Question Presented

Can debt collection and consumer reporting practices relating to nursing home debts that are invalid under the Nursing Home Reform Act violate the Fair Debt Collection Practices Act (FDCPA) and Fair Credit Reporting Act (FCRA)?

Yes. Under the Nursing Home Reform Act, a nursing facility may not condition a resident's admission or continued stay on receiving a guarantee of payment from a third party, such as a relative or friend. Contractual provisions that violate that prohibition are illegal and unenforceable. As detailed in this Circular, certain practices related to the collection of nursing home debts that are invalid under the Nursing Home Reform Act and its implementing regulation violate the FDCPA and FCRA.

Enacted in 1987, the Nursing Home Reform Act establishes a comprehensive set of requirements that protect the health, safety, welfare, and rights of residents of nursing facilities that participate in Medicaid and Medicare. 1 The Centers for Medicare & Medicaid Services (“CMS”) and the Department of Health and Human Services (“HHS”) have issued rules implementing the Nursing Home Reform Act. 2 State agencies are responsible for surveying nursing facilities for compliance with the Nursing Home Reform Act's requirements concerning admissions agreements, and HHS and CMS are responsible for the enforcement of those requirements. 3

Among other protections, the Nursing Home Reform Act and its implementing regulation prohibit a nursing facility that participates in Medicaid or Medicare from requesting or requiring a third-party guarantee of payment as a condition of admission, expedited admission, or continued stay in the facility. 4 As HHS has explained, this prohibition prevents a nursing facility “from requiring a person other than the resident to assume personal responsibility for any cost of the resident's care.”  5 The prohibition applies to all residents and prospective residents of a nursing facility, regardless of whether they are eligible for Medicare or Medicaid. 6 The Nursing Home Reform Act further provides that a nursing facility may require a resident's representative who has legal access to a resident's available income or resources to sign a contract to provide the facility payment from the resident's income or resources, so long as the representative does not incur personal financial liability. 7

Through these provisions, Congress sought to prohibit nursing facilities “from requiring a person, such as a relative, to accept responsibility for the charges incurred by a resident, unless that person is authorized by law to disburse the income or assets of the resident.”  8 A nursing facility's admissions agreement may not contain terms that conflict with the Nursing Home Reform Act and its implementing regulation, 9 and courts have recognized that contract terms that conflict with the Nursing Home Reform Act and its implementing regulation are unenforceable. 10

Some States have adopted State law analogues of the Nursing Home Reform Act that prohibit nursing facilities from requiring third-party guarantees, and admissions agreements can also be unenforceable if they violate those State law prohibitions. 11

While the CFPB does not enforce compliance with the Nursing Home Reform Act and is generally not responsible for overseeing the activities of nursing facilities, the CFPB is responsible for issuing rules regarding and enforcing compliance with the FDCPA and FCRA. 12 The FDCPA and FCRA can also be enforced by other Federal government agencies and States, 13 and through private actions brought by consumers. 14 The CFPB is issuing this Circular to emphasize that certain practices involving the collection of nursing home debts can violate the FDCPA and FCRA. 15

Nursing facilities and their third-party debt collectors at times seek to collect residents' debts from relatives and other third parties when the resident cannot afford to pay. The nursing facilities reportedly collect unpaid balances, often after the resident's discharge or death, directly from third parties. If the third-party refuses to pay the arrears, some nursing facilities hire debt collectors to demand payment, report the debt to consumer reporting companies as the third party's personal debt, and sue the third party in court.

An amount that is owed or allegedly owed for nursing facility services is a “debt” under the FDCPA because it arises out of a consumer transaction. 16 When a nursing facility claims that a resident's bill has not been paid, it may engage a third-party debt collector subject to the FDCPA and Regulation F to collect the resident's debt, 17 including when the facility claims that a third party is personally financially responsible for the debt. Among other things, the FDCPA and Regulation F prohibit the use of “any false, deceptive, or misleading representation or means in connection with the collection of any debt.”  18 That prohibition includes, for example, using a false representation of the “character, amount, or legal status of any debt”; a “threat to take any action that cannot legally be taken or that is not intended to be taken”; and “any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.”  19

The prohibition on misrepresentations includes misrepresenting that a consumer must pay a debt that arises from a contract provision that is illegal and unenforceable under Federal or State law. Thus, a debt collector, including a law firm in litigation, 20 that represents that a third party must personally pay a nursing facility resident's debt may violate the prohibition on misrepresentations where the debt is invalid under the Nursing Home Reform Act, its implementing regulation, or one of its State law analogues. 21

The CFPB is also aware that debt collectors sometimes claim that a third party, such as a relative of the resident, is personally liable for the resident's debt because the third party engaged in financial wrongdoing in relation to the resident's resources. In some cases, debt collectors make such allegations in debt collection lawsuits without having any factual basis for the allegations, and the allegations prove to be false. A debt collector may violate the FDCPA's prohibition on misrepresentations by making a false, baseless allegation in a lawsuit that a third party engaged in financial wrongdoing as a means to hold them personally liable for a resident's debts. 22

The FCRA and its implementing Regulation V impose obligations on consumer reporting companies and on debt collectors who furnish information to consumer reporting companies, including obligations relating to the accuracy of information in consumer reports. For example, a furnisher must “establish and implement reasonable written policies and procedures regarding the accuracy and integrity of the information relating to consumers that it furnishes to a consumer reporting agency.”  23 Furnishers must also investigate consumer disputes concerning the accuracy of the information furnished, 24 and are prohibited from furnishing inaccurate information to any consumer reporting company after receiving notice from a consumer that particular information is inaccurate. 25 In addition, consumer reporting companies “shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates”  26 and must investigate consumer disputes. 27

It is inaccurate to report that a consumer owes a debt when the debt is based on an illegal contract term. Thus, a debt collector who furnishes information about nursing home debts, or a consumer reporting company that includes such information in a consumer report, may violate FCRA and Regulation V if those debts are invalid and unenforceable under the Nursing Home Reform Act, its implementing regulation, or one of its State law analogues. A furnisher or consumer reporting company also violates FCRA or Regulation V if it fails to meet its dispute obligations with respect to information related to such debts.

Consumer Financial Protection Circulars are issued to all parties with authority to enforce Federal consumer financial law. The CFPB is the principal Federal regulator responsible for administering Federal consumer financial law, see 12 U.S.C. 5511, including the Consumer Financial Protection Act's prohibition on unfair, deceptive, and abusive acts or practices, 12 U.S.C. 5536(a)(1)(B), and 18 other “enumerated consumer laws,” 12 U.S.C. 5481(12). However, these laws are also enforced by State attorneys general and State regulators, 12 U.S.C. 5552, and prudential regulators including the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the National Credit Union Administration. See, e.g., 12 U.S.C. 5516(d), 5581(c)(2) (exclusive enforcement authority for banks and credit unions with $10 billion or less in assets). Some Federal consumer financial laws are also enforceable by other Federal agencies, including the Department of Justice and the Federal Trade Commission, the Farm Credit Administration, the Department of Transportation, and the Department of Agriculture. In addition, some of these laws provide for private enforcement.

Consumer Financial Protection Circulars are intended to promote consistency in approach across the various enforcement agencies and parties, pursuant to the CFPB's statutory objective to ensure Federal consumer financial law is enforced consistently. 12 U.S.C. 5511(b)(4).

Consumer Financial Protection Circulars are also intended to provide transparency to partner agencies regarding the CFPB's intended approach when cooperating in enforcement actions. See, e.g., 12 U.S.C. 5552(b) (consultation with CFPB by State attorneys general and regulators); 12 U.S.C. 5562(a) (joint investigatory work between CFPB and other agencies).

Consumer Financial Protection Circulars are general statements of policy under the Administrative Procedure Act. 5 U.S.C. 553(b). They provide background information about applicable law, articulate considerations relevant to the Bureau's exercise of its authorities, and, in the interest of maintaining consistency, advise other parties with authority to enforce Federal consumer financial law. They do not restrict the Bureau's exercise of its authorities, impose any legal requirements on external parties, or create or confer any rights on external parties that could be enforceable in any administrative or civil proceeding. The CFPB Director is instructing CFPB staff as described herein, and the CFPB will then make final decisions on individual matters based on an assessment of the factual record, applicable law, and factors relevant to prosecutorial discretion.

Background

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain GE GEnx-2B67/P model turbofan engines with an affected LPTR stage 4 disk or LPTR stage 6 disk installed, identified by part number and serial number. The NPRM published in the Federal Register on June 22, 2022 (87 FR 37247). The NPRM was prompted by the engine manufacturer notifying the FAA of the detection of an iron inclusion in a forging, which may reduce the fatigue life of certain LPTR stage 4 disks and LPTR stage 6 disks. The manufacturer's investigation determined that the inclusion is a melt-related defect and that, as a result of the inclusion forming in the forging, certain LPTR stage 4 disks and LPTR stage 6 disks may have reduced material properties and a lower fatigue life capability. Reduced material properties may cause premature LPTR stage 4 disk and LPTR stage 6 disk fracture, which could result in uncontained debris release. As a result of its investigation, the manufacturer published service information that specifies procedures for the removal and replacement of certain LPTR stage 4 disks and LPTR stage 6 disks installed on GEnx-2B67/P model turbofan engines. This condition, if not addressed, could result in uncontained debris release, damage to the engine, and damage to the airplane. In the NPRM, the FAA proposed to require the removal of certain LPTR stage 4 disks and LPTR stage 6 disks from service and replacement with parts eligible for installation. The FAA is issuing this AD to address the unsafe condition on these products.

The FAA received one comment, from The Boeing Company (Boeing). Boeing concurred with the contents of the NPRM.

The FAA reviewed the relevant data, considered the comment received, and determined that air safety requires adopting the AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on these products. Except for minor editorial changes, this AD is adopted as proposed in the NPRM.

The FAA reviewed GE GEnx-2B Service Bulletin (SB) 72-0448 R00, dated February 7, 2022. This SB describes procedures for removing the affected LPTR stage 4 disks and LPTR stage 6 disks from service.

The FAA estimates that this AD affects 4 engines installed on airplanes of U.S. registry.

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

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

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

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

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

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

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

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

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

History

The FAA published a final rule (87 FR 54880; September 8, 2022) effective on November 3, 2022, that included an amendment of jet route J-52. The rule inadvertently re-inserted the route segment “Liberal, KS, INT Liberal 137° and Ardmore, OK 309° radials” in the J-52 description that had been removed as published in an earlier action (87 FR 38916; June 30, 2022) which became effective on September 8, 2022.

This rule corrects that error by removing the route segment and editing the J-52 route description accordingly.

Jet routes are published in paragraph 2004 of FAA Order JO 7400.11G, dated August 19, 2022, and effective September 15, 2022 which is incorporated by reference in 14 CFR 71.1. The ATS route listed in this document will be published subsequently in FAA Order JO 7400.11.

Accordingly, pursuant to the authority delegated to me, the description of jet route J-52, published in the Federal Register of September 8, 2022 (87 FR 54880), FR Doc. 2022-19287, is corrected as follows:

I. Executive Summary

This action extends the expiration date of Special Federal Aviation Regulation (SFAR) No. 117, title 14 Code of Federal Regulations (CFR), 91.1617, from October 31, 2022, until October 31, 2024. SFAR No. 117, 14 CFR 91.1617, prohibits certain flight operations in the Tehran FIR (OIIX) by all: U.S. air carriers; U.S. commercial operators; persons exercising the privileges of an airman certificate issued by the FAA, except when such persons are operating U.S.-registered aircraft for a foreign air carrier; and operators of U.S.-registered civil aircraft, except when the operator of such aircraft is a foreign air carrier. Consistent with other recently published flight prohibition SFARs, this action also republishes, with minor administrative revisions, the approval process and exemption information for this SFAR for consistency with other recently-published flight prohibition SFARs.

The FAA is responsible for the safety of flight in the U.S. and for the safety of U.S. civil operators, U.S.-registered civil aircraft, and U.S.-certificated airmen throughout the world. Sections 106(f) and (g) of title 49, U.S. Code (U.S.C.), subtitle I, establish the FAA Administrator's authority to issue rules on aviation safety. Subtitle VII of title 49, Aviation Programs, describes in more detail the scope of the agency's authority. Section 40101(d)(1) provides that the Administrator shall consider in the public interest, among other matters, assigning, maintaining, and enhancing safety and security as the highest priorities in air commerce. Section 40105(b)(1)(A) requires the Administrator to exercise this authority consistently with the obligations of the U.S. Government under international agreements.

The FAA is promulgating this rule under the authority described in 49 U.S.C. 44701, General requirements. Under that section, the FAA is charged broadly with promoting safe flight of civil aircraft in air commerce by prescribing, among other things, regulations and minimum standards for practices, methods, and procedures that the Administrator finds necessary for safety in air commerce and national security. This regulation is within the scope of the FAA's authority because it continues to prohibit the persons described in paragraph (a) of SFAR No. 117, § 91.1617, from conducting flight operations in the Tehran FIR (OIIX) due to the continuing hazards to the safety of U.S. civil flight operations, as described in the preamble to this final rule.

Section 553(b)(3)(B) of title 5, U.S. Code, authorizes agencies to dispense with notice and comment procedures for rules when the agency for “good cause” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Also, section 553(d) permits agencies, upon a finding of good cause, to issue rules with an effective date less than 30 days from the date of publication. In this instance, the FAA finds good cause to forgo notice and comment because notice and comment would be impracticable and contrary to the public interest. In addition, it is contrary to the public interest to allow this SFAR to expire.

The risk environment for U.S. civil aviation in airspace managed by other countries with respect to safety of flight is fluid in circumstances involving weapons capable of targeting or otherwise negatively affecting U.S. civil aviation, as well as other hazards to U.S. civil aviation associated with fighting, extremist or militant activity, or heightened tensions. This fluidity and the need for the FAA to rely upon classified information in assessing these risks makes providing notice and opportunity to comment impracticable and contrary to the public interest. The potential for rapid changes in the risks to U.S. civil aviation significantly limits how far in advance of a new or amended flight prohibition the FAA can usefully assess the risk environment. Furthermore, to the extent that these rules and any amendments are based upon classified information, the FAA cannot share such information with the general public. As a result, engaging in notice and comment would be impracticable.

Additionally, it is crucial that the FAA's flight prohibitions, and any amendments thereto, reflect the agency's current understanding of the risk environment for U.S. civil aviation. This allows the FAA to protect the safety of U.S. operators' aircraft and the lives of their passengers and crews without over-restricting U.S. operators' routing options. The delay that would be occasioned by providing an opportunity to comment on this action would mean that the resulting final action would not be based on the latest information about aviation risk in a fluid environment.

As described in the preamble to this rule, extending the flight prohibition for U.S. civil aviation operations in the Tehran FIR (OIIX) is necessary due to continuing safety-of-flight hazards associated with the ongoing risk of misidentification of civil aircraft in an environment of continued heightened tensions in the region, as well as the risks to civil aircraft from unannounced military activities, including ballistic missile launches and unmanned aircraft systems (UAS) operations, in the region.

Accordingly, the FAA finds good cause exists to forgo notice and comment and any delay in the effective date for this rule.

The FAA originally issued SFAR No. 117, 14 CFR 91.1617, after Iran conducted retaliatory ballistic missile strikes targeting U.S. air bases in Iraq on January 7, 2020, following the death of Iranian Revolutionary Guard Corps (IRGC) Quds Force Commander Qassem Soleimani in a U.S. airstrike. 1 Due to the heightened military activities in the region at that time, including the heightened alert status of Iranian military forces, and elevated political tensions in the Middle East, which included the potential for further escalation, the FAA determined an unacceptable risk to U.S. civil aviation existed in the Baghdad FIR (ORBB), the Tehran FIR (OIIX), and the overwater areas of the Persian Gulf and the Gulf of Oman due to the potential for miscalculation or misidentification.

To address these immediate safety-of-flight hazards, on January 7, 2020, UTC, the FAA issued Notices-to-Airmen (NOTAMs) KICZ A0001/20, A0002/20, and A0003/20, which prohibited U.S. civil flight operations in the Baghdad FIR (ORBB), the Tehran FIR (OIIX), and the overwater airspace above the Persian Gulf and the Gulf of Oman, respectively. 2 Unfortunately, within hours after the FAA issued NOTAM KICZ A0002/20, Iranian air defense forces accidentally shot down Ukraine International Airlines Flight 752 (PS 752), shortly after its departure from Tehran Imam Khomeini International Airport (OIIE). These forces apparently misidentified the aircraft, which was conducting a regularly scheduled passenger flight, as a missile threat. There were no survivors out of the 176 passengers and crew.

Following this tragedy, there was uncertainty about how long the hazards to civil aviation in the Tehran FIR (OIIX) would persist; whether Iran would be transparent in its investigation into the downing of PS 752; and whether Iran would implement changes in its air defense command and control procedures, airspace de-confliction processes, and rules of engagement for air defense engagements to reduce the risk of further tragedies sufficiently to allow for safe U.S. civil aviation operations in the Tehran FIR (OIIX).

The FAA continues to assess the situation in the Tehran FIR (OIIX) as presenting an unacceptable risk to the safety of U.S. civil aviation. Heightened regional tensions remain. The FAA has received no information indicating that Iran has implemented changes to its air defense command and control procedures, airspace de-confliction procedures, and rules of engagement that sufficiently diminish the risk of another accidental shoot down of a civil aircraft by Iranian air defense units in the Tehran FIR (OIIX) during the current or future periods of heightened tensions for U.S. civil aviation operations to resume safely.

Additionally, when the FAA initially issued SFAR No. 117, § 91.1617, the agency was also concerned about the wide array of military activities occurring in, emanating from, or transiting the Tehran FIR (OIIX), in an environment of heightened regional tensions. There was the potential for Iranian ballistic missile fire from western Iran targeting Islamic State of Iraq and ash-Sham (ISIS) and Kurdish opposition groups located in the region, as had occurred in September 2018 and June 2017. Iran had also conducted multiple ballistic missile test launches in the Tehran FIR (OIIX). To the FAA's knowledge, Iran had not issued a NOTAM or other aeronautical information to warn civil aircraft operators of the potential hazard to their operations prior to these missile launches. Additionally, the FAA assessed a potential inadvertent risk to U.S. civil aviation operations in the Tehran FIR (OIIX) from Iranian-fielded Global Positioning System (GPS) and communication jammers continued to exist. These circumstances further contributed to the unacceptable risk environment for U.S. civil aviation in the Tehran FIR (OIIX).

The FAA has continued concerns regarding the potential for unannounced Iranian ballistic missile fire, as well as UAS activity, originating from western Iran and targeting sites in the region. Such activity presents safety-of-flight hazards to civil aviation and airspace de-confliction challenges. On March 12, 2022, up to twelve Fateh-110 surface-to-surface ballistic missiles launched from western Iran and impacted near the construction site of the new U.S. consulate in Erbil, Iraq, and Erbil International Airport (ORER). Iranian officials claimed responsibility for the ballistic missile attack, allegedly carried out in response to the loss of two IRGC officials in an alleged third-party airstrike in Syria. Nearly 48 hours after the March 12, 2022 missile strikes on targets in Erbil, Iran issued a NOTAM, OIIX A0961/22, which stated “All military activity will perform with close cooperation by civil authorities and according to risk analysis results, the launch site and its related activities are clear and with the safe distance from all ATS route, CTR, TMA and CTA.”  3 The timing of this NOTAM, following closely after the missile launches, raises concerns that its issuance may have been an attempt to allay the safety concerns of the international civil aviation community and may not accurately reflect Iran's processes and procedures for safeguarding civil aviation operations during military activities, such as missile launches.

