (weakest) sections of the bus. Testing an entire bus to the complete vehicle test is the most objective, scientific way to assure the entire bus structure is satisfactory and the glazing panels are retained.
Regarding Alternatives 3 and 4, under the Safety Act, NHTSA is directed to issue performance standards,
The variability of assumptions in such models makes this method less preferable for use by NHTSA in evaluating compliance with an FMVSS. For example, for Alternative 3, we would need to identify the location of the plastic zones and plastic hinges as well as estimate their load-deformation curves. For Alternative 4, mathematical models that simulate accurately the actual rollover crash of the vehicle are required.
Further, there is a concern that basing compliance on calculations and computer simulations may not account for differences that may occur between the analytical model and the vehicle
In short, deficiencies in vehicle performance due to poor quality control of manufacturing processes, sub-standard quality of supplied materials or errors in the engineering analysis underlying the vehicle design can be better discovered when an actual vehicle is tested than under a compliance system using Alternatives 3 and 4.
For these reasons, this final rule is based on the complete vehicle test of ECE R.66 to determine compliance. NHTSA is incorporating ECE R.66's compliance framework in a manner that meets the requirements of MAP-21 and the requirements and considerations of NHTSA's Safety Act. The agency emphasizes that FMVSS No. 227 does not preclude manufacturers from using the alternative compliance methods of ECE R.66 to certify their vehicles. As explained in the NPRM,
Manufacturers using ECE R.66's alternatives are responsible for ensuring that the vehicles will meet the requirements of FMVSS No. 227 when tested by NHTSA per the agency's procedures. However, manufacturers certifying compliance of their own vehicles have much more detailed information regarding their own vehicles and production methods than NHTSA and should be capable of using other methods to certify their vehicles. If manufacturers are confident that the data obtained by using the test methods described in ECE R.66's Alternatives 1 through 4 assure conformance with the standard just as the complete vehicle test does, nothing precludes them from using those alternatives to certify their vehicles to FMVSS No. 227 with confidence.
In deciding on the approach adopted by this final rule, NHTSA examined the following alternatives.
NHTSA considered the requirements of FMVSS No. 216, “Roof crush resistance.” FMVSS No. 216 applies to vehicles with a GVWR of 4,536 kg (10,000 lb) or less (light vehicles), and specifies a test that applies localized static loads to the upper front corners of a vehicle's roof and windshield area. The large buses covered under this final rule are larger/heavier than light vehicles and are more likely to roll along a longitudinal vehicle axis than yaw and pitch. Thus, in an actual rollover involving one of these vehicles, the entire length of the vehicle is loaded as in the ECE R.66 test. NHTSA believes the ECE R.66 test is more representative of a real-world rollover of a large bus than the FMVSS No. 216 test since the ECE R.66 test imparts loads along the full length of the vehicle.
In addition, the ECE R.66 test is a dynamic test in which “survival space” performance requirements are specially designed for the large bus interior. There are also additional safety issues specific to the vehicles covered by this rule (opening of emergency exits, detachment of windows from their mountings) that can be evaluated in the dynamic event. Since two-thirds of rollover fatalities are due to ejections, addressing these additional safety issues is vital to addressing the safety problem in rollovers. Therefore, the agency believes that the ECE R.66 test addresses more of the safety needs of a large bus rollover crash than the FMVSS No. 216 test.
FMVSS No. 220 is a school bus roof crush standard that places a uniformly distributed vertical force pushing directly downward on the top of the bus with a platen that is 914 mm (36 inches) wide and that is 305 mm (12 inches) shorter than the length of the bus roof. The standard specifies that when a uniformly distributed load equal to 1.5 times the unloaded vehicle weight is applied to the roof of the vehicle's body structure through a force application plate, the downward vertical movement at any point on the application plate shall not exceed 130 mm (5.125 inches) and the emergency exits must be operable during and after the test.
The agency included FMVSS No. 220 in its research into rollover structural integrity for large buses and, in the NPRM, tentatively decided the ECE R.66 test was preferable to the FMVSS No. 220 for motorcoaches for several reasons. First, the agency determined that an ECE R.66 based test is more suitable for the vehicles covered by FMVSS No. 227 than an FMVSS No. 220-based test because a significant portion of fatalities in the subject buses result from occupant ejections. Unlike school buses, the subject motorcoach and other large buses operate intercity routes and typically travel at higher speeds than school buses transporting children to a local educational facility. Further, many of the motorcoaches and subject intercity buses are designed with a higher center of gravity than school buses and have larger windows. These characteristics can lead to a higher incidence of occupant ejections during rollovers involving the non-school buses. The agency believed dynamic rollover test in ECE R.66 affords the agency the opportunity to better evaluate ejection-related factors such as the emergency exits and side window glazing retention during a rollover crash.
After considering the comments, NHTSA makes the following decisions. As previously discussed, the agency is permitting manufacturers of school bus derivative buses to certify compliance with FMVSS No. 220 as an alternative to certifying to the ECE R.66 test in FMVSS No. 227. FMVSS No. 220 has been proven to adequately ensure roof crush protection in vehicles designed to meet the FMVSSs applying to school buses, so allowing school bus derivative buses to meet FMVSS No. 220 avoids redundancy in the FMVSS. NHTSA is not permitting FMVSS No. 220 as an alternative to FMVSS No. 227 for buses other than school bus derivative buses. The dynamic test in FMVSS No. 227 is a more representative test of real-world rollovers for motorcoaches and buses other than school buses and addresses safety needs arising in rollovers of those vehicles that FMVSS No. 220 does not address.
In addition to the MAP-21 provisions discussed previously in this document, MAP-21 also directs NHTSA to consider the best available science, potential impacts on seating capacity, and potential impacts on the size/weight of motorcoaches.
NHTSA considered the best available science in developing this final rule. The agency developed this rule based on FMVSS No. 220 and ECE R.66 test studies NHTSA conducted on large bus rollover structural integrity (
Coach USA provided the only response to the NPRM request for comment on the impact of added vehicle weight to seating capacity. It requested NHTSA to consider that further increases to motorcoach weight could make it difficult for all operators to carry a full passenger load while still complying with applicable vehicle and axle weight limits. NHTSA does not believe this final rule will adversely impact seating capacity. Large bus buyers expect maximum seating capacity with adequate luggage capacity for a given floor space or vehicle length. Estimates for structural weight added to a bus to meet this final rule are based on usage of steel.
Through this final rule and our accompanying Final Regulatory Evaluation (FRE), the agency has considered the potential impacts of this rule on the size and weight of motorcoaches and other large buses affected by this rule.
NHTSA has designed this rule to complement the agency's 2013 final rule on FMVSS No. 208 requiring seat belts for passenger seating positions. The seat belt rule will result in increasing numbers of passengers buckling up on large buses. As they do so, more and more will be retained within the passenger compartment in crashes. NHTSA has designed it so that FMVSS No. 227 and FMVSS No. 208 work together to provide a survival space to the passengers retained within the passenger compartment due to the seat belts. NHTSA has also designed this final rule bearing in mind NHTSA's May 6, 2016 NPRM,
Finally, NHTSA is avoiding duplicating benefits, costs, and countermeasures in the motorcoach rulemakings of MAP-21. As described above, the agency believes that the requirements of FMVSS No. 227 work together with the passenger seat belt requirements of FMVSS No. 208 and complements an advanced glazing standard. As described in the accompanying FRE, the agency has estimated the benefits and costs of this final rule while considering the effect of seat belts on the subject buses and the application of the ESC rule.
The agency proposed a compliance date of 3 years after publication of the final rule for FMVSS No. 227. MAP-21 (in section 32703(e)) directs that the rulemaking shall apply to all motorcoaches manufactured more than 3 years after the date on which the regulation is published as a final rule.
IC Bus agreed with the proposed 3-year lead time. Van Hool stated “that for the requirements for the strength of superstructure according to the Series of Amendment 01 of UN Regulation No. 66 . . . a transition period of 144 months was granted.”
This final rule adopts the 3-year compliance date. To enable manufacturers to certify to the new requirements as early as possible, optional early compliance with the standard is permitted. The 3-year date for motorcoaches is required by MAP-21. If Van Hool was requesting a 144-month lead time, NHTSA declines the request as contrary to MAP-21. Further, the commenter provided no information to support or further explain their interest in or need for a 144-month (12-year) lead time for the effective date of FMVSS No. 227. Van Hool and others currently manufacture buses for sale to European countries including Italy, France, Germany, Poland, and the Netherlands.
NHTSA concludes that three years of lead time will be sufficient for bus manufacturers generally to make the necessary changes. The lead time for motorcoaches is mandated by MAP-21, but it is also reasonable. Van Hool and other manufacturers of buses that already meet ECE R.66 may have to improve the type of latches used on emergency exits, and improve the mounting of side windows, but three years will be ample time to complete the design, testing, and changes in production necessary to certify compliance to the FMVSS No. 227 requirements.
For manufacturers whose buses do not already meet ECE R.66, NHTSA believes that manufacturers will need to make structural design changes to their large bus models either by changing the strength of the sidewall and glazing frame material or the material's physical dimensions (
The agency stated in the NPRM that, based on the agency's tests of older buses, major structural changes to the vehicle's entire sidewall and roof structure would be needed for some existing buses to meet the proposed rollover structural integrity requirements. NHTSA believed that the structural changes are likely to be cost-prohibitive, making retrofitting for rollover structural integrity impractical. NHTSA requested comments on the feasibility, benefits, and costs of any potential requirement to retrofit existing buses to meet FMVSS No. 227.