Therefore, as a result of the significant, continuing risks to the safety of U.S. civil aviation operations in the Tehran FIR (OIIX), the FAA extends the expiration date of SFAR No. 117, § 91.1617, from October 31, 2022, until October 31, 2024.

Further amendments to SFAR No. 117, § 91.1617, might be appropriate if the risk to U.S. civil aviation safety and security changes. In this regard, the FAA will continue to monitor the situation and evaluate the extent to which persons described in paragraph (a) of SFAR No. 117, § 91.1617, might be able to operate safely in the Tehran FIR (OIIX).

The FAA also republishes the details concerning the approval and exemption processes in Sections IV and V of this preamble, consistent with other recently published flight prohibition SFARs, to enable interested persons to refer to this final rule for comprehensive information about requesting relief from the FAA from the provisions of SFAR No. 117, § 91.1617.

In some instances, U.S. Government departments, agencies, or instrumentalities may need to engage U.S. civil aviation to support their activities in the Tehran FIR (OIIX). If a department, agency, or instrumentality of the U.S. Government determines that it has a critical need to engage any person described in paragraph (a) of SFAR No. 117, § 91.1617, including a U.S. air carrier or commercial operator, to transport civilian or military passengers or cargo or conduct other operations in the Tehran FIR (OIIX), that department, agency, or instrumentality may request the FAA to approve persons described in paragraph (a) of SFAR No. 117, § 91.1617, to conduct such operations.

The requesting U.S. Government department, agency, or instrumentality must submit the request for approval to the FAA's Associate Administrator for Aviation Safety in a letter signed by an appropriate senior official of the requesting department, agency, or instrumentality. 4 The FAA will not accept or consider requests for approval from anyone other than the requesting U.S. Government department, agency, or instrumentality. In addition, the senior official signing the letter requesting FAA approval must be sufficiently positioned within the requesting department, agency, or instrumentality to demonstrate that the organization's senior leadership supports the request for approval and is committed to taking all necessary steps to minimize aviation safety and security risks to the proposed flights. The senior official must also be in a position to: (1) attest to the accuracy of all representations made to the FAA in the request for approval, and (2) ensure that any support from the requesting U.S. Government department, agency, or instrumentality described in the request for approval is in fact brought to bear and is maintained over time. Unless justified by exigent circumstances, requesting U.S. Government departments, agencies, or instrumentalities must submit requests for approval to the FAA no less than 30 calendar days before the date on which the requesting department, agency, or instrumentality wishes the operator(s) to commence the proposed operation(s).

The requestor must send the request to the Associate Administrator for Aviation Safety, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591. Electronic submissions are acceptable, and the requesting entity may request that the FAA notify it electronically as to whether the FAA grants the request for approval. If a requestor wishes to make an electronic submission to the FAA, the requestor should contact the Air Transportation Division, Flight Standards Service, at (202) 267-8166, to obtain the appropriate email address. A single letter may request approval from the FAA for multiple persons described in SFAR No. 117, § 91.1617, or for multiple flight operations. To the extent known, the letter must identify the person(s) the requester expects the SFAR to cover on whose behalf the U.S. Government department, agency, or instrumentality seeks FAA approval, and it must describe—

• The proposed operation(s), including the nature of the mission being supported;

• The service the person(s) covered by the SFAR will provide;

• To the extent known, the specific locations in the Tehran FIR (OIIX) where the proposed operation(s) will occur, including, but not limited to, the flight path and altitude of the aircraft while it is operating in the Tehran FIR (OIIX) and the airports, airfields, or landing zones at which the aircraft will take off and land; and

• The method by which the requesting department, agency, or instrumentality will provide, or how the operator will otherwise obtain, current threat information and an explanation of how the operator will integrate this information into all phases of the proposed operations ( i.e., the pre-mission planning and briefing, in-flight, and post-flight phases).

The request for approval must also include a list of operators with whom the U.S. Government department, agency, or instrumentality requesting FAA approval has a current contract(s), grant(s), or cooperative agreement(s) (or its prime contractor has a subcontract(s)) for specific flight operations in the Tehran FIR (OIIX). The requestor may identify additional operators to the FAA at any time after the FAA issues its approval. Neither the operators listed in the original request, nor any operators the requestor subsequently seeks to add to the approval, may commence operations under the approval until the FAA issues them an Operations Specification (OpSpec) or Letter of Authorization (LOA), as appropriate, for operations in the Tehran FIR (OIIX). The approval conditions discussed below apply to all operators. Requestors should send updated lists to the email address they obtain from the Air Transportation Division by calling (202) 267-8166.

If an approval request includes classified information, requestors may contact Aviation Safety Inspector Bill Petrak for instructions on submitting it to the FAA. His contact information appears in the FOR FURTHER INFORMATION CONTACT section of this final rule.

FAA approval of an operation under SFAR No. 117, § 91.1617, does not relieve persons subject to this SFAR of the responsibility to comply with all other applicable FAA rules and regulations. Operators of civil aircraft must comply with the conditions of their certificates, OpSpecs, and LOAs, as applicable. Operators must also comply with all rules and regulations of other U.S. Government departments, agencies, or instrumentalities that may apply to the proposed operation(s), including, but not limited to, regulations issued by the Transportation Security Administration.

If the FAA approves the request, the FAA's Aviation Safety organization will send an approval letter to the requesting U.S. Government department, agency, or instrumentality informing it that the FAA's approval is subject to all of the following conditions:

(1) The approval will stipulate those procedures and conditions that limit, to the greatest degree possible, the risk to the operator, while still allowing the operator to achieve its operational objectives.

(2) Before any approval takes effect, the operator must submit to the FAA:

(a) A written release of the U.S. Government from all damages, claims, and liabilities, including without limitation legal fees and expenses, relating to any event arising out of or related to the approved operations in the Tehran FIR (OIIX); and

(b) The operator's written agreement to indemnify the U.S. Government with respect to any and all third-party damages, claims, and liabilities, including without limitation legal fees and expenses, relating to any event arising out of or related to the approved operations in the Tehran FIR (OIIX).

(3) Other conditions the FAA may specify, including those the FAA might impose in OpSpecs or LOAs, as applicable.

The release and agreement to indemnify do not preclude an operator from raising a claim under an applicable non-premium war risk insurance policy the FAA issues under chapter 443 of title 49, U.S. Code.

If the FAA approves the proposed operation(s), the FAA will issue an OpSpec or LOA, as applicable, to the operator(s) identified in the original request and any operators the requestor subsequently adds to the approval, authorizing them to conduct the approved operation(s). In addition, as stated in paragraph (3) of this section IV.B, the FAA notes that it may include additional conditions beyond those contained in the approval letter in any OpSpec or LOA associated with a particular operator operating under this approval, as necessary in the interests of aviation safety. U.S. Government departments, agencies, and instrumentalities requesting FAA approval on behalf of entities with which they have a contract or subcontract, grant, or cooperative agreement should request a copy of the relevant OpSpec or LOA directly from the entity with which they have any of the foregoing types of arrangements, if desired.

Any operations not conducted under an approval the FAA issues through the approval process set forth previously may only occur in accordance with an exemption from SFAR No. 117, § 91.1617. A petition for exemption must comply with 14 CFR part 11. The FAA will consider whether exceptional circumstances exist beyond those described in the approval process in the previous section. To determine whether a petition for exemption from the prohibition this SFAR establishes fulfills the standard of 14 CFR 11.81, the FAA consistently finds necessary the following information:

• The proposed operation(s), including the nature of the operation;

• The service the person(s) covered by the SFAR will provide;

• The specific locations in the Tehran FIR (OIIX) where the proposed operation(s) will occur, including, but not limited to, the flight path and altitude of the aircraft while it is operating in the Tehran FIR (OIIX) and the airports, airfields, or landing zones at which the aircraft will take off and land;

• The method by which the operator will obtain current threat information and an explanation of how the operator will integrate this information into all phases of its proposed operations ( i.e., the pre-mission planning and briefing, in-flight, and post-flight phases); and

• The plans and procedures the operator will use to minimize the risks identified in this preamble to the proposed operations, to support the relief sought and demonstrate that granting such relief would not adversely affect safety or would provide a level of safety at least equal to that provided by this SFAR. The FAA has found comprehensive, organized plans and procedures of this nature to be helpful in facilitating the agency's safety evaluation of petitions for exemption from flight prohibition SFARs.

The FAA includes, as a condition of each such exemption it issues, a release and agreement to indemnify, as described previously.

The FAA recognizes that, with the support of the U.S. Government, the governments of other countries could plan operations that may be affected by SFAR No. 117, § 91.1617. While the FAA will not permit these operations through the approval process, the FAA will consider exemption requests for such operations on an expedited basis and in accordance with the order of preference set forth in paragraph (c) of SFAR No. 117, § 91.1617.

If a petition for exemption includes information that is sensitive for security reasons or proprietary information, requestors may contact Aviation Safety Inspector Bill Petrak for instructions on submitting it to the FAA. His contact information is listed in the FOR FURTHER INFORMATION CONTACT section of this final rule.

Federal agencies consider impacts of regulatory actions under a variety of executive orders and other requirements. First, Executive Orders 12866 and 13563 direct that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354), as codified in 5 U.S.C. 603 et seq., requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act of 1979 (Pub. L. 96-39), as codified in 19 U.S.C. Chapter 13, prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, the Trade Agreements Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), as codified in 2 U.S.C. Chapter 25, 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 $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this final rule.

In conducting these analyses, the FAA has determined this final rule has benefits that justify its costs. This rule is a significant regulatory action, as defined in section 3(f) of Executive Order 12866, as it raises novel policy issues contemplated under that Executive order. As 5 U.S.C. 553 does not require notice and comment for this final rule, 5 U.S.C. 603 and 604 do not require regulatory flexibility analyses regarding impacts on small entities. This rule will not create unnecessary obstacles to the foreign commerce of the United States. This rule will not impose an unfunded mandate on State, local, or tribal governments, or on the private sector, by exceeding the threshold identified previously.

This rule prohibits U.S. civil flights in the Tehran FIR (OIIX) due to the significant hazards to U.S. civil aviation described in this preamble. The alternative flight routes result in some additional fuel and operations costs to the operators, as well as some costs attributed to passenger time. Accordingly, the incremental costs of the extension of this SFAR are minimal. By continuing to prohibit unsafe flights, the benefits of this rule will exceed the minimal flight deviation costs. Therefore, the FAA finds that the incremental costs of extending SFAR No. 117, 14 CFR 91.1617, will be minimal and are exceeded by the benefits of avoided risk of deaths, injuries, and property damage that could occur if a U.S. operator's aircraft were shot down (or otherwise damaged) while operating in the Tehran FIR (OIIX).

The Regulatory Flexibility Act (RFA), in 5 U.S.C. 603, requires an agency to prepare an initial regulatory flexibility analysis describing impacts on small entities whenever 5 U.S.C. 553 or any other law requires an agency to publish a general notice of proposed rulemaking for any proposed rule. Similarly, 5 U.S.C. 604 requires an agency to prepare a final regulatory flexibility analysis when an agency issues a final rule under 5 U.S.C. 553 after that section or any other law requires publication of a general notice of proposed rulemaking. The FAA concludes good cause exists to forgo notice and comment and to not delay the effective date for this rule. As 5 U.S.C. 553 does not require notice and comment in this situation, 5 U.S.C. 603 and 604 similarly do not require regulatory flexibility analyses.

The Trade Agreements Act of 1979 (Pub. L. 96-39) prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to this Act, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a legitimate domestic objective, such as the protection of safety, and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards.

The FAA has assessed the potential effect of this final rule and determined that its purpose is to protect the safety of U.S. civil aviation from risks to their operations in the Tehran FIR (OIIX), a location outside the U.S. Therefore, the rule complies with the Trade Agreements Act of 1979.

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) 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 (in 1995 dollars) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $165 million in lieu of $100 million.

This final rule does not contain such a mandate. Therefore, the requirements of Title II of the Act do not apply.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires the FAA to consider the impact of paperwork and other information collection burdens it imposes on the public. The FAA has determined no new requirement for information collection is associated with this final rule.

In keeping with U.S. obligations under the Convention on International Civil Aviation, the FAA's policy is to conform to International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. The FAA has determined no ICAO Standards and Recommended Practices correspond to this regulation. The FAA finds this action is fully consistent with the obligations under 49 U.S.C. 40105(b)(1)(A) to ensure the FAA exercises its duties consistently with the obligations of the United States under international agreements.

While the FAA's flight prohibition does not apply to foreign air carriers, DOT codeshare authorizations prohibit foreign air carriers from carrying a U.S. codeshare partner's code on a flight segment that operates in airspace for which the FAA has issued a flight prohibition for U.S. civil aviation. In addition, foreign air carriers and other foreign operators may choose to avoid, or be advised or directed by their civil aviation authorities to avoid, airspace for which the FAA has issued a flight prohibition for U.S. civil aviation.

The FAA has analyzed this action under Executive Order 12114, Environmental Effects Abroad of Major Federal Actions, and DOT Order 5610.1C, Paragraph 16. Executive Order 12114 requires the FAA to be informed of environmental considerations and take those considerations into account when making decisions on major Federal actions that could have environmental impacts anywhere beyond the borders of the United States. The FAA has determined this action is exempt pursuant to Section 2-5(a)(i) of Executive Order 12114 because it does not have the potential for a significant effect on the environment outside the United States.

In accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 8-6(c), the FAA has prepared a memorandum for the record stating the reason(s) for this determination and has placed it in the docket for this rulemaking.

The FAA has analyzed this rule under the principles and criteria of Executive Order 13132. The agency has determined this action will not have a substantial direct effect on the States, or the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, this rule will not have federalism implications.

The FAA analyzed this rule under Executive Order 13211. The agency has determined it is not a “significant energy action” under the executive order and will not be likely to have a significant adverse effect on the supply, distribution, or use of energy.

Executive Order 13609 promotes international regulatory cooperation to meet shared challenges involving health, safety, labor, security, environmental, and other issues and to reduce, eliminate, or prevent unnecessary differences in regulatory requirements. The FAA has analyzed this action under the policies and agency responsibilities of Executive Order 13609 and has determined that this action will have no effect on international regulatory cooperation.

Except for classified material, all documents the FAA considered in developing this rule, including economic analyses and technical reports, may be accessed from the internet through the docket for this rulemaking.

Those documents may be viewed online at https://www.regulations.gov using the docket number listed above. A copy of this rule will be placed in the docket. Electronic retrieval help and guidelines are available on the website. It is available 24 hours each day, 365 days each year. An electronic copy of this document may also be downloaded from the Office of the Federal Register's website at https://www.federalregister.gov and the Government Publishing Office's website at https://www.govinfo.gov. A copy may also be found at the FAA's Regulations and Policies website at https://www.faa.gov/regulations_policies.

Copies may also be obtained by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue SW, Washington, DC 20591, or by calling (202) 267-9677. Interested persons must identify the docket or amendment number of this rulemaking.

The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) (Pub. L. 104-121) (set forth as a note to 5 U.S.C. 601) requires FAA to comply with small entity requests for information or advice about compliance with statutes and regulations within its jurisdiction. A small entity with questions regarding this document may contact its local FAA official, or the persons listed under the FOR FURTHER INFORMATION CONTACT heading at the beginning of the preamble. To find out more about SBREFA on the internet, visit http://www.faa.gov/regulations_policies/rulemaking/sbre_act/.

In consideration of the foregoing, the Federal Aviation Administration amends chapter I of title 14, Code of Federal Regulations, as follows:

I. Executive Summary

This action extends the expiration date of SFAR No. 77, title 14 Code of Federal Regulations (CFR), 91.1605, from October 26, 2022, until October 26, 2024. SFAR No. 77 prohibits certain flight operations in the Baghdad FIR (ORBB) at altitudes below Flight Level (FL) 320 by all: U.S. air carriers; U.S. commercial operators; persons exercising the privileges of an airman certificate issued by the FAA, except when such persons are operating U.S.-registered aircraft for a foreign air carrier; and operators of U.S.-registered civil aircraft, except when the operator of such aircraft is a foreign air carrier. Consistent with other recently published flight prohibition SFARs, this action also republishes, with minor administrative revisions, the approval process and exemption information for this flight prohibition SFAR.

The FAA is responsible for the safety of flight in the U.S. and for the safety of U.S. civil operators, U.S.-registered civil aircraft, and U.S.-certificated airmen throughout the world. Sections 106(f) and (g) of title 49, U.S. Code (U.S.C.), subtitle I, establish the FAA Administrator's authority to issue rules on aviation safety. Subtitle VII of title 49, Aviation Programs, describes in more detail the scope of the agency's authority. Section 40101(d)(1) provides that the Administrator shall consider in the public interest, among other matters, assigning, maintaining, and enhancing safety and security as the highest priorities in air commerce. Section 40105(b)(1)(A) requires the Administrator to exercise this authority consistently with the obligations of the U.S. Government under international agreements.

The FAA is promulgating this rule under the authority described in 49 U.S.C. 44701, General requirements. Under that section, the FAA is charged broadly with promoting safe flight of civil aircraft in air commerce by prescribing, among other things, regulations and minimum standards for practices, methods, and procedures that the Administrator finds necessary for safety in air commerce and national security. This regulation is within the scope of the FAA's authority because it continues to prohibit the persons described in paragraph (a) of SFAR No. 77, § 91.1605, from conducting flight operations in the Baghdad FIR (ORBB) at altitudes below FL320 due to the continuing hazards to the safety of U.S. civil flight operations, as described in the preamble to this final rule.

Section 553(b)(B) of title 5, U.S. Code, authorizes agencies to dispense with notice and comment procedures for rules when the agency for “good cause” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Also, section 553(d) permits agencies, upon a finding of good cause, to issue rules with an effective date less than 30 days from the date of publication. In this instance, the FAA finds good cause to forgo notice and comment because notice and comment would be impracticable and contrary to the public interest. In addition, it is contrary to the public interest to allow this SFAR to expire.

The risk environment for U.S. civil aviation in airspace managed by other countries with respect to safety of flight is fluid in circumstances involving weapons capable of targeting or otherwise negatively affecting U.S. civil aviation, as well as other hazards to U.S. civil aviation associated with fighting, extremist and militant activity, or heightened tensions. This fluidity and the need for the FAA to rely upon classified information in assessing these risks makes providing notice and opportunity to comment impracticable and contrary to the public interest. The potential for rapid changes in the risks to U.S. civil aviation significantly limits how far in advance of a new or amended flight prohibition the FAA can usefully assess the risk environment. Furthermore, to the extent that these rules and any amendments are based upon classified information, the FAA cannot share such information with the general public. As a result, engaging in notice and comment would be impracticable.

Additionally, it is crucial that the FAA's flight prohibitions, and any amendments thereto, reflect the agency's current understanding of the risk environment for U.S. civil aviation. This allows the FAA to protect the safety of U.S. operators' aircraft and the lives of their passengers and crews without over-restricting U.S. operators' routing options. The delay that would be occasioned by providing an opportunity to comment on this action would mean that the resulting final action would not be based on the latest information about aviation risk in a fluid environment.

As described in the preamble to this rule, extending the flight prohibition for U.S. civil aviation operations in the Baghdad FIR (ORBB) at altitudes below FL320 is necessary due to continuing safety-of-flight hazards associated with multiple state and non-state actors conducting attacks in the Baghdad FIR (ORBB) in pursuit of various objectives. These attacks include military activity by state actors, as well as ongoing militia and terrorist attacks against the Government of Iraq and against U.S. and coalition interests co-located with civilian airports. Accordingly, the FAA finds good cause exists to forgo notice and comment and any delay in the effective date for this rule.

On October 16, 2020, due to the complex security environment that existed in Iraq, the FAA published a final rule amending SFAR No. 77, § 91.1605, to prohibit U.S. civil aviation operations in the Baghdad FIR (ORBB) at altitudes below FL320. 1 Additionally, given that the security environment in Iraq remained fluid and tense, the FAA was concerned about the safety of U.S. civil aviation operations in the Baghdad FIR (ORBB) at altitudes at and above FL320. As a result, NOTAM KICZ A0036/20, which prohibited U.S. civil aviation operations in the Baghdad FIR (ORBB) at all altitudes remained in effect following publication of the October 16, 2020 final rule. This approach maintained flexibility for the FAA to revisit the all-altitude flight prohibition as necessary to determine whether U.S. civil aviation operations could occur safely in the Baghdad FIR (ORBB) at altitudes at or above FL320.

The FAA continued to monitor the security environment in the Baghdad FIR (ORBB) and associated risks to civil aviation safety. By October 2021, the FAA assessed the safety risks to U.S. civil aviation in the Baghdad FIR (ORBB) at altitudes at or above FL320 had diminished sufficiently that U.S. civil aviation could safely resume operations at those altitudes. Since the FAA issued NOTAM KICZ A0036/20 in March 2020, there had been no known threats or attempted attacks against aircraft operating at altitudes at or above FL320. Although ground-based attacks against U.S. and coalition forces in Iraq continued, and incidents involving weaponized unmanned aircraft systems (UAS) had risen significantly, those attacks posed no direct threat to civil aircraft overflying the Baghdad FIR (ORBB) at altitudes at or above FL320. Therefore, on October 22, 2021, the FAA rescinded NOTAM KICZ A0036/20. SFAR No. 77, 14 CFR 91.1605, remained in effect and continued to prohibit U.S. civil aviation operations in the Baghdad FIR (ORBB) at altitudes below FL320 due to the continued unacceptable risk to the safety of U.S. civil aviation operations at those altitudes.

The FAA continues to assess the situation in the Baghdad FIR (ORBB) at altitudes below FL320 as presenting an unacceptable risk to the safety of U.S. civil aviation. Iranian-aligned militia groups (IAMGs) publicly threatened to attack coalition forces remaining in Iraq after December 31, 2020, and continue to demonstrate their capability and intent to attack U.S. and international interests in Iraq, as well as selected Iraqi government targets. On November 7, 2021, militants conducted a weaponized UAS attack against Iraqi Prime Minister Mustafa al-Kadhimi's residence in Baghdad. In January 2022, IAMGs conducted a series of attempted attacks that were likely intended to commemorate the second anniversary of the deaths of Iranian Revolutionary Guard Corps (IRGC) Quds Forces Commander Qassem Soleimani and Iraqi Popular Mobilization Units Deputy Head Abu Mahdi al-Muhandis in a U.S. airstrike in January 2020. On January 3, 2022, IAMGs attempted to attack U.S. interests co-located with Baghdad International Airport (ORBI) with two weaponized UAS. Defensive counter-rocket, artillery, and mortar (C-RAM) systems thwarted the attack, with no reported casualties or damage. On January 4, 2022, militants unsuccessfully attempted an attack with two weaponized UAS against Ayn Al Asad Air Base (ORAA). On January 5, 2022, indirect rocket fire impacted the runway at Baghdad International Airport (ORBI) but did not cause any casualties.

IAMGs have access to UAS and anti-aircraft capable weapons systems, including the Iranian-produced 358 loitering hybrid surface-to-air missile (SAM)/UAS system, which present inadvertent risks to the safety of U.S. civil aviation operations in the Baghdad FIR (ORBB) at altitudes below FL320 and at potentially targeted airports. IAMGs likely lack the ability to conduct effective target identification and airspace de-confliction, increasing the risk of an accidental shoot down of a civil aircraft due to misidentification or misperception.

In addition, the FAA remains concerned about cross-border military activity. Both Iran and Turkey have previously conducted various no-notice, cross-border operations striking targets in northern Iraq using a variety of weapons, including short-range ballistic missiles, rockets, and weaponized UAS. In a recent example, on March 12, 2022, up to twelve Fateh-110 surface-to-surface ballistic missiles launched from western Iran and impacted near the construction site of the new U.S. consulate in Erbil, Iraq, and Erbil International Airport (ORER). Iranian officials claimed responsibility for the ballistic missile attack, allegedly carried out in response to the loss of two IRGC officials in an alleged third-party airstrike in Syria. The missile attack damaged surrounding buildings, but there were no reported casualties, according to the Kurdish Interior Ministry. The assessed points of impact were approximately 14km east/northeast of Erbil International Airport (ORER), based on available open-source reporting.

While this attack did not pose a direct threat to the airport, the missile trajectories possibly presented an inadvertent risk to aircraft in flight that might have been operating at low altitude in the vicinity of Erbil International Airport (ORER) during the time of the attack. In general, unannounced third-party cross-border operations in the Baghdad FIR (ORBB) present a low altitude safety-of-flight risk for aircraft flying in the vicinity of the targeted location(s) and for aircraft on the ground at airports co-located with, or in close proximity to, the intended targets. These activities also pose an airspace de-confliction challenge. Additionally, there continues to be an inadvertent risk to civil aviation operations in the Baghdad FIR (ORBB) from global positioning system (GPS) jammers.

Therefore, as a result of the significant, continuing risks to the safety of U.S. civil aviation operations in the Baghdad FIR (ORBB) at altitudes below FL320, the FAA extends the expiration date of SFAR No. 77, § 91.1605, from October 26, 2022, until October 26, 2024.

Further amendments to SFAR No. 77, § 91.1605, might be appropriate if the risk to U.S. civil aviation safety and security changes. In this regard, the FAA will continue to monitor the situation and evaluate the extent to which persons described in paragraph (a) of this rule might be able to operate safely in the Baghdad FIR (ORBB) at altitudes below FL320.

The FAA also republishes the details concerning the approval and exemption processes in Sections V and VI of this preamble, consistent with other recently published flight prohibition SFARs, to enable interested persons to refer to this final rule for comprehensive information about requesting relief from the FAA from the provisions of SFAR No. 77, § 91.1605.

In some instances, U.S. Government departments, agencies, or instrumentalities may need to engage U.S. civil aviation to support their activities in the Baghdad FIR (ORBB) at altitudes below FL320. If a department, agency, or instrumentality of the U.S. Government determines that it has a critical need to engage any person described in paragraph (a) of SFAR No. 77, § 91.1605, including a U.S. air carrier or commercial operator, to transport civilian or military passengers or cargo or conduct other operations in the Baghdad FIR (ORBB) at altitudes below FL320, that department, agency, or instrumentality may request the FAA to approve persons described in paragraph (a) of SFAR No. 77, § 91.1605, to conduct such operations.

The requesting U.S. Government department, agency, or instrumentality must submit the request for approval to the FAA's Associate Administrator for Aviation Safety in a letter signed by an appropriate senior official of the requesting department, agency, or instrumentality. 2 The FAA will not accept or consider requests for approval from anyone other than the requesting U.S. Government department, agency, or instrumentality. In addition, the senior official signing the letter requesting FAA approval must be sufficiently positioned within the requesting department, agency, or instrumentality to demonstrate that the organization's senior leadership supports the request for approval and is committed to taking all necessary steps to minimize aviation safety and security risks to the proposed flights. The senior official must also be in a position to: (1) attest to the accuracy of all representations made to the FAA in the request for approval, and (2) ensure that any support from the requesting U.S. Government department, agency, or instrumentality described in the request for approval is in fact brought to bear and is maintained over time. Unless justified by exigent circumstances, requesting U.S. Government departments, agencies, or instrumentalities must submit requests for approval to the FAA no less than 30 calendar days before the date on which the requesting department, agency, or instrumentality wishes the operator(s) to commence the proposed operation(s).

The requestor must send the request to the Associate Administrator for Aviation Safety, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591. Electronic submissions are acceptable, and the requesting entity may request that the FAA notify it electronically as to whether the FAA grants the request for approval. If a requestor wishes to make an electronic submission to the FAA, the requestor should contact the Air Transportation Division, Flight Standards Service, at (202) 267-8166, to obtain the appropriate email address. A single letter may request approval from the FAA for multiple persons described in SFAR No. 77, § 91.1605, or for multiple flight operations. To the extent known, the letter must identify the person(s) the requester expects the SFAR to cover on whose behalf the U.S. Government department, agency, or instrumentality seeks FAA approval, and it must describe—

• The proposed operation(s), including the nature of the mission being supported;

• The service the person(s) covered by the SFAR will provide;

• To the extent known, the specific locations in the Baghdad FIR (ORBB) at altitudes below FL320 where the proposed operation(s) will occur, including, but not limited to, the flight path and altitude of the aircraft while it is operating in the Baghdad FIR (ORBB) at altitudes below FL320 and the airports, airfields, or landing zones at which the aircraft will take off and land; and

• The method by which the requesting department, agency, or instrumentality will provide, or how the operator will otherwise obtain, current threat information and an explanation of how the operator will integrate this information into all phases of the proposed operations ( i.e., the pre-mission planning and briefing, in-flight, and post-flight phases).

The request for approval must also include a list of operators with whom the U.S. Government department, agency, or instrumentality requesting FAA approval has a current contract(s), grant(s), or cooperative agreement(s) (or its prime contractor has a subcontract(s)) for specific flight operations in the Baghdad FIR (ORBB) at altitudes below FL320. The requestor may identify additional operators to the FAA at any time after the FAA issues its approval. Neither the operators listed in the original request, nor any operators the requestor subsequently seeks to add to the approval, may commence operations under the approval until the FAA issues them an Operations Specification (OpSpec) or Letter of Authorization (LOA), as appropriate, for operations in the Baghdad FIR (ORBB) at altitudes below FL320. The approval conditions discussed below apply to all operators. Requestors should send updated lists to the email address they obtain from the Air Transportation Division by calling (202) 267-8166.

If an approval request includes classified information, requestors may contact Aviation Safety Inspector Bill Petrak for instructions on submitting it to the FAA. His contact information appears in the FOR FURTHER INFORMATION CONTACT section of this final rule.

FAA approval of an operation under SFAR No. 77, § 91.1605, does not relieve persons subject to this SFAR of the responsibility to comply with all other applicable FAA rules and regulations. Operators of civil aircraft must comply with the conditions of their certificates, OpSpecs, and LOAs, as applicable. Operators must also comply with all rules and regulations of other U.S. Government departments, agencies, or instrumentalities that may apply to the proposed operation(s), including, but not limited to, regulations issued by the Transportation Security Administration.

If the FAA approves the request, the FAA's Aviation Safety organization will send an approval letter to the requesting U.S. Government department, agency, or instrumentality informing it that the FAA's approval is subject to all of the following conditions:

(1) The approval will stipulate those procedures and conditions that limit, to the greatest degree possible, the risk to the operator, while still allowing the operator to achieve its operational objectives.

(2) Before any approval takes effect, the operator must submit to the FAA:

(a) A written release of the U.S. Government from all damages, claims, and liabilities, including without limitation legal fees and expenses, relating to any event arising out of or related to the approved operations in the Baghdad FIR (ORBB) at altitudes below FL320; and

(b) The operator's written agreement to indemnify the U.S. Government with respect to any and all third-party damages, claims, and liabilities, including without limitation legal fees and expenses, relating to any event arising out of or related to the approved operations in the Baghdad FIR (ORBB) at altitudes below FL320.

(3) Other conditions the FAA may specify, including those the FAA might impose in OpSpecs or LOAs, as applicable.

The release and agreement to indemnify do not preclude an operator from raising a claim under an applicable non-premium war risk insurance policy the FAA issues under chapter 443 of title 49, U.S. Code.

If the FAA approves the proposed operation(s), the FAA will issue an OpSpec or LOA, as applicable, to the operator(s) identified in the original request and any operators the requestor subsequently adds to the approval, authorizing them to conduct the approved operation(s). In addition, as stated in paragraph (3) of this section V.B., the FAA notes that it may include additional conditions beyond those contained in the approval letter in any OpSpec or LOA associated with a particular operator operating under this approval, as necessary in the interests of aviation safety. U.S. Government departments, agencies, and instrumentalities requesting FAA approval on behalf of entities with which they have a contract or subcontract, grant, or cooperative agreement should request a copy of the relevant OpSpec or LOA directly from the entity with which they have any of the foregoing types of arrangements, if desired.

Any operations not conducted under an approval the FAA issues through the approval process set forth previously may only occur in accordance with an exemption from SFAR No. 77, § 91.1605. A petition for exemption must comply with 14 CFR part 11. The FAA will consider whether exceptional circumstances exist beyond those described in the approval process in the previous section. To determine whether a petition for exemption from the prohibition this SFAR establishes fulfills the standard of 14 CFR 11.81, the FAA consistently finds necessary the following information:

• The proposed operation(s), including the nature of the operation;

• The service the person(s) covered by the SFAR will provide;

• The specific locations in the Baghdad FIR (ORBB) at altitudes below FL320 where the proposed operation(s) will occur, including, but not limited to, the flight path and altitude of the aircraft while it is operating in the Baghdad FIR (ORBB) at altitudes below FL320 and the airports, airfields, or landing zones at which the aircraft will take off and land;

• The method by which the operator will obtain current threat information and an explanation of how the operator will integrate this information into all phases of its proposed operations ( i.e., the pre-mission planning and briefing, in-flight, and post-flight phases); and

• The plans and procedures the operator will use to minimize the risks identified in this preamble to the proposed operations, to support the relief sought and demonstrate that granting such relief would not adversely affect safety or would provide a level of safety at least equal to that provided by this SFAR. The FAA has found comprehensive, organized plans and procedures of this nature to be helpful in facilitating the agency's safety evaluation of petitions for exemption from flight prohibition SFARs.

The FAA includes, as a condition of each such exemption it issues, a release and agreement to indemnify, as described previously.

The FAA recognizes that, with the support of the U.S. Government, the governments of other countries could plan operations that may be affected by SFAR No. 77, § 91.1605. While the FAA will not permit these operations through the approval process, the FAA will consider exemption requests for such operations on an expedited basis and in accordance with the order of preference set forth in paragraph (c) of SFAR No. 77, § 91.1605.

If a petition for exemption includes information that is sensitive for security reasons or proprietary information, requestors may contact Aviation Safety Inspector Bill Petrak for instructions on submitting it to the FAA. His contact information is listed in the FOR FURTHER INFORMATION CONTACT section of this final rule.

Federal agencies consider impacts of regulatory actions under a variety of executive orders and other requirements. First, Executive Orders 12866 and 13563 direct that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354), as codified in 5 U.S.C. 603 et seq., requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act of 1979 (Pub. L. 96-39), as codified in 19 U.S.C. Chapter 13, prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, the Trade Agreements Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), as codified in 2 U.S.C. Chapter 25, 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 $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this final rule.

In conducting these analyses, the FAA has determined this final rule has benefits that justify its costs. This rule is a significant regulatory action, as defined in section 3(f) of Executive Order 12866, as it raises novel policy issues contemplated under that Executive order. As 5 U.S.C. 553 does not require notice and comment for this final rule, 5 U.S.C. 603 and 604 do not require regulatory flexibility analyses regarding impacts on small entities. This rule will not create unnecessary obstacles to the foreign commerce of the United States. This rule will not impose an unfunded mandate on State, local, or tribal governments, or on the private sector, by exceeding the threshold identified previously.

This rule prohibits U.S. civil flights in the Baghdad FIR (ORBB) at altitudes below FL320, due to the significant, continuing hazards to U.S. civil aviation detailed in the preamble of this final rule. This action also extends the expiration date of this rule for an additional two years.

The FAA acknowledges this flight prohibition might result in additional costs to some U.S. operators, such as increased fuel costs and other operational-related costs. However, the FAA expects the benefits of this action exceed the costs because it will result in the avoidance of risks of fatalities, injuries, and property damage that could occur if a U.S. operator's aircraft were shot down (or otherwise damaged) while operating in the Baghdad FIR (ORBB) at altitudes below FL320.

The Regulatory Flexibility Act (RFA), in 5 U.S.C. 603, requires an agency to prepare an initial regulatory flexibility analysis describing impacts on small entities whenever 5 U.S.C. 553 or any other law requires an agency to publish a general notice of proposed rulemaking for any proposed rule. Similarly, 5 U.S.C. 604 requires an agency to prepare a final regulatory flexibility analysis when an agency issues a final rule under 5 U.S.C. 553 after that section or any other law requires publication of a general notice of proposed rulemaking. The FAA concludes good cause exists to forgo notice and comment and to not delay the effective date for this rule. As 5 U.S.C. 553 does not require notice and comment in this situation, 5 U.S.C. 603 and 604 similarly do not require regulatory flexibility analyses.

The Trade Agreements Act of 1979 (Pub. L. 96-39) prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to this Act, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a legitimate domestic objective, such as the protection of safety, and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards.

The FAA has assessed the potential effect of this final rule and determined that its purpose is to protect the safety of U.S. civil aviation from risks to their operations in the Baghdad FIR (ORBB) at altitudes below FL320, a location outside the U.S. Therefore, the rule complies with the Trade Agreements Act of 1979.

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) 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 (in 1995 dollars) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $155 million in lieu of $100 million.

This final rule does not contain such a mandate. Therefore, the requirements of Title II of the Act do not apply.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires the FAA to consider the impact of paperwork and other information collection burdens it imposes on the public. The FAA has determined no new requirement for information collection is associated with this final rule.

In keeping with U.S. obligations under the Convention on International Civil Aviation, the FAA's policy is to conform to International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. The FAA has determined no ICAO Standards and Recommended Practices correspond to this regulation. The FAA finds this action is fully consistent with the obligations under 49 U.S.C. 40105(b)(1)(A) to ensure the FAA exercises its duties consistently with the obligations of the United States under international agreements.

While the FAA's flight prohibition does not apply to foreign air carriers, DOT codeshare authorizations prohibit foreign air carriers from carrying a U.S. codeshare partner's code on a flight segment that operates in airspace for which the FAA has issued a flight prohibition for U.S. civil aviation. In addition, foreign air carriers and other foreign operators may choose to avoid, or be advised or directed by their civil aviation authorities to avoid, airspace for which the FAA has issued a flight prohibition for U.S. civil aviation.

The FAA has analyzed this action under Executive Order 12114, Environmental Effects Abroad of Major Federal Actions, and DOT Order 5610.1C, Paragraph 16. Executive Order 12114 requires the FAA to be informed of environmental considerations and take those considerations into account when making decisions on major Federal actions that could have environmental impacts anywhere beyond the borders of the United States. The FAA has determined this action is exempt pursuant to Section 2-5(a)(i) of Executive Order 12114 because it does not have the potential for a significant effect on the environment outside the United States.

In accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 8-6(c), the FAA has prepared a memorandum for the record stating the reason(s) for this determination and has placed it in the docket for this rulemaking.

The FAA has analyzed this rule under the principles and criteria of Executive Order 13132. The agency has determined this action will not have a substantial direct effect on the States, or the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, this rule will not have federalism implications.

The FAA analyzed this rule under Executive Order 13211. The agency has determined it is not a “significant energy action” under the executive order and will not be likely to have a significant adverse effect on the supply, distribution, or use of energy.

Executive Order 13609 promotes international regulatory cooperation to meet shared challenges involving health, safety, labor, security, environmental, and other issues and to reduce, eliminate, or prevent unnecessary differences in regulatory requirements. The FAA has analyzed this action under the policies and agency responsibilities of Executive Order 13609 and has determined that this action will have no effect on international regulatory cooperation.

Except for classified material, all documents the FAA considered in developing this rule, including economic analyses and technical reports, may be accessed from the internet through the docket for this rulemaking.