Almost half of the respondents to the NPRM commented on the retrofit issue and all opposed retrofitting. IC Bus, Daimler Trucks, Van Hool, ABA, Greyhound, Coach USA, Prevost, and Advocates raised concerns about retrofit. They believed that the work involved in retrofitting a bus to meet FVMSS No. 227, even just the glazing aspects of the standard, would entail impracticable and unreasonable reworking of the bus structure. The complications of retrofit are exacerbated, they stated, by having to deal with the condition of existing
NHTSA is not specifying a retrofit requirement. The agency did not receive or discover any new information that would alter the previous determination that retrofitting of existing buses would be impracticable and unreasonable. The agency continues to expect the structural changes needed for retrofitting to be substantial, and to involve significant costs beyond those estimated in our regulatory analysis for new buses. The cost impacts would likely have a substantial adverse impact on a significant number of small entities (
Based on the FARS data over the 15-year period between 2004 and 2018, there were a total of 56 fatal rollover crashes involving the bus types covered by this final rule, resulting in 189 occupant fatalities. Beyond the benefits attributable to the rules on seat belts and ESC for these vehicles, NHTSA estimates this final rule will save approximately 3 lives annually (undiscounted) if 15 percent of occupants use seat belts, and approximately 2 lives annually (undiscounted) if 90 percent of occupants use seat belts.
While belted occupants will benefit from a survival space, unbelted occupants will benefit as well. The belted occupant will mostly benefit from reduced intrusion of structures and objects into the survival space. The unbelted occupants will benefit from a reduced risk of occupant ejection. Given these differences in how occupants will benefit from the rule, we have estimated benefits for each group separately.
Also, the benefits estimates will vary by seat belt use. Available research regarding seat belt use suggests that it can be highly variable. NHTSA has estimated the lower end of seat belt use at 15 percent and the upper end of seat belt use at 90 percent. The agency assumes that, initially, belt use will be closer to the lower end (15 percent) because passengers are not yet accustomed to seat belts on the buses. Many large buses in use do not have seat belts, and passengers have not been educated about the benefits of buckling up in a large bus.
NHTSA estimates that at 3 percent and 7 percent discount rates, 1.87 to 2.45 equivalent lives are saved annually if 15 percent of occupants use seat belts and 1.46 to 1.92 equivalent lives are saved annually if 90 percent of occupants use seat belts (see Table 13 below).
The agency estimates that, assuming steel is used to strengthen the vehicle structure to comply with the requirements in this final rule, material costs for each vehicle will range from $325 to $591 and cost between $0.71 million and $1.30 million to equip the entire new large bus fleet annually (see Table 14 below). NHTSA further estimates that, if steel is used to comply, the total weight increase will range from 181 to 356 kg (399 to 784 lb) and cost an additional $1,862 to $4,790 in fuel per vehicle over the lifetime of the vehicle. The total fuel cost for the new fleet is estimated to be $4.10 million to $10.54 million. The total costs will be approximately $4.81 million to $11.84 million annually. The cost per equivalent life saved is estimated to be between $2.48 million and $6.38 million (see Table 15 below) and net economic benefit is estimated to be between $8.25 million and $23.31 million in 2020 dollars.
The available information shows this final rule is cost beneficial. The above estimates for the cost per equivalent life of this rule vary due to uncertainties regarding seat belt use rates and the incremental increase in weight that is necessary to meet FMVSS No. 227. For seat belt use, NHTSA believes that the projected net impact on the economy will be closer to the estimates for the 15 percent belt use rates than the 90 percent belt use rate, as explained above. A large portion of the costs of this structural integrity rule is dependent on this incremental increase in weight. NHTSA does not have more specific information regarding the likely weight increase to these vehicles.
The agency believes that the cost effectiveness of this rule is not very sensitive to changes in belt usage rates because belted passengers will still realize safety benefits because of this rule. Many serious injuries that occur in large bus crashes can occur despite a passenger's use of a safety belt. For example, while belted passengers may not be ejected, they can still be struck by the collapsing side wall of the bus. Therefore, even though increasing seat belt usage rates may mean that more passenger ejections (and fatalities) will be prevented by seat belts (consequently reducing the number of prevented ejections attributable to FMVSS No. 227), the final rule will still be effective in preventing serious injuries to belted passengers. Thus, we expect that the monetized value of the benefits of this rule is not very sensitive to fluctuations in seat belt use—even though the type of benefit will change.
The cost of reinforcing the roof strength and structural integrity of these vehicles to meet the requirements in this final rule are predominantly dependent upon the material and weight increases necessary to reinforce the superstructure. NHTSA estimates that the countermeasures may include stronger roof and side walls, shock resistant latches for emergency exits, and improved window mounting. As mentioned above, these material costs for each vehicle are estimated to be between $325 and $591. However, while the agency assumes in these estimates that steel is applied to reinforce the vehicle structure, the agency is aware that other methods of reinforcing the structure (such as the use of high strength steel sections, rigid polyurethane foam filling to reinforce and stabilize thin-walled, hollow sections, and optimized designs that redistribute the impact loads and enhance the energy absorption capability) may enable a vehicle to withstand greater crash forces without adding as much weight.
The agency also notes that, in addition to the quantifiable benefits mentioned above, there are other benefits arising from this final rule. Our economic analysis of this rule is only able to calculate the benefits that can be realized above and beyond the benefits attributable to previously-published final rules, in particular, the November 25, 2013 (78 FR 70416) seat belt final rule. In other words, we are only able to estimate the benefits to passengers whose serious and fatal injuries were not prevented by seat belts. When an occupant who would have been seriously or fatally injured in a bus crash is estimated as saved from such injury by a countermeasure previously made effective for that occupant (
However, we believe that some people who were saved by the seat belt could still benefit from this rule, as the poor structural integrity of a bus could contribute toward a fatality or an injury for this saved occupant. It is important to note that while the agency could estimate benefits to belted passengers who still were seriously injured or killed notwithstanding the seat belts, because of our practices we do not estimate what additional benefits could be realized by passengers who were already considered saved from serious and fatal injury due to the seat belts. As the agency is unaware of any available information that would enable the agency to quantify this latter benefit, the agency's economic analysis of this rule only estimates the benefits to occupants who were not saved by the seat belts.
NHTSA has considered the impact of this final rule under Executive Orders 12866 and 13563, and DOT administrative rulemaking orders and procedures. This final rule is not considered significant and was not reviewed by the Office of Management and Budget under E.O. 12866.
This final rule increases roof strength and structural integrity for certain large bus types by establishing requirements for maintaining survival space and emergency exit operability during and after a rollover structural integrity test. This final rule specifies a test procedure that tilts the vehicle on a platform until the vehicle becomes unstable and rolls over onto a level concrete impact surface.
NHTSA has prepared a FRE for this final rule.
The policy statement in section 1 of Executive Order 13609 provides, in part: The regulatory approaches taken by foreign governments may differ from those taken by U.S. regulatory agencies to address similar issues. In some cases, the differences between the regulatory approaches of U.S. agencies and those of their foreign counterparts might not be necessary and might impair the ability of American businesses to export and compete internationally. In meeting shared challenges involving health, safety, labor, security, environmental, and other issues, international regulatory cooperation can identify approaches that are at least as protective as those that are or would be adopted in the absence of such cooperation. International regulatory cooperation can also reduce, eliminate, or prevent unnecessary differences in regulatory requirements.
As mentioned in this preamble, the agency has considered regulatory approaches taken by foreign governments (namely, the European Union in ECE R.66) and decided to base FMVSS No. 227 on ECE R.66. In addition to the goal of reducing unnecessary differences in regulatory requirements between the U.S. and its trading partners, the agency has found the ECE R.66 test to be the most suitable test available for ensuring a minimum reasonable level of protection for passengers traveling in buses that are associated with the highest crash risk. While NHTSA has determined that it is not able to adopt the entirety of ECE R.66 and has adopted emergency exits latching requirements which are not in ECR R.66, the agency has explained its rationale for its decisions in the relevant sections of this document.
Pursuant to the Regulatory Flexibility Act (5 U.S.C. 601
NHTSA has considered the effects of this rulemaking action under the Regulatory Flexibility Act. Per 13 CFR 121.201, the Small Business Administration's size standards regulations used to define small business concerns, manufacturers of the vehicles covered by this rule fall under North American Industry Classification System (NAICS) No. 336111,
I certify that this final rule will not have a significant economic impact on small entities. First, the agency estimates that the incremental costs to each vehicle would be $325 to $591 per unit to meet the rule. This incremental cost would not constitute a significant impact given that the average cost of the vehicles covered by this rule ranges from $200,000 to $400,000. Further, these incremental costs, which are very small compared to the overall cost of the vehicle, can ultimately be passed on to the purchaser and user.
In addition, the agency believes that certifying compliance with the rule will not have a significant impact on the small manufacturers. These entities have various options available that they may use to certify compliance with the standard.
This final rule adopts ECE R.66's compliance framework in a manner that meets the requirements of MAP-21 and the requirements and considerations of NHTSA's Safety Act. The standard will not provide for NHTSA's use of Alternatives 1 through 4 to determine compliance. However, this does not mean that manufacturers must use the complete vehicle test to certify their vehicles. To the contrary, the Safety Act requires manufacturers to ensure their vehicle meet all applicable FMVSSs, and that they certify the compliance of their vehicle with applicable FMVSS. The Safety Act specifies that manufacturers may not certify if in exercising reasonable care the manufacturer has reason to know the certificate is false or misleading. This means a manufacturer may use the alternative compliance methods of ECE R.66 to certify its vehicles if it can do so in exercising reasonable care. While manufacturers must ensure that their vehicles will meet the requirements of FMVSS No. 227 when NHTSA tests the vehicles in accordance with the test procedures specified in the standard, they do not have to conduct the test described in FMVSS No. 227 to certify that compliance.
One option is to certify compliance using modeling or engineering analyses (such as a plastic hinge analysis of portal frames of the vehicle). ECE R.66 itself accounts for and accommodates this compliance option, and this approach has been used for years by European manufacturers in meeting ECE R.66. An engineering analysis model is less preferable to the dynamic test procedure specified in this rule as the agency's method of assessing the
The manufacturer could test body sections of the vehicle, as contemplated by ECE R.66, Alternatives 1 and 2. The manufacturer could “section” the vehicle or otherwise obtain a body section representative of the vehicle and of the weakest section of the vehicle. It could base its certification on these tests, without testing a full vehicle. As discussed above, they know their vehicles best, and can test the section most at risk of not meeting FMVSS No. 227 to make sure the vehicle would meet the standard when tested by NHTSA in the complete vehicle test. This process will allow small manufacturers to test parts of the vehicle for compliance, and use their engineering expertise to calculate that the bus will meet the standard when NHTSA tests it in accordance with the procedure specified in FMVSS No. 227.