Those documents may be viewed online at https://www.regulations.gov using the docket number listed above. A copy of this rule will be placed in the docket. Electronic retrieval help and guidelines are available on the website. It is available 24 hours each day, 365 days each year. An electronic copy of this document may also be downloaded from the Office of the Federal Register's website at https://www.federalregister.gov and the Government Publishing Office's website at https://www.govinfo.gov. A copy may also be found at the FAA's Regulations and Policies website at https://www.faa.gov/regulations_policies.

Copies may also be obtained by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue SW, Washington, DC 20591, or by calling (202) 267-9677. Interested persons must identify the docket or amendment number of this rulemaking.

The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) (Pub. L. 104-121) (set forth as a note to 5 U.S.C. 601) requires FAA to comply with small entity requests for information or advice about compliance with statutes and regulations within its jurisdiction. A small entity with questions regarding this document may contact its local FAA official, or the persons listed under the FOR FURTHER INFORMATION CONTACT heading at the beginning of the preamble. To find out more about SBREFA on the internet, visit http://www.faa.gov/regulations_policies/rulemaking/sbre_act/.

In consideration of the foregoing, the Federal Aviation Administration amends chapter I of title 14, Code of Federal Regulations, as follows:

A. Background 1. Statutory Authority

Section 104(b)(1) of the CPSIA requires the Commission to assess the effectiveness of voluntary standards for durable infant or toddler products and to adopt mandatory standards for these products. 15 U.S.C. 2056a(b)(1). A mandatory standard must be “substantially the same as” the corresponding voluntary standard, or it may be “more stringent than” the voluntary standard, if the Commission determines that more stringent requirements would further reduce the risk of injury associated with the product. Id.

Section 104(b)(4)(B) of the CPSIA specifies a process for updating the Commission's rules when a voluntary standards organization revises a standard that the Commission previously incorporated by reference under section 104(b)(1). First, the voluntary standards organization must notify the Commission of the revision. Once the Commission receives this notification, the Commission may reject or accept the revised standard. The Commission may reject the revised standard by notifying the voluntary standards organization, within 90 days of receiving notice of the revision, that it has determined that the revised standard does not improve the safety of the consumer product and that it is retaining the existing standard. If the Commission does not take this action to reject the revised standard, the revised voluntary standard will be considered a consumer product safety standard issued under section 9 of the Consumer Product Safety Act (15 U.S.C. 2058), effective 180 days after the Commission received notification of the revision or on a later date specified by the Commission in the Federal Register . 15 U.S.C. 2056a(b)(4)(B).

Under section 104(b)(1) of the CPSIA, the Commission adopted a mandatory rule for infant swings, codified in 16 CFR part 1223. The rule incorporated by reference ASTM F2088-12a, Standard Consumer Safety Specification for Infant Swings with modifications to make the standard more stringent. 77 FR 66703 (Nov. 7, 2012). The mandatory standard included performance requirements and test methods, as well as requirements for warning labels and instructions, to address hazards to children.

In 2013, ASTM notified CPSC that it had issued a revised standard for infant swings, ASTM F2088-13, and the Commission published a direct final rule incorporating by reference ASTM F2088-13, with no modifications. 78 FR 37706 (June 24, 2013). After the Commission issued the revised mandatory standard in 2013, ASTM approved two more revisions to the infant swing standard: ASTM F2088-15 and ASTM F2088-19. However, ASTM did not notify CPSC of these revisions under CPSIA section 104(b)(4)(B). In October 2020, ASTM notified CPSC that it had revised the voluntary standard for infant swings, ASTM F2088-20, and the Commission published a direct final rule incorporating by reference ASTM 2088-20, with no modifications. 86 FR 4961 (January 19, 2021). 1 In August 2021, ASTM notified CPSC that it had issued a revised standard for infant swings, ASTM F2088-21, and the Commission published a direct final rule incorporating by reference ASTM F2088-21, with no modifications. 86 FR 59609 (October 28, 2021).

In May 2022, ASTM published a revised version of the incorporated voluntary standard. On July 5, 2022, ASTM notified the Commission that it had approved and published the revised version of the voluntary standard. On July 14, 2022, the Commission provided notice in the Federal Register of the availability of the revised standard and sought comment on the effect of the revisions on the safety standard for infant swings. (87 FR 42117). No comments were received.

As discussed in section B. Revisions to ASTM F2088, based on CPSC staff's review of ASTM F2088-22, 2 the Commission will allow the revised voluntary standard to become the mandatory standard. 3 Accordingly, by operation of law under section 104(b)(4)(B) of the CPSIA, ASTM F2088-22 will become the mandatory consumer product safety standard for infant swings on January 1, 2023. 15 U.S.C. 2056a(b)(4)(B). This direct final rule updates 16 CFR part 1223 to incorporate by reference the revised voluntary standard, ASTM F2088-22.

The ASTM standard for infant swings includes performance requirements, test methods, and requirements for marking, labeling, and instructional literature, to address hazards to children associated with infant swings. ASTM F2088 applies to swings with a powered mechanism used to provide a swinging or gliding seat/cradle in any direction relative to the frame. The swinging or gliding mechanism can be powered by batteries, AC adapter, wind-up mechanism, or other means. A cradle swing allows the infant to swing while lying flat. The cradle swing is intended for children from birth until the infant begins to push up on hands and knees (approximately 5 months). An infant swing enables the infant to swing in a seated position and is intended for children from birth until the infant attempts to climb out of the product (approximately 9 months).

ASTM F2088-22 contains substantive changes to the specified warning statement for infant swings in Section 8.6 Warning Statements. Specifically, in Section 8.6.1 Infant Swing, the revised standard changes the wording in the last warning bullet, as follows (changes are highlighted in italics):

• ASTM F2088-21: Stay near and watch infant during use. This product is not safe for unsupervised use or unattended sleep.

• ASTM F2088-22: Stay near and watch baby during use. This product is not safe for sleep or unsupervised use. If baby falls asleep, remove baby as soon as possible and place baby on a firm, flat sleep surface such as a crib or bassinet.

Thus, the word “infant” is replaced with “baby” in the first sentence. The order of the warnings is switched in the second sentence, first to warn that the product is not safe for sleep, and then to warn against unsupervised use. Lastly, a third new sentence provides guidance advising caregivers to remove a baby who has fallen asleep to a product that is safe for sleep.

The Commission assesses that the change from “infant” to “baby” makes the warning more personal to the parent or caregiver. Typically, parents or caregivers identify the occupant of the swing as “my baby” or “the baby,” as opposed to the more impersonal, more clinical, and generic term “infant.” The use of the term “baby” rather than “infant” also aligns with the Ad Hoc Working Task Group's wording developed in late 2014. 4

The Commission assesses that the change from “ This product is not safe for unsupervised use or unattended sleep ” to “This product is not safe for sleep or unsupervised use” is an improvement in safety. The statement “. . . not safe for unsupervised use or unattended sleep ” requires consumers to infer what is meant by “unattended.”  5 Furthermore, consumers are likely to understand and comply with a message directly instructing them on how to avoid the hazard. 6 7

The Commission assesses that the addition of new language stating: “If baby falls asleep, remove baby as soon as possible and place baby on a firm, flat sleep surface such as a crib or bassinet” is an improvement in safety. The basis for this addition is the American Academy of Pediatrics guidance on safe sleep, which states: “If your baby falls asleep in a car seat, stroller, swing, infant carrier or sling, you should move them to a firm sleep surface on their back as soon as possible.”  8 (Emphasis added). The new language clearly states that a swing is not safe for sleep. The new warning language instructs that in the case that the baby falls asleep, caregivers should move the baby to a firm, flat sleep surface. The new language provides tangible examples that consumers can refer to as safe sleep surfaces, such as a crib and a bassinet. In addition, CPSC staff contracted a focus group study  9 including contextual interviews to gather caregivers' perspectives regarding products in which infants may fall asleep, that the manufacturer asserts are not intended for infant sleep. This study sought to capture caregivers' beliefs about the safety, utility, and risks of infants falling asleep in seated products, their reaction to labels designed to warn against unsupervised sleep, and their ability to discern how those labels influence caregiver behavior. Caregivers evaluated specific language, which states: “If baby falls asleep, move baby as soon as possible to a firm, flat sleep surface such as a crib or bassinet.” Overall, the phrase was well received and met parents and caregivers' request for clear guidance on what to do if their child falls asleep in one of these products.

In summary, the revised warning statement provides concise guidance to parents and caregivers that infant swings are not safe for sleep and provides guidance that is consistent with CPSC messaging about the importance of placing sleeping babies on firm, flat sleep surfaces. In addition, the revised warning statement adopts a more personal tone with use of the word “baby” instead of “infant.” The Commission concludes that these changes to the warning statement improve the safety of infant swings.

Section 1223.2 of the direct final rule incorporates by reference ASTM F2088-22. The Office of the Federal Register (OFR) has regulations regarding incorporation by reference. 1 CFR part 51. Under these regulations, agencies must discuss, in the preamble to a final rule, ways in which the material the agency incorporates by reference is reasonably available to interested parties, and how interested parties can obtain the material. In addition, the preamble to the final rule must summarize the material. 1 CFR 51.5(b).

In accordance with the OFR regulations, section B. Revisions to ASTM F2088 of this preamble summarizes the major provisions of ASTM F2088-22 that the Commission incorporates by reference into 16 CFR part 1223. The standard itself is reasonably available to interested parties. Until the direct final rule takes effect, a read-only copy of ASTM F2088-22 is available for viewing, at no cost, on ASTM's website at: https://www.astm.org/CPSC.htm. Once the rule takes effect, a read-only copy of the standard will be available for viewing, at no cost, on the ASTM website at: https://www.astm.org/READINGLIBRARY/. Interested parties can also schedule an appointment to inspect a copy of the standard at CPSC's Office of the Secretary, U.S. Consumer Product Safety Commission, 4330 East-West Highway, Bethesda, MD 20814, telephone: (301) 504-7479; email: cpsc-os@cpsc.gov. Interested parties can purchase a copy of ASTM F2088-22 from ASTM International, 100 Barr Harbor Drive, P.O. Box C700, West Conshohocken, PA 19428-2959 USA; telephone: (610) 832-9585; www.astm.org.

Section 14(a) of the Consumer Product Safety Act (CPSA; 15 U.S.C. 2051-2089) requires manufacturers of products subject to a consumer product safety rule under the CPSA, or to a similar rule, ban, standard, or regulation under any other act enforced by the Commission, to certify that the products comply with all applicable CPSC requirements. 15 U.S.C. 2063(a). Such certification must be based on a test of each product, or on a reasonable testing program, or for children's products, on tests of a sufficient number of samples by a third party conformity assessment body accredited by CPSC to test according to the applicable requirements. As noted, standards issued under section 104(b)(1)(B) of the CPSIA are “consumer product safety standards.” Thus, they are subject to the testing and certification requirements of section 14 of the CPSA.

Because infant swings are children's products, a CPSC-accepted third party conformity assessment body must test samples of the products. Products subject to part 1223 also must comply with all other applicable CPSC requirements, such as the lead content requirements in section 101 of the CPSIA, 10 the tracking label requirements in section 14(a)(5) of the CPSA, 11 and the consumer registration form requirements in section 104(d) of the CPSIA. 12 ASTM F2088-22 makes no changes that would impact any of these existing requirements.

In accordance with section 14(a)(3)(B)(vi) of the CPSA, the Commission previously published a notice of requirements (NOR) for accreditation of third party conformity assessment bodies for testing infant swings. 78 FR 15836 (March 12, 2013). The NOR provided the criteria and process for CPSC to accept accreditation of third party conformity assessment bodies for testing infant swings to 16 CFR part 1223. The NORs for all mandatory standards for durable infant or toddler products are listed in the Commission's rule, “Requirements Pertaining to Third Party Conformity Assessment Bodies,” codified in 16 CFR part 1112. Id.

ASTM F2088-22 did not change the testing requirements, testing equipment, or testing protocols for infant swings. Accordingly, the revisions do not change the way that third party conformity assessment bodies test these products for compliance with the safety standard for infant swings. Testing laboratories that have demonstrated competence for testing in accordance with ASTM F2088-21 are competent to test in accordance with the revised standard ASTM F2088-22. Laboratories will begin testing to the new standard when ASTM F2088-22 goes into effect, and the existing accreditations that the Commission has accepted for testing to this standard will cover testing to the revised standard. Therefore, the Commission considers the existing CPSC-accepted laboratories for testing to ASTM F2088-21 to be capable of testing to ASTM F2088-22 as well. Accordingly, the existing NOR for this standard will remain in place, and CPSC-accepted third party conformity assessment bodies are expected to update the scope of the testing laboratories' accreditations to reflect the revised standard in the normal course of renewing their accreditations.

On July 14, 2022, the Commission provided notice in the Federal Register of the revision to the standard and requested comment on whether the revision improves the safety of infant swings covered by the standard. 87 FR 42117. No comments were submitted. Now, the Commission is issuing this rule as a direct final rule. Although the Administrative Procedure Act (APA; 5 U.S.C. 551-559) generally requires agencies to provide notice of a rule and an opportunity for interested parties to comment on it, section 553 of the APA provides an exception when the agency “for good cause finds” that notice and comment are “impracticable, unnecessary, or contrary to the public interest.” Id. 553(b)(B). The Commission concludes that when it updates a reference to an ASTM standard that the Commission incorporated by reference under section 104(b) of the CPSIA, further notice and comment are unnecessary.

Specifically, under the process set out in section 104(b)(4)(B) of the CPSIA, when ASTM notifies CPSC that it has revised a standard that the Commission has previously incorporated by reference under section 104(b)(1)(B) of the CPSIA, that revision will become the new CPSC standard, unless the Commission determines that ASTM's revision does not improve the safety of the product. Thus, unless the Commission makes such a determination, the ASTM revision becomes CPSC's standard by operation of law. The Commission is allowing ASTM F2088-22 to become CPSC's new standard because its provisions improve the safety of the product. The purpose of this direct final rule is to update the Code of Federal Regulations (CFR) so that it reflects the version of the standard that takes effect by statute. This rule updates the reference in the CFR, but under the CPSIA, ASTM F2088-22 takes effect as the new CPSC standard for infant swings, even if the Commission does not issue this rule. Thus, public comments would not alter substantive changes to the standard or the effect of the revised standard as a consumer product safety standard under section 104(b) of the CPSIA. Under these circumstances, further notice and comment are unnecessary.

In Recommendation 95-4, the Administrative Conference of the United States (ACUS) endorses direct final rulemaking as an appropriate procedure to expedite rules that are noncontroversial and not expected to generate significant adverse comments. See 60 FR 43108 (Aug. 18, 1995). ACUS recommends that agencies use the direct final rule process when they act under the “unnecessary” prong of the good cause exemption in 5 U.S.C. 553(b)(B). Consistent with the ACUS recommendation, the Commission is publishing this rule as a direct final rule, because CPSC does not expect any significant adverse comments.

Unless CPSC receives a significant adverse comment within 30 days of this notification, the rule will become effective on January 1, 2023. In accordance with ACUS's recommendation, the Commission considers a significant adverse comment to be “one where the commenter explains why the rule would be inappropriate,” including an assertion challenging “the rule's underlying premise or approach,” or a claim that the rule “would be ineffective or unacceptable without a change.” 60 FR 43108, 43111 (Aug. 18, 1995). As noted, this rule merely updates a reference in the CFR to reflect a change that occurs by statute, and public comments should address this specific action.

If the Commission receives a significant adverse comment, the Commission will withdraw this direct final rule. Depending on the comment and other circumstances, the Commission may then incorporate the adverse comment into a subsequent direct final rule or publish a notice of proposed rulemaking, providing an opportunity for public comment.

The Regulatory Flexibility Act (RFA; 5 U.S.C. 601-612) generally requires agencies to review proposed and final rules for their potential economic impact on small entities, including small businesses, and prepare regulatory flexibility analyses. 5 U.S.C. 603, 604. The RFA applies to any rule that is subject to notice and comment procedures under section 553 of the APA. Id. As discussed in section F. Direct Final Rule Process of this preamble, the Commission has determined that further notice and the opportunity to comment are unnecessary for this rule. Therefore, the RFA does not apply. CPSC also notes the limited nature of this document, which merely updates the incorporation by reference to reflect the mandatory CPSC standard that takes effect under section 104 of the CPSIA.

The current mandatory standard for infant swings includes requirements for marking, labeling, and instructional literature that constitute a “collection of information,” as defined in the Paperwork Reduction Act (PRA; 44 U.S.C. 3501-3521). While the revised mandatory standard revises the labeling language for infant swings, the revised language would not add to the burden hours because the products already require marking, labeling, and instructional literature under the current standard. The revised labeling provisions merely require different language to that already required by the standard, which would impose minimal if any additional burden because the firm is already required to put labels on the product. The Commission took the steps required by the PRA for information collections when it promulgated 16 CFR part 1223, and the marking, labeling, and instructional literature for infant swings are currently approved under OMB Control Number 3041-0159. Because the information collection burden is unchanged, the revision does not affect the information collection requirements or approval related to the standard.

The Commission's regulations provide a categorical exclusion for the Commission's rules from any requirement to prepare an environmental assessment or an environmental impact statement where they “have little or no potential for affecting the human environment.” 16 CFR 1021.5(c)(2). This rule falls within the categorical exclusion, so no environmental assessment or environmental impact statement is required.

Section 26(a) of the CPSA provides that where a consumer product safety standard is in effect and applies to a product, no state or political subdivision of a state may either establish or continue in effect a requirement dealing with the same risk of injury unless the state requirement is identical to the federal standard. 15 U.S.C. 2075(a). Section 26(c) of the CPSA also provides that states or political subdivisions of states may apply to CPSC for an exemption from this preemption under certain circumstances. Section 104(b) of the CPSIA deems rules issued under that provision “consumer product safety standards.” Therefore, once a rule issued under section 104 of the CPSIA takes effect, it will preempt in accordance with section 26(a) of the CPSA.

Under the procedure set forth in section 104(b)(4)(B) of the CPSIA, when a voluntary standards organization revises a standard that the Commission adopted as a mandatory standard, the revision becomes the CPSC standard within 180 days of notification to the Commission, unless the Commission timely notifies the standards organization that it has determined that the revision does not improve the safety of the product, or the Commission sets a later date in the Federal Register . 15 U.S.C. 2056a(b)(4)(B). The Commission is taking neither of those actions with respect to the standard for infant swings. Therefore, ASTM F2088-22 will take effect as the new mandatory standard for infant swings on January 1, 2023, 180 days after July 5, 2022, when the Commission received notice of the revision.

The Congressional Review Act (CRA; 5 U.S.C. 801-808) states that before a rule may take effect, the agency issuing the rule must submit the rule, and certain related information, to each House of Congress and the Comptroller General. 5 U.S.C. 801(a)(1). The CRA submission must indicate whether the rule is a “major rule.” The CRA states that the Office of Information and Regulatory Affairs determines whether a rule qualifies as a “major rule.”

Pursuant to the CRA, this rule does not qualify as a “major rule,” as defined in 5 U.S.C. 804(2). To comply with the CRA, CPSC will submit the required information to each House of Congress and the Comptroller General.

For the reasons discussed in the preamble, the Commission amends 16 CFR chapter II as follows:

We are adopting amendments to 17 CFR 227.100(a)(2) (“Rule 100(a)(2)”) and 17 CFR 227.201(t) (“Rule 201(t)”) of 17 CFR 227.100 et seq. (“Regulation Crowdfunding”); 17 CFR 230.405 (“Rule 405”) and 17 CFR 239.900 (“Form C”) under the Securities Act of 1933 (“Securities Act”); and 17 CFR 240.12b-2 (“Rule 12b-2”) under the Exchange Act of 1934 (“Exchange Act”).