In the event small manufacturers elect to conduct a test of a full vehicle, there are various methods available to reduce the costs of the test. One such method is by testing a vehicle which is not completely new. As the requirements in this final rule pertain to structural integrity, we believe that a manufacturer could test the relevant body design on an old bus chassis or other underlying structure, and could sufficiently assess and certify the compliance of the vehicle's structural integrity to FMVSS No. 227. Similarly, the agency believes that more costly parts of the vehicle (such as the engine and other portions of the powertrain) could be replaced in a complete vehicle test of a bus with ballast equal to the weight of the absent components. The small manufacturer could base its certification on such testing, which do not involve a destructive test of an actual vehicle.
NHTSA notes that the product cycle of large buses subject to FMVSS No. 227 is much longer than other vehicle types. With a longer product cycle, the agency believes that the costs of certification for manufacturers would be further reduced as the costs of conducting compliance testing and the relevant analyses could be spread over a significantly longer period.
This rule may affect operators of the buses—some of which may be small businesses—but only indirectly as purchasers of these vehicles. As mentioned above, NHTSA anticipates that the impact on these businesses will not be significant because (assuming that additional steel is used for compliance) the expected price increase of the vehicles used by these businesses is small ($325 to $591 for each vehicle (vehicles valued between $200,000 and $400,000)). NHTSA anticipates that fuel costs for these businesses will increase between $1,862 and $4,790 (in 2020 dollars) per vehicle over its lifetime. These expected increases in costs are small in comparison to the cost of each of these vehicles. Given that these costs will equally affect all operators, the small operators will be able to pass these costs onto their consumers. This final rule does not require retrofitting of vehicles on the road.
NHTSA has examined this final rule pursuant to Executive Order 13132 (64 FR 43255; Aug. 10, 1999) and has determined that no additional consultation with States, local governments, or their representatives is mandated beyond the rulemaking process. The agency has concluded that the rule does not have sufficient federalism implications to warrant consultation with State and local officials or the preparation of a federalism summary impact statement. The rule does not have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”
NHTSA rules can have preemptive effect in two ways. First, the National Traffic and Motor Vehicle Safety Act contains an express preemption provision that when a motor vehicle safety standard is in effect under this chapter, a State or a political subdivision of a State may prescribe or continue in effect a standard applicable to the same aspect of performance of a motor vehicle or motor vehicle equipment only if the standard is identical to the standard prescribed under the chapter. 49 U.S.C. 30103(b)(1). It is this statutory command by Congress that preempts any non-identical State legislative and administrative law address the same aspect of performance.
The express preemption provision described above is subject to a savings clause under which “[c]ompliance with a motor vehicle safety standard prescribed under this chapter does not exempt a person from liability at common law.” 49 U.S.C. 30103(e). Pursuant to this provision, State common law tort causes of action against motor vehicle manufacturers that might otherwise be preempted by the express preemption provision are generally preserved. However, the Supreme Court has recognized the possibility, in some instances, of implied preemption of State common law tort causes of action by virtue of NHTSA's rules—even if not expressly preempted.
This second way that NHTSA rules can preempt is dependent upon the existence of an actual conflict between an FMVSS and the higher standard that would effectively be imposed on motor vehicle manufacturers if someone obtained a State common law tort judgment against the manufacturer—notwithstanding the manufacturer's compliance with the NHTSA standard. Because most NHTSA standards established by an FMVSS are minimum standards, a State common law tort cause of action that seeks to impose a higher standard on motor vehicle manufacturers will generally not be preempted. However, if and when such a conflict does exist—for example, when the standard at issue is both a minimum and a maximum standard—the State common law tort cause of action is impliedly preempted. See
Pursuant to Executive Order 13132, NHTSA has considered whether this rule could or should preempt State common law causes of action. The agency's ability to announce its conclusion regarding the preemptive effect of one of its rules reduces the likelihood that preemption will be an issue in any subsequent tort litigation.
To this end, the agency has examined the nature (
NHTSA has analyzed this final rule for the purposes of the National Environmental Policy Act. The agency has determined that implementation of this action will not have any significant impact on the quality of the human environment.
Under the procedures established by the Paperwork Reduction Act of 1995, a person is not required to respond to a collection of information by a Federal agency unless the collection displays a valid Office of Management and Budget (OMB) control number. This rulemaking would not establish any new information collection requirements.
Under the National Technology Transfer and Advancement Act of 1995 (NTTAA) (Pub. L. 104-113), “all Federal agencies and departments shall use technical standards that are developed or adopted by voluntary consensus standards bodies, using such technical standards as a means to carry out policy objectives or activities determined by the agencies and departments.” Voluntary consensus standards are technical standards (
While the agency is not aware of any voluntary standards that exist regarding rollover structural integrity for the large buses covered by this final rule, the agency has examined the applicable European Union standard (ECE R.66). As discussed extensively above, we have adopted an ECE R.66-based test, in part, to avoid requiring manufacturers to meet fundamentally different rollover requirements than those required in the European Union. The areas of this final rule that differ from ECE R.66, and the reasons in support, are extensively discussed in the earlier sections of this preamble.
With respect to the review of the promulgation of a new regulation, section 3(b) of Executive Order 12988, “Civil Justice Reform” (61 FR 4729, February 7, 1996) requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect; (2) clearly specifies the effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct, while promoting simplification and burden reduction; (4) clearly specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. This document is consistent with that requirement.
Pursuant to this order, NHTSA notes as follows. The issue of preemption is discussed above in connection with E.O. 13132. NHTSA notes further that there is no requirement that individuals submit a petition for reconsideration or pursue other administrative proceeding before they may file suit in court.
The Unfunded Mandates Reform Act of 1995 requires agencies to prepare a written assessment of the costs, benefits and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local or tribal governments, in the aggregate, or by the private sector, of more than $158 million annually (adjusted for inflation to 2020 dollars with base year of 1995). This final rule will not result in expenditures by State, local or tribal governments, in the aggregate, or by the private sector in excess of $158 million annually.
Executive Order 12866 and E.O. 13563 require each agency to write all rules in plain language. Application of the principles of plain language includes consideration of the following questions:
• Have we organized the material to suit the public's needs?
• Are the requirements in the rule clearly stated?
• Does the rule contain technical language or jargon that isn't clear?
• Would a different format (grouping and order of sections, use of headings, paragraphing) make the rule easier to understand?
• Would more (but shorter) sections be better?
• Could we improve clarity by adding tables, lists, or diagrams?
• What else could we do to make the rule easier to understand?
If you have any responses to these questions, please inform us.
The Department of Transportation assigns a regulation identifier number (RIN) to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. You may use the RIN contained in the heading at the beginning of this document to find this action in the Unified Agenda.
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
Imports, Motor vehicles, Motor vehicle safety.
In consideration of the foregoing, NHTSA amends 49 CFR part 571 as follows:
49 U.S.C. 322, 30111, 30115, 30117, and 30166; delegation of authority at 49 CFR 1.95.
S1.
S2.
S3.
(a) Subject to S3(b), this standard applies to:
(1) Over-the-road buses; and
(2) Buses that are not over-the-road buses, and that have a gross vehicle weight rating (GVWR) greater than 11,793 kilograms (26,000 pounds).
(b) This standard does not apply to:
(1) School buses, school bus derivative buses, transit buses, and prison buses; and
(2) Buses with 7 or fewer designated seating positions rearward of the driver's seating position that are forward-facing or can convert to forward-facing without the use of tools.
S4.
(1) The front boundary of the survival space is a transverse vertical plane forward of the most forward seat (whether passenger, or driver seat) when the seat back is in the manufacturer's nominal design riding position. This transverse vertical plane is:
(i) For a forward-facing seat, 600 millimeters (mm) in front of the forward most point on the longitudinal centerline of the front surface of the seat back when the seat is in its forward most position;
(ii) For a rearward-facing seat, through the most forward point (relative to the vehicle) on the longitudinal centerline of the seat back when the seat is in its forward most position with respect to the vehicle;
(iii) For a side-facing seat, through the most forward point (relative to the vehicle) on the seat, including the seat back, seat arm rest, and seat cushion.
(2) The rear boundary of the survival space is the inside surface of the rear wall of the occupant compartment of the vehicle.
(3) The outer boundary of the survival space at any transverse cross section between, or at the front and rear boundaries, is defined on each side of the vehicle by the occupant compartment floor and the following three line segments (see Figure 1 of this section, provided for illustration purposes only):
(i) Segment 1 extends vertically from the floor to an end point that is 500 mm above the floor and 150 mm inboard of the side wall.
(ii) Segment 2 starts at the end point of Segment 1. The end point of Segment 2 is 750 mm vertically above and 250 mm horizontally inboard of the end point of Segment 1.
(iii) Segment 3 is a horizontal line that starts at the end point of Segment 2 and ends at the vertical longitudinal center plane of the vehicle.
S5.
S5.1
(a) Items separated from the vehicle and with a mass less than 15.0 grams that enter the survival space will not be considered for this evaluation of survival space intrusion.
(b) Portions of a bus over which there is not a permanent roof, such as the upper level of an open-top double-decker bus, will not be considered for this evaluation.
S5.2
S6.
S6.1
S6.1.1 The tilting platform has a top surface that rests horizontally at its initial position and is of sufficient size to fully contact the bottom of the vehicle's tires, as shown in Figure 2 of this section (figure provided for illustration purposes only).
S6.1.2 The top surface of the tilting platform, at its initial position, is 800 ± 20 millimeters (mm) above the impact surface specified in S6.1.6, as shown in Figures 1 and 2 of this section (figures provided for illustration purposes only).
S6.1.3 The axis of rotation of the tilting platform is a maximum of a 100 mm horizontal distance from the edge of the impact surface closest to the platform and a maximum of 100 mm below the horizontal plane at the top surface of the tilting platform as shown in Figure 3 of this section (figure provided for illustration purposes only).
S6.1.4 The tilting platform is equipped with rigid wheel supports on the top surface as illustrated in Figure 3 of this section (figure provided for illustration purposes only). At each vehicle axle, the wheel closest to the platform's axis of rotation is supported. The rigid wheel supports are positioned to make contact with the outboard tire sidewall of the supported wheels with the vehicle positioned as specified in S6.3.1 to prevent sliding of the vehicle during the test. Each rigid wheel support has the following dimensions:
(a) The height above the top surface of the tilting platform is no greater than two-thirds of the vertical height of the adjacent tire's sidewall.
(b) The width is a minimum of 19 mm.
(c) The length is a minimum of 500 mm.
(d) The top inboard edge has a radius of 10 mm.
S6.1.5 While raising the platform, the tilting platform roll angle, measured at the outside of each wheel farthest from the pivot point, does not differ by more than one degree.
S6.1.6 The impact surface is horizontal, uniform, dry, and smooth concrete. The impact surface covers an area that is large enough to ensure that the vehicle does not strike beyond the impact surface edges.
S6.2
S6.2.1 The vehicle's tires are inflated to the manufacturer's recommended tire pressure.
S6.2.2 Test equipment may be attached securely to the bus structure such that the equipment does not break away from the bus structure from the time the tilting platform begins movement to after the vehicle comes to rest on the impact surface.
S6.2.3 Fixed seats may be removed or adjustable seats repositioned for the installation of test equipment in the survival space. Ballast of any weight up to the weight of the removed seat and 68 kg per designated seating position
S6.2.4 The fuel tank is filled to any level from 90 to 95 percent of capacity. All other vehicle fluids are filled to any level from 90 to 95 percent of capacity. Fluids may be substituted if the weight of the original fluid is maintained.
S6.2.5
S7
(a) Position the vehicle on the tilting platform as illustrated in the examples of Figures 2 and 3 of this section with its longitudinal centerline parallel to the tilt platform's axis of rotation, the right or left side facing the impact surface at NHTSA's option, and with the outboard tire sidewall at the widest axle within 100 mm of the axis of rotation. (Figures provided for illustration purposes only.)
(b) Apply the vehicle parking brakes.
(c) Attach a rigid wheel support to the tilting platform at each axle of the vehicle so that it contacts the outboard tire sidewall of the wheel closest to the impact surface.
(d) Block the suspension system of the vehicle to be within ±25 mm of the normal riding attitude as loaded in S6.2.5.
(e) Vehicle windows, doors, and emergency exits are fully closed and latched but not locked.
(f) Tilt the vehicle at a rate not to exceed 5 degrees/second until it starts to rollover on its own.
Issued under authority delegated in 49 CFR 1.95.
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA or “Agency”) proposes to approve portions of two state implementation plan (SIP) revisions submitted by the State of California to meet Clean Air Act (CAA or “Act”) requirements for the 2012 annual fine particulate matter (PM
Any comments must arrive by January 28, 2022.
Submit your comments, identified by Docket ID No. EPA-R09-OAR-2021-0884, at
Rory Mays, Air Planning Office (AIR-2), EPA Region IX, (415) 972-3227,
Throughout this document, “we,” “us,” and “our” refer to the EPA.
On January 15, 2013, the EPA strengthened the primary annual NAAQS for particulate matter with a diameter of 2.5 microns or less (PM
Epidemiological studies have shown statistically significant correlations between elevated PM
Following promulgation of a new or revised NAAQS, the EPA is required by CAA section 107(d) to designate areas throughout the nation as attaining or not attaining the NAAQS. On January 15, 2015, the EPA designated and classified the SJV as Moderate nonattainment for the 2012 annual PM
On December 27, 2021, the effective date of the SJV's reclassification as a Serious PM
The SJV PM
The EPA is proposing action on portions of three SIP revisions submitted by CARB to meet the Serious nonattainment area requirements for the 2012 annual PM
We refer to the relevant portions of these SIP submissions collectively in this proposal as the “SJV PM
In addition, the EPA is proposing action on the portion of a third SIP submission that pertains to SJVUAPCD Rule 4901, as amended by the District on June 20, 2019, and submitted to the EPA on July 19, 2019 (“Rule 4901 Contingency Provision”). The EPA has already taken final action on the rule modification for this submission.
CAA sections 110(a)(1) and (2) and 110(l) require each state to provide reasonable public notice and opportunity for public hearing prior to the adoption and submission of a SIP or SIP revision to the EPA. To meet this requirement, every SIP submission should include evidence that adequate public notice was given and that an opportunity for a public hearing was provided consistent with the EPA's implementing regulations in 40 CFR 51.102.
CAA section 110(k)(1)(B) requires the EPA to determine whether a SIP submission is complete within 60 days of receipt. This section also provides that any plan that the EPA has not affirmatively determined to be complete or incomplete will become complete by operation of law six months after the date of submission. The EPA's SIP completeness criteria are found in 40 CFR part 51, Appendix V.
The following portions of the 2018 PM
The appendices to the 2018 PM
The District provided public notice and opportunity for public comment prior to its November 15, 2018 public hearing on and adoption of the 2018 PM
CARB developed the “Revised Proposed 2016 State Strategy for the State Implementation Plan” (“2016 State Strategy”) to support attainment planning in the SJV and Los Angeles-South Coast Air Basin (“South Coast”) ozone nonattainment areas.
CARB responded to this resolution by developing and adopting the “San Joaquin Valley Supplement to the 2016 State Strategy for the State Implementation Plan” (“Valley State SIP Strategy”) to support the 2018 PM
The Valley State SIP Strategy includes an Introduction (Ch. 1), a chapter on “Measures” (Ch. 2), and a “Supplemental State Commitment from the Proposed State Measures for the Valley” (Ch. 3). Much of the content of the Valley State SIP Strategy is reproduced in Chapter 4 (“Attainment Strategy for PM
CARB provided the required public notice and opportunity for public comment prior to its October 25, 2018 public hearing on and adoption of the Valley State SIP Strategy.
Lastly, the 2018 PM
In response to the commitment made in the 2018 PM
Upon reclassification of a Moderate nonattainment area as a Serious nonattainment area under subpart 4 of part D, title I of the CAA, the Act requires the state to make a SIP submission that addresses the following Serious nonattainment area requirements:
(1) A comprehensive, accurate, current inventory of actual emissions from all sources of PM
(2) Provisions to assure that the best available control measures (BACM), including best available control technology (BACT), for the control of direct PM
(3) A demonstration (including air quality modeling) that the plan provides for attainment as expeditiously as practicable but no later than the end of the tenth calendar year after designation as a nonattainment area (
(4) Plan provisions that require reasonable further progress (RFP) (CAA section 172(c)(2));
(5) Quantitative milestones which are to be achieved every three years until the area is redesignated attainment and which demonstrate RFP toward attainment by the applicable date (CAA section 189(c));
(6) Provisions to assure that control requirements applicable to major stationary sources of PM
(7) Contingency measures to be implemented if the area fails to meet RFP or to attain by the applicable attainment date (CAA section 172(c)(9)); and
(8) A revision to the nonattainment new source review (NSR) program to lower the applicable “major stationary source”
A state's Serious area plan must also satisfy the requirements for Moderate area plans in CAA section 189(a), to the extent the state has not already met those requirements in the Moderate area plan submitted for the area. In addition, the state's Serious area plan must meet the general requirements applicable to all SIP submissions under section 110 of the CAA, including the requirement to provide necessary assurances that the implementing agencies have adequate personnel, funding, and authority under section 110(a)(2)(E); and the requirements concerning enforcement provisions in section 110(a)(2)(C).
The EPA provided its preliminary views on the CAA's requirements for particulate matter plans under part D, title I of the Act in the following guidance documents: (1) “State Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990” (“General Preamble”);
CAA section 172(c)(3) requires that each SIP include a comprehensive, accurate, current inventory of actual emissions from all sources of the relevant pollutant or pollutants in the nonattainment area. The EPA discussed the emissions inventory requirements that apply to PM
The base year emissions inventory should provide a state's best estimate of actual emissions from all sources of the relevant pollutants in the area,
A state's SIP submission must include documentation explaining how it calculated emissions data for the inventory. In estimating mobile source emissions, a state should use the latest emissions models and planning assumptions available at the time it developed the submission. The latest EPA-approved version of California's mobile source emission factor model for estimating tailpipe, brake, and tire wear emissions from on-road mobile sources that was available during the State's and District's development of the SJV PM
In addition to the base year inventory submitted to meet the requirements of CAA section 172(c)(3), the state must also submit a projected attainment year inventory and emissions projections for each RFP milestone year.
The State included summaries of the planning emissions inventories for direct PM
The State selected 2013 for the base year emission inventory, building on the 2012 actual emissions inventory and considering available air quality data, trends, and field studies.
In addition, simultaneously with submission of the 2018 PM
The State developed base year inventories in the 2018 PM
CARB used EMFAC2014, which was the EPA-approved model at the time CARB developed and submitted the inventories, to estimate on-road motor vehicle emissions based on transportation activity data from the 2014 Regional Transportation Plans adopted by the transportation planning agencies in the SJV.
CARB developed the emissions forecasts by applying growth and control profiles to the base year inventory. CARB's mobile source emissions projections take into account predicted activity rates and vehicle fleet turnover by vehicle model year and adopted controls.
Table 1 provides a summary of the 2018 PM
The inventories in the 2018 PM
In accordance with 40 CFR 51.1008(b)(1), the EPA has evaluated the State's justification for using 2013 for the base year emissions inventory as a technically appropriate inventory year for the 2012 annual PM
The EPA's approval of the State's demonstration that it was impracticable to attain the 2012 annual PM
Therefore, the EPA proposes to find the State's justification for selecting 2013 for the base year emissions inventory to be technically appropriate, consistent with 40 CFR 51.1008(b)(1). Furthermore, the 2013 base year represents actual annual average emissions of all sources within the nonattainment area. Direct PM
With respect to future year baseline projections, we have reviewed the growth and control factors estimated by the State and propose to find them acceptable and thus conclude that the future baseline emissions projections in the 2018 PM
In our rulemaking on the State's attainment plan for the 2006 24-hour PM
For these reasons, we are proposing to approve the 2013 base year emissions inventory in the 2018 PM
The provisions of subpart 4 of part D, title I of the CAA do not define the term “precursor” for purposes of PM
Section 189(e) of the Act requires that the control requirements for major stationary sources of direct PM
Under the PM
In addition, in May 2019, the EPA issued the “PM
We are evaluating the 2018 PM
The State's precursor demonstration and conclusions are found in Chapter 7 (“Demonstration of Federal Requirements for 2012 PM
The State estimates that anthropogenic emissions of NO
We summarize the State's analyses and conclusions for ammonia, SO
With respect to ammonia emission reductions, the EPA's PM
For ammonia, SO
For ammonia, SO
For ammonia, the modeled sensitivity of ambient PM
The State supplemented the sensitivity analysis, particularly for ammonia, with consideration of additional information such as emission trends, the appropriateness of future year versus base year sensitivity, available emission controls, and the severity of nonattainment.