Title I of the JOBS Act  1 added Securities Act Section 2(a)(19) and Exchange Act Section 3(a)(80) to define the term “emerging growth company”  2 (“EGC”). Pursuant to the statutory definition, the Commission is required every five years to index to inflation the annual gross revenue amount used to determine EGC status to reflect the change in the Consumer Price Index for All Urban Consumers (“CPI-U”) published by the Bureau of Labor Statistics (“BLS”). 3 In 2017, the Commission increased the annual gross revenue amount from $1,000,000,000 to $1,070,000,000. 4 We are adopting amendments to our rules to reflect the next statutorily required inflation adjustment to the annual gross revenue amount.

Title III of the JOBS Act added Securities Act Section 4(a)(6), 5 > which provides an exemption from the registration requirements of Securities Act Section 5  6 for certain crowdfunding transactions, and the Commission promulgated Regulation Crowdfunding  7 to implement that exemption. Sections 4(a)(6) and 4A  8 of the Securities Act set forth dollar amounts used in connection with the crowdfunding exemption, and Section 4A(h)(1)  9 states that such dollar amounts shall be adjusted by the Commission not less frequently than once every five years to reflect the change in the CPI-U published by the BLS. Pursuant to this directive, the Commission adjusted the amounts for inflation in the 2017 Release. We are amending Regulation Crowdfunding to again adjust those dollar amounts for inflation pursuant to the statutory requirement.

JOBS Act Section 101 amended Section 2(a)(19) of the Securities Act and Section 3(a)(80) of the Exchange Act to define “emerging growth company” to mean an issuer that had total annual gross revenues of less than $1 billion, as such amount is indexed for inflation every five years by the Commission to reflect the change in the CPI-U during its most recently completed fiscal year. By statute, the adjusted gross revenue threshold must be set to the nearest $1,000,000. Pursuant to this directive, the Commission, in the 2017 Release, adjusted the threshold from $1,000,000,000 to $1,070,000,000. Today, we are adopting an amendment to Rule 405 and to Rule 12b-2 to again index the annual gross revenue amounts included in the definition of “emerging growth company” for inflation to reflect the change in the CPI-U as required by statute.

To determine the new EGC gross revenue threshold to be included in the amendments, we use the same baseline thresholds and CPI-U and the same methodology that the Commission used in the 2017 Release. First, we determine the appropriate CPI-U for December of the calendar year preceding the year of adjustment. Because we are making the inflation adjustment for the definition of EGC in 2022, we use the CPI-U for December 2021, which was 278.802 (“2021 CPI-U”). Consistent with the 2017 Release, we then use the CPI-U for December of 2011, the calendar year before the EGC definition was established by the JOBS Act, which was 225.672 (“2011 CPI-U”).

Second, we calculate the cost-of-living adjustment or inflation factor. To do this, we divide the 2021 CPI-U by the 2011 CPI-U. The resulting inflation factor is 1.23543. 10

Third, we calculate the raw inflation adjustment, which is the inflation adjustment before rounding. To do this, we multiply the initial EGC gross revenue threshold, $1,000,000,000, by the inflation factor 1.23543, the product of which is $1,235,430,000.

Fourth, we round the raw inflation amounts according to the convention set forth in the statutory definition. 11 Because we round only the increased amount, we calculate the increased amount by subtracting the initial EGC gross revenue threshold from the raw maximum inflation adjustment. Accordingly, the increase in the EGC gross revenue threshold from the initial threshold is $235,430,000 ( i.e., $1,235,430,000 less $1,000,000,000), which is rounded to $235,000,000 under the statutory rounding convention.

Finally, we add the rounded increase, $235,000,000, to the initial EGC revenue threshold, $1,000,000,000, which yields an inflation-adjusted EGC revenue threshold of $1,235,000,000. The amendments to the “emerging growth company” definitions in Securities Act Rule 405 and Exchange Act Rule 12b-2 we are adopting reflect this adjusted threshold.

Title III of the JOBS Act amended the Securities Act to add Section 4(a)(6), which provides an exemption from the registration requirements of Section 5 of the Securities Act for certain crowdfunding transactions. In 2015, the Commission adopted Regulation Crowdfunding to implement that exemption. 12 Sections 4(a)(6) and 4A of the Securities Act set forth dollar amounts used in connection with the crowdfunding exemption, 13 and Section 4A(h)(1)  14 states that those dollar amounts shall be adjusted by the Commission not less frequently than once every five years to reflect any changes in the CPI-U. Pursuant to this directive, the Commission, in the 2017 Release, adjusted those dollar amounts to reflect the inflation adjustment for the prior five-year period from December 2011 until December 2016, and we are again amending Rules 100(a)(2) and 201(t) and Form C to adjust for inflation the dollar amounts set forth in these rules and in the form as required by the statute.

To determine the adjusted dollar amounts for Rule 100(a)(2) and Rule 201(t), we use the same process as described above in connection with the EGC adjustment to determine the raw inflation amounts. 15 Then we round the raw inflation amounts to the nearest $100 for amounts under $100,000 and to the nearest $1,000 for amounts that equal or exceed $100,000. The rounded inflation amounts are then added to the initial inflation amounts to yield the inflation-adjusted amounts. Tables 1 and 2 show the current amounts, initial amounts, rounded inflation amounts, and inflation-adjusted amounts for Rules 100(a)(2) and 201(t). 16

I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register MM Mile marker NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background Information and Regulatory History

The Coast Guard was notified by Pro Wakeboard of a racing event that occurs on the Cumberland River. The event will take place on September 23, 2022, from 9 a.m. until 9 p.m. The Captain of the Port Sector Ohio Valley (COTP) has determined that there is a need to protect the river users while the wakeboarders are competing between MM 191.1 and MM 191.5 on the Cumberland River. In response, on August 5, 2022, the Coast Guard published a notice of proposed rulemaking (NPRM) titled “Safety Zone; Cumberland River, Nashville, TN” (87 FR 47949). There we stated why we issued the NPRM and invited comments on our proposed regulatory action related to this wakeboarding event. During the comment period that ended August 19, 2022, we did not receive any comments.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Delaying the effective date of this rule would be impracticable because we must establish the safety zone by September 23, 2022, to respond to the potential safety hazards associated with this wakeboarding event.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The COTP has determined that potential hazards associated with the wakeboarding competition will be a safety concern for anyone within a 0.4 mile radius of the Korean Veterans Bridge. The purpose of this rule is to ensure safety of vessels and the navigable waters in the safety zone before, during, and after the scheduled event.

As noted above, we received no comments on our NPRM published August 5, 2022.

This rule establishes a safety zone from that will be enforced from 9 a.m. to 9 p.m. on September 23, 2022. The safety zone will cover all navigable waters within 0.4 miles of the Korean Veterans Bridge on the Cumberland River in Nashville, TN. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled wakeboarding competition. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The regulatory text appears at the end of this document.

We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB).

This regulatory action determination is based on the size, location, duration, and time-of-day of the safety zone. The safety zone will be 12 hours spread over the course of 1 day in Nashville, TN. The safety zone will only encompass 0.4 miles of the Cumberland River. Vessel traffic will be able to safely transit around this safety zone which would impact a small designated area of the Cumberland River before or after the time of the events on each day. Moreover, the Coast Guard would issue a Broadcast Notice to Mariners via VHF-FM marine channel 16 about the zone, and the rulemaking would allow vessels to seek permission to enter the zone.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received 0 comments from the Small Business Administration on this rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has 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. We have analyzed this rule under that order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves 1 safety zone over the course of 1 day that in total will last for 12 hours. It is categorically excluded from further review under paragraph L[60](a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places, or vessels.

For the reasons discussed in the preamble, the Coast Guard amends “33” CFR part 165 as follows:

I. Background

On April 6, 2022, EPA published a notice of proposed rulemaking (NPRM). 87 FR 19824. In the NPRM, EPA proposed approval of case-by-case VOC RACT determinations for emission units at Hydro Carbide, 1 as EPA found that the RACT controls for these sources met the CAA RACT requirements for the 1997 and 2008 8-hour ozone NAAQS. The case-by-case RACT determinations for sources at these facilities were included in PADEP's May 7, 2020 SIP submission.

As more fully explained in the NPRM, under certain circumstances, states are required to submit SIP revisions to address RACT requirements for both major sources of nitrogen oxides (NO X ) and VOC and any source covered by control technique guidelines (CTG), for each ozone NAAQS. Which NO X and VOC sources in Pennsylvania are considered “major,” and are therefore subject to RACT, is dependent on the location of each source within the Commonwealth. NO X sources in Pennsylvania located in any ozone attainment areas or in any nonattainment areas designated moderate or below are subject to a major source threshold of 100 tons per year (tpy) because of the Ozone Transport Region (OTR) requirements in CAA section 182(f)(1). See definition of “Major NO X emitting facility” at 25 Pennsylvania Code 121.1 and 40 CFR 52.2020(c)(1). Similarly, VOC sources located in any ozone attainment areas or in any nonattainment areas designated serious or below are subject to a major source threshold of 50 tpy because of the OTR requirements in CAA section 184(b)(2). See definition of “Major VOC emitting facility” at 25 Pa. Code 121.1 and 40 CFR 52.2020(c)(1).

On May 16, 2016, PADEP submitted a SIP revision addressing RACT for both the 1997 and 2008 8-hour ozone NAAQS in Pennsylvania. PADEP's May 16, 2016 SIP revision intended to address certain outstanding non-CTG VOC RACT, VOC CTG RACT, and major source VOC and NO X RACT requirements for both standards. The SIP revision requested approval of Pennsylvania's 25 Pa. Code 129.96-100, Additional RACT Requirements for Major Sources of NO X and VOCs (the “presumptive” RACT II rule). Prior to the adoption of the RACT II rule, Pennsylvania relied on the NO X and VOC control measures in 25 Pa. Code 129.92-95, Stationary Sources of NO X and VOCs, (the RACT I rule) to meet RACT for non-CTG major VOC sources and major NO X sources. The requirements of the RACT I rule remain as previously approved in Pennsylvania's SIP and continue to be implemented as RACT. 2 On September 26, 2017, PADEP submitted a supplemental SIP revision including a letter, dated September 22, 2017, which committed to address various deficiencies identified by EPA in PADEP's original May 16, 2016 “presumptive” RACT II rule SIP revision.

On May 9, 2019, EPA conditionally approved the RACT II rule based on the commitments PADEP made in its September 22, 2017 letter. 3 84 FR 20274. In EPA's final conditional approval, EPA established conditions requiring PADEP submit, for EPA's approval, SIP revisions to address any facility-wide or system-wide NO X emissions averaging plans approved under 25 Pa. Code 129.98 and any case-by-case RACT determinations under 25 Pa. Code 129.99. PADEP committed to submitting these additional SIP revisions within 12 months of EPA's final conditional approval ( i.e., by May 9, 2020). Through multiple submissions between 2017 and 2020, PADEP submitted to EPA for approval the various SIP submissions to implement its RACT II case-by-case determinations and alternative NO X and VOC emissions limits. This rule takes final action on a SIP revision for VOC sources at Hydro Carbide, based on EPA's review.

To satisfy a requirement from EPA's May 9, 2019 conditional approval, PADEP submitted to EPA SIP revisions addressing alternative NO X and VOC emissions limits and/or case-by-case RACT requirements for major sources in Pennsylvania subject to 25 Pa. Code 129.98 or 129.99. PADEP's submission included a SIP revision pertaining to case-by-case RACT determinations for the existing VOC emissions units at Hydro Carbide that required a case-by-case RACT determination. 4

In the case-by-case RACT determinations submitted by PADEP, an evaluation was completed to determine if previously SIP-approved, case-by-case RACT emissions limits or operational controls (herein referred to as RACT I and contained in RACT I permits) were more stringent than the RACT II presumptive or case-by-case requirements new to the SIP. If more stringent, the RACT I requirements would continue to apply to the applicable source. If case-by-case RACT II requirements that are new to the SIP are more stringent than the RACT I requirements, then the RACT II requirements would supersede the prior RACT I requirements. 5

Here, EPA is approving SIP revisions pertaining to case-by-case RACT requirements for certain VOC sources at Hydro Carbide. Hydro Carbide is a major source of VOCs and was subject to RACT I under the name Fansteel Hydro Carbide. The case-by-case RACT determinations submitted by PADEP, consist of an evaluation of all reasonably available controls at the time of evaluation for each affected emissions unit, resulting in a determination of what specific emissions limit or control measures satisfy RACT for that particular unit. The adoption of additional emissions limits or control measures to existing SIP-approved RACT I requirements were specified as requirements in a revised federally enforceable permit (hereafter RACT II permit) issued by PADEP to Hydro Carbide. The RACT II permit was submitted as part of the Pennsylvania RACT SIP revision for EPA's approval in the Pennsylvania SIP under 40 CFR 52.2020(d)(1). The RACT II permit being approved in this action for Hydro Carbide (formerly Fansteel Hydro Carbide) is permit number 65-00860, effective November 15, 2019, and is part of the docket for this rulemaking, which is available online at www.regulations.gov, Docket No. EPA-R03-OAR-2022-0284. 6 For certain VOC sources at Hydro Carbide, EPA is incorporating by reference in the Pennsylvania SIP the source-specific emissions limits and control measures in the RACT II permit, and is determining that these provisions satisfy the RACT requirement under the 1997 and 2008 8-hour ozone NAAQS.

This CbC RACT SIP revision incorporates determinations by PADEP of source-specific RACT II controls for individual VOC emission units at Hydro Carbide, where those units are not covered by or cannot meet Pennsylvania's presumptive RACT regulation. After thorough review and evaluation of the information submitted to EPA by PADEP, in its SIP revision submittals for sources at Hydro Carbide, EPA found that: (1) PADEP's case-by-case RACT determinations and conclusions establish limits and/or controls on individual sources that are reasonable and appropriately considered technically and economically feasible controls; and (2) PADEP's determinations are consistent with the CAA, EPA regulations, and applicable EPA guidance.

EPA proposed to find that all the proposed revisions for Hydro Carbide would result in equivalent or additional reductions of VOC emissions. Consistent with section 110(l) of the CAA the proposed revisions will not result in additional VOC emissions and thus should not interfere with any applicable requirement concerning attainment.

Other specific requirements of the 1997 and 2008 8-hour ozone NAAQS case-by-case RACT determinations and the rationale for EPA's proposed action are explained more thoroughly in the NPRM, and its associated technical support document (TSD), and will not be restated here.

EPA received two sets of comments on the April 6, 2022 NPRM. 87 FR 19824. One set of comments expresses support for this SIP revision, and thus no response is necessary. The second set of comments raises general policy considerations not directly relevant to the SIP revision, does not identify any defects, and does not raise any issues concerning the SIP revision's consistency with the CAA with sufficient specificity to determine its relevance to this action. Thus, no response is necessary. A copy of the comments can be found in the docket for this rule action.

EPA is approving case-by-case RACT determinations for certain VOC sources at Hydro Carbide, as required to meet obligations pursuant to the 1997 and 2008 8-hour ozone NAAQS, as revisions to the Pennsylvania SIP.

In this document, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of source-specific RACT determinations under the 1997 and 2008 8-hour ozone NAAQS for certain VOC emission sources at one facility in Pennsylvania, as discussed in Section II. of this preamble. EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at the EPA Region III Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information). Therefore, these materials have been approved by EPA for inclusion in the SIP, have been incorporated by reference by EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rule of EPA's approval, and will be incorporated by reference in the next update to the SIP compilation. 7

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the State, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. Section 804, however, exempts from section 801 the following types of rules: Rules of particular applicability; rules relating to agency management or personnel; and rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties. 5 U.S.C. 804(3). Because this is a rule of particular applicability, EPA is not required to submit a rule report regarding this action under section 801.

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 21, 2022. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed and shall not postpone the effectiveness of such rule or action. This action approving Pennsylvania's VOC RACT requirements for one facility for the 1997 and 2008 8-hour ozone NAAQS may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

For the reasons set out in the preamble, 40 CFR part 52 is amended as follows:

This is a summary of the Commission's Report and Order in WT Docket No. 19-38, FCC 22-53, adopted on July 14, 2022 and released on July 18, 2022. The full text of the Report and Order, including all Appendices, is available for inspection and viewing via the Commission's website by entering the docket number, WT Docket No. 19-38. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format), by sending an email to FCC504@fcc.gov or calling the Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

The Regulatory Flexibility Act (RFA) requires that an agency prepare a regulatory flexibility analysis for notice and comment rulemakings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” Accordingly, the Commission has prepared a Final Regulatory Flexibility Analysis (FRFA) concerning the possible impact of the rule changes contained in this final rule on small entities. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Further Notice of Proposed Rulemaking ( FNPRM ) released in November 2022 in this proceeding (86 FR 74024, Nov. 19, 2022). The Commission sought written public comment on the proposals in the FNPRM, including comments on the IRFA. No comments were filed addressing the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

The requirements in §§ 1.929; 1.950; and 1.60001 through 1.60007 may constitute new or modified collections subject the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. They will be submitted to the Office of Management and Budget (OMB) for review under Section 3507(d) of the PRA. OMB, the general public, and other Federal agencies will be invited to comment on the new or modified information collection requirements contained in this proceeding. In addition, the Commission notes that, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the Commission previously sought, but did not receive, specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees. The Commission describes impacts that might affect small businesses, which includes more businesses with fewer than 25 employees, in the Final Regulatory Flexibility Analysis.

The Commission will send a copy of the Report and Order to Congress and the Government Accountability Office pursuant to the Congressional Review Act. See 5 U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of the Report and Order, including the FRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). A copy of the Report and Order and FRFA (or summaries thereof) will also be published in the Federal Register .

Section 616 of the MOBILE NOW Act required that, within a year of its enactment, the Commission initiate a rulemaking proceeding to assess whether to establish a program, or modify an existing program, under which a licensee that receives a license for exclusive use of spectrum in a specific geographic area under section 301 of the Communications Act of 1934 may partition or disaggregate the license by sale or long-term lease in order to, inter alia, make unused spectrum available to an unaffiliated covered small carrier or an unaffiliated carrier to serve a rural area. 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. MOBILE NOW Act, section 616(b)(2)(A)-(D) (codified at 47 U.S.C. 1506(b)(2)(A)-(D). Section 616 provided that the Commission may offer incentives or reduced performance requirements only if it finds that doing so would likely result in increased availability of advanced telecommunications services in a rural area and directed that if a party fails to meet any build out requirements 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. Id. section 616(b)(3)-(4) (codified at 47 U.S.C. 1506(b)(3)-(4)).

In this final rule, we establish the ECIP largely as proposed in the FNPRM, as an initial measure to facilitate competition and increase spectrum access and rural service through transactions that meet the qualifying requirements.

We establish ECIP eligibility through participation in a transaction involving partitioning and/or disaggregation, leasing, or full assignment of spectrum that meets the qualification requirements discussed below (Qualifying Transaction). Any covered geographic licensee may offer spectrum to an unaffiliated eligible entity through a partition and/or disaggregation, and any covered geographic licensee eligible to lease in an “included service,” as listed in 47 CFR 1.9005 of our rules, may offer spectrum to an unaffiliated eligible entity through a long-term leasing arrangement. Covered geographic licensees consist of specified wireless radio services (WRS) for which the Commission has auctioned exclusive spectrum rights in defined geographic areas. See 47 CFR 1.907. To ensure that appropriate incentives and benefits are afforded consistently across a variety of transaction types, we permit a covered geographic licensee to assign its entire authorization.

We note that in the FNPRM, we proposed that all WRS licensees in “included services” would be permitted to lease spectrum and participate in ECIP. The MOBILE NOW Act, however, requires that we assess the administrative feasibility of adopting program features. We thus modify our proposed approach towards leasing eligibility for lessors to ensure that all ECIP participants can accept responsibility for program obligations and realize program benefits. Accordingly, we do not include all WRS licensees in “included services” as eligible lessors within ECIP, as many of the program obligations and benefits are inapplicable to site-based wireless licensees that are generally permitted to lease; we do, however, permit any covered geographic licensees in “included services” to participate as lessors in the ECIP program. Similarly, we exclude light-touch leasing spectrum manager leases of 3.5 GHz Priority Access Licenses (PALs) in the Citizens Band Radio Service, because we do not believe the light-touch leasing model allows for the level of Commission oversight necessary to practically administer ECIP and avoid potential waste, fraud, and abuse. See 47 CFR 1.9046, 96.32(c), 96.66. We nonetheless permit prospective ECIP participants in the Citizens Band Radio Service to enter into de facto transfer leases or general 21-day notification spectrum manager leases for PALs in order to access spectrum and fully receive the program's benefits.

Some spectrum manager leases of these 3.5 GHz Priority Access Licenses (PALs) in the Citizen's Band Radio Service are governed by the Commission's “light-touch leasing” rules, a process that builds upon and incorporates our traditional spectrum manager leasing approval process. Lessees seeking to engage in light-touch leasing pre-certify with the FCC that they meet the non-lease-specific eligibility and qualification criteria for 3.5 GHz light-touch leasing. Rather than being approved for a lease by the Commission after an application is filed in the Universal Licensing System (ULS), light-touch leases are managed and monitored by a third-party automated frequency coordinator, known as a Spectrum Access System (SAS). The SAS administrator confirms the PALs and lessees meet the light-touch leasing criteria in their pre-certification filings and the lease-specific eligibility requirements. After SAS confirmation, the lessees may immediately begin exercising the leased spectrum usage rights under the light-touch leasing arrangements. On a daily basis, the SAS administrators provide the FCC with an electronic report of the light-touch leasing notifications. The light-touch leases appear on our regularly issued Accepted for Filing Public Notices. See 47 CFR 1.9046, 96.32(c), 96.66; Amendment of the Commission's Rules with Regard to Commercial Operations in the 3550-3650 MHz Band, GN Docket No. 12-354, Order on Reconsideration and Second Report and Order, 81 FR 49024 (July 26, 2016), 31 FCC Rcd 5011, 5068-74, paras. 204-23 (2016) ( 2016 3.5 GHz Second R&O ); see also Promoting Investment in the 3550-3700 MHz Band, GN Docket No. 17-258, Report and Order, 83 FR 63076 (Dec. 7, 2018), 33 FCC Rcd 10598 (2018). The light-touch leasing process substituted only the immediate processing procedure of spectrum management leases under § 1.9020(e)(2), allowing PAL licensees and lessees to enter into spectrum manager leases under the general 21-day notification procedure in § 1.9020(e)(1) with a notification to the SAS prior to operation pursuant to § 1.9046(c). See 2016 3.5 GHz Second R&O, 31 FCC Rcd at 5071, para. 213 & n.485 and 5074, para. 220. The Commission adopted the light-touch leasing approach because the procedures under which we normally process spectrum manager leases in other exclusive-use wireless bands would be impractical in many cases for PALs, given that a significant percentage of these light-touch leases may cover a short period of time or perhaps a single event. See 47 CFR 1.9010, 1.9020(e)(1), 1.9030, 1.9035, 96.32(a).

As specified in the MOBILE NOW Act, we require that each party to a Qualifying Transaction be unaffiliated. We find it in the public interest to apply the Commission's current definition of affiliate from our designated entity rules, which is a person holding an attributable interest in an applicant if such individual or entity directly or indirectly controls or has the power to control the applicant; or is directly or indirectly controlled by the applicant; or is directly or indirectly controlled by a third party or parties that also controls or has the power to control the applicant; or has an “identity of interest” with the applicant. See 47 CFR 1.2110(c)(2), (5). We find this eligibility restriction necessary to meet the intent of Congress and ensure that the parties to a Qualifying Transaction, and therefore intended beneficiaries of ECIP benefits, are unaffiliated to prevent gaming of the program. As such, we require applicants to identify their affiliates as part of their ECIP application in a Qualifying Transaction through the filing of a new FCC Form 602, or the filing of an updated FCC Form 602 if the ownership information on a previously filed version is not current.

We adopt two types of ECIP Qualifying Transactions: those that focus on small carriers and Tribal Nations gaining spectrum access to increase competition, in any location, whether urban, suburban or rural; and those that involve any interested party that commits to operating in, or providing service to, rural areas. In general, both assignments and leases will qualify for ECIP, if they satisfy the other program criteria.

The FNPRM sought comment on whether we should permit full license assignments within the ECIP and, if so, how we should implement these types of transactions. Although many of the proposed ECIP benefits would be applicable to both parties to a transaction involving partition, disaggregation (or to the lessor, in the case of leasing arrangements), they would only be available to the assignee in a full license assignment scenario because the assignor would no longer be licensed for that spectrum after consummation of the assignment. We find it inequitable to bar these types of transactions from ECIP, particularly where transactions involving partitioning and/or disaggregation of the same license the parties might seek to fully assign would be eligible. To increase program flexibility, we therefore permit transactions for full assignments of covered geographic licenses where either of the below prongs are met. We also sought comment on whether the Commission's rules permitting the sharing of performance requirements in the partitioning and/or disaggregation context runs counter to the ECIP framework as proposed in the FNPRM. We find that the program benefits, obligations and penalties cannot be applied equitability in a shared construction obligation scenario, and that it would not be administratively feasible to implement. Therefore, we preclude any license with an existing shared performance obligation from participation in the program, and we will not accept in the ECIP any application with an election from the parties to share performance obligations.

We determine that any covered geographic licensee is eligible to participate as an assignor and any covered geographic licensee in an “included service” is eligible to participate as a lessor, and two types of entities are eligible as assignees or lessees in a Qualifying Transaction under this first prong: either small carriers or Tribal Nations. Consistent with the MOBILE NOW Act, each party to a Qualifying Transaction must be unaffiliated.

Small Carriers. Section 616 of the MOBILE NOW Act defined “Covered small carrier” as a carrier that “has not more than 1,500 employees (as determined under section 121.106 of title 13, Code of Federal Regulations, or any successor thereto)” and “offers services using the facilities of the carrier.” MOBILE NOW Act section 616(a)(1), (codified at 47 U.S.C. 1506(a)(1)). The MOBILE NOW Act also applied the definition of “carrier,” as set forth in section 3 of the Communications Act of 1934, as “any person engaged as a common carrier for hire, in interstate or foreign communication by wire or radio or interstate or foreign radio transmission of energy.” Id. In the FNPRM, we proposed to apply the statutory definition of covered small carriers and sought comment on alternatives. We decline at this time to expand our proposed definition of covered small carriers in establishing eligibility for this prong. We note that Congress' directive in the MOBILE NOW Act focused specifically on making unused spectrum available to covered small carriers and promoting service to rural areas, and the current record in this proceeding has not been sufficiently developed to determine whether to extend the additional incentives of the small carrier prong of ECIP beyond those entities specifically contemplated by Congress.

For purposes of this program, we therefore adopt the above statutory definition of “Covered Small Carrier” and designate them as an eligible beneficiary as a “small carrier” under this transaction prong. For ease of reference, we use the term “small carrier” rather than “covered small carrier” used in the MOBILE NOW Act, though we incorporate into our rules the specific language of the statutory definition.

Tribal Nations. We include Tribal Nations as an additional eligible beneficiary in this transaction prong, independent of whether they qualify as a small carrier. We recognize the acute connectivity challenges that Tribal Nations face and believe that inclusion in the ECIP program will facilitate spectrum access by Tribal Nations in both rural and non-rural areas to help meet their communications needs. We therefore adopt our proposed definition of Tribal Nation as any federally-recognized American Indian Tribe and Alaska Native Village, the consortia of federally recognized Tribes and/or Native Villages, and other entities controlled and majority-owned by such Tribes or consortia. In the FNPRM, we sought comment on how we should facilitate transactions involving entities seeking to serve native Hawaiian Homelands given there are no federally recognized Tribal Nations in Hawaii. In the absence of responsive comments on this issue, we will consider future waiver requests for ECIP program eligibility on behalf of appropriate entities that manage or administer resources on behalf of Native Hawaiians or Hawaiian Homelands. We believe the inclusion of Tribal Nations in ECIP is an important step to facilitate increased spectrum access, and the Commission is committed to working with Tribal Nations to ensure that the benefits afforded through ECIP participation are fully realized.

As proposed, we adopt a minimum spectrum threshold for a qualifying transaction. Specifically, we require that, for licenses included in an ECIP transaction involving a disaggregation, partition/disaggregation in combination, or a lease, the assignor or lessor must include a minimum of 50% of the licensed spectrum, and must demonstrate that it meets the minimum spectrum threshold at every point in the transaction area (where the percentage is calculated at any point as the amount of spectrum being assigned/leased (in megahertz)/total spectrum held under the license (in megahertz)). As an example, we will not permit an assignor participating in ECIP to engage in a transaction whereby it partitions an area and disaggregates spectrum in combination, but seeks to include 75% of its spectrum in the western part of the partitioned area, and 25% of its spectrum in the eastern part of the partitioned area, in an attempt to meet the 50% minimum spectrum threshold through some form of averaging. We believe that this minimum spectrum threshold will provide stakeholders flexibility in structuring transactions to facilitate sufficient spectrum availability for the underlying intended service, while simultaneously preventing transactions involving de minimis spectrum amounts that are potentially entered into solely to obtain ECIP benefits.

We anticipate that secondary market transactions negotiated at arm's length will result in parties acquiring sufficient spectrum to meet their communications needs. We find that requiring minimum spectrum amounts in megahertz to ensure that a current technology can be successfully deployed reduces stakeholder flexibility. Such an approach is not technologically neutral and may not adequately account for future technological advances. By taking a technologically neutral approach that requires a fixed percentage of spectrum relative to each license included in an ECIP transaction, we provide sufficient flexibility to allow a wide range of different WRS licensees the opportunity to participate in, and benefit from, the ECIP. This approach will likely increase the number of ECIP transactions, and foster participation by not effectively barring licensees with smaller spectrum amounts based on the original spectrum allocation in a particular radio service.

Some commenters argued against a minimum threshold. We disagree. The Commission must balance the goals and benefits conferred through the program with the potential harms of abuse, and we find that establishing a minimum spectrum threshold is necessary to prevent sham transactions ( e.g., disaggregation of de minimis spectrum amounts simply to acquire program benefits). Accordingly, we adopt a 50% minimum spectrum threshold as proposed in the FNPRM. Provided the minimum spectrum threshold is met, parties to an ECIP Qualifying Transaction are free to negotiate specific terms for additional amounts of spectrum required to meet their operational or technological needs.

We adopt a minimum geography threshold for Qualifying Transactions under this small carrier or Tribal Nation prong, whether a partition, partition/disaggregation in combination, full assignment or a long-term leasing arrangement. We also incorporate two-tiered geographic scaling based on the overall size of the licensed area in the underlying license from which the ECIP transaction originates to ensure equitable treatment across differently-sized licensed areas. Specifically, for licensed areas that contain 30,000 square miles or less, we require a minimum geography threshold of 25% of the licensed area. For geographic area licenses larger than 30,000 square miles in size, we require a minimum geography threshold of 10% of the licensed area. We believe this approach appropriately balances the size of the licensed area to create incentives for program participation and ensure sufficient land area for small carriers or Tribal Nations, while discouraging transactions involving de minimis geography entered into solely to obtain program benefits.

In the FNPRM, we proposed a 25% geography threshold to ensure sufficient land area was made available for the provision of advanced telecommunications services and to prevent fraud from transactions involving de minimis amounts of geography entered into for the singular purpose of receiving benefits. We are persuaded that the scaling concepts advanced by commenters provide a practical solution towards ensuring a fair and consistent application of the ECIP. We therefore find it in the public interest to adopt the two-tiered hybrid approach discussed above, based on the amount of square mileage within the licensed area of the assignor or lessor, regardless of the license type, to meet the required minimum geography threshold percentage. We believe this approach appropriately balances the goal of ensuring greater program participation, particularly for licensees with larger licensed areas that offer spectrum to others, and that benefit from program benefits applied to their entire license ( e.g., extension of renewal deadline and construction deadlines), while protecting against potential abuse through transactions that include de minimis amounts of geography. Assignors or lessors are permitted to include more of their licensed area in a Qualifying Transaction than the minimum geography threshold in this prong, up to their entire licensed area, potentially resulting in a larger Transaction Geography in a Qualifying Transaction. We believe this allows sufficient flexibility to structure transactions based on the needs of the parties.

We clarify that under the small carrier or Tribal Nation transaction prong, the geography assigned or leased can be from any type or size of covered geographic license and can include rural and/or suburban/urban areas, provided it meets the minimum geography threshold percentage described above. An ECIP transaction between unaffiliated parties, as required under this prong, may be either an assignment (full, partition, and/or disaggregation) or a lease, but not both, for each license. We impose this restriction to meet program goals, including the equitable distribution of program benefits and obligations, and therefore preclude an ECIP participant from, for example, partitioning a percentage of its licensed area, and then leasing another percentage of licensed area from the same license, which when combined meet the minimum geography threshold. While an ECIP application filed under this prong may include more than one license for assignment or leasing to a single assignee/lessee, each included license must independently meet the respective minimum geography percentage threshold, and will be independently reviewed and acted upon. Applications seeking ECIP benefits that do not satisfy the minimum spectrum and geography thresholds for each license on a stand-alone basis will be dismissed. We also clarify that parties participating in ECIP through this small carrier or Tribal Nation transaction prong remain subject to the substantive performance requirements ( e.g., covering a certain population percentage, in most flexible use bands) as set forth in the underlying radio service(s) rules of the license(s) involved in the Qualifying Transaction. Finally, after review of the record, we find no basis to restrict the program to census defined populations.

To further the important Commission and Congressional goals of facilitating the provision of advanced telecommunications service in rural areas, we provide a second possible path for ECIP participants through a rural-focused transaction approach. This prong expands the scope of eligible entities beyond those specifically referenced in the MOBILE NOW Act and is intended to facilitate coverage to rural areas by tying ECIP benefits to construction and operation obligations. We believe this second transaction prong will expand the class of eligible participants, resulting in greater potential for increased spectrum usage and competition in rural areas.

Any covered geographic licensee is eligible to participate as an assignor and any covered geographic licensee in an “included service,” 47 CFR 1.9005, is eligible to participate as a lessor. Further, any entity is eligible to participate as an assignee or lessee if able to meet the prong requirements described below, including, for example, large or small carriers, common carriers, non-common carriers, Tribal Nations, critical infrastructure entities, and other entities (large or small) operating private wireless systems. We reiterate that, consistent with the MOBILE NOW Act, each party to a Qualifying Transaction must be unaffiliated.

Commenters unanimously supported the Commission's FNPRM proposal to adopt a rural-focused transaction prong available to anyone able to meet the requirements. We find it in the public interest to adopt our proposal to expand on the MOBILE NOW Act's focus to incentivize transactions involving a wide variety of stakeholders seeking to provide services in rural areas that may currently face spectrum access challenges.

Similar to our treatment of the small carrier or Tribal Nation prong above and for the same rationale, we adopt the proposed 50% minimum spectrum threshold for each license(s) included in the Qualifying Transaction of the rural-focused transaction prong. For licenses included in an ECIP transaction involving a disaggregation, partition/disaggregation in combination, or a lease, the assignor or lessor must include a minimum of 50% of the licensed spectrum, and must demonstrate that it meets the minimum spectrum threshold at every point in the transaction area (where the percentage is calculated at any point as the amount of spectrum being assigned/leased (in megahertz)/total spectrum held under the license (in megahertz). The minimum spectrum threshold under this rural-focused transaction prong provides stakeholders flexibility in structuring transactions to facilitate sufficient spectrum availability for the provision of advanced telecommunications services in rural areas, while simultaneously preventing transactions involving de minimis spectrum amounts that are potentially entered into solely to obtain ECIP benefits.

In the FNPRM, we proposed in the rural context that a Qualifying Transaction must designate a minimum of 50% of the licensed spectrum, for each license included in the transaction, consistent with the small carrier or Tribal Nation transaction prong. We find that adopting the minimum spectrum threshold is the best approach towards advancing the Commission's goals of fostering the provision of advanced telecommunications services and providing stakeholders flexibility in structuring transactions, while preventing transactions involving de minimis amounts of spectrum.

To achieve the Commission's policy goals of facilitating bona fide transactions that ensure rural service while providing substantial program benefits, we require that a Qualifying Transaction under this prong ( e.g., a partition, partition/disaggregation in combination, full assignment, or a long-term leasing arrangement) must include a minimum amount of “Qualifying Geography.” All geography identified as Qualifying Geography, for purposes of this rural-focused transaction prong, must be in a rural area, as defined below. We adopt the statutory definition of “Rural Area,” which is defined as 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. MOBILE NOW Act, section 616(a)(2) (codified at 47 U.S.C. 1506(a)(2)). Although we understand concerns regarding areas adjacent to large cities/towns, we note that the MOBILE NOW Act did not provide an exception for the inclusion in the definition of “rural” those locations on the periphery of urban areas that are arguably less populated, but nonetheless are part of an urbanized area contiguous or adjacent to a city or town with a population of more than 50,000. We therefore recognize that parties may seek a waiver of the rule in certain unusual circumstances, which we will review pursuant to the criteria set forth in the Commission's rules. See 47 CFR 1.3, 1.925.

As applied to the ECIP rural-focused transaction prong, we define Qualifying Geography as at least 300 contiguous square miles for those licensed areas that are 30,000 square miles and smaller, with appropriate upward scaling for larger licensed areas. After reviewing the record and the varying geographic areas the Commission licenses in greater detail, we find that our proposed scaling approach that focused on license types ( e.g., Partial Economic Area (PEA) or smaller) potentially could create inequities. Commission staff reviewed data regarding license types in Covered Geographic Services, and found that, out of 410 PEAs, 399 (or 98%) were 30,000 square miles or less; however, certain other licensed areas larger than PEAs also consisted of 30,000 square miles or less. For example, 84% of BEAs, 26% of MTAs, and 28% of MEAs, consisted of 30,000 square miles or less. (The license area types reviewed include (from smallest to largest average area size): Counties, Cellular Market Areas (CMAs), Interactive Video Markets (IVMs), Basic Trading Areas (BTAs), Partial Economic Areas (PEAs), Basic Economic Areas (BEAs), Major Trading Areas (MTAs), Major Economic Areas (MEAs), VHF Public Coast (VPC), and Regional Economic Area Groupings (REAGs). See What is Geographic Information Systems (GIS)?, https://www.fcc.gov/wireless/gis-wtb (last visited April 2022)). Accordingly, were we to adopt the “PEA and smaller” approach, as proposed in the FNPRM, as the standard for the 300 square mile minimum Qualifying Geography threshold, 141 out of 170 BEAs, 12 out of 46 MTAs, and 13 out of 46 MEAs, all geographic sizes larger than PEAs, but also containing only 30,000 square miles or less, would have been unnecessarily subject to higher minimum Qualifying Geography thresholds ( e.g., 900 square miles). We seek to remedy this potential inequity through a more neutral approach that incentivizes transactions across all licensed areas in covered geographic services.

We therefore adopt a Qualifying Geography minimum threshold based on actual geographic license size in square miles and find that this slight modification to our proposed approach ensures equal treatment across similar sized licensed areas. Under the rural-focused transaction prong we adopt, the geographic threshold approach scaled for larger licensed areas in four categories is as follows: (1) Up to 30,000 square mile licensed areas—Qualifying Geography = 300 square miles; (2) 30,001-90,000 square mile licensed areas—Qualifying Geography = 900 square miles; (3) 90,001-500,000 square mile licensed areas—Qualifying Geography = 5,000 square miles; and (4) 500,001 square mile licensed areas and above—Qualifying Geography = 15,000 square miles.