The State notes that a 53% reduction in (baseline) NO
The EPA has evaluated the State's precursor demonstration in the 2018 PM
The State based its analyses on the latest available data and studies concerning ambient PM
For the sensitivity-based analysis, the State performed its analyses based on the EPA's recommended approach—
The State's emissions projections in the 2018 PM
In the subsections that follow, we summarize our evaluation of the State's precursor demonstrations for ammonia, SO
In the 2018 PM
The precursor demonstration in the 2018 PM
While the Madera and Hanford responses to ammonia reductions are above the contribution threshold, additional information about these locations leads the EPA to give these responses lower weight in the overall assessment of whether ammonia contributes significantly to PM
For the 2018 PM
There is also information suggesting that the Hanford response to ammonia reductions may be lower than indicated in the State's 2018 PM
The 2018 PM
As additional information for assessing the contribution of ammonia to PM
Another consideration is that the PM
The State's precursor demonstration in the 2018 PM
Finally, based on the 2024 sensitivity results,
In sum, we conclude that the State quantified the sensitivity of ambient PM
In the 2018 PM
We note that the 2018 PM
Therefore, on the basis of these modeled ambient PM
In the 2018 PM
We note that the 2018 PM
The EPA has evaluated and agrees with the State's determination in the 2018 PM
For these reasons, we propose to approve the State's demonstration that VOC emissions do not contribute significantly to ambient PM
Section 189(b)(1)(A) of the CAA requires that each Serious area plan include a demonstration (including air quality modeling) that the plan provides for attainment of the PM
The PM
The EPA's PM
The 2018 PM
CARB's air quality modeling approach investigated the many interconnected facets of modeling ambient PM
The model performance evaluation in section 5.2 (“CMAQ Model Evaluation”) of Appendix K of the 2018 PM
The EPA's evaluation of the modeling for the 2012 annual PM
Most aspects of the 2018 PM
Another modeling aspect that can differ between 24-hour and annual average is the focus of the model performance evaluation on the respective averaging times. For the 24-hour average, it is especially important that modeled concentrations on the highest days are comparable to those on the highest monitored days because calculation of the design value for the 24-hour PM
The 2018 PM
The high PM
The EPA evaluated, in our rulemaking with respect to the 2006 24-hour PM
Section 189(b)(1)(B) of the Act requires for any serious PM
The EPA generally considers BACM a control level that goes beyond existing RACM-level controls, for example by expanding the use of RACM controls or by requiring preventative measures instead of remediation.
Consistent with longstanding guidance provided in the General Preamble Addendum, the preamble to the PM
1. Develop a comprehensive emission inventory of the sources of PM
2. Identify potential control measures;
3. Determine whether an available control measure or technology is technologically feasible;
4. Determine whether an available control measure or technology is economically feasible; and
5. Determine the earliest date by which a control measure or technology can be implemented in whole or in part.
The EPA allows consideration of factors such as physical plant layout, energy requirements, needed infrastructure, and workforce type and habits when considering technological feasibility. For purposes of evaluating economic feasibility, the EPA allows consideration of factors such as the capital costs, operating and maintenance costs, and cost effectiveness (
Once these analyses are complete, the state must use this information to develop enforceable control measures and submit them to the EPA for evaluation as SIP provisions to meet the basic requirements of CAA section 110 and any other applicable substantive provisions of the Act. The EPA is using these steps as guidelines in the evaluation of the BACM and BACT measures and related analyses in the SJV PM
As discussed in section IV.A of this proposed rule, Appendix B of the 2018 PM
For stationary and area sources, the District identifies the sources of direct PM
For mobile sources, CARB identifies the sources of direct PM
The first step in determining BACM is to develop a comprehensive emissions inventory of the sources of direct PM
The remaining steps are to identify potential control measures for each source category, determine whether available control measures or technologies are technologically and economically feasible for implementation in the area, and determine the earliest date by which those control measures or technologies found to be feasible can be implemented, in whole or in part.
We provide an evaluation of many of the District's control measures for stationary sources and area sources in section III of the EPA's “Technical Support Document, EPA Evaluation, San Joaquin Valley Serious Area Plan for the 2012 Annual PM
Mobile source categories for which CARB has primary responsibility for reducing emissions in California include most new and existing on- and non-road engines and vehicles and motor vehicle fuels. The SJV PM
Appendix D of the 2018 PM
We have reviewed the State's and District's analysis and determination in the SJV PM
For the foregoing reasons, we propose to find that the SJV PM
Section 189(e) of the CAA specifically requires that the control requirements applicable to major stationary sources of direct PM
California submitted nonattainment NSR SIP revisions to address the subpart 4 requirements for the Serious area attainment plan for SJV on November 20, 2019.
Section 189(b)(1)(A) of the CAA requires that each Serious area plan include a demonstration (including air quality modeling) that the plan provides for attainment of the relevant PM
The SJV PM
The SJV PM
The remainder of the emission reductions are to be achieved by additional measures to meet enforceable commitments, including potential regulatory and incentive-based measures and, as necessary, substitute measures.
CARB's control measure commitments include 12 regulatory measures and 3 incentive-based measures with implementation anticipated to start no later than 2024.
CARB's aggregate tonnage commitments are “to achieve the aggregate emissions reductions outlined in the Valley State SIP Strategy of 32 tpd of NO
The District's aggregate tonnage commitments are to “achieve the aggregate emissions reductions of 1.88 tpd of NO
CARB and the District's aggregate tonnage commitments sum to 33.88 tpd NO
We note that the SJV PM
The EPA must make several findings in order to approve the modeled attainment demonstration in an attainment plan SIP submission. First, we must find that the attainment demonstration's technical bases, including the emissions inventories and air quality modeling, are adequate. As discussed in section IV.A of this proposed rule, the EPA proposes to approve the emissions inventories on which the State based the SJV PM
Second, we must find that the attainment plan SIP submission provides for expeditious attainment through the timely implementation of the control strategy, including RACM, BACM, and any other emission controls that are needed for expeditious attainment. In the EPA's final rule on the SJV Moderate area plan for the 2012 annual PM
Third, the EPA must find that the emissions reductions that are relied on
The EPA may accept enforceable commitments in lieu of adopted control measures in attainment demonstrations when the circumstances warrant it and the commitments meet three criteria the EPA has established for this purpose. The EPA is proposing to find that circumstances here warrant the consideration of enforceable commitments and that the three criteria are met: (1) The commitments constitute a limited portion of the required emissions reductions, (2) both the State and the District have demonstrated their capability to meet their commitments, and (3) the commitments are for an appropriate timeframe. We therefore propose to approve the State's reliance on these enforceable commitments in its attainment demonstration.
Based on these evaluations, we propose to determine that the SJV PM
Baseline measures will provide the majority of emissions reductions needed to attain the 2012 annual PM
In the 2018 PM
Given the need for substantial emissions reductions from mobile and area sources to meet the NAAQS in California nonattainment areas, the State of California has developed stringent control measures for on-road and non-road mobile sources and the fuels that power them. California has unique authority under CAA section 209 (subject to a waiver by the EPA) to adopt and implement new emissions standards for many categories of on-road vehicles and engines and new and in-use non-road vehicles and engines. The EPA has approved multiple mobile source regulations for which waivers or authorizations have been issued as revisions to the California SIP.
CARB's mobile source program extends beyond regulations that are subject to the waiver or authorization process set forth in CAA section 209 to include standards and other requirements to control emissions from in-use heavy-duty trucks and buses, gasoline and diesel fuel specifications, and many other types of mobile sources. Generally, these regulations have also been submitted and approved as revisions to the California SIP.
As to stationary sources, in the 2018 PM
First, the District amended Rule 4905 (“Natural Gas-fired, Fan-type, Residential Central Furnaces”) on June 21, 2018, to extend the period during which manufacturers may pay emission fees in lieu of meeting the rule's NO
The EPA approved a prior version of Rule 4905 into the California SIP on March 29, 2016.
Second, the 2018 PM
In sum, although Table 4-1 of the 2018 PM
The SJV PM
CARB's commitments are contained in CARB Resolution 18-49 (October 25, 2018) and the Valley State SIP Strategy and consist of two parts: A control measure commitment and a tonnage commitment. First, CARB has committed to “begin the measure's public process and bring to the Board for consideration the list of proposed SIP measures outlined in the
The District's commitments are contained in SJVUAPCD Governing Board Resolution 18-11-16 (November 15, 2018) and Chapter 4 of the 2018 PM
In October 2021, CARB and the District provided the “Progress Report and Technical Submittal for the 2012 PM
Together, as of December 2021, CARB and the District together have adopted 18 measures of the 27 control measure commitments in the SJV PM
Accordingly, the EPA considers that, although CARB and the District have not met the commitment deadlines for several measures, as discussed further in this proposed rule, they have nonetheless made substantial progress in developing and adopting the regulatory measures listed in their respective control measure commitments. We provide further detail on CARB and the District's control measure commitments in section IV.A of the EPA's 2012 Annual PM
Regarding the remaining nine measures not yet proposed for board consideration, we note that one measure, Rule 4550 (“Conservation Management Practices”), has an action year of 2022 in the 2018 PM
The four overdue regulatory measures are: The Zero-Emission Airport Ground Support Equipment measure; the Zero-Emission Off-Road Forklift Regulation Phase 1 measure; the Low-emission Diesel Fuel Requirement; and Rule 4692 (“Commercial Under-fired Charbroiling (Hot-spot Strategy)”). While they have not proposed these measures to their respective boards, CARB and the District timely began the public process on each of the four measures. CARB anticipates board consideration of the diesel fuel measures in 2022 and the forklift measure as early as 2022 and continues to develop the airport ground support equipment measure. The District adopted the “Commercial Underfired Charbroiling Emission Reduction Strategy” on December 17, 2020, and continues to evaluate potential amendments to Rule 4692 in the near future.
The four overdue incentive-based control measures are for the Accelerated Turnover of Trucks and Buses Incentive Projects, the Accelerated Turnover of Off-road Equipment Incentive Projects, the Agricultural Operation Internal Combustion Engines Incentive Projects, and the Commercial Under-fired Charbroiling Incentive Projects. CARB and the District continue to invest in reducing emissions from these sources, as well as other incentive programs not named among the 27 control measure commitments, such as those for nut harvesting and landscape maintenance equipment.
Notwithstanding being overdue in presenting these incentive-based measures for board consideration, CARB and the District state that they continue to assess and/or prepare the formal documentation for the emission reductions from such incentive-based measures that could be applied towards the aggregate tonnage commitments.
CARB and the District point to certain measures that they anticipate will provide more emission reductions than the original emission reduction estimates (
As described in section IV.F.2 of this proposed rule, to attain the 2012 annual PM
As described in sections IV.F.3.b and IV.F.3.c of this proposed rule, CARB and the District have committed to achieve these reductions via the 27 control measure commitments, or such other substitute measures as may be necessary, to achieve the aggregate tonnage commitments for NO
Of the 18 measures adopted to date, as well as the adoption of an important substitute measure (the Agricultural Burning Phase-out Measure), the State has submitted 9 measures as revisions to the California SIP as of November 2021. The EPA has proposed or finalized action on four of these submitted measures, including three with large associated emission reductions of direct PM
First, on July 22, 2020, the EPA published its final approval of the District's 2019 amendment to Rule 4901
Second, on March 24, 2020, the EPA published its proposal to approve the Agricultural Equipment Incentive Measure into the California SIP,
Under longstanding guidance, the EPA has recommended presumptive limits on the amounts of emission reductions from certain voluntary and other nontraditional measures that may be credited in a SIP. Specifically, for voluntary mobile source emission reduction programs, the EPA has identified a presumptive limit of 3% of the additional emission reductions (beyond reductions from baseline measures) required to attain the appropriate NAAQS, and for any particular SIP submittal to demonstrate attainment or maintenance of the NAAQS or progress toward attainment (RFP), 3% of the specific statutory requirement.
According to the State, the SJV's topography and meteorology present significant challenges for air quality. As stated in the 2018 PM
Over the past several decades, the State and District have developed and implemented several comprehensive plans to address attainment of the NAAQS for ozone and particulate matter.
For purposes of the EPA's proposed rule on the Serious area plan for the 2012 annual PM
Third, CARB adopted the Lower Opacity Limits for Heavy-Duty Vehicles measure as revisions to the Heavy-Duty Vehicle Inspection Program (HDVIP) and Periodic Smoke Inspection Program (PSIP). CARB estimated 1,170 tons of PM emissions benefits from the heavy-duty trucking transportation sector from 2019 to 2025.
Fourth, the Agricultural Burning Phase-out Measure is a significant substitute measure that was not part of the State's original control measure commitments. The Agricultural Burning Phase-out Measure, for purposes of state law, was adopted by the District on June 17, 2021,
The EPA has evaluated this measure and has proposed to approve the measure into the California SIP.
For purposes of reviewing the Serious area plan for the 2012 annual PM
The EPA proposes that this is an appropriate calculation method to estimate the emission reductions from the Agricultural Burning Phase-out Measure. It builds upon the baseline measure in the Plan for this source category (
The EPA anticipates finalizing action on the proposed rule on the Agricultural Burning Phase-out Measure prior to or concurrent with final action on the Serious area plan for the 2012 annual PM
Beyond the three measures that the EPA proposes to credit towards the aggregate tonnage commitments, CARB and the District have made substantial progress in developing and adopting additional measures, as described in the 2021 Progress Report. CARB has provided updated emission reduction estimates for 10 additional measures, including 9 that have been adopted, as well as one substitute measure in development. The CARB measure with the largest updated emission reduction estimates is Heavy-Duty I/M. In the Valley State SIP Strategy, CARB originally estimated that Heavy-Duty I/M would achieve 6.8 tpd NO
In particular, CARB states that California Senate Bill 210, signed into law in 2019, enhances the regulatory authority of this program by requiring that on-road heavy-duty vehicles comply with Heavy-Duty I/M in order to register annually with the California Department of Motor Vehicles. CARB also states that the periodic testing component of the program would be complemented by “a new component, roadside emissions monitoring (remote sensing devices and/or CARB's Portable Emissions AcQuisition System, known as PEAQS) to detect high emitting
The EPA is not proposing to credit that amount of emission reductions towards the aggregate tonnage commitments at this time. The EPA would only take such action after Heavy-Duty I/M is approved by the California Office of Administrative Law, and the State submits the measure as a revision to the California SIP. Notwithstanding the fact that the EPA is not proposing to credit this program at this time, the EPA notes that CARB has developed this first-of-its-kind measure for on-road heavy-duty vehicles, documented its extensive regulatory and technical analyses in the measure's Initial Statement of Reasons and associated appendices,
CARB has also been developing a substitute In-Use Locomotive Measure and plans to present the measure for board consideration in 2022.
The District has similarly provided updated emission reduction estimates for eight additional measures, including seven that have been adopted. The District measures with the largest updated emission reduction estimates include amendments to Rule 4702 (“Internal Combustion Engines”) (0.61 tpd NO
At this time, the EPA is not proposing to credit towards the aggregate tonnage commitments the updated emission reduction estimates from these additional CARB and District measures (beyond those we propose to credit elsewhere in this proposed rule). The EPA will review and take action on the CARB and District measures submitted to date (Innovative Clean Transit, Rule 4311, Rule 4306, Rule 4320, and Rule 4702), as well as measure submissions in the future, in separate rulemakings, during which time the public will have an opportunity to review and provide comment. Although we are not proposing to credit reductions from these measures at this time, we have evaluated the updated emission reduction estimates to assess whether NO
Specifically, of the 12 additional measures for which CARB has provided updated emission reduction estimates, the emission reductions sum to 20.89 tpd NO
The combined emission reductions from these additional measures are 22.58 tpd NO
With respect to CARB's remaining emission reductions for NO
CARB identifies four measures of its original control measure commitments with updated emission reduction estimates of “<<0.1” or “N/A,” each of which is overdue. First, the Zero-Emission Airport Ground Support Equipment measure, for which the updated year for board consideration is not specified, had original emission reduction estimates that were quite small at <0.1 tpd NO
Third and fourth, the Accelerated Turnover of Trucks and Buses Incentive Projects measure and the Accelerated Turnover of Off-Road Equipment Incentive Projects measure had original emission reduction estimates of 8 tpd NO
In addition, CARB has identified further measures that were not included in the original control measure commitments that may provide emission reductions toward CARB's aggregate tonnage commitments.
Similarly, the District identifies three measures of its original control measure commitments with updated emission reduction estimates of “- -” or “TBD,” each of which is overdue, which we outline as follows. First and second, the regulatory measure and incentive-based measure for commercial charbroiling had original emission reduction estimates of 0.53 tpd direct PM
Third, the District originally estimated emission reductions of 1.07 tpd NO
The EPA does not have information at this time sufficient to quantify a precise amount of NO
In addition, CARB and the District assert that the District has achieved more direct PM
Thus, at this time, we are not proposing to approve any particular inter-pollutant trading approach for purposes of meeting the aggregate tonnage commitments, nor applying any excess reductions of one pollutant towards fulfilling a portion of committed reductions of the other pollutant. Nevertheless, we note that because, as proposed, the District's direct PM
The EPA interprets the CAA to allow for approval of enforceable commitments that are limited in scope where circumstances exist that warrant the use of such commitments in place of adopted and submitted measures.
Once the EPA determines that circumstances warrant consideration of an enforceable commitment to satisfy a CAA requirement, it considers three factors in determining whether to approve the enforceable commitment: (a) Does the commitment address a limited portion of the CAA requirement; (b) is the state capable of fulfilling its commitment; and (c) is the commitment for a reasonable and appropriate period of time.
With respect to the SJV PM
As part of their respective control measure commitments in the SJV PM
For the first factor, we look to see if the commitment addresses a limited portion of a statutory requirement, such as the amount of emissions reductions needed to attain the NAAQS in a nonattainment area. As shown in Table 5 of this proposed rule, most of the total emission reductions needed to attain the 2012 annual PM
Given the nature of the PM
Therefore, we conclude that the emission reductions remaining as enforceable commitments in the SJV PM
For the second factor, we consider whether the State and District are capable of fulfilling their commitments. As discussed in section IV.F.3.c of this proposed rule and shown in tables IV.A and IV.B of the EPA's 2012 Annual PM
The District has adopted eight measures (including one incentive-based measure) and begun the public process on two of the remaining four measures. The adopted measures include, for example, amendments to Rule 4311 (“Flares”), Rule 4702 (“Internal Combustion Engines”), and Rule 4901 (“Woodburning Fireplaces and Wood Burning Heaters”) (Hot-spot strategy), and the Residential Wood Burning Devices Incentive Projects measure.
As discussed in section IV.3.d of this proposed rule, the remaining aggregate tonnage commitments sum to 28.59 tpd NO
The updated emission reduction estimates for this series of additional CARB and District measures sum to
As further discussed in section IV.F.3.d of this proposed rule, we have considered the role of additional measures for which CARB and the District have not yet quantified an updated emission reduction estimate, which includes several CARB and District measures that may yet achieve sufficient emission reductions to fulfill the remaining aggregate tonnage commitment for NO
Beyond the measures discussed above, both CARB and the District have well-established incentive grant programs to reduce emissions from mobile, stationary, and area sources in the SJV. Funding for the State's incentive programs in the SJV comes from various sources including the Carl Moyer Program, Proposition 1B Goods Movement Emission Reduction Program, Greenhouse Gas Reduction Fund, and the Funding Agricultural Replacement Measures for Emission Reductions (FARMER) program.
Collectively, these incentive funds have been applied to a wide range of emission sources, including heavy-duty trucks, light-duty vehicles, mobile agricultural equipment, locomotives, school buses, alternative fuel infrastructure, community-based programs, agricultural irrigation pumps, residential wood combustion devices, and commercial charbroilers.
However, CARB staff explained that, in light of the progress to-date on committed-to regulatory measures and these two substitute measures, fewer incentive-based emission reductions may ultimately be needed to demonstrate attainment of the 2012 annual PM
More broadly, whether for regulatory measures or incentive-based measures, we note also that CARB and the District will have to submit to the EPA, for SIP approval, any control measure that it intends to rely on to satisfy the aggregate tonnage commitments in the Plan. Furthermore, where CARB or the District intend to substitute reductions in one pollutant to achieve a tonnage commitment concerning a different pollutant (
Given CARB and the District's progress in adopting 18 measures to date, their substantial progress toward achieving the aggregate tonnage commitments, including the District having met and exceeded its direct PM
For the third factor, we consider whether the commitment is for a reasonable and appropriate period of time. As discussed in section II.B of this proposed rule, on March 23, 2017, CARB adopted the 2016 State Strategy and directed staff to return to the Board with a commitment to achieve additional emission reductions from
In the Valley State SIP Strategy, CARB recognized that the earlier attainment dates for the 1997, 2006, and 2012 PM
The SJV PM
As discussed in section IV.F.3.c of this proposed rule, consistent with that schedule, CARB and the District have adopted 18 measures of the 27 control measure commitments and timely began public process on the 4 remaining regulatory measures. While CARB and the District are overdue in proposing the four remaining regulatory measures and the remaining four incentive measures to their respective boards, they have indicated that they will propose at least two of the remaining regulatory measures to their respective boards in 2022, including the Low-emission Diesel Fuel Requirement and Rule 4550 (“Conservation Management Practices”), and one more regulatory measure, the Zero-Emission Off-Road Forklift Regulation Phase 1 measure, as early as 2022.
We consider that these schedules provide a reasonable and appropriate amount of time for CARB and the District to achieve the remaining emission reductions necessary to attain the 2012 annual PM
Section 172(c)(2) of the Act provides that all nonattainment area plans shall require reasonable further progress (RFP) toward attainment. In addition, CAA section 189(c) requires that all PM
For purposes of the particulate matter NAAQS, RFP has historically been met by showing annual incremental emissions reductions sufficient to maintain “generally linear progress” toward attainment by the applicable deadline.
• The pollutant is emitted by a large number and range of sources,
• the relationship between any individual source or source category and overall air quality is not well known,
• a chemical transformation is involved (
• the emission reductions necessary to attain the PM
The EPA believes that the facts and circumstances of each specific area will be relevant to whether the emissions reductions meet the agency's expectations for generally linear progress.
The General Preamble Addendum also indicates that requiring generally linear progress may be less appropriate in other situations, such as:
• Where there are a limited number of sources of direct PM or a relevant precursor,
• where the relationships between individual sources and air quality are relatively well defined, and/or
• where the emission control systems utilized (
In nonattainment areas characterized by any of these latter conditions, the EPA has recommended that RFP may be met by stepwise progress as controls are implemented and achieve significant reductions soon thereafter. For example, if an area's nonattainment problem can be attributed to a few major stationary sources, EPA guidance recommends that states may meet RFP by “adherence to an ambitious compliance schedule” that is likely to yield significant reductions of direct PM or a PM precursor on a periodic basis, rather than on a generally linear basis.
Plans for PM nonattainment areas should include detailed schedules for compliance with emission control measures in the area and provide corresponding annual emission reductions to be achieved by each milestone in the schedule.
In addition to the EPA's longstanding guidance on the RFP requirements for
A state intending to meet the RFP requirement on a stepwise basis must provide an appropriate justification for the selected implementation schedule.
Section 189(c) of the Act requires that PM
The CAA does not specify the starting point for counting the three-year periods for quantitative milestones under CAA section 189(c). In the General Preamble and General Preamble Addendum, the EPA interpreted the CAA to require that the starting point for the first three-year period be the due date for the Moderate area plan submission.
Quantitative milestones must provide for objective evaluation of reasonable further progress toward timely attainment of the PM
Appendix H (“RFP, Quantitative Milestones, and Contingency”) of the 2018 PM
The State addressed the RFP and quantitative milestone requirements in Appendix H to the 2018 PM
Table H-6 and Table H-7 of Appendix H (reproduced in Table 7 of this proposed rule) identify the reductions needed for attainment of the 2012 annual PM
Based on the data in tables 6 and 7 of this proposed rule, CARB and the District set RFP targets for the attainment year and quantitative milestone years as shown in Table H-11 of Appendix H (reproduced in Table 8 of this proposed rule). The targets are consistent with a stepwise approach to demonstrating RFP. The emission projections show steady reductions over time. The reductions between the 2013 base year and the 2019 milestone year (51.6% of the direct PM
According to the Plan, reductions in both direct PM
CARB and the District's control strategy in the 2018 PM
CARB's mobile source control program provides significant ongoing reductions in emissions of direct PM
The Truck and Bus Regulation, first adopted in 2008 and amended in 2011, has rolling compliance deadlines based on truck engine model year (MY). CARB's implementation of the Truck and Bus Regulation includes phase-in requirements for PM
For non-road vehicles, CARB adopted the Off-Road Regulation in 2007 to regulate vehicles used in construction, mining, and other industrial applications. The Off-Road Regulation requires owners to (1) replace older engines or vehicles with newer, cleaner models, (2) retire older vehicles or reduce their use, or (3) apply retrofit exhaust controls.
The District has also adopted numerous stationary and area source rules for direct PM
With respect to the 2022 milestone year, Rule 4354 was amended in 2011 to lower certain limits on emissions of NO
For the remainder of the emission reductions necessary for attainment, the SJV PM
The 2018 PM
The anticipated implementation schedule for new CARB measures is presented in Table 4-8 of the 2018 PM
Section H.1.3 of Appendix H of the Plan provides the State's and District's justifications for the stepwise approach to meeting the RFP requirement and the related implementation schedules for new or revised control measures. These justifications include the time needed to engage in the rulemaking process, including time for state and local public processes; the need to provide time for industry to comply with new regulatory requirements; the need to resolve feasibility issues for emerging technologies; and, for CARB mobile source measures, the need for affected industries to prepare technologies and infrastructure for market-scale adoption.
For example, Appendix H of the 2018 PM
CARB and the District discussed in greater detail a number of specific implementation challenges as part of their justification for meeting the RFP requirement by the stepwise approach in the Plan. For NO
“The objective of many of CARB's new measures is to introduce or advance innovative technologies in early stages of development or market penetration. In the case of technology-forcing regulations, . . . time is needed by the affected industry to ready the technologies, including infrastructure, for market-scale adoption, and would have been discussed previously by CARB and stakeholders during the measure development phase. The time required to facilitate new and innovative technologies is a principle driver of the timeline for control measure implementation CARB laid out in Table 4-8.”
CARB provided more specific information regarding two of these measures on pages H-9 and H-10 of Appendix H. For instance, the development of Heavy-Duty I/M was affirmed by California legislative action in 2019, and CARB was working on program design and infrastructure to implement new legislative direction.
The new direct PM
As discussed in section IV.F.3.c of this proposed rule, CARB and the District have adopted 18 measures of the 27 control measure commitments, a majority of which will achieve direct PM
With respect to the commercial charbroiling, according to information provided in Appendix C of the 2018 PM
While the District has not proposed to its Governing Board amendments to Rule 4692 that impose new control requirements on UFCs, in presenting the District's “Commercial Underfired Charbroiling Emission Reduction Strategy” to its Governing Board on December 17, 2020, the District expressed continued difficulty in identifying feasible control technologies for under-fired charbroiling restaurants, particularly given the “unprecedented impacts of the COVID-19 pandemic to the restaurant industry” that limited revenue streams.
The 2018 PM
Appendix H of the 2018 PM
We note, however, that while quantitative milestones are required for 2019 in the context of the Moderate area plan for the 2012 annual PM
The 2018 PM
In addition to these baseline measures, the 2018 PM
For the 2022 milestone year, Appendix H of the 2018 PM
Appendix H describes CARB's quantitative milestone as a report on two measure-specific milestones: (1) Actions taken between 2019 and 2022 to implement the Truck and Bus Regulation that required particulate filters and cleaner engine standards on existing heavy-duty diesel trucks and buses in California, and (2) the “status of SIP measures adopted between 2019 and 2022, including
For the 2025 attainment year, Appendix H of the 2018 PM
Appendix H describes CARB's quantitative milestone as a report on three measure-specific milestones: (1) “[i]dentify the number of pieces of agricultural equipment turned over to Tier 4 Final due to the
We have evaluated the RFP demonstration in Appendix H of the 2018 PM
Second, the RFP demonstration contains projected emission levels for direct PM
Third, the projected emissions levels based on the implementation schedule in the Plan demonstrate that the control strategy will achieve reasonable further progress toward attainment between the 2013 baseline year and the 2025 attainment year as required by 40 CFR 51.1012(a)(3). Tables 7 and 8 of this proposed rule show decreases in emissions levels in each milestone year, leading to the achievement of the reductions required for attainment in 2025.
Finally, the RFP demonstration shows that overall pollutant emissions will be at levels that reflect stepwise progress between the base year and the attainment year and provides a justification for the selected implementation schedule, as required by 40 CFR 51.1012(a)(4). The steeper decline in emissions by 2025 is primarily due to commitments by CARB and the District to achieve reductions from new control measures by 2025. CARB and the District's justifications for their selected implementation schedules,
We note that although both CARB and the District have committed to propose to their respective boards certain new or revised control measures in the years leading up to the 2025 attainment year, the only enforceable commitment in the Plan that requires adoption of control measures is the tonnage commitment for reductions by 2025, which provides the basis for the stepwise approach to RFP.
Appendix H of the 2018 PM
CARB's quantitative milestones in Appendix H are to take action on or to implement specific measures listed in the State's control measure commitments that apply to heavy-duty trucks and buses, light-duty vehicles, and non-road equipment sources and may provide substantial reductions in emissions of direct PM
For these reasons, we propose to determine that the SJV PM
We note that on January 13, 2020, CARB submitted the “2019 Quantitative Milestone Report for the 2012 PM
Under CAA section 172(c)(9), states required to make an attainment plan SIP submission must include contingency measures that they will implement if the area fails to meet RFP (“RFP contingency measures”) or fails to attain the NAAQS by the applicable attainment date (“attainment contingency measures”). Under the PM
The purpose of contingency measures is to continue progress in reducing emissions while a state revises its SIP to meet the missed RFP requirement or to correct ongoing nonattainment. Neither the CAA nor the EPA's implementing regulations establish a specific amount of emission reductions that implementation of contingency measures must achieve, but the EPA recommends that contingency measures should provide for emission reductions equivalent to approximately one year of reductions needed for RFP in the nonattainment area, calculated as the overall level of reductions needed to demonstrate attainment divided by the number of years from the base year to the attainment year. In general, we expect all actions needed to effect full implementation of the measures to occur within 60 days after the EPA notifies the state of a failure to meet RFP or to attain.
To satisfy the requirements of 40 CFR 51.1014, the contingency measures adopted as part of a PM
The 2018 PM
With respect to the District contingency measure, the 2018 PM
District Rule 4901 is designed to limit emissions generated by the use of wood burning fireplaces, wood burning heaters, and outdoor wood burning devices. The rule establishes requirements for the sale/transfer, operation, and installation of wood burning devices and for advertising the sale of seasoned wood consistent with a moisture content limit within the SJV.
The rule includes a two-tiered, episodic wood burning curtailment requirement that applies during four winter months, November through February. During a level one episodic wood burning curtailment, section 5.7.1 prohibits any person from operating a wood burning fireplace or unregistered wood burning heater but permits the use of a properly operated wood burning heater that meets certification requirements and has a current registration with the District. Sections 5.9 through 5.11 impose specific registration requirements on any person operating a wood burning fireplace or wood burning heater and section 5.12 imposes specific certification requirements on wood burning heater professionals. During a level two episodic wood burning curtailment, operation of any wood burning device is prohibited by section 5.7.2.
Prior to the 2019-2020 wood burning season, the District imposed a level one curtailment when the PM
The District's 2019 revision to Rule 4901 also included the addition of a contingency measure in section 5.7.3 of the rule, requiring that 60 days following the effective date of an EPA final rulemaking that the SJV has failed to attain the 1997, 2006, or 2012 PM
We have evaluated the contingency measure element of the 2018 PM
As noted in our summary of the State's submission, the contingency measure in District Rule 4901 is structured to provide for implementation if the area fails to attain the 2012 annual PM
In accordance with 40 CFR 51.1014, the contingency measure in District Rule 4901 identifies a specific triggering mechanism. In this case, the triggering mechanism in the rule is the EPA's final determination that the SJV has failed to attain the 2012 annual PM
In addition, the contingency measure provision of Rule 4901 is not structured to achieve any additional emissions reductions if the EPA finds that monitoring locations in the “hot spot” counties (
Next, we considered the adequacy of the contingency measure in section 5.7.3 of District Rule 4901 from the standpoint of the magnitude of emissions reductions the measure would provide if triggered. Neither the CAA nor the EPA's implementing regulations for the PM
For these reasons, we propose to disapprove the contingency measure element of the 2018 PM
If the EPA finalizes the proposed disapproval of the contingency measure element for the 2012 annual PM
Section 176(c) of the CAA requires federally funded or approved actions in nonattainment and maintenance areas to conform to the SIP's goals of eliminating or reducing the severity and number of violations of the NAAQS and achieving expeditious attainment of the standards. Conformity to the SIP's goals means that such actions will not: (1) Cause or contribute to new violations of a NAAQS, (2) increase the frequency or severity of an existing violation, or (3) delay timely attainment of any NAAQS or any interim milestone.
Actions involving Federal Highway Administration (FHWA) or Federal Transit Administration (FTA) funding
Under the PM
PM
In addition, transportation conformity requirements apply with respect to emissions of NO
It is not always necessary for states to establish motor vehicle emissions budgets for all of the PM
Additionally, the transportation conformity regulations contain criteria for determining whether emissions of one or more PM
Transportation conformity trading mechanisms are allowed under 40 CFR 93.124 where a state establishes appropriate mechanisms for such trades. The basis for the trading mechanism is the SIP attainment modeling that establishes the relative contribution of each PM
The EPA's process for determining the adequacy of a budget consists of three basic steps: (1) Notifying the public of a SIP submittal; (2) providing the public the opportunity to comment on the budgets during a public comment period; and (3) making a finding of adequacy or inadequacy.
The 2018 PM
The required budget years applicable to the Serious area plan portion of the 2018 PM
Furthermore, the EPA would begin the motor vehicle emissions budget adequacy and approval review processes for the 2028 post-attainment milestone year budgets only if the area fails to attain the standard by December 31, 2025 (the applicable Serious area attainment date if the EPA were to finalize approval of the 2018 PM
The direct PM
In the submittal letter for the 2018 PM
The 2018 PM
To ensure that the trading mechanism does not affect the ability of the SJV to meet the NO
The EPA generally first conducts a preliminary review of budgets submitted with an attainment or maintenance plan for PM
Based on our proposal to approve the State's demonstration that emissions of ammonia, SO
For the reasons discussed in sections IV.G and IV.F of this proposed rule, the EPA is proposing to approve the RFP and attainment demonstrations, respectively, in the 2018 PM
As discussed in section IV.I.2 of this proposed rule, we have already approved the 2022 RFP budgets for the SJV as part of our final rule on the State's Moderate area plan for the 2012 annual PM
As noted above, the State included a trading mechanism to be used in transportation conformity analyses that would be used in conjunction with the budgets in the 2018 PM
The EPA has reviewed the trading mechanism as described on pages D-125 through D-127 in Appendix D of the 2018 PM
In the updated analysis for the 2018 PM
Under the transportation conformity rule, once budgets are approved, they cannot be superseded by revised budgets submitted for the same CAA purpose and the same year(s) addressed by the previously approved SIP until the EPA approves the revised budgets as a SIP revision. As a general matter, such approved budgets cannot be superseded
In the submittal letter for the 2018 PM
Lastly, in section IV.H of this proposed rule, the EPA is proposing to disapprove the contingency measure element of the 2018 PM
For the reasons discussed in this proposed rule, under CAA section 110(k)(3), the EPA proposes to approve, as a revision to the California SIP, the following portions of the SJV PM
1. The 2013 base year emission inventories (CAA section 172(c)(3) and 40 CFR 51.1008(b));
2. the demonstration that BACM, including BACT, for the control of direct PM
3. the demonstration (including air quality modeling) that the Plan provides for attainment as expeditiously as practicable but no later than December 31, 2025 (CAA sections 189(b)(1)(A) and 40 CFR 51.1011(b));
4. plan provisions that require RFP toward attainment by the applicable date (CAA section 172(c)(2) and 40 CFR 51.1012(a));
5. quantitative milestones that are to be achieved every three years until the area is redesignated attainment and that demonstrate RFP toward attainment by the applicable attainment date (CAA section 189(c) and 40 CFR 51.1013(a)(2)(i));
6. motor vehicle emissions budgets for 2025 as shown in Table 9 of this proposed rule (CAA section 176(c) and 40 CFR part 93, subpart A); and
7. the inter-pollutant trading mechanism provided for use in transportation conformity analyses for the 2012 annual PM
We may, however, reconsider this proposal if, based on new information or public comments, we find that the State has not satisfied the statutory criteria for Serious area PM
Pursuant to CAA section 110(k)(3), the EPA proposes to disapprove the contingency measure element of the 2018 PM
If we finalize the disapproval of the contingency measure element as proposed, the offset sanction in CAA section 179(b)(2) would apply in the SJV 18 months after the effective date of a final disapproval, and the highway funding sanctions in CAA section 179(b)(1) would apply in the area six months after the offset sanction is imposed.
In addition to the sanctions, CAA section 110(c)(1) provides that the EPA must promulgate a federal implementation plan (FIP) addressing any disapproved elements of an attainment plan two years after the effective date of disapproval unless the State submits, and the EPA approves, a SIP submission that cures the disapproved elements.
Also, we previously approved the Serious area plan RFP and attainment demonstrations and the motor vehicle emissions budgets for the 2006 24-hour PM
Without a protective finding, the final disapprovals would result in a conformity freeze, under which only projects in the first four years of the most recent conforming Regional Transportation Plans (RTPs) and Transportation Improvement Programs (TIPs) can proceed. Generally, during a freeze, no new RTPs, TIPs, or RTP/TIP amendments can be found to conform until another control strategy implementation plan revision fulfilling the same CAA requirements is submitted, the EPA finds its motor vehicle emissions budget(s) adequate pursuant to § 93.118 or approves the submission, and conformity to the implementation plan revision is determined.
We will accept comments from the public on these proposals for the next 30 days. The deadline and instructions for submission of comments are provided in the
Additional information about these statutes and Executive Orders can be found at
This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.
This action does not impose an information collection burden under the PRA because this action does not impose additional requirements beyond those imposed by state law.
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities beyond those imposed by state law.
This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This action does not impose additional requirements beyond those imposed by state law. Accordingly, no additional costs to state, local, or tribal governments, or to the private sector, will result from this action.
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications, as specified in Executive Order 13175, because the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, and will not impose substantial direct costs on tribal governments or preempt tribal law. Thus, Executive Order 13175 does not apply to this action.
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not impose additional requirements beyond those imposed by state law.
This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.
Section 12(d) of the NTTAA directs the EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. The EPA believes that this action is not subject to the requirements of section 12(d) of the NTTAA because application of those requirements would be inconsistent with the CAA.
The EPA lacks the discretionary authority to address environmental justice in this rulemaking.
Environmental protection, Air pollution control, Ammonia, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Particulate matter, Reporting and recordkeeping requirements, Sulfur dioxide, Volatile organic compounds.
42 U.S.C. 7401