We believe this approach ensures fairness and equal treatment across different license sizes and that scaling for larger licensed areas will ensure sufficient financial commitment by ECIP participants to yield more than nominal spectrum access. We also believe it achieves the Commission's goal of facilitating rural buildout sufficient to justify the ECIP benefits received, thus preventing windfall benefits. To afford ECIP participants substantial flexibility in structuring transactions and to incentivize participation under this rural-focused transaction prong, we permit assignors/lessors in Qualifying Transactions to include spectrum from multiple licenses, as long as the Qualifying Geography intersects each contributing license included in the underlying ECIP transaction application. To facilitate program participation under this rural focused transaction prong, however, we do not require a minimum square mileage of Qualifying Geography per contributing license, provided the sum total of the Qualifying Geography from the contributing licenses meets the required minimum threshold.

To protect program integrity, in instances where a Qualifying Transaction consists of multiple licenses with varying sized licensed areas contributing to the Qualifying Geography, we require the Qualifying Geography to be scaled to the minimum geographic threshold of the largest licensed area included. For example, where the Qualifying Geography intersects three contributing licenses and, based on their smaller overall licensed area, two of the three contributing licenses would require a minimum Qualifying Geography of 300 square miles, and the third contributing license is a larger licensed area that would require 900 square miles of minimum Qualifying Geography, we require the Qualifying Geography for this ECIP Qualifying Transaction to consist of a minimum of 900 square miles.

We do not mandate the maximum geographic scope of the parties' overall transaction, and clarify that the total Transaction Geography can be up to the entire licensed area of the contributing license(s), but no smaller than the minimum Qualifying Geography in the appropriate scaled category. This approach can potentially result in a larger Transaction Geography than the Qualifying Geography and affords program participants sufficient flexibility to structure transactions based on the needs of the parties. In this regard, we strongly encourage all parties to an ECIP transaction, and particularly assignees and lessees, to include as part of the overall transaction sufficient Transaction Geography to ensure that the Qualifying Geography will be 100% covered as required. We reiterate that both the Qualifying Geography and Transaction Geography is not determined by the Commission, but is voluntarily identified by the parties. Both assignees and lessees are required to cover 100% of the Qualifying Geography, and this requirement becomes the assignee's substituted performance obligation in lieu of the service rule obligation. We advise parties to perform the proper due diligence in advance of filing an ECIP application to ensure that site access and/or propagation issues will not prevent the assignee or lessee from meeting its construction requirement. Failure to do so, resulting in subsequent arguments that the 100% Qualifying Geography coverage requirement cannot be met, is a consideration in the Commission's evaluation as to whether the parties entered into a good faith transaction with a bona fide intent to meet the program's obligations. Finally, in any transaction involving licenses authorized in mixed spectrum bands, we clarify that all end-user devices operating throughout the Qualifying Geography must be capable of operation on all spectrum bands for contributing licenses that are part of the transaction.

In this final rule, we adopt three ECIP benefits: where applicable, we afford participants a five-year license term extension, a one year construction extension, and alternative construction requirements for rural-focused transactions.

We adopt a five-year license term extension for the following: all parties involved in a qualifying partition/disaggregation transaction; the lessor entering into a qualifying spectrum leasing transaction, given that the lessor retains the license renewal obligations; and the assignee in full license assignments. We believe this benefit will substantially reduce regulatory burdens associated with renewal obligations and will properly incentivize secondary market transactions, particularly spectrum leases that are subject to the lessor's license term. ECIP is available to a wide variety of WRS licenses, most of which have a renewal showing obligation requiring a demonstration of continued service at or above that required to meet the original construction obligation. We believe that the license term extension benefit offers an incentive, consistent with Congressional direction, to licensees that have yet to meet their construction obligations or those that may not have maintained the required level of service throughout the course of their license term.

We adopt a one-year construction extension for all parties to a Qualifying Transaction for both the interim and final construction benchmarks, where applicable. This benefit applies to the following parties in an ECIP transaction: both parties in a Qualifying Transaction involving partition and/or disaggregation; to the lessor in a qualifying spectrum lease arrangement, and to the assignee in a full license assignment. We are not persuaded that additional time beyond a one-year construction extension of the service rule benchmark is warranted as an ECIP benefit. We seek to facilitate secondary market transactions that will benefit those needing increased spectrum access, as well as the provision of advanced telecommunications services to rural areas. Although Congress specifically focused on the Commission affording construction relief to help realize these policy goals, we are mindful that providing additional time to construct, while beneficial to the licensee recipient, correspondingly results in a delay in the ultimate provision of services to the public. Further, pursuant to the MOBILE NOW Act, the Commission is charged with assessing the administrative feasibility of the program, and we believe that substantially adding to the complexity of ECIP by adopting commenter-suggested gradations of construction extension benefits would not be in the public interest. MOBILE NOW Act section 616(b)(2)(D) (codified at 47 U.S.C. 1506(b)(2)(D)). Therefore, we adopt a one-year construction extension for both the interim and final construction benchmarks, where applicable. We also note that the Commission's rules are very clear with regard to circumstances that would not warrant an extension of time, and specifically state that construction and coverage deadline extension requests will not be granted due to transfers of control or assignments of authorization. 47 CFR 1.946(e)(3). For the ECIP program, Congress directed the Commission to consider incentives that we may deem appropriate to facilitate transactions, and specifically included this type of relief as a possible incentive. We find that application of this benefit serves the public interest as an incentive to participate in ECIP. We also clarify that construction deadlines previously extended through grant of a waiver may not be automatically transferrable to the assignee, unless specified by the waiver grant instrument. If transferrable, and where such further transfer is predicated upon the recipient justifying the waiver relief, ECIP assignees must separately justify any waiver relief separate from, and prior to, grant of ECIP benefits.

For the rural-focused transaction prong, we substitute an assignee's existing service rule-based performance requirement, if applicable, for the entire Transaction Geography as reflected on the assignee's new license created through ECIP, with the alternative construction benchmark described below. This benefit is provided to assignees in a Qualifying Transaction involving partition, partition and disaggregation combination, or full license assignment. Specifically, under ECIP, an assignee or lessee is required to provide 100% coverage to its Qualifying Geography, which is at least 300 square miles for licensed areas up to 30,000 square miles, with upward scaling by licensed area size. Although we require an assignee or lessee to meet the 100% Qualifying Geography coverage requirement to provide rural service in exchange for ECIP benefits, we do not substitute the alternative construction benchmark to leasing arrangements, as the lessee has no service-rule based performance benchmark requiring substitution. Moreover, under the Commission's rules, the lessor has the responsibility to meet underlying performance benchmarks for its entire license and also retains the ability to count any lessee construction towards lessor's buildout obligation. We also clarify that where the Commission has previously modified the assignor's substantive service-based performance requirement through conditions granted by waiver and such requirements have not been met, the assignee will only receive the substituted alternative construction requirement if the assignee separately requests, and is granted, a waiver to receive this ECIP benefit in lieu of the modified performance requirement applicable to the assignor.

We reiterate that although we require 100% coverage of the Qualifying Geography, parties to an ECIP transaction are free to include significantly more geography than the minimum square mileage of Qualifying Geography required to be constructed. In fact, under some circumstances, the Qualifying Geography coverage requirement can likely be met through construction of a single transmitter with approximately a ten mile radius of operation, though we anticipate that assignees or lessees may deploy multiple transmitters to ensure robust network coverage and to provide sufficient buffer to ensure 100% coverage of the Qualifying Geography. We find that substituting service rule requirements with mandatory coverage of Qualifying Geography for those assignees with remaining performance requirements represents a key benefit and an incentive to participate in ECIP, while still requiring a legitimate investment in network infrastructure that will result in public interest benefits in rural areas.

In adopting the substitution of an alternative construction requirement in lieu of service based requirements for rural-focused transactions (for assignees involved in partitioning and/or disaggregation or full license assignments), we clarify our treatment of the interim and final construction deadline in two distinct scenarios. First, where the interim performance requirement has not been met at the time of the ECIP transaction, the assignee meets its interim performance obligation for the entire Transaction Geography specified in its new authorization (if larger than the Qualifying Geography) by complying with this alternative approach, and we remove the final performance requirement set forth in the service rules for the particular license acquired in the ECIP transaction. Second, where an assignor has previously met the interim construction deadline, this alternative construction benchmark will replace the final construction obligation for the assignee's entire Transaction Geography. We believe this flexible approach will facilitate rural-focused transactions and will ensure a reasonable stakeholder investment in rural buildout sufficient to warrant ECIP benefits. In the event an assignee has no performance obligation because the respective interim and final benchmarks have been satisfied, we do not confer the benefit of a substituted performance obligation.

In this final rule, we adopt several measures to protect the integrity of ECIP from potential waste, fraud, and abuse and to promote the program's goals of increased spectrum access, rural service, and competition. We also clarify that, unless specified herein, participation in the ECIP does not relieve a licensee of the obligation to comply with other Commission rules including, but not limited to, the following: (1) designated entity eligibility requirements or the obligation to make an unjust enrichment payment when required; (2) competitive review of an ECIP transaction if needed; (3) the application of a service-specific spectrum aggregation rule; or (4) obligations required by the Tribal Lands Bidding Credit rule.

These protections include: (1) a requirement for applicants seeking to participate in ECIP to select either the small carrier/Tribal Nation prong or the rural-focused transaction prong, but not both, for each ECIP transaction, without the option of changing prongs once selected; (2) a five-year holding period on licenses assigned through partitioning and/or disaggregation from an ECIP transaction, and a five-year minimum term for leasing arrangements; (3) an operational requirement of 100% coverage of the Qualifying Geography for three consecutive years for rural-focused transactions; (4) automatic termination of the relevant ECIP license and bar from future program participation for a licensee's failure to comply with the five-year holding period or to meet the applicable buildout and operational requirements (as required for rural-focused transactions); and (5) a one-time cap on ECIP benefits for each license subject to a Qualifying Transaction ( e.g., the original license and the subsequent license(s) issued from a partition and/or disaggregation). In adopting these program protections, we acknowledge that ECIP is in its nascency, and that we will continue to fine-tune the program to enhance its effectiveness and to better meet our objectives. We also direct the Wireless Telecommunications Bureau to conduct an evaluation of the program and prepare a report to the Commission no later than five years after the effective date of this final rule.

As with any Commission program conferring a benefit and intended to achieve results that serve the public interest, we find it imperative to establish adequate protections to avoid the potential of waste, fraud, and abuse. Indeed, some of the protections we adopt today were specifically included in the MOBILE NOW Act and have been implemented in prior Commission proceedings to guard against anti-competitive behavior and abuse of Commission process. See, e.g., MOBILE NOW Act section 616(b)(3) (codified at 47 U.S.C. 1506(b)(3)) (stating that automatic license termination is the consequence of failure to buildout); 47 CFR 20.22(c) (requiring a holding period for 600 MHz reserve licenses); 47 CFR 1.946(c) (automatic termination for failure to build-out wireless licenses in certain radio services). Based on our experience administering wireless licenses to support the provision of service to rural areas, we find that implementing the protections discussed in more detail below aligns with our program goals and serves the public interest to facilitate, as much as possible, intense spectrum utilization in these underserved areas. We believe that our approach addresses a major commenter concern (ensuring that the assignor/lessor is not unduly punished for the failings of the assignee/lessee) while also protecting ECIP from waste, fraud, and abuse.

To avoid gamesmanship and provide for administrative efficiency, ECIP participant(s) must select either the small carrier/Tribal Nation prong or the rural-focused transaction prong, even if the receiving party is otherwise eligible for both options. We find it more efficient and in the public interest to adopt a requirement that provides a clear and distinct path to ECIP participation by mandating that parties to an ECIP transaction may select either prong, but not both. This approach results in consistent application of program benefits and ensures program integrity by requiring applicants to follow through with their stated commitment to provide certain public interest benefits, and also reduces the potential for gamesmanship in ECIP prong selection. Accordingly, parties to an ECIP transaction are required to make a prong selection in the application filed with the Commission to approve the ECIP transaction, i.e., an FCC Form 603 (for partitions and/or disaggregation) or FCC Form 608 (for leases). Once the associated application has been granted by the Commission, the parties (now ECIP participants) are not permitted to change their selection.

This restriction ensures that no party changes its ECIP prong selection, particularly towards the end of the period allotted for completing construction obligations, thereby leveraging potentially more favorable regulatory requirements. For example: Licensee A (the assignor) and Licensee B (the assignee) both file an FCC Form 603 application, selecting the rural-focused transaction prong, with Licensee B committing to provide service to a partitioned rural area of at least 300 rural square miles of Qualifying Geography as a substitute for an upcoming performance deadlines mandated under our service rules. Under this prong, Licensee B must meet the applicable construction and operational requirements for that area by the extended construction deadline. Once the Commission grants the application, Licensee B is not permitted to later elect, in lieu of meeting its obligation to provide service throughout its chosen Qualifying Geography, to meet the performance requirements applicable under the small carrier or Tribal Nation prong, i.e., covering a percentage of the population within its license area (as required in many flexible wireless radio services), which may include more sub-urban and urban populations—even if Licensee B could have originally qualified for that prong as a small carrier. We clarify that, as with any transaction seeking Commission approval to alienate licensed spectrum, and independent of ECIP, the applicant(s) must otherwise meet the requirements to be Commission licensees and the Commission must deem the transaction to be in the public interest. See 47 U.S.C. 310(d).

We find that this approach aligns with the program's goals of fostering increased accessed to spectrum and the provision of rural service, ensures transparency by providing concrete criteria and expectations to program participants and the public, and is a less burdensome and a more efficient way to administer the program.

With certain exceptions described below, we adopt a five-year holding period during which licensees cannot further partition, disaggregate, assign or lease licenses assigned through ECIP. We similarly adopt a five-year minimum lease term for long-term spectrum manager or long-term de facto transfer leasing arrangements under ECIP. Specifically, assignees of licenses obtained through partitioning and/or disaggregation or full license assignment pursuant to an ECIP-related transaction may subsequently assign or lease, in whole or in part, those licenses to other entities, regardless of whether the entity receiving the license is ECIP-eligible, only after a five-year holding period starting from the date of license issuance, and provided that the assignee has met any relevant construction requirement (interim and final) and operational requirement discussed below (for rural-focused transactions) for those licenses. We also require lessors and lessees participating in ECIP to commit to at least a five-year lease term for long-term spectrum manager or long-term de facto transfer leasing arrangements. We acknowledge that this five-year restriction may not directly align with parties' immediate business needs in all cases, but we believe that this approach, on balance, best promotes the goals of the program, effectively deters unwanted behavior, and serves the public interest.

Restriction on Leasing and Subleasing of Spectrum Rights Obtained through ECIP. We adopt our proposed approach to prohibit the leasing or subleasing of spectrum by ECIP assignees and lessees during the five-year holding period or five-year minimum lease term, respectively. In leasing/subleasing arrangements after the applicable five-year period, the lessee or sublessee will not receive ECIP benefits, consistent with the one-time ECIP benefit rule we discuss below. We remain concerned about situations where, for example, an ECIP licensee (or lessee) monetizes its benefits by further leasing its spectrums rights to a third party, with no guarantee that the lessee/sublessee's activities will yield the public interest benefits intended by ECIP. We therefore decline to allow such leasing arrangements during the relevant five-year period to help ensure program obligations are met by assignees and lessees, given the benefits ECIP provides, and to avoid providing an opportunity for program participants to circumvent our rules.

Exceptions to the Holding Period. Given the realities and challenges of today's ever-growing wireless market, and our consistent approach of providing flexibility to wireless radio service licensees to foster competition, we adopt an exception to the requisite holding period for pro forma transactions, including transfers and assignments. We have previously found pro forma transactions to be in the public interest because such transactions promote competition by allowing service providers to change their ownership structure or to reorganize without regulatory delay, increasing a provider's ability to compete in today's marketplace—a goal repeatedly advocated by Congress and the Commission.

We also adopt an exception to our holding period for lease arrangements, including subleases, involving providers of Contraband Interdiction Systems (CIS). We find that ECIP restrictions intended to prevent waste, fraud, and abuse should not be applied to vital public safety-related leasing or sub-leasing arrangements intended to deploy systems that prevent contraband wireless device use in correctional facilities. Specifically, to enable an ECIP assignee or lessee to lease/sublease a license (or some portion thereof) to a CIS provider, we will provide an exception to the: (1) five-year holding period or five-year minimum lease term; (2) operational requirement for rural-focused transactions (as applicable); (3) prohibition against leasing/subleasing during the relevant five-year period; and (4) penalties for failing to comply with certain program obligations. We find that this approach is consistent with our ECIP program goals, and enables CIS operation where needed to promote public safety. In adopting this exception, we reiterate that CIS providers require access to all the commercial spectrum bands covering the footprint of the correctional facility to effectively operate, and that any gap in coverage could render the system less effective. Because of these operating parameters, a CIS provider will likely need to enter into multiple spectrum leasing arrangements for the same geographic area covering the correctional facility. Given the public safety importance of protecting correctional facility staff and the public from the potential harms associated with the use of contraband wireless devices, we find it in the public interest to adopt narrow exceptions to the program protections.

We decline to adopt an exception for licensees that are exiting the wireless business. Given the various business models under which WRS licensees operate, we find it impractical to apply a one-size-fits-all standard to a proposed transaction involving an ECIP-participating licensee intending to exit the wireless business. We also note that the Commission does not generally permit a licensee to rely on business decisions and related transactions to justify a request for extension or waiver of performance requirements. See 47 CFR 1.946. Further, applying such a rigid standard can also run counter to the goals of the ECIP; if the standard is too lenient, it may be used by an ECIP entity to circumvent the Commission's rules and, if the standard is too harsh, it may prevent program participation and/or hinder competition. We therefore elect to address these types of situations on a case-by-case basis. As such, where an ECIP licensee intends to exit the telecommunications industry prior to the end of the requisite holding period or prior to the expiration of any applicable five-year lease term, we will entertain waiver requests for review under the criteria set forth in § 1.925 of the Commission's rules. See 47 CFR 1.925.

We also decline to adopt an exception to the five-year minimum lease term, or an alternative penalty scheme, for lessees that prematurely terminate their lease due to an involuntary transaction, such as bankruptcy. Based on our experience gained by administering transactions involving wireless licenses, we believe that adopting an exception for a lease termination resulting from involuntary transactions is unnecessary as such circumstances are atypical. We recognize, however, that a waiver of the five-year minimum lease term may be sought in unusual circumstances.

For rural-focused transactions, we adopt an operational requirement whereby the assignee or lessee must operate or provide service throughout the entire Qualifying Geography for a minimum of three consecutive years.

Operational Requirement—Coverage. Given the benefits afforded to participating licensees through ECIP, we find that adopting the operational requirement largely as proposed is in the public interest as a targeted measure to ensure that operation or the provision of service occurs throughout the entire Qualifying Geography for a sustained period. To fulfill the operational requirement, an assignee or lessee of an ECIP rural-focused transaction must, for a minimum of three consecutive years, operate or provide service to 100% of the Qualifying Geography. Specifically, a common carrier assignee/lessee must provide signal coverage for 100% of the Qualifying Geography and offer commercial service in that area. An assignee/lessee that intends to operate private, internal communications for business purposes, including, for example, utilities, must demonstrate that it has fulfilled the three-year operational requirement by providing 100% signal coverage to the entire Qualifying Geography, and certify that it has provided continuous private communications throughout that area for a minimum of three consecutive years. We also adopt our proposal to impose a minimum level service requirement during the three-year operational period. During this three year period, operation/service must not fall below that used (or intended to be used) to meet the relevant construction requirement for assignees and lessors, and lessees must continue to provide service (or operate, to meet private internal business needs) throughout the entire Qualifying Geography, irrespective of whether the lessor attributes any of the lessee's buildout for its performance benchmark compliance.

For assignees, we note that the applicable Qualifying Geography of which 100% coverage must be met to fulfill the operational requirement could vary, depending on the size of the license(s) contributed. Where the parties in an ECIP transaction elect to contribute different license sizes to the Qualifying Geography, we will determine the size of the Qualifying Geography by using the minimum threshold applicable to the largest contributing license it intersects ( e.g., if the Qualifying Geography intersects a contributing license whose licensed area size is 30,001 to 90,000 square miles, the assignee's 100% coverage requirement must be at least 900 square miles, even if the Qualifying Geography also intersects a contributing license with a licensed area of 30,000 square miles or less). In this scenario, where multiple licenses contribute to the Qualifying Geography, to meet the operational requirement, we will also require that all spectrum contributed (if from different spectrum bands) to the Qualifying Geography be accessible by end-user devices operating throughout the Qualifying Geography. By adopting such a requirement, we ensure that the alternative construction benchmark is not used in such a way to undermine an important ECIP goal, the enabling of diverse spectrum access and the provision of service to rural areas.

Operational Requirement—Commencement of Three Year Period. We apply the operational requirement both to assignees (whether through partitioning, partitioning/disaggregation in combination, or full assignment) and lessees. We recognize, however, that the Commission's service rules regulate assignees and lessees differently, with varying rights and responsibilities applicable to each. For example, a lessee does not have service rule-based performance benchmarks or license renewal obligations independent of the licensee lessor, whereas an assignee is issued a separate license, may have independent performance requirements (if not previously met by the assignor), and has renewal obligations. Further, as discussed above, in the case of leasing arrangements under ECIP, we do not substitute the alternate geographic construction requirement for the service-based rule requirement, because the licensee lessor has the option of counting lessee construction towards compliance with lessor's performance benchmark. Given these distinctions in regulatory treatment, we find it in the public interest to adopt, with certain modifications, our proposal regarding the date by which operation or service must commence to ensure both timely construction and three continuous years of operation, and we clarify below the application of the rule in various scenarios that involve assignees versus lessees participating in ECIP.

To not undermine the key ECIP benefit afforded through the extension of the interim and final performance benchmarks associated with an assigned license, we will require an assignee with an upcoming interim benchmark (or final benchmark, if the interim has passed) to commence the three year operational requirement no later than the date of the extended interim (or extended final, if no interim) construction deadline. However, where a license assigned through ECIP has no service rule-based performance requirement because the licensee has met both the interim and final benchmarks, we require the assignee to commence the three year continuous operation requirement no later than two years after consummation of the ECIP transaction. This approach ensures prompt service/operation within the entire Qualifying Geography, regardless of whether the underlying performance requirements of the assignor's license that was partitioned, partition/disaggregated, or fully assigned, have been met. This approach also recognizes that a reasonable period of time might be required to construct the entire Qualifying Geography, particularly where the assignee may have acquired the Qualifying Geography as part of a larger Transaction Geography with plans to operate or provide service beyond the Qualifying Geography as part of a larger network.

With respect to lessees, we require the three year operational period to commence no later than two years following the commencement of the lease, regardless of whether the licensee lessor has an upcoming extended interim and/or final performance benchmark, or whether it has previously met both performance benchmarks. We seek to ensure that leased spectrum within the Qualifying Geography is timely put to use in the public interest, given the ECIP benefits conferred to the licensee/lessor. This approach is therefore warranted, particularly where we do not substitute construction of the Qualifying Geography as an alternative performance requirement (unlike an assignee, where the service rule construction requirement has not yet been met) because a lessee has no independent performance obligation. Moreover, as noted, a licensee/lessor has the option, but is not required, to count lessee construction towards lessor's performance obligation, so lessee construction under the Commission's service rules is not mandatory. By requiring a lessee of spectrum through ECIP to operate or provide service no later than two years following lease commencement, we also ensure three years of continuous operation where ECIP parties enter into the minimum required five year lease term.

We clarify that the date of construction that commences that start of the required three-year period of continuous operation is the date reflected on either: (1) the assignee's timely-filed construction notification required under our service rules, see 47 CFR 1.946(d), informing the Commission that the relevant buildout/coverage requirement has been met for the license at issue; or (2) its Initial Operational Requirement Notification, discussed below. Because lessees are not required under our service rules to file construction notifications, their date of actual construction will be the date indicated in its Initial Operational Requirement Notification. If the assignee or lessee files their Initial Operational Requirement Notification prior to the relevant construction deadline, we will count the date of construction certified to in that filing, as reflected in ULS, as the start date for the three-year operational period. For example, where the interim performance benchmark has not been met at the time of the ECIP transaction and the assignee does not fulfill its construction requirement until the extended interim construction deadline, the date of the extended interim deadline would apply for determining when the operational period commences. Alternatively, where the assignee elects to construct and file a notification with the Commission before the extended interim construction deadline, then the filing date of the notification governs.

Initial and Final Operational Requirement Notifications. In order to ensure that assignees and lessees of rural-focused prong ECIP transactions comply with the operational requirement, we require the filing of two notifications: (1) an Initial Operational Requirement Notification, to be filed within 30 days of the commencement of operations complying with the operational requirement; and (2) a Final Operational Requirement Notification, to be filed within 30 days of satisfaction of the three consecutive year operational requirement. The Initial Operational Requirement Notification must include the following: (1) the date the assignee/lessee began operations; (2) a certification that the assignee/lessee satisfies the operational requirement of 100% coverage of the Qualifying Geography for that license or lease; and (3) technical data demonstrating such compliance. The Final Operational Requirement Notification must also include the following: (1) a certification that the network satisfied the operational requirement of 100% coverage of the Qualifying Geography for three consecutive years; (2) the date on which the three year period was completed; and (3) technical data demonstrating the coverage provided. The Initial Operational Requirement Notification and Final Operational Requirement Notification are required in addition to any construction notification required to be filed with the Commission pursuant to rule § 1.946. 47 CFR 1.946. We direct the Bureau to release a public notice providing program participants with further details regarding compliance with the Initial and Final Operational Requirement Notification procedures including, for example, the filing method and applicable fees. The data obtained from these filings will be critical component part of the Bureau's ECIP Evaluation Report, discussed below.

We find it unnecessary to penalize the assignor or lessor when the assignee or lessee is solely at fault for failing to adhere to the holding period, or meet the construction or operational requirement (for rural-focused transactions). In taking this approach, we observe that the assignee/lessee is an unaffiliated entity and that the assignor/lessor is not typically a guarantor of assignee/lessee performance, and therefore penalties should be applied to the party responsible for the violation and its affiliates. Additionally, we are aware that program participation may be hindered if we impose penalties on an assignor/lessor for the failures of the assignee/lessee that are beyond its control.

We remain committed, however, to preventing bad faith transactions which bring no public benefits in return for the ECIP benefits conferred. For instance, a licensee might actively seek an ECIP-eligible entity to derive ECIP benefits through a lease of unused spectrum rights without regard for whether that entity has the financial or technical resources to meet program requirements. Such agreements also might include compensating that recipient entity to participate in a transaction.

Accordingly, we will not penalize assignors/lessors that enter into good faith transactions with assignees/lessees for subsequent assignee/lessee failure to meet program obligations. However, where the assignor/lessor is found to have entered into a transaction solely to reap program benefits, whereby it knew or should have known the assignee/lessee could or would not meet program obligations, we will bar the assignor/lessor entity and its affiliates from future participation in ECIP (as discussed below), and may impose monetary penalties if appropriate. In taking this approach, we strike a balance between fostering spectrum access, increased competition, and facilitating service to rural areas through program incentives, and adopting appropriate protective measures that will not unduly hinder program effectiveness.

To address this concern, we require two new certifications to be included in the assignment and/or lease applications (FCC Forms 603 and 608, respectively). First, each party to the transaction must certify either that: (1) the licensee or lessor did not confer any benefit (monetary or otherwise) to the assignee/lessee as consideration for entering into the proposed ECIP transaction; or (2) if the parties cannot make this certification, provide a description of the benefit(s) conferred. In some transactions, for example, the consideration to an assignee or lessee might include roaming privileges or sharing of infrastructure that would not be indicative of a bad faith transaction, but which nonetheless merits Commission review to ensure program integrity. Second, each party to the transaction must certify that it has entered into the transaction in good faith and that the licensee/lessor reasonably believes that the assignee/lessee has the resources and a bona fide intent to meet the program's obligations. We caution prospective ECIP participants that making a false certification or providing false information in an assignment or lease application is a violation of the Commission's rules, which may result in a forfeiture or other penalties. See 47 CFR 1.17, 1.80. Additionally, as indicated in FCC Form 603 and 608, making a willful false statement in the form or attachment is punishable by fine and/or imprisonment (under 18 U.S.C. 1001) and/or revocation of any station license or construction permit (under 47 U.S.C. 312(a)(1)), and/or forfeiture (47 U.S.C. 503). Additionally, we direct the Bureau to refer suspected ECIP-related fraud or misrepresentation to the Enforcement Bureau.

Consistent with the MOBILE NOW Act, we adopt our proposal to automatically terminate any license(s) assigned as part of an ECIP transaction where the assignee: (1) fails to comply with the five-year holding period; (2) fails to meet the relevant buildout requirement(s); and/or (3) fails to fully comply with the operational requirement (for rural-focused transactions). We also bar from future program participation the licensee that was the subject of the automatic termination and/or any lessee that fails to comply with the holding requirement (including by subleasing or prematurely terminating their lease) or is found to have engaged in a bad faith transaction to obtain ECIP benefits, as well as any affiliate of those entities. This bar will also apply to lessors that prematurely terminate a qualifying lease. In addition, to ensure program integrity, we clarify that the bar will apply indefinitely to the licensee, lessor, and/or lessee, including any of its affiliates. This means any officer, director, or entity that directly or indirectly controls the licensee or is directly or indirectly controlled by the licensee, may be within the scope of persons subject to the bar. In order to maximize administrative efficiency, while also minimizing gamesmanship of our prohibition on barred entities participating in ECIP, a prospective ECIP participant will be considered “an affiliate of a barred entity” if it was affiliated with that entity either when the barred entity applied for the program for the transaction for which it was barred or at the time the prospective ECIP applicant applied to participate in the program. Once a licensee/lessee has been barred from program participation, it will no longer be eligible for ECIP benefits for future transactions, even if it enters into transactions that would otherwise be eligible for such benefits.

We find that the two consequences we adopt today, i.e., automatic license termination and a bar on future program participation, are necessary and appropriate measures to deter program waste, fraud, and abuse, given the substantial benefits being offered to ECIP participants. Based on our experience administering wireless licenses and programs that provide benefits in furtherance of the public interest, we find that these two penalties are appropriate measures to incentivize program participants to fulfill their core program requirements. Importantly, the automatic termination provision is consistent with section 616 of the MOBILE NOW Act, which provides that “the right to the spectrum shall be forfeited” if a party “fails to meet any build out requirements set by the Commission.” MOBILE NOW Act section 616(b)(3), (codified at 47 U.S.C. 1506(b)(3)). We also adopt these penalties to impress upon program participants the importance of meeting the obligations associated with receiving ECIP benefits and the general need for program compliance to ensure the program operates effectively.

At the same time, we seek to encourage ECIP participation by ensuring that the penalties are targeted and proportional to the gravity of the program participant's failure to meet its ECIP obligations. We therefore limit the scope of actions that would merit automatic license termination against the ECIP assignee to the following: (1) failure to meet the five-year holding period; (2) failure to meet the relevant construction requirement for all the license(s) at issue, either interim or final deadline; and (3) failure to meet the 100% coverage and three-year operational requirement for the Qualifying Geography. The actions that will result in a bar from future participation in ECIP by the culpable party, as applicable, and its affiliates, are: (1) prematurely terminating a lease within the minimum five-year term or entering into a sublease in violation of ECIP rules; (2) failure to meet the five-year holding period; (3) failure to meet the relevant construction requirement for the license(s) at issue, either interim or final deadline; (4) failure to meet the 100% coverage and three-year operational requirement for the Qualifying Geography; and (5) entering into a transaction in bad faith, solely for the purpose of obtaining program benefits.

We clarify that, where appropriate, the automatic termination penalty will apply to the subject license regardless of whether the service rules for that license would yield a more lenient result. We also note that since an ECIP lessee does not hold the license subject to a qualifying lease, the automatic license termination penalty would not apply to it. With respect to an assignee failure identified above in a rural-focused transaction, the automatic termination penalty will apply to each license that makes up any part of the Qualifying Geography. For example, if an ECIP transaction results in two assigned licenses each consisting of Qualifying Geography of 150 square miles for a total of 300 square miles of Qualifying Geography, the assignee's failure to timely construct either license will result in the termination of both licenses, given our requirement that the entire Qualifying Geography must be constructed given the ECIP benefits conferred.

Date on Which a Barred Licensee/Lessee Will Lose Eligibility to Participate in the ECIP and Contents of Notification. When an ECIP licensee/lessee has failed to meet one or more of the above criteria by the relevant deadline(s), the bar commences on the date the licensee/lessee receives notice, which the Bureau will provide by letter. The letter will specify the reasons why the licensee/lessee will no longer be permitted to participate in ECIP and explain the scope and effect of the penalty. Additionally, we find that, consistent with the Commission's notice rules, notice has been provided once the Bureau sends such letter via electronic mail, using the last email address of record in ULS for that licensee/lessee. 47 CFR 1.5.

Effect of Being Barred from Program Participation. Once an ECIP participant has been barred from future program participation, it, along with its affiliates, are no longer eligible to receive ECIP benefits for entering into subsequent Qualifying Transactions. This applies to all parties in a transaction which would otherwise be ECIP-eligible; if a barred entity is a party to the transaction, it is not ECIP-eligible and no ECIP benefits will flow to any party to that transaction, even if the transaction meets all other ECIP criteria. Given that the established bar is from future program participation, a barred licensee/lessee will continue to receive existing ECIP benefits acquired through unrelated prior ECIP transactions, provided those benefits were conferred prior to the start date of the bar. We clarify that once an entity has been barred from participation in the program, the Commission will not process a pending application for ECIP participation to which it is a party, even where the application was initially accepted for filing prior to the date the bar commenced.

We will not provide additional ECIP benefits where a licensee has already received benefits for a license involved in a previous ECIP transaction. Specifically, if a license in a given transaction has previously been involved in any ECIP-related transaction and received ECIP benefits as a result, any party that holds that license (or some portion thereof) cannot subsequently receive ECIP benefits by including that license (including any sub-parts of the license, spectrally or geographically) in another ECIP transaction. This restriction applies to the original license in the ECIP transaction, as well as to the licenses issued through a partition and/or disaggregation. We adopt this limitation to prevent licensees from undermining our renewal and construction requirements by compounding ECIP-related extensions through multiple ECIP transactions.

To ensure ECIP promotes competition and increases spectrum access for small carriers and Tribal Nations, as well as increases service to rural areas, we direct the Bureau to evaluate the progress and effectiveness of the ECIP program and submit a report to the Commission, no later than five years following the effective date of this final rule. Because the report could benefit from input from interested stakeholders, we also direct the Bureau and the Consumer and Governmental Affairs Bureau to conduct outreach, prior to the Bureau drafting the report, in order to yield meaningful evaluation and feedback of the ECIP from those interested stakeholders. As part of this outreach, we expect that both the Bureau and the Consumer and Governmental Affairs Bureau will monitor the program's effectiveness for Tribal Nations. The report should include information about ECIP participation by eligible stakeholders, including the number of ECIP transactions since the inception of the program, as well as geographic areas and spectrum made available under each prong of the program. The report may include recommended rule and policy changes that would help improve the effectiveness of the program, including an assessment of whether the program is achieving benefits for Tribal Nations. Finally, the report should be made publicly available, although the Bureau may also prepare a non-public version with commercially sensitive information, if needed.

Independent of establishing ECIP, we adopt rules permitting license reaggregation up to the original geographic size and spectrum band(s) for the type of license, and also adopt accompanying proposed safeguards. We find that allowing reaggregation will ease the administrative burden on both licensees and Commission staff. Further, we find that allowing reaggregation will create more certainty regarding our secondary markets rules and procedures to encourage licensees to engage in these types of transactions in the first instance.

Specifically, applicants seeking license reaggregation will be required to submit an application requesting a major modification pursuant to Commission rule § 1.929, 47 CFR 1.929, as well as an attachment certifying compliance with three safeguards. The compliance certification must state 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; and (3) not violated the Commission's permanent discontinuance rules. These safeguards are intended to ensure that licensees seeking to reaggregate licenses are not doing so merely to avoid complying with the regulatory requirements ( e.g. meeting performance benchmarks) associated with each license to be reaggregated.

After review of the record, we agree with the majority of commenters that argue allowing reaggregation creates a certainty that a license holder could re-aggregate partitioned or disaggregated licenses in the future which would eliminate a potential reason not to partition or disaggregate in the first instance. We find that establishing a formal process for license reaggregation reduces regulatory and administrative burdens and could incentivize, not undermine, secondary market transactions consistent with the purposes of the ECIP and the goals of the MOBILE NOW Act. As the record reflects, we anticipate that requests for reaggregation will be submitted by licensees that, for business reasons, have reacquired licenses in their (or an affiliated party's) name potentially as part of a larger transaction, and now seek to reaggregate previously partitioned and/or disaggregated licenses into a single license largely for administrative purposes. We find that the substantial benefit of establishing a formal process for license reaggregation, coupled with our proposed safeguards to qualify for reaggregation, renders a five-year holding period unnecessary. Accordingly, we adopt our proposal to permit license reaggregation, up to the original geographic size and spectrum band(s) for the type of license, including the three safeguards described above to protect against potential abuses. We also clarify that in the event licenses identified in a voluntarily filed application for reaggregation have varying expiration dates, we will apply the earliest such date to the overall reaggregated license for reasons of administrative convenience, and to prevent the windfall of license term extensions achieved merely by seeking license reaggregation.

Treatment of Existing Waivers Grants or Special Conditions. We find it in the public interest to apply a flexible approach to reaggregation requests that maintains previously granted relief where applicable. We also find, however, that an automatic application of the terms and conditions of an individual license, that may have been subject to waiver relief, to the entire reaggregated license is not warranted absent a separate justification. We will apply special conditions (to reflect prior grant of waiver of application or special conditions) to a reaggregated license as necessary to identify the appropriate type and scope of relief, both spectrally and geographically, applicable to subparts of that license ( e.g., variations in transmit power levels, out-of-band emission limits or other technical parameters, or alternative interference protection criteria, for specific spectrum or geographic areas associated with the reaggregated license). Finally, we direct the Bureau to issue a public notice confirming the administrative details of required filings including, for example, the filing method, electronic map format, and applicable fees. See, e.g., Wireline Competition Bureau Provides Guidance to Carriers Receiving Connect America Fund Support Regarding Their Broadband Location Reporting Obligations, Docket No. 10-90, Public Notice, 31 FCC Rcd 12900 (WCB 2016) (providing guidance Public Notice (PN) describing required information and filing parameters to enable carrier compliance with earlier Commission order); Wireless Telecommunications Bureau To Accept 900 MHz Broadband Segment Applications Beginning May 27, 2021, WT Docket No. 17-200, Public Notice, 36 FCC Rcd 7377 (WTB 2021).

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 1 as follows: