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Office of Energy Efficiency and Renewable Energy, Department of Energy.
Final rule.
The U.S. Department of Energy (DOE) is publishing a final rule to amend the compliance date for its manufactured housing energy conservation standards. Currently, manufacturers must comply with these standards on and after May 31, 2023. This final rule delays compliance until July 1, 2025, for Tier 2 homes, and until 60 days after issuance of enforcement procedures for Tier 1 homes. DOE is delaying the compliance date to allow DOE more time to establish enforcement procedures that provide clarity for manufacturers and other stakeholders regarding DOE's expectations of manufacturers and DOE's plans for enforcing the standards.
This final rule is effective May 30, 2023.
The docket for this rulemaking, which includes
The docket web page can be found at
Mr. Matthew Ring, U.S. Department of Energy, Office of the General Counsel (GC-33), 1000 Independence Avenue SW, Washington, DC 20585; Telephone: (202) 586-2555; Email:
The Energy Independence and Security Act of 2007 (“EISA,” Pub. L. 110-140) directs the U.S. Department of Energy (“DOE” or, in context, “the Department”) to establish energy conservation standards for manufactured housing (“MH”).
EISA directs DOE to base its standards on the most recent version of the International Energy Conservation Code (“IECC”) and any supplements to that code, except in cases where DOE finds that the IECC is not cost-effective or where a more stringent standard would be more cost-effective, based on the impact of the IECC on the purchase price of manufactured housing and on total life-cycle construction and operating costs. (
On June 17, 2016, DOE published in the
On August 3, 2018, DOE published a Notice of Data Availability (“NODA”), stating it was examining possible alternatives to the requirements proposed in the June 2016 NOPR and seeking further input from the public, including on first-time costs related to the purchase of manufactured homes. 83 FR 38073 (“August 2018 NODA”). Prior to the NODA, in December of 2017, the Sierra Club filed a suit against DOE in the U.S. District Court for the District of Columbia, alleging that DOE had failed to meet its statutory deadline for establishing energy efficiency standards for manufactured housing.
After evaluating the comments received in response to the June 2016 NOPR and the August 2018 NODA, DOE published a supplemental NOPR (“SNOPR”) on August 26, 2021, in which DOE proposed energy conservation standards for manufactured homes based on the 2021 IECC. 86 FR 47744 (“August 2021 SNOPR”). DOE's primary proposal in the August 2021 SNOPR was a “tiered” approach based on the 2021 IECC. The “tiered” approach identifies a subset of less stringent energy conservation standards for certain manufactured homes (based on retail list price) in light of the cost-effectiveness considerations required by EISA. DOE's alternate proposal was an “untiered” approach, wherein energy conservation standards for all manufactured homes would be based on certain thermal envelope components and specifications of the 2021 IECC. Both proposals replaced the June 2016 NOPR proposal.
On October 26, 2021, DOE published a NODA regarding updated inputs and results of the analyses presented in the August 2021 SNOPR (both “tiered” and “untiered” approaches), including a sensitivity analysis regarding an alternative sized-based tier threshold and an alternate exterior wall insulation requirement (R-21) for certain HUD zones. 86 FR 59042 (“October 2021 NODA”). In addition, DOE reopened the public comment period on the August 2021 SNOPR through November 26, 2021. DOE sought comments on the updated inputs and corresponding analyses, encouraged stakeholders to provide additional data to inform the analyses, and stated it might further revise the rulemaking analysis based on new or updated information.
On May 31, 2022, DOE published a final rule codifying the current energy conservation standards for manufactured housing in a new part of the Code of Federal Regulations (“CFR”) under 10 CFR part 460, subparts A, B, and C (“May 2022 Final Rule”). 87 FR 32728. Subpart A of 10 CFR part 460 presents generally the scope of the rule and provides definitions of key terms. Subpart B establishes new requirements for manufactured homes that relate to climate zones, the building thermal envelope, air sealing, and installation of insulation, based on certain provisions of the 2021 IECC. Subpart C establishes new requirements based on the 2021 IECC related to duct sealing; heating, ventilation, and air conditioning (“HVAC”); service hot water systems; mechanical ventilation fan efficacy; and heating and cooling equipment sizing.
Under the energy conservation standards, the stringency of the requirements under subpart B are based on a tiered approach depending on the number of sections of the manufactured home. Accordingly, two sets of standards are established in subpart B (
In the May 2022 Final Rule, DOE adopted a compliance date such that the standards would apply to manufactured homes that are manufactured on or after one year following the publication date of the final rule in the
On March 24, 2023, DOE published in the
In this final rule, DOE is amending the compliance date for part 460 consistent with its proposed compliance date in the NOPR for Tier 1 (
Commenters were generally supportive of DOE's proposal to amend the compliance date for part 460. DOE received over 500 comments on the March 2023 NOPR. The vast majority of these comments were campaign form letters (Campaign Form Commenters) containing nearly identical commentary on the NOPR.
The Campaign Form Commenters strongly urged DOE to amend the compliance date for part 460 until DOE's future enforcement procedures take effect. Campaign Form Commenters stated that it is virtually impossible for the industry to know whether its compliance efforts will be found satisfactory without a clear understanding of how DOE will enforce the standards or how they will be evaluated for compliance. Campaign Form Commenters stated that industry members need time to understand DOE's enforcement procedures and prepare their operations to ensure compliance with the energy standards. Campaign Form Commenters stated it is therefore imperative that DOE delay the compliance date and engage in rulemaking for test procedures, compliance, and enforcement before the DOE energy standards are implemented. The Northwest Energy Efficiency Alliance
DOE agrees with the commenters that it is necessary to amend the compliance date for part 460. As noted in the March 2023 NOPR, DOE believes enforcement procedures will provide additional clarity to manufacturers and consumers regarding DOE's expectations of manufacturers and DOE's plans for enforcing the standards. Delaying the compliance date until after the enforcement procedures are issued provides manufacturers time to understand DOE's enforcement procedures and prepare their operations to ensure compliance with DOE's standards. Additionally, DOE will provide notice and opportunity for stakeholders to comment on its enforcement procedures in the rulemaking process to establish those procedures. As noted previously, DOE believes the compliance dates adopted in this final rule provide (1) time for DOE to develop enforcement procedures and engage in the rulemaking process necessary to codify those procedures, (2) clarity to manufacturers on when and how to comply, and (3) time for manufacturers to adjust their practices consistent with DOE's enforcement procedures. More specifically, DOE believes providing a set date for Tier 2 homes provides manufacturers with additional clarity on when compliance will be required so that manufacturers can build in the time necessary to make the adaptations to manufacturer processes required to implement the more stringent Tier 2 standards. Accordingly, DOE has finalized those compliance dates in part 460.
Skyline, Cavco, and MHI stated that DOE should allow for a longer compliance lead time after issuance of enforcement procedures given the vast design and process changes required by DOE's standards and the uncertainty regarding testing, compliance, and enforcement. (Skyline at p. 1, Cavco at p. 1, MHI at p. 2) MHI stated that, at present, manufacturers do not know what enforcement procedures will require, so they do not know whether the designs and processes created after May 2022 to attempt to comply with DOE's standards will comport with DOE's enforcement procedures, and that to date, DOE has provided no guidance on what enforcement procedures may require, so no work can be done to understand or apply them until they are made final. MHI further stated that, due to supply chain constraints, manufacturers may need to change designs or processes to comply with DOE's standards based on material availability and cost. (MHI at p. 10) Accordingly, Skyline, Cavco, and MHI stated that DOE should use a compliance lead time of 3 to 5 years after issuance of final enforcement procedures, like that typically seen in DOE's appliance energy efficiency standards, to permit the industry sufficient time to redesign floor plans, obtain approval from HUD for those designs, make capital improvements to manufacturing facilities, create new and different manufacturing processes, implement quality control procedures, and begin producing compliant homes. Skyline, Cavco, and MHI stated that, at minimum, DOE should provide a 1-year compliance lead time after issuance of enforcement procedures given that such procedures are likely to require manufacturers to start over with their efforts to comply with DOE's standards. (Skyline at p. 2, Cavco at p. 2, MHI at p. 9)
DOE agrees that additional time after DOE issues enforcement procedures is appropriate for manufacturers, particularly for Tier 2 homes, and is therefore finalizing a compliance date of July 1, 2025, for Tier 2 homes. DOE notes that this date corresponds roughly to 3 years after the issuance of part 460.
Twenty-one energy efficiency, environmental, and/or consumer advocate organizations filed joint comments (Joint Commenters)
Although DOE agrees with Joint Commenters that manufacturers have experience implementing efficiency measures similar to DOE's standards (
Joint Commenters stated that if DOE decides it must delay the compliance date, it should set a new fixed date instead of an open-ended delay. Joint commenters stated that the open-ended delay DOE has proposed nullifies the Department's statutory duty to issue standards and that DOE has not offered any justification for proposing an open-ended delay as opposed to a delay of limited duration. Joint Commenters stated that a more limited delay would enable DOE to address the compliance issues that the Department claims warrant attention, while providing clearer guidance to all stakeholders regarding the path forward. (Joint Commenters at p. 2) Joint Commenters further stated that if DOE nonetheless delays the compliance date as proposed, compliance should be required shortly after the enforcement procedures are finalized. Joint Commenters stated that the compliance date delay following issuance of enforcement procedures
DOE disagrees with Joint Commenters that its proposed amended compliance date “nullifies” DOE's obligation to issue standards under EISA. The standards have been in effect since August 1, 2022. As noted in the March 2023 NOPR, manufacturers need clarity from DOE's forthcoming enforcement procedures in order to ensure homes comply with DOE's standards. Nevertheless, upon consideration of Joint Commenters' suggestion of a fixed date, DOE concludes that setting a fixed date for compliance with the Tier 2 home standards will provide added certainty to manufacturers, consumers, and other interested parties. It is imperative that DOE amend the compliance date to allow sufficient time for DOE to develop procedures, engage in the rulemaking process, and consider all necessary information and feedback obtained during the rulemaking to establish enforcement procedures. Additionally, as noted previously, manufacturers will need time to adjust their practices in accordance with DOE's forthcoming enforcement procedures to best ensure demonstrable compliance with the standards while minimizing the potential for civil penalties due to noncompliance. Accordingly, DOE has determined that the delay of the compliance dates adopted in this final rule is warranted. With respect to the difference between the compliance dates for Tier 1 and Tier 2 homes, DOE recognizes that it did not fully explain this distinction in the NOPR, but does so now. DOE has determined that additional time is necessary for manufacturers to make adjustments to their operations and practices to ensure compliance with the Tier 2 standards because the Tier 2 standards are inherently more energy efficient than the Tier 1 standards. In addition, by establishing a fixed date for Tier 2, manufacturers will have a greater ability to plan for the adjustments needed to achieve compliance as compared to an indeterminate future date, thus maximizing the probability of full compliance with the more stringent Tier 2 standards. Accordingly, DOE is implementing the July 1, 2025, compliance date for Tier 2 homes in this final rule.
Campaign Form Commenters stated that the industry must be given a sufficient time to respond to DOE's proposed enforcement procedures with their feedback and concerns, and that DOE must seriously consider the recommendations provided by the industry and address these concerns in its final rule to ensure that DOE's enforcement procedures are feasible and support the continued production of affordable manufactured homes. Hemminger stated that it would be hard to comply with the current DOE standards in part 460 since the details are not laid out as to what needs done, by whom, or penalties that may be applied for not complying. (Hemminger at p. 1) Hemminger stated that if the DOE standards are reviewed and clarified, then manufacturers, their vendors, and inspection agencies would clearly know what is expected. (Hemminger at p. 2) Hemminger also stated that the entire network of people who produce, sell, deliver, install, inspect, and finance these homes need to know what is expected of them, and that in return potential homeowners will be able to decide whether or not they will be able to afford a home. Hemminger concluded by stating that everyone needs to be confident that homes being sold are fully compliant and customers need to be sure that they will not receive a notice of violation as well. (Hemminger at p. 2)
Skyline, Cavco, and MHI supported DOE's proposal to amend the compliance date to afford DOE additional time to establish enforcement procedures so that the benefits of DOE's standards can be fully realized. (Skyline at p. 1, Cavco at p. 1, MHI at 1) Skyline, Cavco, and MHI stated that DOE should create testing, compliance, and enforcement procedures that protect manufacturers from a vague and incalculable civil penalty, as well as potential civil liability. These commenters stated that EISA allows for a civil penalty of “1 percent of the manufacturer's retail list price of the manufactured housing” for violations of DOE's standards but that manufacturers generally do not create a “retail list price,” and that term is not recognized in the manufactured housing industry. (Skyline at p. 1-2, Cavco at p. 1-2, MHI at 3-4) MHI stated that enforcement procedures could help clarify what it stated are issues with DOE's current standards, such as manufacturers being unable to use certain components (
Joint Commenters stated that DOE should develop enforcement procedures as soon as possible. Joint Commenters stated that since HUD has not been able to incorporate the DOE standard in a timely way, and since its advisory committee (the Manufactured Housing Consensus Committee or “MHCC”) has recommended that HUD not adopt the DOE standard but instead develop a weaker standard, DOE cannot at this point simply rely on HUD to ensure compliance. Instead, Joint Commenters stated that DOE should develop procedures to improve compliance in case HUD fails to incorporate the DOE standard, as a backup enforcement mechanism, and to provide compliance tools and facilitate measurement of compliance. DOE also should consider whether finalizing the test procedures that were issued as a draft in 2016 would add further clarity and improve compliance. (Joint Commenters at p. 2)
DOE agrees with commenters that enforcement procedures are necessary to provide clarity to manufacturers to ensure compliance with DOE's standards and the full realization of benefits of DOE's standards. Regarding specific issues raised by commenters for DOE to address in its enforcement procedures, DOE will consider these comments in its rulemaking to establish those procedures. DOE intends to engage in the rulemaking process in the coming months to establish enforcement procedures for part 460. As noted previously, DOE is adopting the compliance dates in this final rule to ensure that DOE has sufficient time to develop enforcement procedures, engage in the rulemaking process, and fully consider stakeholder feedback on the enforcement procedures. DOE encourages commenters to participate in that rulemaking and provide feedback to the Department.
In addition to comments on DOE's proposal to amend the compliance date of part 460, commenters also commented on the standards of part 460, generally, and DOE's rulemaking to establish those standards (summarized in section I). Campaign Form Commenters stated that, while they support and commend DOE's decision to amend the compliance date to allow more time to establish enforcement procedures, DOE's proposal to amend the compliance date does not address the underlying concerns of the industry regarding DOE's standards. Campaign
MHARR stated that, regardless of any delay of the compliance date, DOE's manufactured housing energy conservation standards should be withdrawn and redone because they would be destructive of the manufactured housing industry and the availability of affordable homeownership for lower and moderate-income Americans. (MHARR at p. 8) MHARR stated that the lack of enforcement and compliance procedures in current part 460 is proof of the inadequacy of DOE's rulemaking. (MHARR at p. 7) MHARR stated that no amount of delay or modification can remedy DOE's failure to abide by EISA's cost-effectiveness and HUD-coordination requirements in the rulemaking process, and that the failure to abide by EISA's requirements makes the standards of part 460 and any action to modify such standards invalid, arbitrary, and not in accordance with applicable law. (MHARR at p. 8) L.A. “Tony” Kovach
Senator Tim Scott, Ranking Member of the Senate Committee on Banking, Housing and Urban Affairs (Senator Scott),
Skyline, Cavco, and MHI stated that the failure of DOE to consider the cost of testing, compliance, and enforcement renders DOE's cost-effectiveness analysis for part 460 incomplete and inaccurate, and that DOE used flawed assumptions regarding increases in component part prices and interest rates in its analysis. Skyline, Cavco, and MHI stated that DOE should implement the delay rule not only to create testing, compliance, and enforcement provisions, but also to reconsider its cost analysis. Skyline, Cavco, and MHI further stated that DOE's current standards will price tens of thousands of homebuyers out of homeownership and cause them to remain in housing that is less energy efficient than today's manufactured homes, and that even modest purchase price increases disproportionately impact manufactured home purchasers who typically have incomes far below the national average. (Skyline at p. 2, Cavco at p. 2, MHI at p. 1-3) Skyline, Cavco, and MHI also stated that DOE should use the delayed compliance date to resolve its failure to adequately consult with HUD during the rulemaking for part 460, and that DOE should consult with HUD and the MHCC now to make modifications or additions to the standards. (Skyline at p. 2, Cavco at p. 2, MHI at p. 5)
MHI stated that requirements of DOE's standards are unworkable. More specifically, MHI stated that § 460.205's requirement to use Air Conditioning Contractors of America (ACCA) Manuals J and S creates an unworkable conflict with the HUD code and that there are currently no furnaces available that are both rated for use under the HUD Code and that comply with part 460. (MHI at p. 4) MHI further stated that windows with solar heat gain coefficient (SHGC) values required by part 460 cannot be used in homes above certain elevation, that the
DOE's only proposal in this rulemaking is whether to amend the compliance date of part 460. Therefore, comments regarding the substance of the May 2022 Final Rule, including the standards adopted by DOE and the rationale DOE offered in support of its decision, are out of the scope of the current rulemaking action. Nevertheless, DOE notes that it addressed many of the concerns raised by these commenters in the May 2022 Final Rule. Pursuant to EISA, DOE based its standards on the latest version of the IECC and performed a life-cycle cost-effectiveness analysis of its standards, which DOE determined to be cost-effective.
The Arkansas Department of Labor and Licensing (ADLL) stated that it is responsible for enforcing the HUD Code in Arkansas, the authority for which is derived from the HUD process set for at 24 CFR 3282.301 through 3282.309. ADLL stated that it has received numerous inquiries from the industry, regulators, and lawmakers as to the impact of DOE's manufactured housing standards, stating that DOE's standards have caused substantial confusion in Arkansas given the conflicts between DOE's standards and the HUD Code.
Kit HomeBuilders stated its belief that HUD should be an integral part of incorporating DOE's standards into the HUD Code, while working with the industry on how this can be accomplished, which would benefit the industry by allowing HUD and its stakeholders the opportunity to work together on how requirements can be met and enforced. Senator Scott stated that any effort by DOE to develop standards should not undermine HUD's long-established requirements but must complement existing requirements to ensure appropriate consideration of the affordability and availability of such housing choices for consumers. (Senator Scott at p. 2) Skyline and Cavco commented that DOE's standards set forth several requirements that conflict with the HUD Code and ignore current component supply challenges and realities of manufactured home construction. Skyline and Cavco stated that, while these conflicts and challenges should be resolved through substantive rulemaking, some of them could potentially be resolved through testing, compliance, and enforcement, and that DOE should delay the compliance date for part 460 to attempt to resolve these conflicts and challenges through testing, compliance, and enforcement. (Skyline at p. 2, Cavco at p. 2)
MHI commented that DOE should consult with HUD and the MHCC for additions or modifications to DOE's standards. MHI stated that the MHCC refused to recommend wholesale adoption of DOE's standards into the HUD Code, preferring a more incremental approach, to preserve home affordability, and particularly noted that the MHCC determined that DOE circumvented the standards development process prescribed in EISA which requires cost justification and consultation with HUD. (MHI at p. 5-6) MHI stated that the MHCC's recommended changes to the HUD Code allow for testing, enforcement, and regulatory compliance within HUD's existing framework, which helps minimize costs to manufacturers and ultimately consumers, but that there still may be a gap in enforcement between HUD's final standards and DOE's final standards, which may need to be resolved. MHI commented that should HUD adopt the MHCC recommendations into the HUD code, manufacturers will be subject to two sets of conflicting regulations. MHI stated that HUD and DOE should consider engaging in joint rulemaking to ensure that the HUD Code and Energy rule are fully aligned, and that there is precedent for such joint rulemaking as HUD and the Department of Transportation engaged in similar joint rulemaking for manufactured home transportation standards. (MHI at p. 7-8)
Joint Commenters stated that DOE should assist HUD to incorporate the DOE standard into the HUD Code as soon as possible. Joint Commenters stated that having two different energy standards for manufactured homes does not benefit anyone, and applying HUD's compliance procedures would improve compliance and achieve greater energy savings. Joint Commenters stated that, to the extent possible, the DOE standard should be incorporated by reference into the HUD Code so that future updates of the DOE standard do not again lead to different standards and long delays. (Joint Commenters at p. 2) NEEA commented that the HUD design and inspection process for manufactured homes could be easily modified to achieve equivalent energy efficiency performance, and that DOE could provide validation of equivalence where DOE's language or approach differs and is more in line with HUD enforcement standard practice. NEEA also stated that the most significant challenges manufacturers face can be addressed if DOE would provide HUD with a crosswalk of equivalent energy efficiency. NEEA provided specific recommendations for four sections of the HUD Code that if used should be equivalent to the DOE standard: 24 CFR 3280.103 (light and ventilation), 3280.505 (air infiltration), 3280.506 (heat loss/heat gain), and 3280.715 (circulating air systems). (NEEA at p. 2-3)
As stated previously, DOE's only proposed action in this rulemaking is whether to amend the compliance date of part 460. Therefore, comments regarding potential future collaboration or rulemaking with HUD regarding DOE's standards and/or the HUD Code are outside the scope of the current rulemaking action. However, DOE notes that it addressed a number of the concerns raised by these commenters in the May 2022 Final Rule. As noted in that rule, DOE consulted with HUD in establishing its efficiency standards for manufactured homes.
Based on the foregoing, under its authority to establish energy conservation standards for manufactured housing (42 U.S.C. 17071), DOE amends the compliance date for the manufactured housing energy conservation standards in 10 CFR part 460 until 60-days after promulgation of DOE's forthcoming enforcement procedures for Tier 1 homes, and until July 1, 2025, for Tier 2 homes. With respect to the requirements of subpart C of part 460, DOE requires compliance with those provisions beginning 60 days after publication of its final enforcement procedures for Tier 1 homes, and beginning July 1, 2025, for Tier 2 homes. Importantly, DOE has made minor changes to the regulatory text of § 460.1 from that which was proposed in the March 2023 NOPR, including the reservation of a new subpart D of part 460, which will contain DOE's forthcoming enforcement procedures. Upon issuance of DOE's enforcement procedures in subpart D, DOE will update the compliance date for Tier 1 homes in § 460.1 to state the specific calendar date by which manufacturers must comply once that date is known.
As noted in the March 2023 NOPR, DOE believes enforcement procedures will provide additional clarity to manufacturers and consumers regarding DOE's expectations of manufacturers and DOE's plans for enforcing the standards. Delaying the compliance date until after the enforcement procedures are issued provides manufacturers time to understand DOE's enforcement procedures and adjust their operations to ensure compliance with DOE's standards. DOE acknowledges that some of the consumer benefits (
Accordingly, DOE delays the May 31, 2023, compliance date for the standards of 10 CFR part 460 until 60 days after DOE's publication of its final enforcement procedures for the Tier 1 standards, and until July 1, 2025, for the Tier 2 standards.
The Administrative Procedure Act requires that publication of a rule be made not less than 30 days before its effective date, except as otherwise provided by the agency for good cause. 5 U.S.C. 553(d)(3). An explanation of this good cause must be included with the rule.
Given the immediacy of the May 31, 2023, compliance date currently prescribed, DOE finds good cause to make this rule delaying that date effective on publication. 5 U.S.C. 553(d)(3). This will prevent a problematic scenario in which, after May 31, 2023, manufacturers would need to comply with the standards—without the benefit of relevant enforcement procedures—only to have the compliance date delayed weeks later. Moreover, this prevents manufacturers from being subject to legal actions (from DOE or otherwise) for potential noncompliance with DOE's standards in this period. DOE believes the need for immediate effect of this final rule to avoid these scenarios exceeds the need for persons affected by DOE's standards to have 30 days to prepare for amendment of the compliance date given that there is little (if any) burden to prepare for the amended compliance date of this rule. Rather, manufacturers will be able to continue working towards compliance with the standards (with the benefit of eventual DOE enforcement procedures) without facing a need to comply with DOE's standards for a matter of weeks before the amended compliance date takes effect. Accordingly, by making this final rule effective immediately, DOE is providing manufacturers with certainty that they need not comply with part 460 until after DOE issues enforcement procedures that will provide clarity for manufacturers' compliance with the standards.
As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this final rule before its effective date. The report will state that it has been determined that this final rule is not a “major rule” as defined by 5 U.S.C. 804(2).
The Secretary of Energy has approved publication of this final rule.
Administrative practice and procedure, Buildings and facilities, Energy conservation, Housing standards, Reporting and recordkeeping requirements.
This document of the Department of Energy was signed on May 19, 2023, by Francisco Alejandro Moreno, Acting Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the
For the reasons stated in the preamble, DOE amends part 460 of chapter II of title 10, Code of Federal Regulations as set forth below:
42 U.S.C. 17071; 42 U.S.C. 7101
This subpart establishes energy conservation standards for manufactured homes as manufactured at the factory, prior to distribution in commerce for sale or installation in the field. Manufacturers must apply the requirements of this part to a manufactured home subject to § 460.4(b) that is manufactured on or after 60 days after publication of final enforcement procedures for this part. DOE will amend this section to include the specific compliance date, once known. Manufacturers must apply the requirements of this part to a manufactured home subject to § 460.4(c) that is manufactured on or after July 1, 2025.
Loan Programs Office, Department of Energy.
Interim final rule; request for comments.
The Department of Energy (“DOE”) issues this interim final rule (“IFR”) amending the regulations implementing the loan guarantee provisions in Title XVII of the Energy Policy Act of 2005 (“Title XVII”) to implement provisions of the Inflation Reduction Act of 2022 (“IRA”) that expand or modify the authorities applicable to the Title XVII Loan Guarantee Program. Specifically, this IFR: establishes regulations necessary to implement the Energy Implementation Reinvestment (“EIR”) Program and other categories of projects authorized by the IRA for Title XVII loan guarantees; revises provisions directly related to DOE's implementation of the Title XVII Loan Guarantee Program as expanded by the IRA; amends provisions to conform with the broader changes to the Title XVII Loan Guarantee Program; and revises certain sections for clarity and organization. DOE is issuing an IFR due to the urgency to implement an additional potential $290 billion of loan authority for loan guarantees prior to the loan guarantee authority expiration in 2026 and to provide the opportunity for all eligible projects to seek loan guarantees under the new IRA provisions. The amendments in this IFR also facilitate the increased volume of applications resulting from the new authorities and funding in the IRA and provide efficiencies in the loan processing.
This IFR is effective May 30, 2023. DOE will accept comments, data, and information regarding this IFR no later than July 31, 2023.
Interested persons may submit comments, identified by RIN 1901-AB59, by any of the following methods:
No telefacsimiles (faxes) will be accepted. For detailed instructions on submitting comments and additional information on the rulemaking process, see section IV of this document,
Mr. Steven Westhoff, Attorney-Adviser, Loan Programs Office, email:
The Inflation Reduction Act of 2022 (“IRA”)
The loan authority and related appropriations for the credit subsidy costs of loan guarantees under sections 1703 and 1706 made available under the IRA are available through September 30, 2026. In order to fully implement the Title XVII Loan Guarantee Program as modified by the IRA and IIJA in a timely manner, DOE is revising 10 CFR part 609 (“part 609”) through this interim final rule (“IFR”). The IFR facilitates the submission of applications to DOE for the broader array of projects eligible for Title XVII loan guarantees following the enactment of the IRA and improves the application process for parties considering applying for loan guarantees.
Title XVII, as amended, provides the Secretary the authority to issue loan guarantees for certain eligible projects, including innovative clean energy projects and energy infrastructure reinvestment projects.
Following DOE's issuance of initial guidelines and an initial solicitation for pre-applications for the program in 2006, DOE promulgated the original part 609 to implement and issue loan guarantees under the program in 2007.
This IFR establishes regulations necessary to implement the EIR Program
Through publication of this IFR, DOE is also providing a comment period until July 31, 2023. Comments submitted during this period will be reviewed, and a final rule, responding to those comments as well as reflecting the experience DOE gains in implementing this IFR, will be issued at a later date.
Under section 1703, DOE is authorized to support innovative energy projects that fall into one or more of the 13 categories specified in section 1703(b). With additional authority to guarantee up to a total principal amount of $40 billion provided by the IRA, DOE is ensuring that part 609 explicitly describes all categories of statutorily eligible projects to provide certainty to potential loan guarantee applicants regarding their ability to access the program. In the IFR, DOE provides that eligible projects under section 1703 include both innovative energy projects and innovative supply chain projects. (
Finally, the IRA enabled DOE to offer loan guarantees to projects that increase the domestically produced supply of critical minerals
The IRA creates the new EIR Program under section 1706 to guarantee loans to projects that retool, repower, repurpose, or replace energy infrastructure that has ceased operations, or enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of greenhouse gases. The IRA appropriates $5 billion through September 30, 2026, to carry out the EIR Program, with a limitation on commitments to guarantee loans the total principal amount of which is not greater than $250 billion.
Potential projects could include repurposing shuttered fossil energy facilities for clean energy production, retooling infrastructure from power plants that have ceased operations for new clean energy uses, or updating operating energy infrastructure with emissions control technologies, including carbon capture, utilization, and storage (“CCUS”). EIR could also support the transition of an oil or gas pipeline or refinery into a clean energy project, such as clean hydrogen or carbon dioxide transportation infrastructure. While the EIR Program does not have the same requirements as section 1703 loan guarantees with respect to projects utilizing innovative technology, all EIR projects are required to avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of greenhouse gases.
Since the passage of the IRA, DOE has engaged in significant stakeholder outreach, participating in over 11 listening sessions regarding EIR that have convened over 75 organizations and over 162 participants. A repeated comment received in the listening sessions is the need for DOE to provide additional clarity regarding the eligibility requirements and application process for EIR projects, including through updates to part 609.
The IFR includes provisions expanding the rule to describe the eligibility requirements for Title XVII loan guarantees for the categories of projects described in section 1706 and includes such projects as “Eligible Projects” for the purposes of the Title XVII Loan Guarantee Program. (
The cumulative effect of the amendments to the Title XVII Loan Guarantee Program enacted through the IRA and provision of appropriations and loan authority under the IRA for categories of projects added by the Energy Act of 2020 and the IIJA is to materially expand the types of projects eligible for loan guarantees from DOE under Title XVII. The additional $40 billion of loan guarantee commitment authority for section 1703 projects is not allocated to specific technology categories as certain pre-IRA loan authority was, meaning that the program no longer needs to adopt technology-specific solicitations. The ability to support EIR projects, critical minerals projects, and State energy financing institution projects opens the door to a wide range of new project characteristics, and expands Title XVII to support both innovative and non-innovative projects. The prior version of part 609 and the solicitations for applications to the program contemplated relatively uniform, large scale infrastructure projects, such as utility scale power generation projects. However, both the changes to Title XVII
With the IFR, DOE removes from the Code of Federal Regulations the specific minimum application requirements applicable to potential applicants to the Title XVII program as well as eliminates from the regulation the detailed evaluation criteria applicable to DOE's review of Title XVII loan guarantee applications. DOE will subsequently issue guidance for the Title XVII Loan Guarantee Program, which will include the information historically set forth in the specific solicitations issued in connection with the program. DOE expects that these changes to the Title XVII Loan Guarantee Program will significantly improve the ability of applicants and potential applicants to understand the program requirements as they apply to specific categories of eligible projects and to navigate the Title XVII Loan Guarantee Program more efficiently. The IFR is a critical foundation allowing DOE to finalize comprehensive materials for potential applicants, improving access to, and administration of, this important program.
DOE will also capture and make public many of the recommendations made with respect to DOE's administration of the Title XVII Loan Guarantee Program in the course of the 2022 request for information.
In the IFR, DOE specifies that it will obligate the credit subsidy cost of a loan guarantee at the time of Conditional Commitment, rather than its current practice of obligating credit subsidy cost at financial close of the Loan Guarantee Agreement. Under the prior version of part 609, the Secretary was authorized to terminate a Conditional Commitment for any reason at any time prior to the execution of the Loan Guarantee Agreement. This program modification represents an alignment of the Title XVII Loan Guarantee Program with other federal lending programs pursuant to the Federal Credit Reform Act of 1990. The impact of this change is to structure the Title XVII Loan Guarantee Program such that Conditional Commitments utilizing the loan authority and appropriations for the cost of loan guarantees provided by the IRA must be entered into prior to September 30, 2026, which represents the end of availability of these funds under the IRA. While not likely in the next several years, if appropriated funds are not available for the Secretary to pay credit subsidy costs at the time of Conditional Commitment, such costs may instead paid by the borrower.
In connection with the expected increase in the number of loan guarantee applications following the passage of the IRA, DOE has assessed the types and amounts of fees it expects to collect in connection with the administration of the Title XVII Loan Guarantee Program. In the IFR, DOE describes the categories of fees it will collect at the financial closing of a Title XVII loan guarantee and the other fees and charges it may collect from a Borrower after the issuance of a loan guarantee to provide additional clarity to the public with respect to fees associated with the program.
DOE has also determined it will no longer assess application fees in connection with the program. The Energy Act of 2020 amendments provide that a fee for the guarantee sufficient to cover the applicable administrative expenses of the Title XVII Loan Guarantee Program may be charged on or after financial close.
In the IFR, DOE confirms that the third-party advisor costs of DOE as loan guarantor represent the transaction costs associated with providing financing to the applicable project. For each of the categories of projects DOE has determined to be eligible under Title XVII, including those expanded categories allowed by the passage of the IRA, the financing of the relevant project will require the engagement by the applicant, any eligible lender, and DOE of third-party advisors to assist in the structuring and negotiation of the project's financing. The costs of such third-party advisors are directly attributable to the review, processing, closing and management of specific loan transactions and vary significantly in relation to the maturity and organization of the applicant and the complexity of the proposed project, among other factors. Third-party advisor costs are financing costs that may be included in the overall amount of Project Costs for an Eligible Project receiving a Title XVII loan guarantee. The services provided by third-party advisors directly support the financing and potential deployment of the project that is being proposed by an applicant and thus are appropriately borne by the applicant. This arrangement is customary in project finance.
DOE has confirmed that the costs associated with third-party advisors are easily distinguished from the administrative expenses associated with administering the Title XVII Loan
Under the IFR, Transaction Costs are defined in § 609.2, and the method for the payment of these Transaction Costs as an element of Project Costs is retained within the rule in § 609.11.
In the IFR, DOE specifies that environmental remediation costs constitute eligible Project Costs for Energy Infrastructure Reinvestment Projects, as specified in the IRA. In addition, the definition of Project Costs in § 609.10 is modified to provide that in DOE's discretion, the costs of refinancing outstanding indebtedness that is directly associated with the Eligible Project may be included.
The amendments in this IFR redesignate and add additional sections to 10 CFR part 609 for organization and clarity and to conform to the IRA provisions. The following table displays the changes as follows:
Provided below is a section-by-section analysis of the changes made by this IFR.
The title of part 609 is revised from “Loan Guarantees for Projects That Employ Innovative Technologies” to “Loan Guarantees for Clean Energy Projects,” reflecting the expansion of Title XVII eligibility beyond projects that employ or deploy a New or Significantly Improved Technology.
Part 609 prescribes policies and procedures for receiving, evaluating, and approving applications for loan guarantees. DOE is revising § 609.1(a) and (c) for clarity and updated legal references. DOE is also deleting § 609.1(d) because critical minerals projects are now specifically eligible and authorized for loan guarantees under section 1703(b).
Section 609.2 is revised to incorporate definitions associated with the IRA and to make changes conforming to the remainder of revisions set forth in the IFR. DOE is adding the following definitions: “Energy Infrastructure”, “Energy Infrastructure Reinvestment Project”, “Innovative Energy Project”, “Innovative Supply Chain Project”, “Maintenance Fee”, “Reasonable Prospect of Repayment”, “State”, “State Energy Financing Institution”, “State Energy Financing Institution Project”, “Title XVII”, “Title XVII Loan Guarantee Program”, and “Transaction Costs”. DOE is revising the following definitions: “Administrative Cost of a Loan Guarantee”, “Applicant”, “Application”, “Borrower”, “Commercial Technology”, “Conditional Commitment”, “Credit Subsidy Cost”, “Davis-Bacon Act”, “Eligible Lender”, “Eligible Project”, “Energy Infrastructure”, “Equity”, “Facility Fee”, “Guaranteed Obligation”, “Holder”, “New or Significantly Improved Technology”, “Project Costs”, “Project Sponsor”, and “Term Sheet”. The following definitions are deleted: “Act”, “Application Fee”, “Preliminary Term Sheet”, and “Solicitation”.
The interpretations in § 609.2(b) are deleted. These interpretations are not statutorily required and do not add or
Section 609.3, “Solicitations,” is redesignated and revised as § 609.19, “Title XVII loan guarantee program guidance,” to change the method for publishing invitations for applications for loan guarantees from a solicitation-based application process to a standing invitation published through DOE's Title XVII Loan Guarantee Program website; and to make conforming and clarifying changes.
DOE is adding a new § 609.3, “Title XVII eligible projects,” to distinguish and describe the expanded categories of eligible projects under Title XVII, as amended and authorized by the IRA and the IIJA. The new § 609.3 further defines these “Eligible Project” categories under Title XVII, including “Innovative Energy Project”, “Innovative Supply Chain Project”, “State Energy Financing Institution Project”, and “Energy Infrastructure Reinvestment Project”.
Section 609.4, “Submission of applications,” is revised to incorporate the application references for the categories of projects made eligible for loan guarantees under the IRA and IIJA; to consolidate provisions regarding additional information, including credit assessment and credit rating requirements (moving language formerly at § 609.4(d)(22) and (e) to § 609.12; see also § 609.5(a)); to remove provisions related to the application fee that DOE will no longer assess; to delete other specific minimum application requirements previously set forth in the section; to reduce the period of time after which DOE may reject an incomplete application from four to two years; to further describe DOE's obligation to provide responses to applicant inquiries regarding the status of applications; and to make conforming and clarifying changes.
Section 609.5, “Programmatic, technical, and financial evaluation of applications,” is revised to be titled “Evaluation of applications”; to identify the application evaluation criteria applicable to specific categories of eligible projects; to add failure to meet “know your customer” requirements as a basis for application denial; to eliminate certain specific application evaluation criteria from the rule; and to make conforming and clarifying changes.
Section 609.6, “Term Sheets and conditional commitments,” is revised to reduce the period of time for the negotiation of a term sheet from four years to two years; to remove references to fees payable in connection with the term sheet; to reflect the obligation of the credit subsidy cost at conditional commitment rather than loan guarantee closing; and to make conforming and clarifying changes.
Section 609.7, “Closing on the loan guarantee agreement,” is revised to reflect the obligation of the credit subsidy cost at conditional commitment rather than loan guarantee closing (moving language formerly at § 609.7(b)(1) and (3) to § 609.6); to move the applicant requirements regarding credit ratings to a single section of the rule (moving language formerly at § 609.7(b)(9) to § 609.12); to add an explicit requirement, consistent with existing law, that review under the National Environmental Policy Act of 1969 (NEPA) be completed prior to closing; and to make conforming and clarifying changes.
Section 609.8, “Loan guarantee agreement,” is revised to clarify certain terms applicable to all Title XVII loan guarantee agreements; to reflect the differing repayment terms for certain categories of Eligible Projects; and to make conforming and clarifying changes.
Section 609.9, “Lender servicing requirements,” is revised for clarity.
Section 609.10, “Project costs,” is revised to include all provisions of the rule pertaining to project costs in a single section of the rule; to incorporate the defined term “Transaction Costs”; to specifically include interconnection costs; to include, in DOE's discretion, the costs of refinancing outstanding indebtedness relating to the Eligible Project; to include environmental remediation costs of Energy Infrastructure Reinvestment Projects as provided by the IRA; to include, in DOE's discretion with respect to projects consisting of distributed energy resources, the costs incurred by the end-user of each distributed energy resource pursuant to contractual arrangements with the Project Sponsor. to refer to cost information and criteria published in guidance on the Title XVII Loan Guarantee Program website; and to make conforming and clarifying changes.
Section 609.11, “Fees and Charges,” is redesignated in part and revised as § 609.13. This IFR adds a new § 609.11, “Transaction Costs,” to reflect in a single rule provision all requirements applicable to the arrangements for third-party advisors, including retaining substantial portions of the latter part of the prior § 609.11 (former paragraphs (f)-(h)).
Section 609.12, “Full faith and credit and incontestability,” is redesignated as § 609.14 and a new § 609.12, “Credit Ratings,” is added to reflect and further specify in a single rule provision all requirements regarding the submission of credit assessments or credit ratings in connection with an application for a loan guarantee. As discussed above, § 609.12 under this IFR incorporates certain provisions related to credit rating that had been in prior § 609.4 and 609.7. Based upon DOE's experience administering the Title XVII Loan Guarantee Program for over 15 years, credit assessments and credit ratings are no longer required by regulation simply because Project Costs exceed a certain threshold, but the Secretary retains the authority and discretion to require a credit assessment or credit rating for any project.
Sections 609.13-609.16 have been redesignated, and §§ 609.17-609.19 have been added, due to the changes described previously. The redesignated § 609.18, “Deviations,” has been amended to remove unnecessary specificity regarding the Secretary's discretion over charging and collection of fees. DOE has also made minor revisions to §§ 609.13-609.18 for clarity and organization. Redesignated § 609.19, “Title XVII loan guarantee program guidance,” is described in further detail previously, under the analysis of § 609.3.
DOE will accept comments, data, and information regarding this IFR on or before the date provided in the
However, your contact information will be publicly viewable if you include it in the comment itself or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Otherwise, persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments.
Do not submit to
DOE processes submissions made through
Include contact information each time you submit comments, data, documents, and other information to DOE. If you submit via postal mail or hand delivery/courier, please provide all items on a CD, if feasible, in which case it is not necessary to submit printed copies. No telefacsimiles (faxes) will be accepted.
Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are written in English, and that are free of any defects or viruses. Documents should not contain special characters or any form of encryption. If possible, documents should carry the electronic signature of the author.
This IFR has been determined to be a “significant regulatory action” under Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (October 4, 1993). Accordingly, this action was subject to review under that Executive Order by the Office of Information and Regulatory Affairs (“OIRA”) of the Office of Management and Budget (“OMB”).
Section 553(a)(2) of the Administrative Procedure Act (“APA”) exempts from the APA's notice and comment procedures rulemakings that involve matters relating to public property, loans, grants, benefits, or contracts. As a rulemaking relating to the issuance of loans, DOE has determined that a notice of proposed rulemaking (and comment thereon) is not required for the amendments to part 609 in this IFR.
Moreover, section 553(b)(3)(B) of the APA (5 U.S.C. 551
DOE has determined that prior notice and comment are contrary to the public interest given the ambitious timeline Congress has imposed on DOE for guaranteeing loans up to a total principal amount of $290 billion prior to the loan guarantee authority expiration in 2026 and to provide the opportunity for all eligible projects to seek loan guarantees under the new IRA provisions. Given the short award period, it is imperative that DOE put the IFR provisions in place concurrent with solicitation of comment to process the influx of applications that DOE has already received in response to the passage of the IRA and to best advise stakeholders on how to obtain loan funding. Specifically, DOE has seen an increase in active applications from 61 to 111 active applications to the Loan Programs Office for Title XVII loan guarantees from August 1, 2022 through April 30, 2023, representing an increase of approximately $30.1 billion in new Title XVII financing requests. Making the amendments in this IFR effective immediately helps facilitate the increased volume of applications resulting from the new authorities and funding in the IRA and IIJA and provide efficiencies in the loan processing. DOE anticipates the number of new active
As noted previously, DOE is concurrently accepting comments on this IFR. DOE is committed to considering all comments received in response to this IFR and promptly publishing a final rule.
The Regulatory Flexibility Act (5 U.S.C. 601
This IFR updates part 609. As noted in prior part 609 rulemaking actions, DOE is not obligated to prepare a regulatory flexibility analysis for this rulemaking because there is not a requirement to publish a general notice of proposed rulemaking for rules related to loans under the Administrative Procedure Act (5 U.S.C. 553(a)(2)).
Information collection requirements for the DOE regulations at 10 CFR part 609 pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
LPO uses the information an Applicant provides to determine whether the project proposed by the Applicant meets the eligibility and other legal requirements of the applicable Loan Guarantee Program. In addition, the information collected through the ICR assists the Department to meet its public transparency and accountability obligations, such as requirements and requests to deliver timely information on Title XVII Program and TELGP activities to OMB, Congress, and the public.
Public reporting burden for the requirements in this IFR is estimated to average 146.5 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. All responses are expected to be collected electronically. The public reporting burden anticipates that there will be 89 respondents to the information collection request annually. The burden estimate reflects an increase of 14 hours per response compared to the prior burden estimate. This increase results from the inclusion of information regarding an applicant's Community Benefits Plan in the information collection request. All Title XVII project applicants are required to submit a Community Benefits Plan with Part II of their application. To support the goal of building a clean and equitable energy economy, DOE projects are expected to (1) support meaningful community and labor engagement; (2) invest in America's workforce; (3) advance diversity, equity, inclusion, and accessibility; and (4) contribute to the President's goal that 40% of the overall project benefits flow to Disadvantaged Communities (DACs) (the Justice40 Initiative). The Justice40 Initiative aims to ensure that 40% of overall benefits of clean energy investment flow to disadvantaged communities, which can be identified by the Climate and Economic Justice Screening Tool.
The revised recordkeeping and reporting requirements associated with this rulemaking are not mandatory until the information collection is approved by OMB.
Notwithstanding any other provision of law, a person is not required to respond to, and will not be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB control number. Applying for benefits under Title XVII is voluntary.
Pursuant to NEPA, DOE has analyzed this IFR in accordance with NEPA and DOE's NEPA implementing regulations (10 CFR part 1021). DOE has determined that this IFR qualifies for categorical exclusion under 10 CFR part 1021, subpart D appendix A5 as a rulemaking that amends an existing rule or regulation (
With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (February 7, 1996), imposes on executive agencies the general duty to adhere to the following requirements: (1) eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general
With regard to the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires, in pertinent part, that executive agencies make every reasonable effort to ensure that the regulation: (1) clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General.
Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them.
DOE has completed the required review and determined that, to the extent permitted by law, this rule meets the relevant standards of Executive Order 12988.
Executive Order 13132, “Federalism,”
DOE has examined this IFR and has determined that it will not preempt State law and 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. Accordingly, no further action is required by Executive Order 13132.
Under Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments,”
Title II of the Unfunded Mandates Reform Act of 1995 (“UMRA”)
Section 654 of the Treasury and General Government Appropriations Act, 1999
Section 515 of the Treasury and General Government Appropriations Act, 2001
DOE has reviewed this IFR under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.
Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,”
As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule. The report will state that it has been determined that the rule is a “major rule” as defined by 5 U.S.C. 804(2). In accordance with 5 U.S.C. 808(2), this IFR will be effective upon publication based upon DOE's finding of good cause that prior notice and public procedure thereon are contrary to the public interest. See section V.B of this document,
The Secretary of Energy has approved publication of this Interim final rule; request for comments.
Administrative practice and procedure, Energy, Loan programs, Reporting and recordkeeping requirements.
This document of the Department of Energy was signed on May 19, 2023, by Robert Marcum, Deputy Director, Loan Programs Office, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the
42 U.S.C. 7254, 16511-16517.
(a) This part sets forth the policies and procedures that DOE uses for receiving, evaluating, and approving applications for loan guarantees to support Eligible Projects under Title XVII, including sections 1703 and 1706, of the Energy Policy Act of 2005.
(b) This part applies to all Applications, Conditional Commitments, and Loan Guarantee Agreements.
(c) Section 600.22 of title 10 of the Code of Federal Regulations shall not apply to actions taken under this part.
When used in this part the following words have the following meanings.
(1) The total of all administrative expenses that DOE incurs during:
(i) The evaluation of an Application for a Guarantee;
(ii) The negotiation and offer of a Term Sheet;
(iii) The negotiation of a Loan Guarantee Agreement and related documents, including the issuance of a Guarantee; and
(iv) The servicing and monitoring of a Loan Guarantee Agreement, including during the construction, startup, commissioning, shakedown, and operational phases of an Eligible Project.
(2) The Administrative Cost of a Loan Guarantee does not include Transaction Costs.
(1) Any Person formed for the purpose of, or engaged in the business of, lending money, including State Energy Financing Institutions, financial
(i) Not debarred or suspended from participation in a Federal Government contract or participation in a non-procurement activity (under a set of uniform regulations implemented for numerous agencies, such as DOE, at 2 CFR part 180);
(ii) Not delinquent on any Federal debt or loan;
(iii) Legally authorized and empowered to enter into loan guarantee transactions authorized by Title XVII and this part;
(iv) Able to demonstrate experience in originating and servicing loans for commercial projects similar in size and scope to the Eligible Project, or able to procure such experience through contracts acceptable to DOE; and
(v) Able to demonstrate experience as the lead lender or underwriter by presenting evidence of its participation in large commercial projects or energy-related projects or other relevant experience, or able to procure such experience through contracts acceptable to DOE; or
(2) The Federal Financing Bank.
(1) The generation or transmission of electric energy; or
(2) The production, processing, and delivery of fossil fuels, fuels derived from petroleum, or petrochemical feedstocks.
(1) A technology, or a defined suite of technologies, concerned with the production, storage, consumption, or transportation of energy, including of associated critical minerals and other components or other eligible energy-related project categories under section 1703(b) of Title XVII, and that is not a Commercial Technology, and that either:
(i) Has only recently been developed, discovered, or learned; or
(ii) Involves or constitutes one or more meaningful and important improvements in productivity or value, in comparison to Commercial Technologies in use in the United States at the time the Term Sheet is issued.
(2) If regional variation significantly affects the deployment of a technology, such technology may still be considered “New or Significantly Improved Technology” if no more than 6 projects employ the same or similar technology as another project, provided no more than 2 projects that use the same or a similar technology are located in the same region of the United States.
(1) A quasi-independent entity or an entity within a State agency or financing authority established by a State:
(i) To provide financing support or credit enhancements, including loan guarantees and loan loss reserves, for Eligible Projects; and
(ii) To create liquid markets for eligible projects, including warehousing and securitization, or take other steps to reduce financial barriers to the deployment of existing and new Eligible Projects.
(2) The term “State Energy Financing Institution” includes an entity or organization established by an Indian Tribal entity or an Alaska Native Corporation to achieve the purposes described in paragraphs (1)(i) and (ii) of this definition.
(1)(i) Out-of-pocket costs of financial, legal, and other professional services associated with the financing of an Eligible Project, including services necessary to obtain required licenses and permits, prepare environmental reports and data, conduct legal and technical due diligence, develop and audit a financial model, negotiate the terms and provisions of project contracts and financing documents, including those costs associated with the advisors to DOE and any other Eligible Lender; and
(ii) Costs of issuing Eligible Project debt, such as commitment fees, upfront fees, and other applicable financing fees, costs and expenses imposed by Eligible Lenders.
(2) Transaction Costs do not include the Administrative Cost of a Loan Guarantee or Credit Subsidy Costs.
(a)(1) DOE is authorized to provide loan Guarantees for certain categories of projects under Title XVII including:
(i) Innovative Energy Projects under section 1703 of Title XVII;
(ii) Innovative Supply Chain Projects under section 1703 of Title XVII;
(iii) State Energy Financing Institution Projects under section 1703 of Title XVII; and
(iv) Energy Infrastructure Reinvestment Projects under section 1706 of Title XVII.
(2) A Project meeting the applicable eligibility requirements set forth herein constitutes an “Eligible Project” under Title XVII.
(b) An eligible Innovative Energy Project is a project that:
(1) Falls within a category set forth in section 1703(b) of Title XVII;
(2) Is located in the United States;
(3) Is at one location, except that the project may be located at two or more locations if the project is comprised of installations or facilities employing a single New or Significantly Improved Technology that is deployed pursuant to an integrated and comprehensive business plan. An Innovative Energy Project located in more than one location is a single Eligible Project;
(4) Deploys a New or Significantly Improved Technology; and
(5) Avoids, reduces, utilizes, or sequesters air pollutants or anthropogenic emissions of greenhouse gases.
(c) An eligible Innovative Supply Chain Project is a project that:
(1) Manufactures a product with an end-use set forth in section 1703(b) of Title XVII;
(2) Is located in the United States;
(3) Is at one location, except that the project may be located at two or more locations if the project is comprised of installations or facilities employing a single New or Significantly Improved Technology that is deployed pursuant to an integrated and comprehensive business plan. An Innovative Supply Chain Project located in more than one location is a single Eligible Project;
(4) Either:
(i) Deploys a New or Significantly Improved Technology in the manufacturing process; or
(ii) Manufactures a product that represents a New or Significantly Improved Technology; and
(5) Avoids, reduces, utilizes, or sequesters air pollutants or anthropogenic emissions of greenhouse gases through:
(i) The relevant manufacturing process of the relevant product; or
(ii) The end-use of the component on a full life-cycle basis.
(d) An eligible State Energy Financing Institution Project is a project that:
(1) Falls within a category set forth in section 1703(b) of Title XVII;
(2) Is located at one or more locations in the United States;
(3) Avoids, reduces, utilizes, or sequesters air pollutants or anthropogenic emissions of greenhouse gases;
(4) Receives financial support or credit enhancements from a State Energy Financing Institution; and
(5) May include a partnership between one or more State Energy Financing Institutions and private entities, Tribal entities, or Alaska Native corporations in carrying out the project.
(e) An eligible Energy Infrastructure Reinvestment Project is a project that:
(1) Is located in the United States;
(2) Either:
(i) Enables operating Energy Infrastructure to avoid, reduce, utilize, or sequester air pollutants or anthropogenic emissions of greenhouse gases; or
(ii) Retools, repowers, repurposes, or replaces Energy Infrastructure that has ceased operations; provided that if such project involves electricity generation through the use of fossil fuels, such project shall be required to have controls or technologies to avoid, reduce, utilize, or sequester air pollutants and anthropogenic emissions of greenhouse gases; and
(3) May include the remediation of environmental damage associated with Energy Infrastructure.
(a) DOE may direct that Applications be submitted in more than one part; provided, that the parts of such Application, taken as a whole, contain such information published by DOE in guidance on the Title XVII Loan Guarantee Program website pursuant to § 609.19. In such event, subsequent parts of an Application may be filed only after DOE invites an Applicant to make an additional submission. If DOE directs that Applications be submitted in more than one part, the initial part of
(b) An Applicant may submit Applications for multiple proposed projects and for projects using different technologies; provided that an Applicant for an Innovative Energy Project or Innovative Supply Chain Project may not submit an Application or Applications for multiple Innovative Energy Projects or multiple Innovative Supply Chain Projects using the same technology. For purposes of this paragraph (b), the term “Applicant” shall include the Project Sponsor and any subsidiaries or affiliates of the Project Sponsor.
(c) DOE has no obligation to evaluate an Application that is not complete, and may proceed with such evaluation, or a partial evaluation, only in its discretion. DOE will not design an Eligible Project for Applicants, but may respond, in its discretion, in general terms to specific proposals. DOE's response to questions from potential Applicants are pre-decisional and preliminary in nature.
(d) Unless an Applicant requests an extension and such an extension is granted by DOE in its discretion, an Application may be rejected if it is not complete within two years from the date of submission (or date of submission of the first part thereof, in the case of Applications made in more than one part).
(e) DOE shall respond, in writing, to any inquiry by an Applicant about the status of its Application within ten (10) days of receipt of such request. If an Application has been pending before DOE for 180 days or more, such response shall include:
(1) A description of the current status of review of the Application;
(2) A summary of any factors that are delaying a final decision on the Application, a list of what items are required in order to reach a final decision, citations to authorities stating the reasons why such items are required, and a list of actions the Applicant can take to expedite the process; and
(3) An estimate of when a final decision on the Application will be made.
(a) Applications will be considered in a merit-based review process, considering such factors determined and published by DOE in guidance on its Title XVII Loan Guarantee Program website pursuant to § 609.19. At any time, DOE may request additional information or supporting documentation from an Applicant.
(b) Applications will be denied if:
(1) The proposed project is not an Eligible Project;
(2) With respect to applications for Innovative Energy Projects and Innovative Supply Chain Projects, the applicable technology is not ready to be deployed commercially in the United States, cannot yield a commercially viable product or service in the use proposed in the Application, does not have the potential to be deployed in other commercial projects in the United States, or is not or will not be available for further commercial use in the United States;
(3) The Person proposed to issue the loan or purchase other debt obligations constituting the Guaranteed Obligations is not an Eligible Lender;
(4) The proposed project is for demonstration, research, or development;
(5) Significant Equity for the proposed project will not be provided by the date of issuance of the Guaranteed Obligations, or such later time as DOE in its discretion may determine;
(6) The proposed project does not present a Reasonable Prospect of Repayment of the Guaranteed Obligations;
(7) With respect to applications for Energy Infrastructure Reinvestment Projects such application fails to include an analysis of how the proposed project will engage with and affect associated communities or, where the Applicant is an electric utility, an assurance that Applicant will pass on the financial benefit from the Guarantee to the customers of, or associated communities served by, the electric utility; or
(8) The Applicant or Project Sponsor does not satisfy DOE's “know your customer” requirements.
(c) If an Application has not been denied pursuant to paragraph (b) of this section, DOE will evaluate the proposed project based on the criteria published by DOE in guidance on its Title XVII Loan Guarantee Program website pursuant to § 609.19.
(d) After DOE completes its review and evaluation of a proposed project, DOE will notify the Applicant in writing of its determination whether to proceed with due diligence and negotiation of a Term Sheet. DOE will proceed only if it determines that the proposed project is highly qualified and suitable for a Guarantee. Upon written confirmation from the Applicant that it desires to proceed, DOE and the Applicant will commence negotiations.
(e) DOE shall provide all Applicants with a reasonable opportunity to correct or amend any Application in order to meet the criteria set forth in this part or any other conditions required by DOE, prior to any denial of such Application. A determination by DOE not to proceed with a proposed project shall be final and non-appealable, but shall not prejudice the Applicant or other affected Persons from applying for a Guarantee in respect of a different proposed project pursuant to another, separate Application. Prior to DOE's denial of any Application, DOE shall advise the Applicant in writing, not less than ten (10) business days prior to the effective date of such denial. If an Application could be amended or corrected such that DOE would determine that the project is highly qualified and suitable for a Guarantee, DOE may set forth the reasons for such proposed denial along with a list of items that may be corrected or amended by the Applicant. If requested by any Applicant, DOE shall meet with such Applicant in order to address questions or concerns raised by the Applicant.
(a) DOE, after negotiation of a Term Sheet with an Applicant, may offer such Term Sheet to an Applicant or such other Person that is an affiliate of the Applicant and that is acceptable to DOE. DOE's offer of a Term Sheet shall be in writing and signed by the Contracting Officer. DOE's negotiation of a Term Sheet imposes no obligation on the Secretary to offer a Term Sheet to the Applicant.
(b) DOE shall terminate its negotiations of a Term Sheet if it has not offered a Term Sheet in respect of an Eligible Project within two years after the date of the written notification set forth in § 609.5(d), unless extended in writing by DOE.
(c) If and when the offeree specified in a Term Sheet satisfies all terms and conditions for acceptance of the Term Sheet, including written acceptance thereof, the Term Sheet shall become a Conditional Commitment. Each Conditional Commitment shall include
(d) Prior to or on the date of the Conditional Commitment, DOE will ensure that:
(1) OMB has reviewed and approved DOE's calculation of the Credit Subsidy Cost of the Guarantee;
(2) One of the following has occurred:
(i) Appropriated funds for the Credit Subsidy Cost are available;
(ii) The Secretary has received from the Borrower payment in full for the Credit Subsidy Cost and deposited the payment into the Treasury; or
(iii) A combination of one or more appropriations under paragraph (d)(2)(i) of this section and one or more payments from the Borrower under paragraph (d)(2)(ii) of this section has been made that is equal to the Credit Subsidy Cost; and
(3) The Department of the Treasury has been consulted as to the proposed terms and conditions of the Loan Guarantee Agreement.
(e) If, subsequent to execution of a Conditional Commitment, the financing arrangements of the Borrower, or in respect of an Eligible Project, change from those described in the Conditional Commitment, the Applicant shall promptly provide updated financing information in writing to DOE. All such updated information shall be deemed to be information submitted in connection with an Application. Based on such updated information, DOE may take one or more of the following actions:
(1) Determine that such changes are not material to the Borrower, the Eligible Project or DOE;
(2) Amend the Conditional Commitment accordingly, including by re-calculating the Credit Subsidy Cost in accordance with § 609.6(d);
(3) Postpone the expected closing date of the associated Loan Guarantee Agreement; or
(4) Terminate the Conditional Commitment.
(a) Subsequent to entering into a Conditional Commitment with an Applicant, DOE, after consultation with the Applicant, will set a closing date for execution of a Loan Guarantee Agreement.
(b) Prior to or on the closing date of a Loan Guarantee Agreement DOE will ensure that:
(1) Pursuant to section 1702(h) of Title XVII, DOE will receive from the Applicant the Facility Fee referred to in § 609.13(b) on the closing date;
(2) The Department of the Treasury has been consulted as to the terms and conditions of the Loan Guarantee Agreement.
(2) The Loan Guarantee Agreement and related documents contain all terms and conditions DOE deems reasonable and necessary to protect the interest of the United States;
(3) Each holder of the Guaranteed Obligations is an Eligible Lender, and the servicer of the Guaranteed Obligations meets the servicing performance requirements of § 609.9(b);
(4) DOE has determined the principal amount of the Guaranteed Obligations expected to be issued in respect of the Eligible Project, as estimated at the time of issuance, will not exceed 80 percent of the Project Costs of the Eligible Project;
(5) DOE has completed all necessary reviews under the National Environmental Policy Act of 1969; and
(6) All conditions precedent specified in the Conditional Commitment are either satisfied or waived in writing by the Contracting Officer. If the counterparty to the Conditional Commitment has not satisfied all such terms and conditions on or prior to the closing date of the Loan Guarantee Agreement, DOE may, in its discretion, set a new closing date, or terminate the Conditional Commitment.
(a) Only a Loan Guarantee Agreement executed by the Contracting Officer can obligate DOE to issue a Guarantee in respect of Guaranteed Obligations. DOE is not bound by oral representations.
(b) Each Loan Guarantee Agreement shall contain the following requirements and conditions, and shall not be executed until the Contracting Officer determines that the following requirements and conditions are satisfied:
(1) The Federal Financing Bank shall be the only Eligible Lender in transactions where DOE guarantees 100 percent (but not less than 100 percent) of the principal and interest of the Guaranteed Obligations issued under a Loan Guarantee Agreement. Where DOE guarantees 90 percent or less of the Guaranteed Obligation, the guaranteed portion may be separated from or “stripped” from the non-guaranteed portion of the Guaranteed Obligation, if the loan is participated, syndicated or otherwise resold in the secondary debt market.
(2) The Borrower shall be obligated to make full repayment of the principal and interest on the Guaranteed Obligations and other debt of a Borrower over a period not to exceed:
(i) In the case of an Innovative Energy Project, an Innovative Supply Chain Project, or a State Energy Financing Institution Project, the lesser of 30 years or 90 percent of the projected useful life of the Eligible Project's major physical assets, as calculated in accordance with U.S. generally accepted accounting principles and practices; and
(ii) In the case of an Energy Infrastructure Reinvestment Project, 30 years.
(3) If any financing or credit arrangement of the Borrower or relating to the Eligible Project, other than the Guaranteed Obligations, has an amortization period shorter than that of the Guaranteed Obligations, DOE shall have determined that the resulting financing structure allocates to DOE a reasonably proportionate share of the default risk, in light of:
(i) DOE's share of the total debt financing of the Borrower;
(ii) Risk allocation among the credit providers to the Borrower; and
(iii) Internal and external credit enhancements.
(4) The Guarantee does not finance, either directly or indirectly tax-exempt debt obligations, consistent with the requirements of section 149(b) of the Internal Revenue Code.
(5) The principal amount of the Guaranteed Obligations, when combined with funds from other sources committed and available to the Borrower, shall be sufficient to pay for expected Project Costs (including adequate contingency amounts) and otherwise to carry out the Eligible Project.
(6) There shall be a Reasonable Prospect of Repayment by the Borrower of the principal of and interest on the Guaranteed Obligations and all of its other debt obligations.
(7) The Borrower shall pledge collateral or surety determined by DOE to be necessary to secure the repayment of the Guaranteed Obligations. Such collateral or security may include Eligible Project assets and assets not related to the Eligible Project.
(8) The Loan Guarantee Agreement and related documents shall include detailed terms and conditions that DOE deems necessary and appropriate to
(9) The Guaranteed Obligations shall not be subordinate in payment or lien priority to other financing. In DOE's discretion, Guaranteed Obligations may share a lien position with other financing on a
(10) There is satisfactory evidence that the Borrower will diligently pursue the Eligible Project and is willing, competent, and capable of performing its obligations under the Loan Guarantee Agreement and the loan documentation relating to its other debt obligations.
(11) The Borrower shall have paid all fees and expenses due to DOE or the U.S. Government, including such amount of the Credit Subsidy Cost as may be due and payable from the Borrower at the time of the Conditional Commitment.
(12) The Borrower, any Eligible Lender, and each other relevant party shall take, and be obligated to continue to take, those actions necessary to perfect and maintain liens on collateral in respect of the Guaranteed Obligations.
(13) DOE or its representatives shall have access to the offices of the Borrower and the Eligible Project site at all reasonable times in order to monitor the—
(i) Performance by the Borrower of its obligations under the Loan Guarantee Agreement; and
(ii) Performance of the Eligible Project.
(14) DOE and Borrower have reached an agreement regarding the information that will be made available to DOE and the information that will be made publicly available.
(15) The Borrower shall have filed applications for or obtained any required regulatory approvals for the Eligible Project and is in compliance, or promptly will be in compliance, where appropriate, with all Federal, State, and local regulatory requirements.
(16) The Borrower shall have no delinquent Federal debt.
(17) The Project Sponsors have made or will make a significant Equity investment in the Borrower or the Eligible Project, and will maintain control of the Borrower or the Eligible Project as agreed in the Loan Guarantee Agreement.
(18) The Loan Guarantee Agreement and related agreements shall include such other terms and conditions as DOE deems necessary or appropriate to protect the interests of the United States.
(c) The Loan Guarantee Agreement shall provide that, in the event of a default by the Borrower:
(1) Interest on the Guaranteed Obligations shall accrue at the rate or penalty rate, as applicable, stated in the Loan Guarantee Agreement or the Loan Agreement until DOE makes full payment of the defaulted Guaranteed Obligations and, except when such Guaranteed Obligations are funded through the Federal Financing Bank, DOE shall not be required to pay any premiums, defaults, or prepayment penalties; and
(2) The holder of collateral pledged in respect of the Guaranteed Obligations shall be obligated to take such actions as DOE may reasonably require to provide for the care, preservation, protection, and maintenance of such collateral so as to enable the United States to achieve maximum recovery.
(d)(1) An Eligible Lender or other Holder may sell, assign or transfer a Guaranteed Obligation to another Eligible Lender that meets the requirements of § 609.9. Such latter Eligible Lender shall be required to assume all servicing, monitoring, and reporting requirements as provided in the Loan Guarantee Agreement. Any transfer of the servicing, monitoring, and reporting functions shall be subject to the prior written approval of DOE.
(2) The Secretary, or the Secretary's designee or contractual agent, for the purpose of identifying Holders with the right to receive payment under the Guaranteed Obligations, shall include in the Loan Guarantee Agreement or related documents a procedure for tracking and identifying Holders of Guaranteed Obligations. Any contractual agent approved by the Secretary to perform this function may transfer or assign this responsibility only with the Secretary's prior written approval.
(e) Each Loan Guarantee Agreement shall require the Borrower to make representations and warranties, agree to covenants, and satisfy conditions precedent to closing and to each disbursement that, in each case, relate to its compliance with the Davis-Bacon Act and the Cargo Preference Act.
(f) The Applicant, the Borrower, or the Project Sponsor must estimate, calculate, record, and provide to DOE any time DOE requests such information and at the times provided in the Loan Guarantee Agreement all costs incurred in the design, engineering, financing, construction, startup, commissioning, and shakedown of the Eligible Project in accordance with generally accepted accounting principles and practices.
(a) When reviewing and evaluating a proposed Eligible Project, all Eligible Lenders (other than the Federal Financing Bank) shall at all times exercise the level of care and diligence that a reasonable and prudent lender would exercise when reviewing, evaluating, and disbursing a loan made by it without a Federal guarantee.
(b) Loan servicing duties shall be performed by an Eligible Lender, DOE, or another qualified loan servicer approved by DOE. When performing its servicing duties, the loan servicer shall at all times exercise the level of care and diligence that a reasonable and prudent lender would exercise when servicing a loan made without a Federal guarantee, including:
(1) During the construction period, monitoring the satisfaction of all of the conditions precedent to all loan disbursements, as provided in the Loan Guarantee Agreement, Loan Agreement, or related documents;
(2) During the operational phase, monitoring and servicing the Guaranteed Obligations and collection of the outstanding principal and accrued interest as well as undertaking to ensure that the collateral package securing the Guaranteed Obligations remains uncompromised; and
(3) Until the Guaranteed Obligations have been repaid, providing annual or more frequent financial and other reports on the status and condition of the Guaranteed Obligations and the Eligible Project, and promptly notifying DOE if it becomes aware of any problems or irregularities concerning the Eligible Project or the ability of the Borrower to make payment on the Guaranteed Obligations or its other debt obligations.
(a) The Project Costs of an Eligible Project are those costs, including escalation and contingencies, that are expended or accrued by a Borrower and are necessary, reasonable, customary, and directly related to the design, engineering, financing, construction, startup, commissioning, and shakedown of an Eligible Project.
(b) Project Costs include:
(1) Costs of acquisition, lease, or rental of real property, including engineering fees, surveys, title insurance, recording fees, and legal fees incurred in connection with land acquisition, lease or rental, site
(2) Costs of engineering, architectural, legal and bond fees, and insurance paid in connection with construction of the facility;
(3) Costs of equipment purchases, including a reasonable reserve of spare parts to the extent required;
(4) Costs to provide facilities and services related to safety and environmental protection;
(5) Transaction Costs;
(6) Costs of necessary and appropriate insurance and bonds of all types including letters of credit and any collateral required therefor;
(7) Costs of design, engineering, startup, commissioning, and shakedown;
(8) Costs of obtaining licenses to intellectual property necessary to design, construct, and operate the Eligible Project;
(9) To the extent required by the Loan Guarantee Agreement and not intended or available for any cost referred to in paragraph (d) of this section, costs of funding any reserve fund, including without limitation, a debt service reserve, a maintenance reserve, and a contingency reserve for cost overruns during construction; provided that proceeds of a Guaranteed Obligation deposited to any reserve fund shall not be removed from such fund except to pay Project Costs, to pay principal of the Guaranteed Obligation, or otherwise to be used as provided in the Loan Guarantee Agreement;
(10) Capitalized interest necessary to meet market requirements and other carrying costs during construction;
(11) In DOE's sole discretion, the cost of refinancing outstanding indebtedness that is directly associated with the Eligible Project, including the principal amount of such indebtedness, accrued interest thereon, and any reasonable and customary prepayment premium or breakage costs; provided that DOE determines that the refinancing furthers the purpose of the Eligible Project.
(12) With respect to Energy Infrastructure Reinvestment Projects, the cost of remediation of environmental damage associated with the Energy Infrastructure; and
(13) Other necessary and reasonable costs, including, without limitation, previously acquired real estate, equipment, or other materials, costs of interconnection, and any engineering, construction, make-ready, design, permitting, or other work completed on an existing facility or project;
(c) Where a Project consists of the financing and installation of a series of distributed energy resources, DOE may deem the eligible Project Costs to consist of the reasonable and documented costs incurred by the end-user of each distributed energy resource in connection with the contractual agreement between the end-user and the Project Sponsor or its agent, provided that:
(1) DOE is able to validate such reasonable and documented costs through standard customer contracts and standard distributed energy resource system attributes; and
(2) The Borrower institutes a compliance system satisfactory to DOE to ensure that each distributed energy resource supported by a Guarantee complies with any eligibility criteria required by DOE, including with respect to approved customer contracts and approved distributed energy resource systems.
(d) Project Costs do not include:
(1) Fees and commissions charged to Borrower, including finder's fees, for obtaining Federal or other funds;
(2) Parent corporation or other affiliated entity's general and administrative expenses, and non-Eligible Project related parent corporation or affiliated entity assessments, including organizational expenses;
(3) Goodwill, franchise, trade, or brand name costs;
(4) Dividends and profit sharing to stockholders, employees, and officers;
(5) Research, development, and demonstration costs of readying an innovative technology for employment in a commercial project;
(6) Costs that are excessive or are not directly required to carry out the Eligible Project, as determined by DOE;
(7) Expenses incurred after startup, commissioning, and shakedown of the facility, or, in DOE's discretion, any portion of the facility that has completed startup, commissioning, and shakedown;
(8) Borrower-paid Credit Subsidy Costs, the Administrative Cost of a Loan Guarantee, and any other fee collected by DOE; and
(9) Operating costs.
(e) Costs incurred in connection with an Eligible Project may be subject to such other criteria for inclusion as Project Costs as published by DOE from time to time in guidance on the Title XVII Loan Guarantee Program website pursuant to § 609.19.
(a) Upon making a determination to engage independent consultants or outside counsel with respect to an Application, DOE will proceed to evaluate and process such Application only following execution by an Applicant or Project Sponsor, as appropriate, of an agreement satisfactory to DOE to pay the Transaction Costs charged by the independent consultants and outside legal counsel. Each Applicant, Borrower, or Project Sponsor, as applicable, shall be responsible for the payment of Transaction Costs associated with DOE's independent consultants and outside legal counsel in connection with an Application, Conditional Commitment, or Loan Guarantee Agreement, as applicable. Appropriate provisions regarding payment of such Transaction Costs shall also be included in each Term Sheet and Loan Guarantee Agreement or, upon a determination by DOE, in other appropriate agreements.
(b) Notwithstanding payment by Applicant, Borrower, or Project Sponsor, all services rendered by an independent consultant or outside legal counsel to DOE in connection with an Application, Conditional Commitment, or Loan Guarantee Agreement shall be solely for the benefit of DOE (and such other creditors as DOE may agree in writing). DOE may require, in its discretion, the payment of an advance retainer to such independent consultants or outside legal counsel as security for the collection of the fees and expenses charged by the independent consultants and outside legal counsel. In the event an Applicant, Borrower, or Project Sponsor fails to comply with the provisions of such payment agreement, DOE in its discretion, may stop work on or terminate an Application, a Conditional Commitment, or a Loan Guarantee Agreement, or may take such other remedial measures in its discretion as it deems appropriate.
(c) DOE shall not be financially liable under any circumstances to any independent consultant or outside counsel for services rendered in connection with an Application, Conditional Commitment, or Loan Guarantee Agreement except to the extent DOE has previously entered into an express written agreement to pay for such services.
(a) Where conditions justify, in the sole discretion of the Secretary, DOE may require that an Applicant submit a preliminary credit assessment for the proposed project, reflecting the project without a Guarantee, from a nationally recognized statistical ratings organization.
(b) Where conditions justify, in the sole discretion of the Secretary, DOE may require that an Applicant provide
(a) Unless explicitly authorized by statute, no funds obtained from the Federal Government, or from a loan or other instrument guaranteed by the Federal Government, may be used to pay for the Credit Subsidy Cost, the Facility Fee, the Maintenance Fee, and any other fees charged by or paid to DOE relating to Title XVII or any Guarantee thereunder. An Applicant may, at any time, use non-Federal monies to pay the Credit Subsidy Cost or DOE fees.
(b) DOE may charge Applicants a non-refundable Facility Fee, payable on the closing date for the Loan Guarantee Agreement.
(c) In order to encourage and supplement private lending activity DOE may collect from Borrowers for deposit in the United States Treasury a non-refundable Risk-Based Charge which, together with the interest rate on the Guaranteed Obligation that LPO determines to be appropriate, will take into account the prevailing rate of interest in the private sector for similar loans and risks. The Risk-Based Charge shall be paid at such times and in such manner as may be determined by DOE, but no less frequently than once each year, commencing with payment of a pro-rated payment on the date the Guarantee is issued. The amount of the Risk-Based Charge will be specified in the Loan Guarantee Agreement.
(d) DOE may collect a Maintenance Fee as set forth in the Loan Guarantee Agreement. The Maintenance Fee shall accrue from the date of execution of the Loan Guarantee Agreement through the date of payment in full of the related Guaranteed Obligations. If DOE determines to collect a Maintenance Fee, it shall be paid by the Borrower each year (or portion thereof) in advance in the amount specified in the applicable Loan Guarantee Agreement.
(e) In the event a Borrower or an Eligible Project experiences difficulty relating to technical, financial, or legal matters or other events (
(1) If such difficulty requires DOE to incur time or expenses beyond those customarily expended to monitor and administer performing loans, DOE may collect an extraordinary expenses fee from the Borrower that will reimburse DOE for such time and expenses, as determined by DOE; and
(2) For all fees and expenses of DOE's independent consultants and outside counsel, to the extent that such fees and expenses are elected to be paid by DOE notwithstanding the provisions of § 609.11.
The full faith and credit of the United States is pledged to the payment of principal and interest of Guaranteed Obligations pursuant to Guarantees issued in accordance with Title XVII and this part. The issuance by DOE of a Guarantee shall be conclusive evidence that it has been properly obtained; that the underlying loan qualified for such Guarantee; and that, but for fraud or material misrepresentation by the Holder, except when the Holder is the Federal Financing Bank, such Guarantee shall be legal, valid, binding, and enforceable against DOE in accordance with its terms.
(a) If a Borrower defaults in making a required payment of principal or interest on a Guaranteed Obligation and such default has not been cured within the applicable grace period, the Holder may make written demand for payment upon the Secretary in accordance with the terms of the applicable Guarantee. If a Borrower defaults in making a required payment of principal or interest on a Guaranteed Obligation and such default has not been cured within the applicable grace period, the Secretary shall notify the Attorney General.
(b) Subject to the terms of the applicable Guarantee, the Secretary shall make payment within 60 days after receipt of written demand for payment from the Holder, provided that the demand for payment complies in all respects with the terms of the applicable Guarantee. Interest shall accrue to the Holder at the rate stated in the promissory note evidencing the Guaranteed Obligation, without giving effect to the Borrower's default in making a required payment of principal or interest on the applicable Guarantee Obligation or any other default by the Borrower, until the Guaranteed Obligation has been fully paid by DOE. Payment by the Secretary on the applicable Guarantee does not change Borrower's obligations under the promissory note evidencing the Guaranteed Obligation, Loan Guarantee Agreement, Loan Agreement, or related documents, including an obligation to pay default interest.
(c) Following payment by the Secretary pursuant to the applicable Guarantee, upon demand by DOE, the Holder shall transfer and assign to the Secretary (or his or her designee or agent) the promissory note evidencing the Guaranteed Obligation, all rights and interests of the Holder in the Guaranteed Obligation, and all rights and interests of the Holder in respect of the Guaranteed Obligation, except to the extent that the Secretary determines that such promissory note or any of such rights and interests shall not be transferred and assigned to the Secretary. Such transfer and assignment shall include, without limitation, all of the liens, security, and collateral rights of the Holder (or his or her designee or agent) in respect of the Guaranteed Obligation.
(d) Following payment by the Secretary pursuant to a Guarantee or other default of a Guaranteed Obligation, the Secretary is authorized to protect and foreclose on the collateral, take action to recover costs incurred by, and all amounts owed to, the United States as a result of the defaulted Guarantee Obligation, and take such other action necessary or appropriate to protect the interests of the United States. In respect of any such authorized actions that involve a judicial proceeding or other judicial action, the Secretary shall act through the Attorney General. The foregoing provisions of this paragraph (d) shall not relieve the Secretary from his or her obligations pursuant to any applicable Intercreditor Agreement. Nothing in this paragraph (d) shall limit the Secretary from exercising any rights or remedies pursuant to the terms of the Loan Guarantee Agreement.
(e) The cash proceeds received as a result of any foreclosure on the collateral, or other action, shall be distributed in accordance with the Loan Guarantee Agreement (subject to any applicable Intercreditor Agreement).
(f) The Loan Guarantee Agreement shall provide that cash proceeds received by the Secretary (or his or her designee or agent) as a result of any foreclosure on the collateral or other action shall be applied in the following order of priority:
(1) Toward the pro rata payment of any costs and expenses (including unpaid fees, fees and expenses of counsel, contractors and agents, and liabilities and advances made or incurred) of the Secretary, the Attorney General, the Holder, a collateral agent, or other responsible person of any of them (solely in their individual capacities as such and not on behalf of or for the benefit of their principals),
(2) To pay all accrued and unpaid fees due and payable to the Secretary, the Attorney General, the Holder, a collateral agent, or other responsible person of any of them on a pro rata basis in respect of the Guaranteed Obligation;
(3) To pay all accrued and unpaid interest due and payable to the Secretary, the Attorney General, the Holder, a collateral agent, or other responsible person of any of them on a pro rata basis in respect of the Guaranteed Obligation;
(4) To pay all unpaid principal of the Guaranteed Obligation;
(5) To pay all other obligations of the Borrower under the Loan Guarantee Agreement, the Loan Agreement, and related documents that are remaining after giving effect to the preceding provisions and are then due and payable; and
(6) To pay to the Borrower, or its successors and assigns, or as a court of competent jurisdiction may direct, any cash proceeds then remaining following the application of all payment described in paragraphs (f)(1) through (5) of this section.
(g) No action taken by the Holder or its agent or designee in respect of any collateral will affect the rights of any person, including the Secretary, having an interest in the Guaranteed Obligations or other debt obligations, to pursue, jointly or severally, legal action against the Borrower or other liable persons, for any amounts owing in respect of the Guaranteed Obligation or other applicable debt obligations.
(h) In the event that the Secretary considers it necessary or desirable to protect or further the interest of the United States in connection with exercise of rights as a lien holder or recovery of deficiencies due under the Guaranteed Obligation, the Secretary may take such action as he determines to be appropriate under the circumstances.
(i) Nothing in this part precludes, nor shall any provision of this part be construed to preclude, the Secretary from purchasing any collateral or Holder's or other Person's interest in the Eligible Project upon foreclosure of the collateral.
(j) Nothing in this part precludes, nor shall any provision of this part be construed to preclude, forbearance by any Holder with the consent of the Secretary for the benefit of the Borrower and the United States.
(k) The Holder and the Secretary may agree to a formal or informal plan of reorganization in respect of the Borrower, to include a restructuring of the Guaranteed Obligation and other applicable debt of the Borrower on such terms and conditions as the Secretary determines are in the best interest of the United States.
(a) If the Secretary exercises his or her right under the Loan Guarantee Agreement to require the holder of pledged collateral to take such actions as the Secretary (subject to any applicable Intercreditor Agreement) may reasonably require to provide for the care, preservation, protection, and maintenance of such collateral so as to enable the United States to achieve maximum recovery from the collateral, the Secretary shall, subject to compliance with the Antideficiency Act, 31 U.S.C. 1341
(b) In the event of a default, the Secretary may enter into such contracts as he determines are required or appropriate, taking into account the term of any applicable Intercreditor Agreement, to care for, preserve, protect or maintain collateral pledged in respect of Guaranteed Obligations. The cost of such contracts may be charged to the Borrower.
Each Loan Guarantee Agreement and related documents shall provide that:
(a) The Eligible Lender, or DOE in conjunction with the Federal Financing Bank where loans are funded by the Federal Financing Bank or other Holder or other party servicing the Guaranteed Obligations, as applicable, and the Borrower, shall keep such records concerning the Eligible Project as are necessary, including the Application, Term Sheet, Conditional Commitment, Loan Guarantee Agreement, Credit Agreement, mortgage, note, disbursement requests and supporting documentation, financial statements, audit reports of independent accounting firms, lists of all Eligible Project assets and non-Eligible Project assets pledged in respect of the Guaranteed Obligations, all off-take and other revenue producing agreements, documentation for all Eligible Project indebtedness, income tax returns, technology agreements, documentation for all permits and regulatory approvals, and all other documents and records relating to the Borrower or the Eligible Project, as determined by the Secretary, to facilitate an effective audit and performance evaluation of the Eligible Project; and
(b) The Secretary and the Comptroller General, or their duly authorized representatives, shall have access, for the purpose of audit and examination, to any pertinent books, documents, papers, and records of the Borrower, Eligible Lender, or DOE or other Holder or other party servicing the Guaranteed Obligation, as applicable. Such inspection may be made during regular office hours of the Borrower, Eligible Lender, DOE or other Holder, or other party servicing the Eligible Project and the Guaranteed Obligations, as applicable, or at any other time mutually convenient.
(a) Subject to the requirements of Title XVII and as otherwise permitted by applicable law, the Secretary may authorize deviations from the requirements of this part upon:
(1) Either receipt from the Applicant, Borrower, or Project Sponsor, as applicable, of—
(i) A written request that the Secretary deviate from one or more requirements; and
(ii) A supporting statement briefly describing one or more justifications for such deviation; or
(iii) A determination by the Secretary in his or her discretion to undertake a deviation;
(2) A finding by the Secretary that such deviation supports program objectives and the special circumstances stated in the request make such deviation clearly in the best interest of the Government; and
(3) If the waiver would constitute a substantial change in the financial terms of the Loan Guarantee Agreement and related documents, DOE's consultation with OMB and the Secretary of the Treasury.
(b) If a deviation under this section results in an increase in the applicable Credit Subsidy Cost, such increase shall be funded either by additional fees paid by the Borrower or on behalf of the Borrower by any third party or, if an appropriation is available, by means of an appropriations act. The Secretary has
(a) Invitations for the submission of Applications for loan guarantees for Eligible Projects shall be published on DOE's Title XVII Loan Guarantee Program website. The Title XVII Loan Guarantee Program website shall contain guidance for potential Title XVII Applicants and solicit applications for a Guarantee.
(b) The Title XVII Loan Guarantee Program website must include, at a minimum, the following guidance:
(1) The dollar amount of loan guarantee authority potentially being made available by DOE for Guarantees under Title XVII;
(2) The method and further instructions for submission of Applications;
(3) The name and address of the DOE representative whom a potential Applicant may contact to receive further information;
(4) The programmatic, technical, financial, and other factors and criteria that DOE will use to evaluate Applications, including but not limited to consideration of the Reasonable Prospect of Repayment, the amount of Equity provided, and the reliance on other Federal assistance;
(5) The required contents of the Application, which may vary by category of Eligible Project; and
(6) Such other information as DOE may deem appropriate.
(c) Using procedures as may be announced by DOE, a potential Applicant may request a meeting with DOE to discuss its potential Application. At its discretion, DOE may meet with a potential Applicant, either in person or electronically, to discuss its potential Application. DOE's responses to questions from potential Applicants and DOE's statements to potential Applicants, including any initial thoughts on the eligibility of the project, are pre-decisional and preliminary in nature. Any such responses and statements are subject in their entirety to any final action by DOE with respect to an Application submitted in accordance with § 609.4.
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule.
This final rule updates the Federal Aviation Administration (FAA) manual requirements to reflect industry use of electronic and paper manuals. The amendments apply to fractional ownership operations; domestic, flag, and supplemental operations; rules governing the operations of U.S.-registered civil airplanes which have a seating configuration of 20 or more passengers or a maximum payload capacity of 6,000 pounds or more when common carriage is not involved; and commuter and on-demand operations. This action requires manuals accessed in paper format to display the date of last revision on each page, and it requires manuals accessed in electronic format to display the date of last revision in a manner in which a person can immediately ascertain it. This action also revises the requirement for program managers or certificate holders to carry appropriate parts of the manual aboard airplanes during operations. The FAA instead requires program managers or certificate holders to ensure the appropriate parts of the manual are accessible to flight, ground, and maintenance personnel when such personnel are performing their assigned duties. Lastly, this rule updates outdated language that refers to accessing information in manuals kept in microfiche. The FAA removes this outdated language and simply requires that all manual information and instructions be displayed clearly and be retrievable in the English language.
This final rule is effective June 29, 2023.
For information on where to obtain copies of rulemaking documents and other information related to this final rule, see “Additional Information” in the
Sandra Ray, Voluntary Programs and Rulemaking Section, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone (412) 329-3088; email
The FAA is adopting without change, a notice of proposed rulemaking (NPRM),
In addition, this rulemaking clarifies in §§ 91.1023, 121.139, and 135.21 that program managers or certificate holders must ensure appropriate parts of the manual are accessible on each aircraft when the aircraft are away from their principal base of operations, in lieu of indicating that manuals must exist in any particular format. This rulemaking provides certificate holders flexibility regarding how their flight, ground, and maintenance personnel access electronic manuals and permits them to obtain information in a manner that reflects current technological capabilities.
Lastly, this rulemaking amends §§ 91.1023, 121.139, 125.71, and 135.21 to update language that requires certificate holders accessing manuals in “other than printed form” to ensure there is a “compatible reading device available to those persons that provides a legible image” or “a system that is able to retrieve the maintenance information and instructions in the English language.” The FAA replaces this outdated language with a requirement that all manual information and instructions be displayed clearly and be retrievable in the English language.
The FAA's authority to issue rules on aviation safety is found in Title 49 of the United States Code (U.S.C.). Subtitle I,
Subtitle VII of title 49, Aviation Programs, describes in more detail the scope of the FAA's authority. This rulemaking is issued under the authority described in Subtitle VII, Aviation Programs, section 44701(a)(5). Under that section, the FAA is charged with prescribing regulations and minimum standards for other practices, methods, and procedures necessary for safety in air commerce and national security. This regulation is within the scope of that authority.
Authority for this particular rulemaking is also derived from 49 U.S.C. 44701(d)(1)(A), which specifically states the Administrator, when prescribing safety regulations, must consider the duty of an air carrier to provide service with the highest possible degree of safety in the public interest. Such authority applies to the oversight the FAA exercises to ensure safety of aviation operations, including review of manual information and instructions.
FAA regulations require operators subject to part 91, subpart K, and parts 121, 125, and 135 to prepare and keep current operations manuals for use and guidance of flight, ground operations, and management personnel. These manuals must contain specific information about operations and must include the names of management personnel; copies of operations specifications; and many procedures for weight and balance calculations, accident notifications, airworthiness determinations, reporting mechanical irregularities, maintenance, and refueling.
Operators currently use electronic and internet-based technology to provide their flight, ground, and maintenance personnel with access to the manuals in a variety of formats, including electronic flight bags (EFB) and portable electronic devices (PED). Such technology has caused many operators to utilize manuals in electronic format rather than accessing paper manuals. This final rule updates FAA manual requirements to reflect industry use of electronic and paper manuals.
Current manual requirements in applicable FAA regulations do not appropriately accommodate the use of electronic manuals. Further, the requirement that some certificate holders “carry” appropriate parts of the manual on each aircraft when away from their principal base of operations is outdated and no longer necessary due to modern technology. Prior to the advent of electronic manuals and the internet, operators were required to physically carry the ground servicing and maintenance parts of the manual aboard an aircraft to ensure the manual was available to personnel at out stations or other locations away from the certificate holder's principal base of operations. Personnel at out stations did not always have their own manuals, or access to necessary manuals, so they relied on the aircraft to carry the manuals to them. Technological advancements have now rendered this prescriptive requirement unnecessary because accessing electronic manuals is significantly easier for flight, ground, and maintenance personnel. The current language requires operators accessing manuals in “other than printed form” to ensure there is a “compatible reading device available to those persons that provide a legible image” or “a system that is able to retrieve the maintenance information and instructions in the English language” is outdated. The FAA promulgated this text during an era when certificate holders used microfiche technology to store and read manual information. The existing requirements do not reflect current technology.
On July 14, 2022, the FAA published an NPRM titled “Updating Manual Requirements to Accommodate Technology.”
The NPRM provided for a 60-day comment period, which ended on September 12, 2022. The FAA received four comments from industry (National Business Aviation Association, The Cargo Airline Association, ABXAIR, and Airlines for America (A4A)) and one anonymous comment. All commenters generally supported the proposed revisions; however, A4A and the anonymous commenter recommended changes, as described in the Discussion of the Final Rule section of this preamble.
The FAA proposed to amend §§ 91.1025, 121.135, 125.73, and 135.23 to remove the requirement for the date of last revision on each page concerned as it applies to operators using electronic manuals. The FAA proposed to revise the introductory paragraphs of §§ 91.1025, 125.73, and 135.23 to state that each manual accessed in paper format must display the date of last revision on each page and that each manual accessed in electronic format must display the date of last revision in a manner in which a person can immediately ascertain it. The FAA proposed similar revisions to § 121.135, as it contains the same language requiring manuals to have the date of last revision on each page revised. Further, the FAA proposed to revise § 121.135(a) introductory text such that it includes the same regulatory text as the FAA adds to the other regulatory sections as discussed above. This rule also removes § 121.135(a)(3) because it contains the requirement to “have the date of last revision on each page concerned,” which would be duplicative of the language in § 121.135(a) introductory text. As a result, the NPRM proposed to designate § 121.135(a)(4) as § 121.135(a)(3). Finally, the FAA proposed to amend the introductory paragraph of § 125.73. While all of the above-referenced sections currently contain the requirement concerning the date of last revision on each revised page, the introductory paragraph of § 125.73 proposed to include an additional requirement that each manual has the “revision number” on each revised page.
A4A made two recommendations for changes in the final rule. First, A4A suggested that the FAA revise § 121.135 (and similar proposed sections) to replace “immediately” with “reasonably.” A4A stated this change would allow electronic manuals to have the date displayed at a location that is reasonably accessible for an ordinary person using the manual, including at the top of the section (
The FAA has considered the recommendation and determined to keep the existing language of “immediately” in the rule. The FAA's intent in using “immediately” is to require that manuals have the date of last revision readily accessible in the manual that the crewmember is using. “Immediately” means that a crewmember could scroll to find the date within the open document. The FAA determined that “reasonably” is not specific enough of a term and open to interpretation. A crewmember must be able to ascertain quickly that they are using the most current version of the manual.
A4A's second comment recommended that § 121.135 (and similar proposed sections) provide further flexibility on the requirement to “display the date of last revision” for manuals accessed in electronic format, which is a holdover requirement of paper manual systems. A4A stated that the objective of the requirement to display the date of last revision is to ensure and confirm that the technician is using the most up-to-date version of the manual. However, some operator systems have imposed revision access and control capabilities—
The FAA has considered the recommendation and has determined to adopt the revisions to §§ 91.1025, 121.135, 125.73, and 135.23 as proposed in the NPRM. The FAA is requiring that the date of last revision be present somewhere in an electronic manual and is leaving the choice of where to place that date on the air carrier. For revision control purposes, there needs to be a method to confirm that employees are using the most current manual when performing their job duties. The FAA determined that the most straightforward way to confirm use of the correct version is to display the date of revision while giving the air carrier the flexibility of determining where to put that date. Additionally, only having one version of the manual on the website does not ensure that it is the most current version.
Sections 91.1023(g), 121.139(a), 125.71(f), and 135.21(g) require that, when manuals exist in other than printed form, certificate holders must carry compatible reading devices that provide legible images of maintenance information and instructions. In addition, certificate holders must have a system that is able to retrieve the maintenance information and instructions in the English language. The FAA promulgated these requirements when certificate holders used microfiche technology to ensure the information was readable, or retrievable, in the English language.
Specifically, the NPRM proposed to amend the requirements of §§ 91.1023, 121.139, and 135.21 to reflect the ability operators now have to access manuals using electronic devices in order to download the manual or access it via the internet. The proposed amendments to §§ 91.1023, 121.139, and 135.21 give certificate holders the flexibility to use technology in providing access to the electronic manual. Specifically, this final rule removes the requirement that certificate holders “carry” appropriate parts of the manual on each airplane when away from its principal base of operations. The NPRM proposed to replace the word “carry” or “carried” in the aforementioned sections with the requirement to ensure parts of the manual associated with personnel's assigned duties are accessible for flight, ground, and maintenance personnel “at all times when those personnel are performing their duties.” This language ensures personnel always have access to the necessary information while performing their assigned duties.
The FAA acknowledges that the revisions to §§ 91.1023, 121.139, and 135.21 could result in reliability concerns regarding certificate holders' ability to maintain consistent access to its manuals,
The previously discussed amendments to § 121.139 will result in the removal of paragraphs (a) and (b), replacing them with a single paragraph. Further, the FAA proposed to amend § 121.139 by changing the section heading to read “Manual accessibility: Supplemental operations.”
The NPRM also proposed to amend §§ 91.1023(g), 121.139, 125.71(f), and 135.21(g) to require that all manual information and instructions be displayed clearly and be retrievable in the English language. Removing the compatible reading device requirement is appropriate because electronic manuals do not require a separate, compatible reading device to view the manual information. The NPRM proposed requiring all manual information and instructions be accessible to the appropriate personnel and appear in a manner in which they can read and comprehend the necessary provisions. Due to FAA's oversight of certificate holders' manuals, such manual information and instructions must be readable and retrievable in the English language for the FAA to review and approve the manual. Therefore, the requirement that all manual information and instructions under §§ 91.1023, 121.139, 125.71, and 135.21 be readable and retrievable in the English language codifies current practice and brings this regulatory requirement up-to-date.
The FAA received one comment on this proposal from an anonymous commenter. The anonymous commenter stated that the exception language in existing § 121.139(b) is very similar to the exception language in § 125.71(g). However, the FAA stated in the NPRM that the amendment to the similar requirement in § 125.71 is not needed. The commenter believed the rationale for the change in § 121.139 would appear to apply equally to § 125.71(g). The commenter suggested the FAA review § 125.71(g) again to determine if a similar change is warranted.
The FAA has reviewed the comment and the section in question and determined that no change is warranted. Under current § 121.139, certificate holders conducting supplemental operations are always required to carry manuals onboard the aircraft except if
Federal agencies consider impacts of regulatory actions under a variety of executive orders and other requirements. First, Executive Order 12866 and Executive Order 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 the costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. The current threshold after adjustment for inflation is $165 million using the most current (2021) Implicit Price Deflator for the Gross Domestic Product. This portion of the preamble summarizes the FAA's analysis of the economic impacts of this rule.
In conducting these analyses, the FAA has determined that this final rule: will result in benefits that justify costs; is not an economically “significant regulatory action” as defined in section 3(f) of Executive Order 12866; will not have a significant economic impact on a substantial number of small entities; will not create unnecessary obstacles to the foreign commerce of the United States; and will not impose an unfunded mandate on State, local, or tribal governments, or on the private sector.
The FAA estimates the rulemaking will not result in additional costs to affected operators that conduct operations under part 91, subpart K, and parts 121, 125, and 135. The rule provides flexibility for the efficient use of electronic manuals for these operators. The modified requirements also ensure consistency for manual requirements for these operators. These flexibilities may reduce the administrative costs of maintaining and providing manual accessibility to these operators. The FAA determines changes to the rule will not adversely affect safety.
This rulemaking updates the manual display requirements for these affected operators to accommodate electronic manuals. In particular, the modified rules remove the requirement to have the date of last revision on each page concerned as it applies to operators using electronic manuals. This rule adds a separate requirement to allow operators using electronic manuals flexibility in displaying the date of last revision while maintaining the existing requirement for operators with paper manuals.
This rule also revises the current requirement to physically carry appropriate parts of the manual aboard airplanes for these operators. As a result, operators will have flexibility regarding how flight, ground, and maintenance personnel use electronic manuals and can provide access to each manual's information in a manner that reflects current technological capabilities.
Based on information from industry, affected operators currently provide their flightcrew personnel with access to manuals in electronic formats, including EFBs and PEDs.
The FAA expects the incremental changes from this final rule to provide additional flexibilities to these operators for the efficient use of electronic manuals with no additional costs. These flexibilities may result in savings from avoided costs to these operators of maintaining and providing access to manuals for flightcrew, ground, and maintenance personnel. The FAA did not identify data to quantify with certainty the incremental savings of this rulemaking and the flexibilities it will provide to operators conducting operations under part 91, subpart K, and parts 125 and 135.
The Aviation Rulemaking Advisory Committee (ARAC) report provided information and insight on the potential costs and savings related to certain part 121 operators conducting operations to ensure appropriate parts of the manual are available for use by ground and maintenance personnel.
The report identified potential cost savings that would include a reduction in weight through the elimination of paper manuals compared to equipment associated with non-paper manuals and a reduction in time auditing, updating, and printing paper manuals. In the report, one A4A member reported annual costs of approximately $500,000 for operators of part 121 airplanes to create paper manuals.
The changes in this rulemaking will not have an adverse impact on safety because flightcrew members or inspectors will continue to be able to identify and ensure the manual or appropriate parts are up-to-date. Likewise, the changes to manual accessibility to these operators have no adverse impact on safety because flight, ground, and maintenance personnel have access to the necessary parts of the manual wherever these operators conduct their operations.
In addition, the FAA has determined no adverse safety implication will result from the final rule for flightcrews and other personnel because such personnel are required to have access to parts of the manual that are appropriate to their assigned duties when they are performing those duties. This rule alone will not result in new logistical issues related to connectivity because much of the current baseline maintenance activities rely on connectivity. In addition, as discussed in the ARAC report, in the unlikely event that connectivity is problematic or the on-ground electronic means is interrupted, maintenance activities will temporarily halt. While this may affect operations, it ensures that no adverse effect on safety occurs.
The Regulatory Flexibility Act (RFA) of 1980, Public Law 96-354, (5 U.S.C. 601-612), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121, 110 Stat. 857, Mar. 29, 1996) and the Small Business Jobs Act of 2010 (Pub. L. 111-240, 124 Stat. 2504, Sept. 27, 2010), requires Federal agencies to consider the effects of the regulatory action on small business and other small entities and to minimize any significant economic impact. The term “small entities” comprises small businesses and 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.
This rule removes the requirement to have the date of last revision on each page concerned, as it applies to part 91, subpart K, and parts 121, 125, and 135 operators using electronic manuals and adds a separate requirement that allows operators using electronic manuals flexibility in displaying the date of last revision, while maintaining the requirement for operators using paper manuals. This rulemaking also revises the current requirement to carry appropriate parts of the manual aboard airplanes for these operators. As a result, this rulemaking provides operators with flexibility regarding how flight, ground, and maintenance personnel access the appropriate parts of the manual. The rulemaking, therefore, enables these operators to use electronic manuals efficiently and provide access to the manual information in a manner that reflects current technological capabilities.
The rulemaking will not result in additional costs to affected operators. The rulemaking does not mandate the use of an electronic format for manuals. Rather, the rule provides flexibility for the efficient use of electronic manuals. Such flexibility may reduce administrative costs of maintaining and providing manual accessibility to these operators. In addition, the FAA estimates that some operators will not incur savings from this rule because they currently benefit from these flexibilities.
Therefore, as provided in 5 U.S.C. 605(b), the head of the FAA certifies that this rulemaking will not result in a significant economic impact on a substantial number of small entities.
The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465), 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 these Acts, 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 rulemaking and determined that it will have only a domestic impact and, therefore, will not create obstacles to the foreign commerce of the United States.
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) governs the issuance of Federal regulations that require unfunded mandates. An unfunded mandate is a regulation that requires a State, local, or tribal government or the private sector to incur direct costs without the Federal Government having first provided the funds to pay those costs. The FAA determined that this final rule will not result in the expenditure of $165 million or more by State, local, or tribal governments, in the aggregate, or the private sector, in any one year.
The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. This rule does not include any new requirement for information collection or changes to existing information collections associated with this final rule. The existing information collection associated with all part 121 manual requirements was approved under Office of Management and Budget (OMB) control number 2120-0008, Part 121 Operating Requirements: Domestic, Flag, and Supplemental Operations. The information collection estimates the cost for the original manual for original certification and the cost of manual revisions. The information collection attributes the burden associated with manual revision to § 121.133 and does not attribute any burden to § 121.139. The FAA has determined this rulemaking does not require any adjustment in the estimate of public or government burden under the Paperwork Reduction Act.
The existing information collection associated with all part 135 manual requirements was approved under OMB control number 2120-0039, Part 135—Operating Requirements: Commuter and On-demand Operations and Rules Governing Persons on Board such Aircraft. This collection attributes the burden with manuals to § 135.21. The FAA has determined this rule does not require any adjustment in the estimate of public or government burden under the Paperwork Reduction Act.
The existing information collection associated with all part 125 manual requirements was approved under OMB control number 2120-0085, Certification and Operations: Airplanes with Seating Capacity of 20 or More Passenger Seats or Maximum Payload of 6,000 Pounds or More—14 CFR part 125. This collection associates the burden with manuals to § 125.71. The FAA has determined this rulemaking does not require any adjustment in the estimate of public or government burden under the Paperwork Reduction Act.
The existing information collection associated with all 14 CFR part 91, subpart K, was approved under OMB
In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to conform to International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. The FAA has determined that there are no ICAO Standards and Recommended Practices that correspond to these regulations.
FAA Order 1050.1F identifies FAA actions that are categorically excluded from the preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act (NEPA) in the absence of extraordinary circumstances. The FAA has determined this rulemaking action qualifies for the categorical exclusion identified in paragraph 5-6.6f for regulations and involves no extraordinary circumstances.
The FAA has analyzed this final rule under the principles and criteria of Executive Order 13132, Federalism. The FAA has determined that 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 and, therefore, will not have federalism implications.
Consistent with Executive Order 13175, Consultation and Coordination with Indian Tribal Governments,
The FAA analyzed this final rule under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use. The FAA has determined that it is not a “significant energy action” under the Executive order and is not likely to have a significant adverse effect on the supply, distribution, or use of energy.
Executive Order 13609, Promoting International Regulatory Cooperation, 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.
A copy of the NPRM, all comments received, this final rule, and all background material may be viewed online at
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. Commenters must identify the docket or amendment number of this rulemaking.
All documents the FAA considered in developing this final rule, including economic analyses and technical reports, may be accessed in the electronic docket for this rulemaking.
The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 requires the 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 person listed under the
Air carriers, Air taxis, Aircraft, Airports, Aviation safety, Charter flights, Freight, Reporting and recordkeeping requirements, Transportation.
Air carriers, Aircraft, Airmen, Aviation safety, Charter flights, Reporting and recordkeeping requirements, Safety, Transportation.
Aircraft, Airmen, Aviation safety, Reporting and recordkeeping requirements.
Air taxis, Aircraft, Airmen, Aviation safety, Reporting and recordkeeping requirements.
In consideration of the foregoing, the Federal Aviation Administration amends chapter I of title 14, Code of Federal Regulations as follows:
49 U.S.C. 106(f), 106(g), 40101, 40103, 40105, 40113, 40120, 44101, 44111, 44701, 44704, 44709, 44711, 44712, 44715, 44716, 44717, 44722, 46306, 46315, 46316, 46504, 46506-46507, 47122, 47508, 47528-
The revisions read as follows:
(f) The program manager must ensure the appropriate parts of the manual are accessible to flight, ground, and maintenance personnel at all times when such personnel are performing their assigned duties.
(g) The information and instructions contained in the manual must be displayed clearly and be retrievable in the English language.
Each program operating manual accessed in paper format must display the date of last revision on each page. Each program operating manual accessed in electronic format must display the date of last revision in a manner in which a person can immediately ascertain it. Unless otherwise authorized by the Administrator, the manual must include the following:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40119, 41706, 42301 preceding note added by Pub. L. 112-95, sec. 412, 126 Stat. 89, 44101, 44701-44702, 44705, 44709-44711, 44713, 44716-44717, 44722, 44729, 44732; 46105; Pub. L. 111-216, 124 Stat. 2348 (49 U.S.C. 44701 note); Pub. L. 112-95, 126 Stat. 62 (49 U.S.C. 44732 note); Pub. L. 115-254, 132 Stat. 3186 (49 U.S.C. 44701 note).
The revision reads as follows:
(a) Each manual accessed in paper format must display the date of last revision on each page. Each manual accessed in electronic format must display the date of last revision in a manner in which a person can immediately ascertain it. Each manual required by § 121.133 must:
Each certificate holder conducting supplemental operations must ensure the appropriate parts of the manual are accessible to flight, ground, and maintenance personnel at all times when such personnel are performing their assigned duties. The information and instructions contained in the manual must be displayed clearly and be retrievable in the English language.
49 U.S.C. 106(f), 106(g), 40113, 44701-44702, 44705, 44710-44711, 44713, 44716-44717, 44722.
(f) The information and instructions contained in the manual must be displayed clearly and be retrievable in the English language.
Each manual accessed in paper format must display the date of last revision on each page. Each manual accessed in electronic format must display the date of last revision in a manner in which a person can immediately ascertain it. The manual must include:
49 U.S.C. 106(f), 106(g), 40113, 41706, 44701-44702, 44705, 44709, 44711-44713, 44715-44717, 44722, 44730, 45101-45105; Pub. L. 112-95, 126 Stat. 58 (49 U.S.C. 44730).
The revisions read as follows:
(f) The certificate holder must ensure the appropriate parts of the manual are accessible to flight, ground, and maintenance personnel at all times when such personnel are performing their assigned duties.
(g) The information and instructions contained in the manual must be displayed clearly and be retrievable in the English language.
Each manual accessed in paper format must display the date of last revision on each page. Each manual accessed in electronic format must display the date of last revision in a manner in which a person can immediately ascertain it. The manual must include:
Office of Foreign Assets Control, Treasury.
Publication of web general licenses.
The Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing four
GL 1 was issued on February 2, 2017. See
OFAC: Assistant Director for Licensing, 202-622-2480; Assistant Director for Regulatory Affairs, 202-622-4855; or Assistant Director for Sanctions Compliance & Evaluation, 202-622-2490.
This document and additional information concerning OFAC are available on OFAC's website:
On February 2, 2017, OFAC issued GL 1 to authorize certain transactions otherwise prohibited by E.O. 13694 of April 1, 2015, (“Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities,” 80 FR 18077) as amended by E.O. 13757 of December 28, 2016 (“Taking Additional Steps to Address the National Emergency With Respect to Significant Malicious Cyber-Enabled Activities,” 82 FR 1). Subsequently, OFAC issued three further iterations of GL 1: On March 15, 2018, OFAC issued GL 1A, which superseded GL 1, to authorize certain transactions otherwise prohibited by E.O. 13694 and by Section 224 of the Countering America's Adversaries Through Sanctions Act (CAATSA, 22 U.S.C. 9524); on February 17, 2021, OFAC issued GL 1B, which superseded GL 1A, to authorize certain transactions otherwise prohibited by E.O. 13694, Section 224 of CAATSA, and the Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 CFR part 544 (the WMDPSR); and on April 27, 2023, OFAC issued GL 1C, which superseded GL 1B, to authorize certain transactions otherwise prohibited by the Cyber-Related Sanctions Regulations, 31 CFR part 578 (the CRSR), the WMDPSR, and E.O. 14078 of July 19, 2022 (“Bolstering Efforts to Bring Hostages and Wrongfully Detained United States Nationals Home,” 87 FR 43389). OFAC incorporated E.O. 13694, E.O. 13757, and portions of CAATSA into the CRSR on September 6, 2022. Each GL was made available on OFAC's website (
(a) Except as provided in paragraph (b), all transactions and activities otherwise prohibited pursuant to Executive Order (E.O.) 13694 of April 1, 2015 (“Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities”), as amended by E.O. 13757 of December 28, 2016 (“Taking Additional Steps to Address the National Emergency With Respect to Significant Malicious Cyber-Enabled Activities”), are authorized that are necessary and ordinarily incident to:
(1) Requesting, receiving, utilizing, paying for, or dealing in licenses, permits, certifications, or notifications issued or registered by the Federal Security Service (a.k.a. Federalnaya Sluzhba Bezopasnosti) (a.k.a. FSB) for the importation, distribution, or use of information technology products in the Russian Federation, provided that (i) the exportation, reexportation, or provision of any goods or technology that are subject to the Export Administration Regulations, 15 CFR parts 730 through 774, is licensed or otherwise authorized by the Department of Commerce and (ii) the payment of any fees to the Federal Security Service for such licenses, permits, certifications, or notifications does not exceed $5,000 in any calendar year;
Except for the limited purposes described in paragraph (a)(l), this paragraph does not authorize the exportation, reexportation, or provision of goods or technology to or on behalf of the Federal Security Service.
(2) Complying with law enforcement or administrative actions or investigations involving the Federal Security Service; and
(3) Complying with rules and regulations administered by the Federal Security Service.
(b) This general license does not authorize:
(1) The exportation, reexportation, or provision of any goods, technology, or services to the Crimea region of Ukraine; or
(2) The transfer of any property or debiting of any account blocked pursuant to any E.O. or statute, or 31 CFR chapter V, or any transactions or dealings otherwise prohibited by any E.O. other than E.O. 13694 as amended by E.O. 13757, or any other part of 31 CFR chapter V.
Dated: February 2, 2017
(a) Except as provided in paragraph (b), all transactions and activities otherwise prohibited pursuant to Executive Order (E.O.) 13694 of April 1, 2015 (“Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities”), as amended by E.O. 13757 of December 28, 2016 (“Taking Additional Steps to Address the National Emergency With Respect to Significant Malicious Cyber- Enabled Activities”), or Section 224 of the Countering America's Adversaries Through Sanctions Act, Public Law 115-44, Aug. 2, 2017, 131 Stat. 886 (22 U.S.C. 9401
(1) Requesting, receiving, utilizing, paying for, or dealing in licenses, permits, certifications, or notifications issued or registered by the Federal Security Service (a.k.a. Federalnaya Sluzhba Bezopasnosti) (a.k.a. FSB) for the importation, distribution, or use of information technology products in the Russian Federation, provided that (i) the exportation, reexportation, or provision of any goods or technology that are subject to the Export Administration Regulations, 15 CFR parts 730 through 774, is licensed or otherwise authorized by the Department of Commerce and (ii) the payment of any fees to the Federal Security Service for such licenses, permits, certifications, or notifications does not exceed $5,000 in any calendar year;
Except for the limited purposes described in paragraph (a)(l), this paragraph does not authorize the exportation, reexportation, or provision of goods or technology to or on behalf of the Federal Security Service.
(2) Complying with law enforcement or administrative actions or investigations involving the Federal Security Service; and
(3) Complying with rules and regulations administered by the Federal Security Service.
(b) This general license does not authorize:
(1) The exportation, reexportation, or provision of any goods, technology, or services to the Crimea region of Ukraine; or
(2) The transfer of any property or debiting of any account blocked pursuant to any E.O. or statute, or 31 CFR chapter V, or any transactions or dealings otherwise prohibited by any E.O. other than E.O. 13694 as amended by E.O. 13757, any section of CAATSA other than Section 224, or any other part of 31 CFR chapter V.
(c) Effective March 15, 2018, General License No. 1, dated February 2, 2017, is replaced and superseded in its entirety by this General License No. 1A.
(a) Except as provided in paragraph (b) of this general license, all transactions and activities prohibited by Executive Order (E.O.) 13694, as amended by E.O. 13757 of December 28, 2016, the Cyber-Related Sanctions Regulations, 31 CFR part 578 (CRSR), the Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 CFR part 544 (WMDPSR), or Section 224 of the Countering America's Adversaries Through Sanctions Act (CAATSA) (22 U.S.C. 9524) involving the Federal Security Service (a.k.a. Federalnaya Sluzhba Bezopasnosti) (a.k.a. FSB) are authorized, provided that such transactions and activities are necessary and ordinarily incident to:
(1) Requesting, receiving, utilizing, paying for, or dealing in licenses, permits, certifications, or notifications issued or registered by the Federal Security Service for the importation, distribution, or use of information technology products in the Russian Federation, provided that (i) the exportation, reexportation, or provision of any goods or technology that are subject to the Export Administration Regulations, 15 CFR parts 730 through 774, is licensed or otherwise authorized by the Department of Commerce; and (ii) the payment of any fees to the Federal Security Service for such licenses, permits, certifications, or notifications does not exceed $5,000 in any calendar year;
Except for the limited purposes described in paragraph (a)(1), this paragraph does not authorize the exportation, reexportation, or provision of goods or technology to or on behalf of the Federal Security Service.
(2) Complying with law enforcement or administrative actions or investigations involving the Federal Security Service; and
(3) Complying with rules and regulations administered by the Federal Security Service.
(b) This general license does not authorize:
(1) The exportation, reexportation, or provision of any goods, technology, or services to the Crimea region of Ukraine;
(2) The transfer of any property or debiting of any account blocked pursuant to any E.O., statute, or 31 CFR chapter V; or
(3) Any transactions or activities otherwise prohibited by the CRSR, the WMDPSR, or any other part of 31 CFR chapter V; any E.O. other than E.O. 13694, as amended by E.O. 13757; any statute other than Section 224 of CAATSA; or any transactions or activities with any blocked person other than the blocked person described in paragraph (a) of this general license.
(c) Effective March 2, 2021, General License No. 1A, dated March 15, 2018, is replaced and superseded in its entirety by this General License No. 1B.
Dated: March 2, 2021
(a) Except as provided in paragraph (b) of this general license, all transactions prohibited by the Cyber-Related Sanctions Regulations, 31 CFR part 578 (CRSR), the Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 CFR part 544 (WMDPSR), or Executive Order (E.O.) 14078, involving the Federal Security Service (a.k.a. Federalnaya Sluzhba Bezopasnosti) (a.k.a. FSB) are authorized, provided that such transactions are ordinarily incident and necessary to:
(1) Requesting, receiving, utilizing, paying for, or dealing in licenses, permits, certifications, or notifications issued or registered by the Federal Security Service for the importation, distribution, or use of information technology products in the Russian Federation, provided that (i) the exportation, reexportation, or provision of any goods or technology that are subject to the Export Administration Regulations, 15 CFR parts 730 through 774, is licensed or otherwise authorized by the Department of Commerce; and (ii) the payment of any fees to the Federal Security Service for such licenses, permits, certifications, or notifications does not exceed $5,000 in any calendar year;
Except for the limited purposes described in paragraph (a)(1), this paragraph does not authorize the exportation, reexportation, or provision of goods or technology to or on behalf of the Federal Security Service.
(2) Complying with law enforcement or administrative actions or investigations involving the Federal Security Service; or
(3) Complying with rules and regulations administered by the Federal Security Service.
(b) This general license does not authorize:
(1) The transfer of any property or debiting of any account blocked
(2) Any transactions otherwise prohibited by the CRSR, the WMDPSR, or E.O. 14078, including transactions with any blocked person other than the blocked person described in paragraph (a) of this general license, unless separately authorized.
(c) Effective April 27, 2023, General License No. 1B, dated February 17, 2021, is replaced and superseded in its entirety by this General License No. 1C.
The exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any goods, services, or technology to the so-called “Donetsk People's Republic” or “Luhansk People's Republic” (DNR/LNR) regions of Ukraine, or such other regions of Ukraine as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, pursuant to E.O. 14065, or to the Crimea region of Ukraine remains prohibited pursuant to authorities implemented by the Ukraine-/Russia-Related Sanctions Regulations, 31 CFR part 589, among others.
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone for certain navigable waters in the Laguna Madre. The safety zone is needed to protect personnel, vessels, and the marine environment from potential hazards created by a firework display launched from a barge in the Laguna Madre, South Padre Island, Texas. Entry of vessels or persons into this zone is prohibited unless specifically authorized by the Captain of the Port Sector Corpus Christi or a designated representative.
This rule is effective from 9:30 p.m. through 11:59 p.m. on May 28, 2023.
If you have questions on this rule, call or email Lieutenant Commander Anthony Garofalo, Sector Corpus Christi Waterways Management Division, U.S. Coast Guard; telephone 361-939-5130, email
The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. We must establish this safety zone immediately to protect personnel, vessels, and the marine environment from potential hazards created by the fireworks display and lack sufficient time to provide a reasonable comment period and then to consider those comments before issuing the rule.
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
The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034. The Captain of the Port Sector Corpus Christi (COTP) has determined that potential hazards associated with the fireworks display from 9:30 p.m. through 11:59 p.m. on May 28, 2023, will be a safety concern for anyone within the waters of the Laguna Madre area with a 700 yard radius from the following point; 26°6′02.1″ N, 97°10′17.7″ W. The purpose of this rule is to ensure safety of vessels and persons on these navigable waters in the safety zone while the display of the fireworks takes place in the Laguna Madre.
This rule establishes a temporary safety zone from 9:30 p.m. through 11:59 p.m. on May 28, 2023. The safety zone will encompass certain navigable waters of the Laguna Madre and is defined by a 700-yard radius around the launching platform. The regulated area encompasses a 700-yard radius from the following point; 26°6′02.1″ N, 97°10′17.7″ W. The fireworks display will take place in waters of the Laguna Madre. No vessel or person is permitted to enter the temporary safety zone during the effective period without obtaining permission from the COTP or a designated representative, who may be contacted on Channel 16 VHF-FM (156.8 MHz) or by telephone at 361-939-0450. The Coast Guard will issue Broadcast Notices to Mariners, Local Notices to Mariners, and/or Safety Marine Information Broadcasts, as appropriate.
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, and duration of the safety zone. The temporary safety zone will be enforced for a short period of 2.5 hours. The zone is limited to a 700-yard radius from the launching position of in the navigable
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 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 temporary 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 contact the person listed in the
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. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the
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, 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 establishment of a temporary safety zone for navigable waters of the Laguna Madre in a zone defined by a 700 yard radius from the following coordinate: 26°6′02.1″ N, 97°10′17.7″ W. The safety zone is needed to protect personnel, vessels, and the marine environment from potential hazards created by fireworks display in the waters of the Laguna Madre. It is categorically excluded from further review under paragraph L60 of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A record of environmental consideration is not necessary, but will be provided if needed.
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
46 U.S.C. 70034, 70051, 70124; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 00170.1, Revision No. 01.3.
(a)
(b)
(c)
(2) If permission is granted, all persons and vessels shall comply with the instructions of the COTP or designated representative.
(d)
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is approving, as a revision to the Illinois State Implementation Plan (SIP), the state's plan for maintaining the 1997 ozone National Ambient Air Quality Standard (NAAQS or standard) through 2032 in St. Louis, MO-IL area. The original St. Louis nonattainment area for the 1997 ozone standard included Jersey, Madison, Monroe and St. Clair Counties in Illinois and Franklin, Jefferson, St. Charles and St. Louis Counties and St. Louis City in Missouri. The SIP, submitted by the Illinois Environmental Protection Agency (IEPA) on August 24, 2022, addresses the second maintenance plan required for Jersey County, Illinois. EPA proposed to approve this action on March 14, 2023 and received no adverse comments.
This final rule is effective on June 29, 2023.
EPA has established a docket for this action under Docket ID No. EPA-R05-OAR-2022-0744. All documents in the docket are listed on the
Kathleen D'Agostino, Attainment Planning and Maintenance Section, Air Programs Branch (AR-18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 886-1767,
Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.
On March 14, 2023, EPA proposed to approve Illinois' plan for maintaining the 1997 ozone NAAQS through 2032 in the St. Louis Area (88 FR 15629). An explanation of the Clean Air Act (CAA) requirements, a detailed analysis of the revisions, and EPA's reasons for proposing approval were provided in the notice of proposed rulemaking and will not be restated here. The public comment period for this proposed rule ended on April 13, 2023. EPA received no comments on the proposal.
EPA is approving the Jersey County second maintenance plan for the 1997 ozone NAAQS, submitted by IEPA on August 24, 2022, as a revision to the Illinois SIP. The second maintenance plan is designed to keep the St. Louis area in attainment of the 1997 ozone NAAQS through 2032.
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 14094 (88 FR 21879, April 11, 2023);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• 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
• 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 subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it approves a state program;
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and
• 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.
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Executive Order 12898 (Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial.
IEPA did not evaluate environmental justice considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. EPA did not perform an EJ analysis and did not consider EJ in this action. Due to the nature of the action being taken here, this action is expected to have a neutral to positive impact on the air quality of the affected area. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goal of E.O. 12898 of achieving environmental justice for people of color, low-income populations, and Indigenous peoples.
This action is subject to the Congressional Review Act, and EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).
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 July 31, 2023. 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 may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Volatile organic compounds.
For the reasons stated in the preamble, title 40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(e) * * *
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is approving, under the Clean Air Act (CAA), revised sulfur dioxide (SO
This final rule is effective on June 29, 2023.
EPA has established a docket for this action under Docket ID No. EPA-R05-OAR-2022-0477. All documents in the docket are listed on the
Tyler Salamasick, Control Strategies Section, Air Programs Branch (AR18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 886-6206,
Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.
On January 26, 2023 (88 FR 4935), EPA proposed to approve revisions to Ohio's SO
EPA is approving revisions and rescissions to OAC 3745-18 submitted by Ohio on May 23, 2022, with the exception of selected paragraphs in OAC 3745-18-04. Specifically, EPA is approving Ohio rules OAC 3745-18-01 through OAC 3745-18-06 [with the exception of OAC 3745-18-04(D)(2), (D)(3), (D)(5), (D)(6), (E)(2), (E)(3), and (E)(4)], OAC 3745-18-08, OAC 3745-18-10, OAC 3745-18-11, OAC 3745-18-15, OAC 3745-18-23, OAC 3745-18-24, OAC 3745-18-26, OAC 3745-18-28, OAC 3745-18-31, OAC 3745-18-33, OAC 3745-18-35, OAC 3745-18-37, OAC 3745-18-47, OAC 3745-18-49, OAC 3745-18-53, OAC 3745-18-54, OAC 3745-18-56, OAC 3745-18-61, OAC 3745-18-63, OAC 3745-18-68, OAC 3745-18-69, OAC 3745-18-77, OAC 3745-18-78, OAC 3745-18-80, OAC 3745-18-82 through OAC 3745-18-85, OAC 3745-18-91, and OAC 3745-18-92, as effective on February 2, 2022. EPA is removing Ohio rules OAC 3745-18-07, OAC 3745-18-09, OAC 3745-18-12 through OAC 3745-18-14, OAC 3745-18-16 through OAC 3745-18-22, OAC 3745-18-25, OAC 3745-18-27, OAC 3745-18-29, OAC 3745-18-30, OAC 3745-18-32, OAC 3745-18-34, OAC 3745-18-36, OAC 3745-18-38 through OAC 3745-18-46, OAC 3745-18-48, OAC 3745-18-50 through OAC 3745-18-52, OAC 3745-18-55, OAC 3745-18-57 through OAC 3745-18-60, OAC 3745-18-62, OAC 3745-18-64, OAC 3745-18-65, OAC 3745-18-67, OAC 3745-18-70 through OAC 3745-18-76, OAC 3745-18-79, OAC 3745-18-81, OAC 3745-18-86 through OAC 3745-18-89, OAC 3745-18-93, and OAC 3745-18-94. EPA is taking no action on OAC 37-18-04(D)(2), (D)(3), (D)(5), (D)(6), (E)(2), (E)(3), and (E)(4). These paragraphs have not been previously approved by EPA and are outside the cleanup intent of this final SIP revision.
In this rule, 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 the Ohio Sulfur Dioxide Regulations described in section II of this preamble and set forth in the amendments to 40 CFR part 52 below. EPA has made, and will continue to make, these documents generally available through
Also in this document, as described in section II of this preamble and set forth in the amendments to 40 CFR part 52 below, EPA is removing provisions of the EPA-Approved Ohio Regulations and Statutes from the Ohio State Implementation Plan, which is incorporated by reference in accordance with the requirements of 1 CFR part 51.
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 14094 (88 FR 21879, April 11, 2023);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• 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
• 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 subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it approves a state program;
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and
• 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.
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Executive Order 12898 (Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”
The Ohio EPA did not evaluate environmental justice considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. EPA did not perform an EJ analysis and did not consider EJ in this action. Due to the nature of the action being taken here, this action is expected to have a neutral to positive impact on the air quality of the affected area. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goal of E.O. 12898 of achieving environmental justice for people of color, low-income populations, and Indigenous peoples.
This action is subject to the Congressional Review Act, and EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).
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 July 31, 2023. 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 may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Sulfur oxides.
For the reasons stated in the preamble, title 40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(c) * * *
Environmental Protection Agency (EPA).
Final rule; correction.
The Environmental Protection Agency (EPA) is correcting a final rule that was published in the
This correction is effective May 30, 2023. On March 29, 2023, the Director of the Federal Register approved the material listed in this correction for incorporation by reference as of May 30, 2023.
The EPA has established a docket for this action under Docket ID No. EPA-HQ-OAR-2020-0556. All documents in the docket are listed on the
Mrs. Lula H. Melton, Office of Air Quality Planning and Standards, Air Quality Assessment Division (E143-02), Environmental Protection Agency, Research Triangle Park, NC 27711; telephone number: (919) 541-2910; fax number: (919) 541-0516; email address:
In the final rule published on March 29, 2023 (88 FR 18396), the following correction to an amendatory instruction to “Part 60—Standards of Performance for New Stationary Sources, Subpart A—General Provisions” is made.
In FR Doc. 2023-04956, appearing on page 18396 in the
The revisions and addition read as follows:
(h) * * *
(187) ASTM D6216-20, Standard Practice for Opacity Monitor Manufacturers to Certify Conformance with Design and Performance Specifications, approved September 1, 2020; IBR approved for appendix B to part 60.
(201) ASTM D6784-02 (Reapproved 2008), Standard Test Method for Elemental, Oxidized, Particle-Bound and Total Mercury in Flue Gas Generated from Coal-Fired Stationary Sources (Ontario Hydro Method), approved April 1, 2008; IBR approved for § 60.56c(b).
(202) ASTM D6784-16, Standard Test Method for Elemental, Oxidized, Particle-Bound and Total Mercury in Flue Gas Generated from Coal-Fired Stationary Sources (Ontario Hydro Method), approved March 1, 2016; IBR approved for appendix B to part 60.
Federal Communications Commission.
Final rule.
In this document, the Federal Communications Commission (the FCC or Commission), amends a rule to announce mandatory use of the CALEA Electronic Filing System (CEFS), which is available at:
Effective June 29, 2023.
Rosemary Cabral, Attorney Advisor, Policy and Licensing Division, Public Safety and Homeland Security Bureau, at (202) 418-0662 or
This is a summary of the Commission's Order in PS Docket No. 22-217, DA 23-392, adopted and released on May 15, 2023. The full text of this document is available at
The Commission has determined, and the Administrator of the Office of Information and Regulatory Affairs (OIRA), Office of Management and Budget (OMB), concurs, that this rule is non-major under the Congressional Review Act, 5 U.S.C. 804(2). The Commission will send a copy of this Order to Congress and the Government Accountability Office pursuant to 5 U.S.C. 801(a)(1)(A).
Under Section 604(a) of the Regulatory Flexibility Act, the Bureau is not required to prepare a final regulatory flexibility analysis because the Order does not require notice-and-comment rulemaking. Although not required in this particular situation, we are optionally including a Final Regulatory Flexibility Certification in this order since an Initial Regulatory Flexibility Certification was included in the
This document does not adopt or propose new or substantively modified information collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any new or modified information collection burden for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198,
Section 105 of the Communications Assistance for Law Enforcement Act, 47 U.S.C. 1004, and section 229(b) of the Communications Act, 47 U.S.C. 229(b), require all covered entities to file System Security and Integrity (SSI) Plans with the Federal Communications Commission (Commission). The Commission first specified the requirements for telecommunications carriers' SSI Plans in 1999. Pursuant to § 1.20005 of the Commission's rules, all providers subject to CALEA must file their SSI Plans prior to commencing service and must re-file a complete updated SSI Plan within 90 days following any changes to information contained in a previously-filed SSI Plan. All SSI Plans must contain all information listed under §§ 1.20003 and 1.20004 of the Commission's rules.
On June 1, 2022, the Public Safety and Homeland Security Bureau (Bureau) announced the launch of CEFS, which allows covered entities to file System Security and Integrity Policies and Procedures Documents (SSI Plans) confidentially and securely online, eliminating the need for paper filing. Filers that seek to file confidentially or to preserve the confidentiality of a piece of information in a filing may still request such treatment under § 0.459 of the Commission's rules. Also, CEFS operates on a platform that links to the Commission Registration System (CORES) to reduce the need for filers to re-enter basic information that CORES users have already provided to the Commission. The new system will allow users to file SSI Plans electronically and, once they have electronically filed a plan in CEFS, to log back in to CEFS and retrieve and view that filing. CEFS encourages timely filings of new SSI Plans and updated SSI Plans and reduces the risk of filing errors that require re-submission.
In the
On December 12, 2022, the Bureau announced the availability of CEFS for voluntary filing of SSI Plans. During this time, the Bureau began accepting SSI Plans that were filed in CEFS voluntarily, and implementing enhancements to ensure that CEFS is operating effectively and efficiently when mandatory electronic filing takes effect.
Over the past decades, the Commission has made significant progress to upgrade and modernize its filing procedures. Given the well-established benefits of electronic filing, in this Order, we amend our rules to require the electronic filing of SSI Plans through the new database, CEFS. Specifically, the order amends § 1.20005 to announce mandatory use of the CALEA Electronic Filing System (CEFS) to file SSI Plans electronically. The new CEFS database will reduce the overall burden associated with these filings as well as increase the efficiency of our administrative processes significantly.
Communications common carriers, Reporting and recordkeeping requirements, Telecommunications.
For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 1 as follows:
47 U.S.C. chs. 2, 5, 9, 13; 28 U.S.C. 2461 note, unless otherwise noted.
(a) Each telecommunications carrier shall file with the Commission the policies and procedures it uses to comply with the requirements of this subpart. These policies and procedures shall be filed before commencing service and, thereafter, within 90 days of a carrier's merger or divestiture or a carrier's amendment of its existing policies and procedures.
(c) As of June 29, 2023, any filings required by paragraph (a) of this section shall be submitted electronically through the Commission's CALEA Electronic Filing System (CEFS).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; retention limit adjustment.
NMFS is adjusting the General category bluefin tuna (BFT) daily retention limit from the default of one large medium or giant BFT to three large medium or giant BFT. This daily retention limit applies to Atlantic Tunas General category (commercial) permitted vessels and Highly Migratory Species (HMS) Charter/Headboat permitted vessels with a commercial sale endorsement when fishing commercially for BFT. This adjustment will be effective for the June through August time period until further modified.
Effective June 1, 2023, through August 31, 2023, or until NMFS announces via an action in the
Larry Redd, Jr.,
Atlantic HMS fisheries, including BFT fisheries, are managed under the authority of the Atlantic Tunas Convention Act (ATCA; 16 U.S.C. 971
As described in § 635.27(a), the current baseline U.S. BFT quota is 1,316.14 metric tons (mt) (not including the 25 mt ICCAT allocated to the United States to account for bycatch of BFT in pelagic longline fisheries in the Northeast Distant Gear Restricted Area). The General category baseline quota is 710.7 mt. This baseline quota is further subdivided into subquotas by time period. The baseline subquota for the June through August time period is 355.4 mt. The default General category daily retention limit is one large medium or giant BFT (measuring 73 inches (185 cm) curved fork length (CFL) or greater) per vessel per day/trip and applies to General category permitted vessels and to HMS Charter/Headboat permitted vessels (when fishing commercially for BFT) (§ 635.23(a)(2)).
Under § 635.23(a)(4), NMFS may increase or decrease the daily retention limit of large medium and giant BFT over a range of zero to five BFT per vessel after considering the regulatory determination criteria under § 635.27(a)(7).
NMFS has considered all of the relevant determination criteria and their applicability to the General category BFT retention limit for the June through August time period. After considering these criteria, NMFS has decided to increase the daily retention limit from one to three large medium or giant BFT per vessel per day/trip (
Regardless of the duration of a fishing trip, the daily retention limit applies upon landing. For example (and specific to the June through August time period limit), whether a vessel fishing under the General category retention limit takes a 2-day trip or makes two trips in 1 day, the daily limit of three fish may not be exceeded upon landing. This General category retention limit is effective in all areas, except for the Gulf of Mexico, where NMFS prohibits targeting fishing for BFT, and applies to those vessels permitted in the General category, as well as to those HMS Charter/Headboat permitted vessels with a commercial sale endorsement when fishing commercially for BFT.
Regarding the usefulness of information obtained from catches in the particular category for biological sampling and monitoring of the status of the stock (§ 635.27(a)(7)(i)), biological samples collected from BFT landed by General category fishermen and provided by BFT dealers continue to provide NMFS with valuable parts and data for ongoing scientific studies of BFT age and growth, migration, and reproductive status. Additional opportunity to land BFT would support the continued collection of a broad range of data for these studies and for stock monitoring purposes.
NMFS also considered the catches of the General category quota to date and the likelihood of closure of the General category if no adjustment is made (§ 635.27(a)(7)(ii)). Commercial-size BFT are anticipated to migrate to the fishing grounds off the northeast U.S. coast by early June. Given the typically slow catch rates in early June, it is unlikely that increasing the retention limit from one BFT to three BFT per vessel for a short period of time would result in the subquota for the June through August time period to be reached. If catch rates increase, NMFS could take another action to reduce the trip limit to ensure the fishery would remain open throughout the June through August time period. In 2022, NMFS took similar action to increase the retention limit to three BFT per vessel in the first part of the June through August time period (87 FR 32094, May 27, 2022). When catch rates increased in late June, NMFS reduced the retention limit from three BFT per vessel back to the default limit of one BFT per vessel (87 FR 38673, June 29, 2022). NMFS found that when the retention limit was three BFT per vessel, the vast majority of successful trips (
NMFS also considered the effects of the adjustment on the BFT stock and the effects of the adjustment on accomplishing the objectives of the 2006 Consolidated HMS FMP (§ 635.27(a)(8)(v) and (vi)). This retention limit adjustment would be consistent with established quotas and subquotas, which are implemented consistent with ICCAT Recommendation 22-10, ATCA, and the objectives of the 2006 Consolidated HMS FMP and amendments. In establishing these quotas and subquotas and associated management measures, ICCAT and NMFS considered the best scientific information available, objectives for stock management and status, and effects on the stock. This retention limit adjustment is in line with the established management measures and stock status determinations. It is also important that NMFS limit landings to the subquotas both to adhere to the subquota allocations and to ensure that landings are as consistent as possible with the pattern of fishing mortality (
Another principal consideration in setting the retention limit is the objective of providing opportunities to harvest the available General category quota without exceeding the annual quota. This consideration is based on the objectives of the 2006 Consolidated HMS FMP and its amendments, and includes achieving optimum yield on a continuing basis and optimizing the ability of all permit categories to harvest available BFT quota allocations (related to § 635.27(a)(7)(x)). NMFS anticipates that General category participants in all areas and time periods will have opportunities to harvest the General category quota in 2023, through proactive inseason management such as retention limit adjustments and/or the timing and amount of quota transfers (based on consideration of the determination criteria regarding inseason adjustments), as practicable. As discussed above, NMFS will closely monitor General category catch rates associated with the various authorized gear types (
A limit lower than three fish at the start of the June through August time period could result in diminished fishing opportunities for those General category vessels using harpoon gear, based on past fish behavior early in the season. Lower limits may also result in effort shifts from the General category to the Harpoon category, which could result in premature closure of the Harpoon category (related to § 635.27(a)(7)(iv)), and, potentially, additional inseason adjustments. General category harpoon landings have averaged less than 5 percent of the General category landings in recent years and these landings occur early in the season. A three-fish retention limit for an appropriate period of time will provide a greater opportunity to harvest the June through August subquota with harpoon gear in the General category while maintaining equitable distribution of fishing opportunities for harpoon and rod and reel General category participants.
Given these considerations, NMFS has determined that a three-fish General category retention limit is warranted for the beginning of the June through August time period. This retention limit would provide a reasonable opportunity to harvest the available U.S. BFT quota (including the expected increase in available 2023 quota based on 2022 underharvest), without exceeding it, while maintaining an equitable
NMFS will continue to monitor the BFT fishery closely. Dealers are required to submit landing reports within 24 hours of a dealer receiving BFT. Late reporting by dealers compromises NMFS' ability to timely implement actions such as quota and retention limit adjustment, as well as closures, and may result in enforcement actions. Additionally, and separate from the dealer reporting requirement, General and HMS Charter/Headboat vessel owners are required to report their own catch of all BFT retained or discarded dead, within 24 hours of the landing(s) or end of each trip, by accessing
Depending on the level of fishing effort and catch rates of BFT, NMFS may determine that additional adjustments are necessary to ensure available quota is not exceeded or to enhance scientific data collection from, and fishing opportunities in, all geographic areas. If needed, subsequent adjustments will be published in the
NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act and regulations at 50 CFR part 635 and is exempt from review under Executive Order 12866.
The Assistant Administrator for NMFS (AA) finds that pursuant to 5 U.S.C. 533(b)(B), there is good cause to waive prior notice and opportunity to provide comment on this action, as notice and comment would be impracticable and contrary to this action for the following reasons. Specifically, the regulations implementing the 2006 Consolidated HMS FMP and amendments provide for inseason retention limit adjustments to respond to the unpredictable nature of BFT availability on the fishing grounds, the migratory nature of this species, and the regional variations in the BFT fishery. Providing prior notice and an opportunity for public comment on the change in the daily retention limit from the default level for the June through August time period would be impracticable. Based on available BFT quotas, fishery performance in recent years, and the availability of BFT on the fishing grounds, responsive adjustment to the General category BFT daily retention limit from the default level is warranted to allow fishermen to take advantage of availability of fish and of quota. NMFS could not have proposed these actions earlier, as it needed to consider and respond to updated data and information about fishery conditions and this year's landings. If NMFS was to offer a public comment period now, after having appropriately considered that data, it would preclude fishermen from harvesting BFT that are legally available consistent with all of the regulatory criteria, and/or could result in selection of a retention limit inappropriate to the amount of quota available for the period.
Fisheries under the General category daily retention limit will commence on June 1 and thus prior notice would be contrary to the public interest. Delays in increasing these retention limits would adversely affect those General and Charter/Headboat category vessels that would otherwise have an opportunity to harvest more than the default retention limit of one BFT per day/trip and may result in low catch rates and quota rollovers. Analysis of available data shows that adjustment to the BFT daily retention limit from the default level would result in minimal risks of exceeding the ICCAT-allocated quota. NMFS provides notification of retention limit adjustments by publishing the action in the
Adjustment of the General category retention limit needs to be effective June 1, 2023, or as soon as possible thereafter, to minimize any unnecessary disruption in fishing patterns, to allow the impacted sectors to benefit from the adjustment, and to not preclude fishing opportunities for fishermen in geographic areas with access to the fishery only during this time period. Foregoing opportunities to harvest the respective quotas may have negative social and economic impacts for U.S. fishermen that depend upon catching the available quota within the time periods designated in the 2006 Consolidated HMS FMP and amendments.
For all of the above reasons, the AA finds that pursuant to 5 U.S.C. 553(d), there is also good cause to waive the 30-day delay in effective date.
16 U.S.C. 971
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend Very High Frequency (VHF) Omnidirectional Range (VOR) Federal airway V-233 and revoke VOR Federal airway V-320. The FAA is proposing this action due to the planned decommissioning of the VOR portion of the Mount Pleasant, MI (MOP), VOR/Distance Measuring Equipment (VOR/DME) navigational aid (NAVAID). The Mount Pleasant VOR is being decommissioned in support of the FAA's VOR Minimum Operational Network (MON) program.
Comments must be received on or before July 14, 2023.
Send comments identified by FAA Docket No. FAA-2023-1203 and Airspace Docket No. 23-AGL-12 using any of the following methods:
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FAA Order JO 7400.11G, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Colby Abbott, Rules and Regulations Group, Office of Policy, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591; telephone: (202) 267-8783.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would modify the National Airspace System (NAS) as necessary to preserve the safe and efficient flow of air traffic.
The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should submit only one time if comments are filed electronically, or commenters should send only one copy of written comments if comments are filed in writing.
The FAA will file in the docket all comments it receives, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, the FAA will consider all comments it receives on or before the closing date for comments. The FAA will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. The FAA may change this proposal in light of the comments it receives.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Operations office (see
VOR Federal airways are published in paragraph 6010(a) of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document proposes to amend the current version of that order, FAA Order JO 7400.11G, dated August 19, 2022, and effective September 15, 2022. These updates would be published in the next update to FAA Order JO 7400.11. That order is publicly available as listed in the
FAA Order JO 7400.11G lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.
The FAA is planning to decommission the VOR portion of the Mount Pleasant, MI (MOP), VOR/DME in March 2024. The Mount Pleasant VOR was one of the candidate VORs identified for discontinuance by the FAA's VOR MON program and listed in the final policy statement notice, “Provision of Navigation Services for the Next Generation Air Transportation System (NextGen) Transition to Performance-Based Navigation (PBN) (Plan for Establishing a VOR Minimum Operational Network),” published in the
Although the VOR portion of the Mount Pleasant VOR/DME is planned for decommissioning, the co-located DME portion of the NAVAID is being retained to support current and future NextGen PBN flight procedure requirements.
The Air Traffic Service (ATS) routes affected by the Mount Pleasant VOR decommissioning are VOR Federal airways V-233 and V-320. The remaining ground-based NAVAID coverage in the area is insufficient to enable the continuity of the airways within the affected area. As such, the FAA proposes to remove the affected portion of V-233 and expand the existing gap in the airway, and to revoke V-320 in its entirety.
To address the proposed removal of the affected airway segment of V-233 and the revocation of V-320, instrument flight rules traffic could use adjacent VOR Federal airways V-78, V-133, V-420, and V-609, or receive air traffic control (ATC) radar vectors to fly through or around the affected area. Aircraft equipped with Area Navigation (RNAV) capabilities could also use RNAV route T-265 or file point to point through the affected area using the fixes and waypoints that will remain in place. Visual flight rules pilots who elect to navigate via the affected ATS routes could also take advantage of the adjacent VOR Federal airways or ATC services listed previously.
The FAA is proposing an amendment to 14 CFR part 71 by amending VOR Federal airway V-233 and revoking VOR Federal airway V-320 due to the planned decommissioning of the VOR portion of the Mount Pleasant, MI, VOR/DME. The proposed airway actions are described below.
The NAVAID radials in the VOR Federal airway V-233 description in the Proposed Amendment section below are unchanged and stated in degrees True north.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
From Spinner, IL; INT Spinner 061° and Roberts, IL, 233° radials; Roberts; Knox, IN; to Goshen, IN. From Gaylord, MI; to Pellston, MI.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend the Class E airspace at Rush City, MN. The FAA is proposing this action as the result of an airspace review caused by the decommissioning of the Rush City non-directional beacon (NDB). The geographic coordinates of the airport would also be updated to coincide with the FAA's aeronautical database.
Comments must be received on or before July 14, 2023.
Send comments identified by FAA Docket No. FAA-2023-0919 and Airspace Docket No. 23-AGL-11 using any of the following methods:
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FAA Order JO 7400.11G, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Rebecca Shelby, Federal Aviation Administration, Operations Support Group, Central Service Center, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone (817) 222-5857.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend the Class E airspace extending upward from 700 feet above the surface at Rush City Regional Airport, Rush City, MN, to support instrument flight rule (IFR) operations at this airport.
The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should submit only one time if comments are filed electronically, or commenters should send only one copy of written comments if comments are filed in writing.
The FAA will file in the docket all comments it receives, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, the FAA will consider all comments it received on or before the closing date for comments. The FAA will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or dely. The FAA may change this proposal in light of the comments it receives.
An electronic copy of this document may be downloaded through the internet at
You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the
Class E airspace is published in paragraph 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document proposes to amend the current version of that order, FAA Order JO 7400.11G, dated August 19, 2022, and effective September 15, 2022. These updates would be published subsequently in the next update to FAA Order JO 7400.11. That order is publicly available as listed in the
FAA Order JO 7400.11G lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.
The FAA is proposing an amendment to 14 CFR part 71 by modifying the Class E airspace extending upward from 700 feet above the surface to within a 6.4-mile (decreased from a 6.5-mile) radius of Rush City Regional Airport, Rush City, MN; removing the Rush City NDB from the airspace legal description; and updating the geographic coordinates of the airport to coincide with the FAA's aeronautical database.
This action is the result of an airspace review caused by the decommissioning of the Rush City NDB which provided navigation information for the instrument procedures at this airport.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from 700 feet above the surface within a 6.4-mile radius of Rush City Regional Airport.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; request for comments.
NMFS proposes regulations to implement Amendment 51 to the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP), as prepared and submitted by the South Atlantic Fishery Management Council (Council). For snowy grouper, this proposed rule would revise the sector annual catch limits (ACLs), commercial seasonal quotas, recreational fishing season, and recreational accountability measures (AMs). In addition, Amendment 51 would revise the acceptable biological catch (ABC), annual optimum yield (OY), and sector allocations of the total ACL. The purpose of this proposed rule and Amendment 51 is to end overfishing of snowy grouper, rebuild the stock, and achieve OY while minimizing, to the extent practicable, adverse social and economic effects.
Written comments must be received by June 29, 2023.
You may submit comments on the proposed rule, identified by “NOAA-NMFS-2023-0026,” by either of the following methods:
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An electronic copy of Amendment 51, which includes a fishery impact statement and a regulatory impact review, may be obtained from the Southeast Regional Office website at
Rick DeVictor, telephone: 727-824-5305, or email:
The South Atlantic snapper-grouper fishery includes snowy grouper and is managed under the FMP. The FMP was prepared by the Council and is implemented by NMFS through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).
The Magnuson-Stevens Act requires that NMFS and the regional fishery management councils prevent overfishing and achieve, on a continuing basis, the OY from federally managed fish stocks. These mandates are intended to ensure that fishery resources are managed for the greatest overall benefit to the Nation, particularly with respect to providing food production and recreational opportunities and protecting marine ecosystems. To further this goal, the Magnuson-Stevens Act requires fishery managers to minimize bycatch and
All weights described in this proposed rule are in gutted weight.
In 2004, a stock assessment for snowy grouper was completed through the Southeast Data, Assessment, and Review (SEDAR) process (SEDAR 4), and it was determined that the stock was subject to overfishing and overfished. As a result of that stock status, Amendment 13C to the FMP established management measures to end overfishing (71 FR 55096, September 21, 2006) and Amendment 15A to the FMP established a rebuilding plan for snowy grouper (73 FR 14942, March 20, 2008). The rebuilding plan year started in 2006 with a target time to rebuild snowy grouper of 34 years.
The snowy grouper stock was assessed again in 2013 through SEDAR 36 and was determined to not be undergoing overfishing, although the stock was overfished but rebuilding. In response to the assessment and a subsequent ABC recommendation by the Council's Scientific and Statistical Committee (SSC), the Council and NMFS implemented management actions through the final rule for Regulatory Amendment 20 to the FMP (80 FR 43033, July 21, 2015). Regulatory Amendment 20 and its implementing final rule modified the ACL by setting it equal to the ABC and OY, increased the commercial trip limit to 200 lb (91 kg), and modified the recreational fishing season from the calendar year to May through August.
The most recent SEDAR stock assessment for South Atlantic snowy grouper (SEDAR 36 Update) was completed in 2021 and included data through 2018. The assessment used revised estimates for recreational catch from the Marine Recreational Information Program (MRIP) based on the Fishing Effort Survey (FES). In 2018, the MRIP fully transitioned its estimation of recreational effort to the mail-based FES. Previous estimates of recreational catch for snowy grouper were made using MRIP's Coastal Household Telephone Survey (CHTS) phone call-based methodology. As explained in Amendment 51, total recreational fishing effort estimates generated from the MRIP FES are different than those from the MRIP CHTS and earlier survey methods. This difference in estimates is because MRIP FES is designed to more accurately measure fishing activity, not because there was a sudden change in fishing effort. The MRIP FES is considered a more reliable estimate of recreational effort by the Council's SSC, the Council, and NMFS, and more robust compared to the MRIP CHTS method. The SSC reviewed the SEDAR 36 Update and found that the assessment was conducted using the best scientific information available, and was adequate for determining stock status and supporting fishing level recommendations. The findings of the assessment indicated that the South Atlantic snowy grouper stock remains overfished and is undergoing overfishing.
Following a notification from NMFS to a fishery management council that a stock is undergoing overfishing and is overfished, the Magnuson-Stevens Act requires the fishery management council to develop an FMP amendment with actions that immediately end overfishing and rebuild the affected stock. In a letter dated June 10, 2021, NMFS notified the Council that the snowy grouper stock is overfished and undergoing overfishing but continues to rebuild, and the Council subsequently developed Amendment 51 in response to the results of SEDAR 36 Update.
In addition to the proposed revisions to the sector ACLs and seasonal commercial quotas, the Council determined that further modifications to snowy grouper management measures are needed to help constrain recreational harvest to the proposed fishing levels in Amendment 51. The proposed rule would reduce the length of the recreational fishing season and would also adjust the recreational AMs to ensure they are effective at keeping recreational landings from exceeding the proposed recreational ACL and correct for ACL overages if they occur. The Council decided not to revise the current commercial trip limit or AMs, finding that those measures sufficiently ensured that the commercial harvest of snowy grouper is constrained to the ACL.
The Council determined that the actions in Amendment 51 would end overfishing of South Atlantic snowy grouper, rebuild the stock, and achieve OY while minimizing, to the extent practicable, adverse social and economic effects.
This proposed rule would revise the total and sector ACLs, seasonal commercial quotas, recreational fishing season, and the recreational AMs for snowy grouper in the South Atlantic exclusive economic zone (EEZ).
As implemented through the final rule for Regulatory Amendment 20, the current total ACL and annual OY for snowy grouper are equal to the current ABC of 185,464 lb (84,125 kg). In Amendment 51, the Council would revise the ABC, and set the ABC, ACL, and annual OY equal to each other.
The proposed rule would revise the total ACL and annual OY equal to the recommended ABC of 119,654 lb (54,274 kg) for 2023; 121,272 lb (55,008 kg) for 2024; 122,889 lb (55,741 kg) for 2025; and 122,889 lb (55,741 kg), for 2026 and subsequent fishing years.
Amendment 51 would set a total ACL for snowy grouper in 2023, 2024, 2025, and in 2026, with the 2026 ACL in place for the subsequent fishing years. However, the ACL value for 2025 is identical to the ACL value for 2026. While NMFS is listing the ACL value for 2025 and 2026 in the
The Council would revise the commercial and recreational allocations of the total ACL for snowy grouper in Amendment 51. The current sector ACLs for snowy grouper are based on the commercial and recreational allocations of the total ACL at 83 percent and 17 percent, respectively, that were revised in Regulatory Amendment 20. These allocations were determined using average commercial and recreational landings from 1986 to 2005, which included estimates of recreational catch from the MRIP CHTS method.
In Amendment 51, the Council would determine allocations using the average commercial and recreational landings from 1986 to 2005, but include the estimates of recreational catch during those years using the MRIP FES method from the SEDAR 36 Update. The Council would specify new commercial and recreational allocations of 87.55 percent and 12.45 percent, respectively, which results in a shift of allocation of 4.55 percent from the recreational sector to the commercial sector. The Council reasoned that using average landings from 1986 to 2005 was more appropriate because it would exclude the more recent years that had depth and area closures that may have affected the allocation calculations, and would strike the most appropriate balance between the needs of both sectors. The Council acknowledged that because the snowy grouper portion of the snapper-grouper fishery operates primarily in deeper water and is therefore more difficult to access for recreational
The commercial ACLs would be 104,757 lb (47,517 kg) for 2023; 106,174 lb (48,160 kg) for 2024; 107,589 lb (48,802 kg) for 2025; and 107,589 lb (48,802 kg) for 2026 and subsequent years.
The recreational ACLs would be 1,668 fish for 2023; 1,691 fish for 2024; 1,713 fish for 2025; and 1,713 fish for 2026 and subsequent years.
The commercial quota for snowy grouper is equivalent to the commercial ACL. Regulatory Amendment 27 to the FMP established two commercial fishing seasons for snowy grouper and divided the commercial quota between the seasons (85 FR 4588, January 27, 2020). The Council allocated 70 percent of the commercial quota to Season 1 from January through June, and 30 percent of the quota to Season 2 from July through December. Any remaining commercial quota from Season 1 is added to the commercial quota in Season 2, but any remaining quota from Season 2 is not be carried forward into the next fishing year. Amendment 51 and this proposed rule would not alter the current commercial fishing seasons or seasonal allocations of the commercial ACL.
Under Amendment 51, the commercial quotas in 2023 for Season 1 would be 73,330 lb (33,262 kg) and for Season 2 would be 31,427 lb (14,255 kg); in 2024, Season 1 would be 74,322 lb (33,712 kg) and Season 2 would be 31,852 lb (14,448 kg); in 2025, Season 1 would be 75,312 lb (34,161 kg) and Season 2 would be 32,277 lb (14,641 kg); and for 2026 and subsequent years, Season 1 would be 75,312 lb (34,161 kg) and Season 2 would be 32,277 lb (14,641 kg).
Recreational harvest of snowy grouper is currently allowed from May 1 through August 31 each year. This proposed rule would revise the recreational fishing season for snowy grouper where harvest would be allowed only from May 1 through June 30. The recreational sector would be closed annually from January 1 through April 30, and from July 1 through December 31. During the proposed seasonal closures, the recreational bag and possession limits for snowy grouper would be zero. Shortening the time recreational fishing is allowed would help to reduce the risk that recreational harvest would exceed the proposed reduction to its sector ACL, while still allowing for retention of snowy grouper when recreational fishermen target co-occurring species, such as blueline tilefish, in some areas.
The current recreational AMs were established through Amendment 34 to the FMP (81 FR 3731, January 22, 2016). The AMs for snowy grouper include an in-season closure for the remainder of the fishing year if recreational landings reach or are projected to reach the recreational ACL, regardless of whether the stock is overfished. The AMs also include a post-season adjustment if recreational landings exceed the recreational ACL, and then during the following fishing year recreational landings will be monitored for a persistence in increased landings. If the total ACL for snowy grouper is exceeded and the stock is overfished, the length of the recreational fishing season and the recreational ACL are reduced by the amount of the recreational ACL overage.
This proposed rule would revise the recreational AMs for snowy grouper. Given the proposed 2-month fishing season, the current in-season closure and stock status-based post-season AM would be removed. The proposed recreational AM would be a post-season AM that would be triggered in the following fishing year if the recreational ACL was exceeded in the previous year. If recreational landings exceed the recreational ACL, NMFS would reduce the length of the recreational fishing season in the following year by the amount necessary to prevent the recreational ACL from being exceeded. However, the length of the recreational season would not be reduced if NMFS determines, using the best scientific information available, that a reduction is not necessary.
The Council's intent in revising the recreational AM is to avoid an in-season closure of the recreational sector and extend maximum fishing opportunities to the sector during the proposed 2-month recreational season. The proposed rule would remove the current potential duplicate AM application of a reduction in the recreational season length and a payback of the recreational ACL overage if the total ACL was exceeded. Under the proposed measure, the AM trigger would not be tied to the total ACL, but only to the recreational ACL. The proposed modification would ensure that an ACL overage in the recreational sector does not in turn affect the catch levels for the commercial sector. Any reduced recreational season length as a result of the AM being implemented would apply to the recreational fishing season in the year following a recreational ACL overage.
In addition to the measures within this proposed rule, Amendment 51 would revise the overfishing limit (OFL) for snowy grouper and set the ACL equal to the ABC. The amendment would also revise the OY and the sector allocations.
The current ABC for snowy grouper was approved in Regulatory Amendment 20, based upon a stock assessment (SEDAR 36) and recommendations from the Council's SSC.
Based on the SEDAR 36 Update, the Council's SSC recommended to the Council new OFL and ABC levels, with the ABC reduced from the OFL. The assessment and associated OFL and ABC recommendations for snowy grouper incorporated the revised estimates for recreational catch and effort from the MRIP FES. The SSC determined that the new OFL and ABC recommendations within Amendment 51 also represent the best scientific information available.
The Council chose to specify OY for snowy grouper on an annual basis and set it equal to the ABC and total ACL, in accordance with the guidance provided in the Magnuson-Stevens Act National Standard 1 Guidelines at 50 CFR 600.310(f)(4)(iv).
Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with Amendment 51, the FMP, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to
This proposed rule has been determined to be not significant for purposes of Executive Order 12866.
An initial regulatory flexibility analysis (IRFA) was prepared, as required by section 603 of the Regulatory Flexibility Act (RFA; 5 U.S.C. 603). The IRFA describes the economic impact this proposed rule, if adopted, would have on small entities. A description of the action, why it is being considered, and the legal basis for this action are contained in the
This proposed rule, if implemented, would: (1) revise the snowy grouper total ACL, (2) revise the snowy grouper sector ACLs, (3) modify the snowy grouper recreational season, and (4) revise the recreational AMs for snowy grouper. The proposed changes to the ACL, as well as the sector allocations, would apply to all federally-permitted commercial vessels, federally-permitted charter vessels and headboats (for-hire vessels), and recreational anglers that fish for or harvest snowy grouper in Federal waters of the South Atlantic. The proposed changes to the recreational season and AMs would only apply to federally permitted owners and operators of for-hire vessels and recreational anglers. This proposed rule would not directly apply to federally-permitted dealers. Any change in the supply of snowy grouper available for purchase by dealers as a result of this proposed rule, and associated economic effects, would be an indirect effect of this rule and would therefore fall outside the scope of the RFA.
Although all components of this proposed rule would apply to for-hire vessels, they would not be expected to have any direct effects on these entities. For-hire vessels sell fishing services to recreational anglers. The proposed changes to the snowy grouper management measures would not directly alter the services sold by these vessels. Any change in demand for these fishing services, and associated economic effects, as a result of this proposed rule would be a consequence of a change in anglers' behavior, secondary to any direct effect on anglers and, therefore, an indirect effect of this proposed rule. Based on the historically-minimal level of charter-mode target effort for snowy grouper in the South Atlantic, NMFS does not expect any change in for-hire trip demand to result from this proposed rule; however, should it occur, the associated indirect effects would fall outside the scope of the RFA. For-hire captains and crew are allowed to retain snowy grouper under the recreational bag limit; however, they cannot sell these fish. As such, for-hire captains and crew are only affected as recreational anglers. The RFA does not consider recreational anglers to be entities, so they are also outside the scope of this analysis (5 U.S.C. 603). Small entities include small businesses, small organizations, and small governmental jurisdictions (5 U.S.C. 601(6) and 601(3)-(5)). Recreational anglers are not businesses, organizations, or governmental jurisdictions. In summary, only the impacts on commercial vessels will be discussed.
As of August 26, 2021, there were 579 valid or renewable South Atlantic snapper-grouper unlimited permits and 112 valid or renewable 225-lb (102-kg) trip-limited snapper-grouper permits. On average from 2015 through 2019, there were 161 federally-permitted commercial vessels with reported landings of snowy grouper in the South Atlantic. For the 161 commercially permitted vessels, the average annual vessel-level gross revenue from all species for 2015 through 2019 was $82,475 (2021 dollars) and snowy grouper accounted for approximately 6.1 percent of this revenue. For commercial vessels that harvest snowy grouper in the South Atlantic, NMFS estimates that economic profits are $3,299 (2021 dollars) or approximately 4 percent of annual gross revenue, on average. The maximum annual revenue from all species reported by a single one of the vessels that harvested snowy grouper from 2015 through 2019 was $638,709 (2021 dollars).
For RFA purposes only, NMFS has established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing (see 50 CFR 200.2). A business primarily engaged in commercial fishing (North American Industry Classification System code 11411) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $11 million for all its affiliated operations worldwide. All of the commercial fishing businesses directly regulated by this proposed rule are believed to be small entities based on the NMFS size standard. No other small entities that would be directly affected by this proposed rule have been identified.
This proposed rule would revise the total ACL for snowy grouper, based on the most recent recommendation from the Council's SSC in response to the SEDAR 36 Update. This catch limit would reflect a shift in recreational reporting units from the MRIP CHTS to the MRIP FES. The total ACL would be set equal to the ABC or 119,654 lb (54,274 kg) in 2023, 121,272 lb (55,008 kg) in 2024, and 122,889 lb (55,742 kg) in 2025 and subsequent years. Based on the current sector allocation percentages, the proposed changes to the catch limits would represent a decrease in the current commercial ACL for snowy grouper of 54,622 lb (24,776 kg) in 2023, 53,279 lb (24,167 kg) in 2024, and 51,937 lb (23,558 kg) in 2025 and subsequent years. However, as discussed below, this proposed rule would also modify the percentage of the total ACL that is allocated to the commercial sector and therefore economic effects to small entities are quantified as part of that discussion.
Amendment 51 would increase the commercial sector allocation from 83 percent of the total snowy grouper ACL to 87.55 percent. This, in conjunction with the proposed changes to the total ACLs, would result in a commercial ACL for snowy grouper of 104,757 lb (47,517 kg) in 2023 (73,330 lb [33,262 kg] in Season 1 and 31,427 lb [14,255 kg] in Season 2); 106,174 lb (48,160 kg) in 2024 (74,322 lb [33,712 kg] in Season 1 and 31,852 lb [14,448 kg] in Season 2); and 107,589 lb (48,802 kg) in 2025 and subsequent years (75,312 lb [34,161 kg] in Season 1 and 32,277 lb [14,641 kg] in Season 2). Relative to the status quo commercial ACL of 153,935 lb (69,824 kg), this would be a decrease of 49,178 lb (22,307 kg) in 2023; 47,761 lb (21,664 kg) in 2024; and 46,346 lb (21,022 kg) in 2025 and subsequent years. These decreases in the commercial ACL would be expected to result in corresponding decreases in aggregate ex-vessel revenue of $284,249 (2021 dollars) in 2023, $276,059 in 2024, and $267,880 in 2025 and subsequent years. Divided by the average number of vessels with reported landings of snowy grouper from 2015 through 2019, this translates to an annual loss in ex-vessel revenue that ranges from $1,664 (2021 dollars) to $1,766 per vessel, which is approximately 2 percent of average annual per vessel gross revenue. It is noted that snowy grouper makes up a relatively small portion of annual gross revenue for vessels that land the species (6.1 percent), and on trips where snowy grouper are harvested, it comprises less than a quarter of trip revenue, on average (2015 to 2019). Therefore,
The following discussion describes the alternatives that were not selected as preferred by the Council.
Three alternatives were considered for the proposed action to set the ABC, total ACL, and annual OY equal to 119,654 lb (54,274 kg) in 2023, 121,272 lb (55,008 kg) in 2024, and 122,889 lb (55,742 kg) in 2025 and subsequent years. The first alternative to the proposed action, the no action alternative, would maintain the current ABC, ACL, and annual OY of 185,464 lb (84,125 kg). Therefore, it would not be expected to change fishing practices or commercial harvests of snowy grouper, nor would it be expected to result in economic effects. This alternative was not selected by the Council because it would not end overfishing and it would be inconsistent with the SSC's latest catch limit recommendations and the transition to MRIP FES, and therefore, would not be based on the best scientific information available.
The second alternative would set the ACL and annual OY for snowy grouper equal to 95 percent of the most recent ABC recommendation from the SSC. Under the second alternative, both the ACL and annual OY would be set to 113,671 lb (51,560 kg) in 2023, 115,208 lb (52,257 kg) in 2024, and 116,745 lb (52,955 kg) in 2025 and subsequent years. Relative to the proposed total ACLs and assuming no change to the current sector allocations, this alternative would reduce the commercial ACL and annual OY by an additional 5,983 lb (2,714 kg) in 2023, 6,064 lb (2,751 kg) in 2024, and 6,144 lb (2,787 kg) in 2025 and subsequent years. These further reductions in the ACL would result in an estimated annual reduction in ex-vessel revenue and economic profits that is $34,582 (2021 dollars) to $35,512 ($215 to $221 per vessel) greater than what is expected under the proposed action. The Council did not select the second alternative because they felt it would be less effective at achieving the objectives of the FMP and that the current monitoring mechanisms in the South Atlantic, coupled with the existing and proposed management measures, would be sufficient at preventing overages, thus not requiring a buffer between the ABC and ACL.
The third alternative would set the ACL and annual OY for snowy grouper equal to 90 percent of the most recent ABC recommendation from the SSC. Under the third alternative, both the ACL and annual OY would be set to 107,689 lb (48,847 kg) in 2023, 109,145 lb (49,507 kg) 2024, and 110,600 lb (50,167 kg) in 2025 and subsequent years. Relative to the proposed total ACLs and assuming no change to the current sector allocations, this alternative would reduce the commercial ACL and annual OY by an additional 11,965 lb (5,427 kg) in 2023, 12,127 lb (5,501 kg) in 2024, and 12,289 lb (5,574 kg) in 2025 and subsequent years. These further reductions in the ACL would result in an estimated annual reduction in ex-vessel revenue and economic profits that is $69,158 (2021 dollars) to $71,030 ($430 to $441 per vessel) greater than what is expected under the proposed action. The Council did not select the third alternative because they felt it would be less effective at achieving the objectives of the FMP and that the current monitoring mechanisms in the South Atlantic, coupled with the existing and proposed management measures, would be sufficient at preventing overages, thus not requiring a buffer between the ABC and ACL.
Two alternatives were considered for the proposed action to revise sector allocations and ACLs for snowy grouper. The first alternative to the proposed action, the no action alternative, would retain the current commercial sector and recreational sector allocations as 83 percent and 17 percent, respectively, of the revised total ACL for snowy grouper. Based on the proposed total ACL schedule of 119,654 lb (54,274 kg) in 2023, 121,272 lb (55,008 kg) 2024, and 122,889 lb (55,742 kg) in 2025 and subsequent years, this alternative would result in a commercial ACL of 99,313 lb (45,048 kg) in 2023, 100,656 lb (45,657 kg) in 2024, and 101,998 lb (46,266 kg) in 2025 and subsequent years. Compared to the proposed commercial sector allocation of 87.55 percent, this alternative would result in a commercial ACL that is 5,444 lb (2,469 kg) lower in 2023, 5,518 lb (2,503 kg) lower in 2024, and 5,591 lb (2,536 kg) lower in 2025 and subsequent years. This would translate to an additional aggregate annual loss in ex-vessel revenue and economic profits of $31,466 (2021 dollars) to $32,316 ($195 to $201 per vessel) relative to the proposed action. The Council did not select the first alternative because the status quo sector allocation percentages are based on average landings from 1986 through 2005 in MRIP CHTS units and therefore do not reflect the intent or results of the original allocation formula when applied to the proposed ACL based on MRIP FES units. The terms “MRIP CHTS units” and “MRIP FES units” signify landings data that are in different scales and are not directly comparable.
The second alternative would allocate 73.36 percent of the revised total ACL for snowy grouper to the commercial sector and 26.64 percent of it to the recreational sector. Based on the proposed total ACL schedule, this alternative would result in a commercial ACL of 87,778 lb (39,815 kg) in 2023, 88,965 lb (40,354 kg) in 2024, and 90,151 lb (40,892 kg) in 2025 and subsequent years. Compared to the proposed commercial sector allocation of 87.55 percent, this alternative would result in a commercial ACL that is 16,979 lb (7,702 kg) lower in 2023, 17,209 lb (7,806 kg) lower in 2024, and 17,438 lb (7,910 kg) lower in 2025 and subsequent years. This would translate to an additional aggregate annual loss in ex-vessel revenue and economic profits of $98,139 (2021 dollars) to $100,792 ($610 to $626 per vessel) relative to the proposed action. The Council did not select the second alternative because they felt that the method used to determine the current allocations (average landings from 1986-2005) was more appropriate than the allocations formula adopted through the 2012 Comprehensive ACL Amendment to the FMP for unassessed species (77 FR 15916, March 16, 2012). They also felt that the second alternative would be less effective at achieving the objectives of the FMP and satisfying the needs of the commercial sector, in particular.
No duplicative, overlapping, or conflicting Federal rules have been identified. In addition, no new reporting, record-keeping, or other compliance requirements are introduced by this proposed rule. This proposed rule contains no information collection requirements under the Paperwork Reduction Act of 1995.
Commercial, Fisheries, Fishing, Recreational, Snowy grouper, South Atlantic.
For the reasons set out in the preamble, NMFS proposes to amend 50 CFR part 622 as follows:
16 U.S.C. 1801
(b) * * *
(8)
(a) * * *
(1) * * *
(i) From January 1 through June 30 each year.
(A) 2023—73,330 lb (33,262 kg).
(B) 2024—74,322 lb (33,712 kg).
(C) 2025 and subsequent fishing years—75,312 lb (34,161 kg).
(ii) From July 1 through December 31 each year.
(A) 2023—31,427 lb (14,255 kg).
(B) 2024—31,852 lb (14,448 kg).
(C) 2025 and subsequent fishing years—32,277 lb (14,641 kg).
(b)
(ii) If commercial landings of snowy grouper, as estimated by the SRD, exceed the commercial ACL, and the combined commercial and recreational ACL specified in paragraph (b)(3) of this section is exceeded, and snowy grouper are overfished based on the most recent Status of U.S. Fisheries Report to Congress, the AA will file a notification with the Office of the Federal Register to reduce the commercial ACL for that following fishing year by the amount of the commercial ACL overage in the prior fishing year.
(2)
(ii) If recreational landings for snowy grouper exceed the recreational ACL specified in paragraph (b)(2)(i) of this section, then during the following fishing year NMFS will reduce the length of the recreational fishing season by the amount necessary to prevent recreational landings from exceeding the recreational ACL in the following fishing year. NMFS will use the best scientific information available to determine if reducing the length of the recreational fishing season is necessary. When the recreational sector for snowy grouper is closed as a result of NMFS reducing the length of the recreational fishing season, the bag and possession limits for snowy grouper harvested in or from the South Atlantic EEZ are zero.
(3)
Administrative Conference of the United States.
Notice.
The Assembly of the Administrative Conference of the United States will meet during a one-day hybrid plenary session to consider four proposed recommendations and to conduct other business. Written comments may be submitted in advance, and the meeting will be accessible to the public.
The meeting will take place on Thursday, June 15, 2023, from 9 a.m.-5 p.m. (ET). The meeting may adjourn early if all business is finished.
For those attending in person, the meeting will be held at The George Washington University Law School in the Jacob Burns Moot Court Room, 2000 H Street NW, Washington, DC 20052. There will be a virtual attendance option. Information on how the public can access the meeting will be available on the agency's website prior to the meeting at
Shawne McGibbon, General Counsel (Designated Federal Officer), Administrative Conference of the United States, Suite 706 South, 1120 20th Street NW, Washington, DC 20036; telephone 202-480-2080; email
The Administrative Conference of the United States makes recommendations to Federal agencies, the President, Congress, and the Judicial Conference of the United States regarding the improvement of administrative procedures (5 U.S.C. 594). The membership of the Conference, when meeting in plenary session, constitutes the Assembly of the Conference (5 U.S.C. 595).
Additional information about the proposals and the agenda, as well as any changes or updates to the same, can be found at the 79th Plenary Session page on the Conference's website prior to the start of the meeting: at
Agency for International Development.
Notice of information collection.
Under the provisions of the Paperwork Reduction Act, the U.S. Agency for International Development (USAID) seeks the Office of Management and Budget (OMB) approval for the new information collection for safeguarding against exploitation, sexual abuse, child abuse, and child neglect.
Submit comments on or before June 24, 2023.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Written comments for this information collection should be sent within 30 days of publication of this notice via:
1.
2.
Kathleen Stohs,
The purpose of this collection is to enable the U.S. Agency for International Development to respond to allegations of exploitation, sexual abuse, child abuse, and child neglect and institute appropriate standards of behavior. Submissions will be required from recipients to comply with pending award requirements to safeguard against exploitation, sexual abuse, child abuse, and child neglect in USAID-funded programming. Information submitted by recipients as part of this collection will be presumed to be confidential. USAID takes the protection of personally identifiable information (PII) seriously and takes precautions to ensure the confidentiality and security of PII, consistent with USAID's Automated Directives System (ADS) Chapter 508 and does not request PII in this information collection. Agency staff must only share information on individual responses on a need-to-know basis and take steps to protect any sensitive information, including redacting sensitive information and limiting access.
(i) reasonable measures to reduce the risk of exploitation, sexual abuse, child abuse, and child neglect. Where implementation of projects under this award may involve children, this includes limiting unsupervised interactions with children and complying with applicable laws, regulations, or customs regarding harmful image-generating activities of children;
(ii) an awareness program to inform employees, agents, interns, or any other person provided access or contact with beneficiaries about the requirements of this provision, including the activities prohibited, the action that will be taken in response to violations, and the mechanism(s) for reporting allegations;
(iii) a description of how beneficiaries and local community members:
A. are made aware of the prohibited activities,
B. how they may report allegations, and
C. how (A) and (B) are carried out in a manner which is inclusive, culturally appropriate, and sensitive to the context;
(iv) safe, accessible, and publicly available reporting mechanism(s) that may be integrated with any existing or similar such mechanisms, for anyone to confidentially report exploitation, sexual abuse, child abuse, and child neglect, with appropriate safeguards to protect whistle-blowers and survivors, including express protection against retaliation for reporting, and documented procedures for protecting personally identifiable information (PII)
(v) appropriate measures to protect survivors of or witnesses to any exploitation, sexual abuse, child abuse, and child neglect of any person and not prevent or hinder cooperating fully with U.S. Government authorities.
The recipient must provide a copy of the compliance plan to the Agreement Officer upon request.
A 60-day notice was published in the
The new standard provision, Safeguarding Against Exploitation, Sexual Abuse, Child Abuse, and Child Neglect, will be publicly available following the completion of the Information Collection process. The provision will be applicable to all U.S. and non-U.S. awards NGOs, including fixed amount awards and the full text of the provision will be provided in USAID's Automated Directive System (ADS) 303maa M20, 303mab M15, and 303mat M6. The provision includes requirements for the recipient to have and implement a set of publicly available standards, policies, or procedures to prevent, detect, address, and respond to allegations of exploitation, sexual abuse, child abuse, and child neglect that:
(1) prohibit employees, agents, interns, or any other person provided access or contact with beneficiaries, from engaging in any exploitation, sexual abuse, child abuse, and child neglect of any person during the period of performance, supporting or advancing these actions, or intentionally ignoring or failing to act upon allegations of these actions;
(2) are consistent with the Inter-Agency Standing Committee's Six Core Principles Relating to Sexual Exploitation and Abuse, as amended, available at
(3) require reporting of suspicions or concerns related to any exploitation, sexual abuse, child abuse, and child neglect of any person to the recipient;
(4) require a “survivor-centered approach” for responding to alleged violations of the prohibitions. Such an approach must ensure the survivor's dignity, experiences, considerations, needs, and resiliencies are placed at the center of the process;
(5) when a child is involved, require a “best interest of the child determination” for responding to alleged violations of the prohibitions. This determination considers the best possible outcome for a vulnerable child who has been exposed to violence, abuse, exploitation or neglect;
(6) include remedies for violations;
(7) monitor subrecipients, employees, agents, interns, or any other person provided access or contact with beneficiaries,
(8) details the actions that may be taken against subrecipients, employees, agents, interns, or any other person provided access or contact under the award who commit exploitation, sexual abuse, child abuse, and child neglect of any person or who fail to take reasonable steps to prevent it; and;
(9) provide transparency on hiring, screening, and employment practices, including on rehiring or transfer and referencing for subsequent employers.
For awards exceeding $500,000, the recipient must develop, implement, and maintain a compliance plan, either in conjunction with or separate from the Trafficking in Persons Compliance Plan, that details risk analysis and mitigation measures that will be implemented during the period of performance of the award to prevent and address exploitation, sexual abuse, child abuse, and child neglect of any person. The recipient's compliance plan must be appropriate to the size and complexity of the award and to the nature and scope of the activities, including the particular risks presented by the operating context. The plan must include, at a minimum, the following:
(i) reasonable measures to reduce the risk of exploitation, sexual abuse, child abuse, and child neglect. Where implementation of projects under this award may involve children, this includes limiting unsupervised interactions with children and complying with applicable laws, regulations, or customs regarding harmful image-generating activities of children;
(ii) an awareness program to inform employees, agents, interns, or any other person provided access or contact with beneficiaries about the requirements of this provision, including the activities prohibited, the action that will be taken in response to violations, and the mechanism(s) for reporting allegations;
(iii) a description of how beneficiaries and local community members:
A. are made aware of the prohibited activities,
B. how they may report allegations, and
C. how (A) and (B) are carried out in a manner which is inclusive, culturally appropriate, and sensitive to the context;
(iv) safe, accessible, and publicly available reporting mechanism(s) that may be integrated with any existing or similar such mechanisms, for anyone to confidentially report exploitation, sexual abuse, child abuse, and child
(v) appropriate measures to protect survivors of or witnesses to any exploitation, sexual abuse, child abuse, and child neglect of any person and not prevent or hinder cooperating fully with U.S. Government authorities.
Although “credible information” is not defined, under the plain meaning of the term, if the source and circumstances support a reasonable belief that the event(s) described have occurred, the matter shall be referred to the Responsibility, Safeguarding, and Compliance (RSC) Division, the appropriate Agreement Officer, and Inspector General. This is an intentionally low threshold for initial disclosure, which upholds the policy to prohibit exploitation, sexual abuse, child abuse, and neglect.
For the purposes of the forthcoming standard provision, employee means individual who is engaged in the performance of this award as a direct employee, consultant, or volunteer of the recipient or any subrecipient.
For the purposes of the forthcoming standard provision, agent means any individual, including a director, an officer, or an independent contractor, authorized to act on behalf of an organization.
If the estimated value of services required to be performed under the award outside the United States exceeds $500,000, the recipients will maintain a “Safeguarding Against Exploitation, Sexual Abuse, Child Abuse, and Child Neglect Compliance Plan,” either in conjunction with or separate from the Trafficking in Persons Compliance Plan.
(1) prohibit employees, agents, interns, or any other person provided access or contact with beneficiaries, from engaging in any exploitation, sexual abuse, child abuse, and child neglect of any person during the period of performance, supporting or advancing these actions, or intentionally ignoring or failing to act upon allegations of these actions;
(2) are consistent with the Inter-Agency Standing Committee's Six Core Principles Relating to Sexual Exploitation and Abuse, as amended, available at
(3) require reporting of suspicions or concerns related to any exploitation, sexual abuse, child abuse, and child neglect of any person to the recipient;
(4) require a “survivor-centered approach” for responding to alleged violations of the prohibitions. Such an approach must ensure the survivor's dignity, experiences, considerations, needs, and resiliencies are placed at the center of the process;
(5) when a child is involved, require a “best interest of the child determination” for responding to alleged violations of the prohibitions. This determination considers the best possible outcome for a vulnerable child who has been exposed to violence, abuse, exploitation or neglect;
(6) include remedies for violations;
(7) monitor subrecipients, employees, agents, interns, or any other person provided access or contact with beneficiaries,
(8) details the actions that may be taken against subrecipients, employees, agents, interns, or any other person provided access or contact under the award who commit exploitation, sexual abuse, child abuse, and child neglect of any person or who fail to take reasonable steps to prevent it; and;
(9) provide transparency on hiring, screening, and employment practices, including on rehiring or transfer and referencing for subsequent employers.
The Office of Inspector General maintains their own policies related to the collection of PII and USAID's policies do not affect OIG's right to access this information.
(i) reasonable measures to reduce the risk of exploitation, sexual abuse, child abuse, and child neglect. Where implementation of projects under this award may involve children, this includes limiting unsupervised interactions with children and complying with applicable laws, regulations, or customs regarding harmful image-generating activities of children;
(ii) an awareness program to inform employees, agents, interns, or any other person provided access or contact with beneficiaries about the requirements of this provision, including the activities prohibited, the action that will be taken in response to violations, and the mechanism(s) for reporting allegations;
(iii) a description of how beneficiaries and local community members:
A. are made aware of the prohibited activities,
B. how they may report allegations, and
C. how (A) and (B) are carried out in a manner which is inclusive, culturally appropriate, and sensitive to the context;
(iv) safe, accessible, and publicly available reporting mechanism(s) that may be integrated with any existing or similar such mechanisms, for anyone to confidentially report exploitation, sexual abuse, child abuse, and child neglect, with appropriate safeguards to protect whistle-blowers and survivors, including express protection against retaliation for reporting, and documented procedures for protecting personally identifiable information (PII) from unauthorized access and disclosure; and
(v) appropriate measures to protect survivors of or witnesses to any exploitation, sexual abuse, child abuse, and child neglect of any person and not prevent or hinder cooperating fully with U.S. Government authorities.
Tolerated has been removed and replaced with the specific language: supporting or advancing these actions, or intentionally ignoring or failing to act upon allegations of these actions.
While final decisions on cost allowability, allocability and reasonableness will rest with the cognizant Agreement Officer, USAID recognizes the need to strengthen the aid community's overall capacity for safeguarding against exploitation, sexual abuse, child abuse, and child neglect, including individual organizations' varying levels of existing capacity.
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments are requested regarding (1) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
Comments regarding this information collection received by June 29, 2023 will be considered. Written comments and recommendations for the proposed information collection should be submitted within 30 days of the publication of this notice on the following website
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.
This information collection is necessary to comply with the requirements outlined in Homeland Security Presidential Directive (HSPD) 12, and Federal Information Processing Standard (FIPS) 201-3. USDA must implement an identity proofing, registration, and issuance process consistent with the requirements outlined in FIPS 201-3. This information collection form was required as part of USDA's identity proofing and registration process. After 10/27/06, form AD 1197 was eliminated from the HSPD-12 process with the USDA's participation in the GSA USAccess program, however the form continues to be utilized for the information collection and processing of USDA Site Badges (non-PIV). As USDA continues the HSPD-12 program, one estimate of burden has been calculated and one process description has been included.
USDA.
Notice of public and virtual meeting.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the United States Department of Agriculture (USDA) and the Federal Advisory Committee Act (FACA), that a public meeting of the USDA Equity Commission (EC or Commission), Subcommittee for Agriculture and the Rural Community Economic Development (RCED) Subcommittee will convene to continue its work reviewing USDA programs, services, and policies for the purpose of making recommendations for how the Department can improve access and advance equity.
The EC meeting will be held Tuesday, June 27 through Thursday, June 29, 2023, from 10:00 a.m. EST to 6:00 p.m. EST each day.
The public can participate via a zoom meeting link. Access information will be provided to registered individuals via email. Detailed information can be found at:
Cecilia Hernandez, Designated Federal Officer, USDA Equity Commission, Office of the Deputy Secretary, 1400 Independence Avenue SW, Room 6006-S, Washington, DC 20250-0235; Phone: (202) 913-5907; Email:
The Commission and Subcommittees are authorized under section 1006(b)(3) of the American Rescue Plan Act of 2021, Public Law 117-2 (the Act) and operates in compliance with the Federal Advisory Committee Act, as amended, 5 U.S.C. app. 10.
On January 20, 2021, President Biden signed an Executive Order on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government and committed to creating the USDA Equity Commission as part of his rural agenda and commitment to closing the racial wealth gap and addressing longstanding inequities in agriculture. Section 1006 of the American Rescue Plan directed USDA to create the Equity Commission and provided funds sufficient to ensure the Commission is well staffed and positioned to deliver on its charge.
The USDA Equity Commission will advise the Secretary of Agriculture and provide USDA with an analysis of how its programs, policies, systems, structures, and practices contribute to barriers to inclusion or access, systemic discrimination, or exacerbate or perpetuate racial, economic, health and social disparities and recommendations for action. The Agriculture Subcommittee reports to the Equity Commission and provides recommendations on issues of concern related to agriculture. The Rural Community Economic Development Subcommittee (RCED) also reports to the Equity Commission and is focused on issues related to rural community prosperity. The Equity Commission delivered an interim report and provided actionable recommendations in February 2023. A final report will be completed by winter of 2024.
In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, USDA, its agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family or parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Equal opportunity practices in accordance with USDA's policies will be followed in all appointments to the Committee. To ensure that the recommendations of the Committee have taken in account the needs of the diverse groups served by USDA, membership shall include to the extent possible, individuals with demonstrated ability to represent minorities, women and person with disabilities. USDA is an equal opportunity provider, employer, and lender.
Persons with disabilities who require alternative means of communication for program information (
Animal and Plant Health Inspection Service, USDA.
Notice of public meeting.
We are giving notice that the General Conference Committee of the National Poultry Improvement Plan will be holding a public meeting.
The General Conference Committee public meeting will be held on Thursday, June 29, 2023, from 7:30 a.m. to 12:30 p.m.
The meeting will be held at the Sonesta Downtown Columbus Hotel, 33 East Nationwide Blvd., Columbus, OH 43215.
Dr. Elena Behnke, Senior Coordinator, National Poultry Improvement Plan, VS, APHIS, USDA, 1506 Klondike Road, Suite 101, Conyers, GA 30094; (770) 922-3496; email:
The General Conference Committee (the Committee) of the National Poultry Improvement Plan (NPIP), representing cooperating State agencies and poultry industry members, serves an essential function by acting as liaison between the poultry industry and the Department in matters pertaining to poultry health.
Topics for discussion at the upcoming meeting include:
1. National Veterinary Services Laboratories Avian Influenza Update.
2. Salmonella Update.
3. Mycoplasma Update.
4. New Diagnostic Tests Seeking NPIP Approval.
The meeting will be open to the public; however, APHIS will be unable to allow public participation in session discussions due to time constraints. Written statements may be filed with the Committee before or after the meeting. Statements filed with the Committee must include the name of the Agency contact as listed under
If needed, please request reasonable accommodations no later than June 9, 2023, by contacting the person listed under
This notice of meeting is given pursuant to section 10 of the Federal Advisory Committee Act (5 U.S.C. 10).
USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Persons with disabilities who require alternative means of communication for program information (
Equal opportunity practices in accordance with USDA's policies will be followed in all appointments to the Committee. To ensure that the recommendations of the Committee have taken in account the needs of the diverse groups served by USDA, membership shall include to the extent possible, individuals with demonstrated ability to represent minorities, women and person with disabilities. USDA is an equal opportunity provider, employer, and lender.
Food and Nutrition Service (FNS), USDA.
Notice.
In accordance with the Paperwork Reduction Act of 1995, this notice invites the general public and other public agencies to comment on this proposed information collection. This is a new collection for the contract Assessment of Mobile Technologies for Using Supplemental Nutrition Assistance Program (SNAP) Benefits (Mobile Payment Pilot evaluation). The purpose of the Mobile Payment Pilot evaluation is to assess the effects of five pilot projects that will allow SNAP participants to use mobile payments to purchase food as an alternate option to a physical electronic benefit transfer (EBT) card.
Written comments must be received on or before July 31, 2023.
Comments may be sent to: Maya Sandalow, Food and Nutrition Service, U.S. Department of Agriculture, 1320 Braddock Place, 5th floor, Alexandria, VA 22314. Comments may also be submitted via email to
All responses to this notice will be summarized and included in the request for Office of Management and Budget approval. All comments will be a matter of public record.
Requests for additional information or copies of this information collection should be directed to Maya Sandalow at (703) 305-1615.
The Agricultural Act of 2018 (2018 Farm Bill) authorized the use of mobile payments from devices like cell phones, tablets, and smart watches, as an alternate option to a physical electronic benefit transfer (EBT) card to conduct a SNAP transaction. This authorization was subject to the result of five mobile payment pilot projects. Mobile payments may improve the customer experience; save participant and retailer time; reduce potential stigma of using EBT; reduce costs; and prevent benefit fraud, loss, or theft.
The U.S. Department of Agriculture, Food and Nutrition Service (FNS) selected five State SNAP agencies to participate in the Mobile Payment Pilot: Illinois, Louisiana, Massachusetts, Missouri, and Oklahoma. These State pilots include a variety of design implementation strategies in terms of payment model, retail partnerships, marketing plans, and pilot scale. The Mobile Payment Pilot Evaluation will assess the effects of the pilots, using information obtained from FNS, selected State SNAP agencies, retailers, and SNAP participants. The evaluation has four objectives: (1) assessing the implementation of the pilots, (2) examining the adoption and use of mobile technologies, (3) understanding implications for program integrity, and (4) assessing replicability and costs. In each of the five sites, the evaluation will conduct three rounds of semi-structured interviews with State SNAP agencies, EBT processors, retailers, and other partners. Interviews will occur during the pilot planning period and once the pilots are implemented, and will collect information about the pilot design and implementation.
In each of the five sites, the evaluation will also conduct two, 5-minute surveys and four focus groups among SNAP participants. One survey will be conducted among 250 participants who used mobile payments and the other will be conducted among 250 participants who did not use mobile payments. Similarly, two focus groups will be conducted with participants who used the technology and two others will be conducted with participants who did not use it.
In addition, the evaluation will collect SNAP administrative data, cost data, and retailer transaction data from the FNS ALERT and STARS systems. These data will be used to describe the adoption of mobile payment technologies and benefit redemption patterns by participant, retailer, and community characteristics.
Data collected from staff at State SNAP agencies, partners (such as EBT processors, mobile application vendors, and payment providers), and retailers will be used to describe how the pilots were planned and implemented. Data collected from SNAP participants will provide more information about their decisions to use or not use mobile payments, barriers to use, and participant satisfaction and user experience. Administrative, cost, and transaction data will provide insights on adoption and use of mobile payments. Ultimately, the findings will guide FNS in determining if expanding availability of mobile payments nationwide is cost-effective, secure, and accessible to participants.
The evaluation team will pretest the survey and semi-structured interviews. The team will conduct pretest interviews with nine SNAP participants for the two survey instruments, three State SNAP agency staff members for the key informant interview guide, and three retailer staff members for the retailer interview guide.
(1) SNAP participants who did and did not use mobile payments,
(2) State SNAP agency, other State agency, and business staff (including vendors who provide mobile application development, electronic benefit transfer processing, payment providers, and other services in support of mobile payments),
(3) Retailer staff overseeing the provision of mobile payments for the pilot projects at a corporate level, or staff working in a retailer location offering mobile payments.
SNAP participants in the pilot areas will be asked to participate in one survey or focus group (including participants who did or did not use mobile payments). SNAP participants will receive an advance letter to notify them about the survey, emails or text messages to assess their interest in participating in the survey, and a reminder letter to encourage them to complete the survey. Participants who choose to complete the survey will complete a five minute web or phone survey. SNAP participants in the pilot areas may also receive emails or text messages to ask if they would be interested in participating in a focus group. If they choose to participate in a focus group, the participant would receive a text message or phone call with several questions to ensure they are eligible to participate, followed by reminder emails or text messages to encourage them to attend the in-person focus group.
State SNAP agency, other State agency, and business staff will respond to up to three in-person or telephone interviews. Staff from these entities will receive an email to invite them to participate in an interview, before participating in an interview lasting up to 60 minutes. Selected State SNAP agency staff will provide administrative data one time and cost data on a quarterly basis 10 times.
Retailer staff will respond to up to two in-person interviews. Retailer staff will receive a screening telephone call to invite the retail store to participate in interviews with staff. The screener will include several questions to help the evaluation team tailor interview protocols for the store in advance. Following the screener, the retail store manager or other applicable staff will receive an email to invite them to participate in an interview. Each interview with a retail staff member will last between 15 and 30 minutes.
Rural Utilities Service, USDA.
Notice.
The Rural Utilities Services (RUS or the Agency), an agency of the United States Department of Agriculture (USDA), announces its Technical Assistance and Construction for Innovative Regional Wastewater Treatment Solutions (TAC-RWTS) Grant Pilot Program application window for Fiscal Year (FY) 2023. Grants may be made to eligible entities for the study, design, or construction of regional wastewater systems for historically impoverished communities in areas that have had difficulty installing traditional wastewater treatment systems due to soil conditions. Solutions must be innovative and account for strategic management and regulatory models. Successful applications will be selected by the Agency for funding and subsequently awarded from available funds for the TAC-RWTS Grant Pilot Program. All applicants are responsible for any expenses incurred in developing their applications.
Completed applications must be filed through
Applications and all supporting documentation must be submitted electronically through
Christina Cerio, Community Programs Specialist, Water and Environmental Program, RUS, USDA, by email at
• Assisting rural communities recover economically through more and better market opportunities and through improved infrastructure;
• Ensuring all rural residents have equitable access to RD programs and benefits from RD funded projects; and
• Reducing climate pollution and increasing resilience to the impacts of climate change through economic support to rural communities.
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(a) Represents an eligible consortium;
(b) Is legally established prior to the submission of the application and located within one of the following:
(i) A state within the United States;
(ii) The District of Columbia;
(iii) The Commonwealth of Puerto Rico; or
(iv) A U.S. territory or Federally Associated State;
(c) Has the legal capacity and authority to carry out the grant purpose;
(d) Demonstrates that it possesses the financial, technical, and managerial capability to comply with federal and state laws and requirements. For construction projects whereby ownership is retained by the applicant or consortium, the applicant must demonstrate within the application that the facility owner has the capacity to own, operate, and maintain the facility;
(e) Has no delinquent debt to the federal government or no outstanding judgments to repay a federal debt; and,
(f) Is not a corporation that has been convicted of a felony (or had an officer or agent acting on behalf of the corporation convicted of a felony) within the past 24 months. Any corporation that has any unpaid federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability is not eligible.
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(a) The entity shall be:
(i) A public body, such as a municipality, county, district, authority, or other political subdivision of a state, territory or commonwealth;
(ii) An organization operated on a not-for-profit basis, such as an association, cooperative, or private corporation. The organization must be an association controlled by a local public body or bodies, or have a broadly based ownership by or membership of people of the local community; or
(iii) Indian Tribes on Federal and State reservations and other federally recognized Indian Tribes.
(b) The entity must be a party to the consortium agreement or otherwise confirm their commitment in writing from an authorized representative. The letter must reference the appropriate votes, resolutions, or other actions taken by the entity's leadership to participate and assume ownership of the constructed facility.
(c) The entity must be an active participant in the project and demonstrate the ability to own, operate, and maintain the facility, including compliance with state and Federal laws.
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(a) Reasonable fees and costs such as: legal, engineering, administrative services, fiscal advisory, recording, environmental analyses and surveys, possible salvage or other mitigation measures, planning, establishing or acquiring rights;
(b) Costs of acquiring interest in land; rights, leases, permits, rights-of-way; and other evidence of land or protection necessary for development of the facility;
(c) Purchasing or renting equipment necessary to install, operate, maintain, extend, or protect facilities;
(d) Cost of additional applicant labor and other expenses necessary to install and extend service;
(e) The cost for connecting the user to the main service line; and
(f) Initial operating expenses, for a period ordinarily not exceeding one year when the applicant is unable to pay such expenses and adequate documentation is provided related to long-term sustainability.
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(a) The Applicant's assertion that the beneficiaries are historically impoverished.
(b) The Applicant's assertion as to the difficulties surrounding the proposed area's soil conditions and why installing traditional wastewater has not been effective.
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Application information is also available at
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(a) To be considered for funding, applicants must be an eligible entity and must submit a complete application by the deadline date. Applicants should consult the cost principles and general administrative requirements for grants pertaining to their organizational type when preparing the budget and completing other parts of the application. Applications should be prepared in conformance with program regulations, and departmental and other applicable regulations including 2 CFR parts 180, 182, 200, 400 and 421, or any successor regulations.
(b) Applicants should carefully review the TAC-RWTS FY 2023 Application Guide. The application guide provides specific, detailed instructions for each item of a complete application. The Agency emphasizes the importance of including every item and strongly encourages applicants to follow the instructions carefully, using the examples and illustrations in the TAC-RWTS FY 2023 Application Guide. Applicants should ensure they are using the most updated version of the TAC-RWTS Application Guide before submitting an application. Any updates to the TAC-RWTS Application Guide will be posted at
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(a) At the time of application, each applicant must have an active registration in the System for Award Management (SAM) before submitting its application in accordance with 2 CFR part 25, Universal Identifier and System for Award Management. To register in SAM, entities will be required to obtain and create a Unique Entity Identifier (UEI). Instructions for obtaining the UEI are available at
(b) Each applicant must maintain an active SAM registration, with current, accurate and complete information, at all times during which it has an active Federal award or an application under consideration by a Federal awarding agency.
(c) Each applicant must ensure they complete the Financial Assistance General Representations and Certifications in SAM.
(d) Applicants must provide a valid UEI in its application, unless determined exempt under 2 CFR 25.110, Exceptions.
(e) The Agency will not make an award until the applicant has complied with all SAM requirements including providing the UEI. If an applicant has not fully complied with the requirements by the time the Agency is ready to make an award, the Agency may determine that the applicant is not qualified to receive a Federal award and use that determination as a basis for making a Federal award to another applicant.
(f) The entity that will retain the rights to own, operate, and maintain the constructed facility will also be required to complete the registration requirements outlined above. The timing of any requirements will be outlined in the Grant Agreement issued following the selection of an application.
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The Agency will not solicit or consider new scoring or eligibility information that is submitted after the application deadline. RUS also reserves the right to ask applicants for clarifying information and additional verification of assertions in the application.
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(a) Facilities which are not modest in size, design, and cost;
(b) Grant finder's fees;
(c) The construction of any new combined storm and sanitary sewer facilities;
(d) Any portion of the cost of a facility which does not serve a rural area;
(e) That portion of project costs normally provided by a business or industrial user, such as wastewater pretreatment, etc.;
(f) Rental for the use of equipment or machinery owned by the applicant;
(g) For other purposes not directly related to operating and maintenance of the facility being installed or improved; and
(h) Pay project costs when other funding is a guaranteed loan obtained in accordance with 7 CFR part 5019.
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Applicants may contract with a nonaffiliated organization for not more than 49 percent of the grant to provide the proposed assistance. Projects proposing technical assistance efforts through contracting that exceed 49 percent are ineligible. RUS's definition of an affiliated organization is as follows:
In corporate law and taxes, an affiliate is a company that is related to another company, usually by being in the position of a member or a subordinate role (must be verified by organizational documentation). Two companies may be affiliated if one company has control over the other or if both are controlled by a third company. One corporation can be affiliated with another corporation by shareholdings, by holding a minority interest, or one corporation might be a subsidiary of another.
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(a) Incomplete or ineligible applications as of the deadline for submission will not be considered. If an application is determined to be incomplete or ineligible, the applicant will be notified in writing.
(b) Complete, eligible applications will be evaluated competitively by a review team, composed of at least three RUS employees selected from the Water Programs Division. They will make overall recommendations based on the program elements found in 7 CFR part 1775 and this NOFO, including review criteria presented in this notice. They will award points as described in the scoring criteria within this notice. Each application will receive a score based on the averages of the reviewers' scores and discretionary points awarded by the RUS Administrator. RUS reserves the right to request additional information once an application is determined to be
(c) Applications will be ranked, and grants awarded based upon the scoring results and funding availability. At RUS's discretion, projects scoring too low may not be awarded funding even if funding remains available.
(d) Regardless of the score an application receives, if RUS determines that the project is technically infeasible, RUS will notify the applicant, in writing, and no further action will be taken.
(e) The Agency reserves the right to offer the applicant less than the grant funding requested.
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(a)
(i) Eligible and selected for funding,
(ii) Eligible but offered less funds than requested,
(iii) Eligible but not selected for funding due to ranking of all applications, or
(iv) Ineligible for the grant.
(b)
(c)
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Any change in the scope of the project, budget adjustments of more than 10 percent of the total budget, or any other significant change in the project must be reported to and approved by the approval official by written amendment to the grant agreement. Any change not properly approved may be cause for termination of the grant.
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Any public facilities constructed through this award whereby ownership is retained by the grantee will be serviced in accordance with 2 CFR part 200 and the grant agreement. Should the facility be transferred to an eligible entity, as defined within this NOFO, the grantee will complete a review of the technical, managerial, and financial capacity of the entity prior to transfer. The analysis will be submitted to RUS for review prior to completing the transfer. The facility will be serviced by the grantee until such time that the conditions of 2 CFR part 200 and the grant agreement are met. This includes monitoring the disposition of the facility, partially or in whole, related to this award.
For general questions about this announcement, please contact Christina Cerio at
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Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information (
To file a program discrimination complaint, a complainant should complete a Form AD-3027, USDA Program Discrimination Complaint Form, which can be obtained online at
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USDA is an equal opportunity provider, employer, and lender.
Dorel Juvenile Group Inc. submitted a notification of proposed production activity to the FTZ Board (the Board) for its facility in Columbus, Indiana within Subzone 72W. The notification conforming to the requirements of the Board's regulations (15 CFR 400.22) was received on May 15, 2023.
Pursuant to 15 CFR 400.14(b), FTZ production activity would be limited to the specific foreign-status material(s)/component(s) and specific finished product(s) described in the submitted notification (summarized below) and subsequently authorized by the Board. The benefits that may stem from conducting production activity under FTZ procedures are explained in the background section of the Board's website—accessible via
The proposed finished products include car seats (booster; convertible; infant), child car seat head rest assemblies, infant walkers, and child strollers (duty rate ranges from duty-free to 4.4%).
The proposed foreign-status materials and components include: plastic car seat bags; pads (car seat; walker; stroller); car seat components (plastic components (webbing guide; footrest assembly; snack tray assembly; hinge spacer; belt hook fastener; harness hook; headrest gear; torso adjuster button; cup holder; armrest assembly; base recline handle; canopy hoop; linkage assembly; cover for infant carrier base release cables); child car seat level indicators; metal components (headrest locking plate and two plastic pins; anti-rebound bar; washer plate; axle and plastic axle sleeve); rubber anti-skid runners; button adjustment assemblies for infant carrier handles; child car seat crotch assemblies; nylon components (strap with metal latch for car seat installation; harness with locking plastic buckle; harness strap; tether; strap with latch assembly); lap belts with nylon straps and plastic buckles; central front adjusters with infant splitter plate; steel rods); infant car seats; wheel and toy attachments for infant walkers; plastic resin; nylon components (belts with plastic lanyard guides; webbing; thread); magnetic chest clips; steel components (locking clip; S clip; C plate headrest
Public comment is invited from interested parties. Submissions shall be addressed to the Board's Executive Secretary and sent to:
A copy of the notification will be available for public inspection in the “Online FTZ Information System” section of the Board's website.
For further information, contact Juanita Chen at
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) determines that certain freight rail couplers and parts thereof (freight rail couplers) from the People's Republic of China (China) are being, or are likely to be, sold in the United States at less-than-fair value (LTFV) during the period of investigation, January 1, 2022, through June 30, 2022.
Applicable May 30, 2023.
Drew Jackson or Zachary Shaykin, AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-4406 or (202) 482-2638, respectively.
On March 13, 2023, Commerce published in the
For a complete description of the events that followed the Preliminary Determination, see the Issues and Decision Memorandum.
The period of investigation is January 1, 2022, through June 30, 2022.
The products covered by this investigation are freight rail coupler systems and certain components thereof from China. For a complete description of the scope of this investigation,
During the course of this investigation and the concurrent LTFV and countervailing duty investigations of freight rail couplers from and Mexico, and China, Commerce received scope comments from interested parties. Commerce issued a Preliminary Scope Memorandum to address these comments and set aside a period of time for parties to address scope issues in scope case and rebuttal briefs.
In accordance with section 733(e) of the Tariff Act of 1930, as amended (the Act) and 19 CFR 351.206(h), Commerce determines that critical circumstances exist with respect to imports of freight rail couplers from China for the China-wide entity. For a full description of the methodology and results of Commerce's critical circumstances analysis,
For the purposes of this final determination, consistent with the
Because no Chinese exporters qualified for a separate rate, producer/exporter combination rates were not calculated for this final determination.
Commerce determines that the following estimated weighted-average dumping margin exists for the POI:
Because
As a result of our
Pursuant to section 735(c)(1)(B)(ii) of the Act and 19 CFR 351.210(d), we will instruct CBP to require a cash deposit for such entries of merchandise equal to the amount by which the normal value exceeds the U.S. price as follows: (1) for all Chinese exporters of subject merchandise, the cash deposit rate will be equal to the estimated dumping margin established for the China-wide entity; and (2) for all third country exporters of subject merchandise, the cash deposit rate is also the cash deposit rate applicable to the China-wide entity. These suspension of liquidation instructions will remain in effect until further notice.
If the U.S. International Trade Commission (ITC) issues a final affirmative injury determination, we intend to issue an antidumping duty order and continue to require a cash deposit of estimated antidumping duties for such entries of subject merchandise in the amounts indicated above, in accordance with section 736(a) of the Act. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated, and all estimated duties deposited as a result of the suspension of liquidation will be refunded or canceled.
In accordance with section 735(d) of the Act, we will notify the ITC of our final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of freight rail couplers from China no later than 45 days after our final determination.
If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded or canceled, as Commerce determines to be appropriate. If the ITC determines that such injury does exist, Commerce intends to issue an antidumping duty order directing CBP to assess, upon further instruction by Commerce, antidumping duties on all imports of the subject merchandise that are entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation, as discussed above in the “Continuation of Suspension of Liquidation” section.
In the event that the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
This determination is issued and published pursuant to sections 735(d) and 777(i) of the Act, and 19 CFR 351.210(c).
The scope of this investigation covers certain freight railcar couplers (also known as “fits” or “assemblies”) and parts thereof. Freight railcar couplers are composed of two main parts, namely knuckles and coupler bodies but may also include other items (
Subject freight railcar couplers and parts are included within the scope whether finished or unfinished, whether imported individually or with other subject or nonsubject parts, whether assembled or unassembled, whether mounted or unmounted, or if joined with nonsubject merchandise, such as other nonsubject parts or a completed railcar. Finishing includes, but is not limited to, arc washing, welding, grinding, shot blasting, heat treatment, machining, and assembly of various parts. When a subject coupler or subject parts are mounted on or to other nonsubject merchandise, such as a railcar, only the coupler or subject parts are covered by the scope.
The finished products covered by the scope of this investigation meet or exceed the AAR specifications of M-211, “Foundry and
The country of origin for subject couplers and parts thereof, whether fully assembled, unfinished or finished, or attached to a railcar, is the country where the subject coupler parts were cast or forged. Subject merchandise includes coupler parts as defined above that have been further processed or further assembled, including those coupler parts attached to a railcar in third countries. Further processing includes, but is not limited to, arc washing, welding, grinding, shot blasting, heat treatment, painting, coating, priming, machining, and assembly of various parts. The inclusion, attachment, joining, or assembly of nonsubject parts with subject parts or couplers either in the country of manufacture of the in-scope product or in a third country does not remove the subject parts or couplers from the scope.
The couplers that are the subject of this investigation are currently classifiable in the Harmonized Tariff Schedule of the United States (HTSUS) statistical reporting number 8607.30.1000. Unfinished subject merchandise may also enter under HTSUS statistical reporting number 7326.90.8688. Subject merchandise attached to finished railcars may also enter under HTSUS statistical reporting numbers 8606.10.0000, 8606.30.0000, 8606.91.0000, 8606.92.0000, 8606.99.0130, 8606.99.0160, or under subheading 9803.00.50. Subject merchandise may also be imported under HTSUS statistical reporting number 7325.99.5000. These HTSUS subheadings are provided for convenience and customs purposes only; the written description of the scope of this investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) received scope ruling applications, requesting that scope inquiries be conducted to determine whether identified products are covered by the scope of antidumping duty (AD) and/or countervailing duty (CVD) orders and that Commerce issue scope rulings pursuant to those inquiries. In accordance with Commerce's regulations, we are notifying the public of the filing of the scope ruling applications listed below in the month of April 2023.
Applicable May 30, 2023.
Terri Monroe, AD/CVD Operations, Customs Liaison Unit, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230, telephone: (202) 482-1384.
In accordance with 19 CFR 351.225(d)(3), we are notifying the public of the following scope ruling applications related to AD and CVD orders and findings filed in or around the month of April 2023. This notification includes, for each scope application: (1) identification of the AD and/or CVD orders at issue (19 CFR 351.225(c)(1)); (2) concise public descriptions of the products at issue, including the physical characteristics (including chemical, dimensional and technical characteristics) of the products (19 CFR 351.225(c)(2)(ii)); (3) the countries where the products are produced and the countries from where the products are exported (19 CFR 351.225(c)(2)(i)(B)); (4) the full names of the applicants; and (5) the dates that the scope applications were filed with Commerce and the name of the ACCESS scope segment where the scope applications can be found.
Fresh Garlic from the People's Republic of China (China) (A-570-831); whole garlic cloves (in brine);
Circular Welded Non-Alloy Steel Pipe from Mexico (A-201-805); certain black, plain-ended, threaded, or threaded-and-coupled circular welded steel pipe;
Tapered Roller Bearings and Parts Thereof, Finished or Unfinished from China (A-570-601); low-carbon steel
This list of scope ruling applications is not an identification of scope inquiries that have been initiated. In accordance with 19 CFR 351.225(d)(1), if Commerce has not rejected a scope ruling application nor initiated the scope inquiry within 30 days after the filing of the application, the application will be deemed accepted and a scope inquiry will be deemed initiated the following day—day 31.
In accordance with 19 CFR 351.225(m)(2), if there are companion AD and CVD orders covering the same merchandise from the same country of origin, the scope inquiry will be conducted on the record of the AD proceeding. Further, please note that pursuant to 19 CFR 351.225(m)(1), Commerce may either apply a scope ruling to all products from the same country with the same relevant physical characteristics, (including chemical, dimensional, and technical characteristics) as the product at issue, on a country-wide basis, regardless of the producer, exporter, or importer of those products, or on a company-specific basis.
For further information on procedures for filing information with Commerce through ACCESS and participating in scope inquiries, please refer to the Filing Instructions section of the Scope Ruling Application Guide, at
Please note that this notice of scope ruling applications filed in AD and CVD proceedings may be published before any potential initiation, or after the initiation, of a given scope inquiry based on a scope ruling application identified in this notice. Therefore, please refer to the case segment on ACCESS to determine whether a scope ruling application has been accepted or rejected and whether a scope inquiry has been initiated.
Interested parties who wish to be served scope ruling applications for a particular AD or CVD order may file a request to be included on the annual inquiry service list during the anniversary month of the publication of the AD or CVD order in accordance with 19 CFR 351.225(n) and Commerce's procedures.
Interested parties are invited to comment on the completeness of this monthly list of scope ruling applications received by Commerce. Any comments should be submitted to James Maeder, Deputy Assistant Secretary for AD/CVD Operations, Enforcement and Compliance, International Trade Administration, via email to
This notice of scope ruling applications filed in AD and CVD proceedings is published in accordance with 19 CFR 351.225(d)(3).
Office for Coastal Management, National Ocean Service, National Oceanic and Atmospheric Administration, Department of Commerce.
Notice of public meeting and opportunity to comment.
The National Oceanic and Atmospheric Administration (NOAA), Office for Coastal Management, will hold an in-person public meeting to solicit input on the performance evaluation of the Jobos Bay National Estuarine Research Reserve. NOAA also invites the public to submit written comments.
NOAA will hold an in-person public meeting on Wednesday, June 7, 2023, at 5 p.m. Atlantic Standard Time. NOAA will consider all relevant written comments received by Friday, June 16, 2023.
Comments may be submitted by one of the following methods:
•
•
Ralph Cantral, evaluator, NOAA Office for Coastal Management, by email at
Section 315(f) of the Coastal Zone Management Act (CZMA) requires NOAA to conduct periodic evaluations of federally approved national estuarine research reserves. The evaluation process includes holding one or more public meetings, considering public comments, and consulting with interested Federal, State, and local agencies and members of the public. During the evaluation, NOAA will consider the extent to which the Commonwealth of Puerto Rico has met the national objectives, adhered to the management program approved by the Secretary of Commerce, and adhered to the terms of financial assistance under the CZMA. When the evaluation is complete, NOAA's Office for Coastal Management will place a notice in the
Commodity Futures Trading Commission.
Notice.
The Commodity Futures Trading Commission (“CFTC” or “Commission”) is announcing an opportunity for public comment on a proposed information collection by the agency. Under the Paperwork Reduction Act (“PRA”), Federal agencies are required to publish notice in the
Comments must be submitted on or before July 31, 2023.
You may submit comments, identified by “Notice of Intent to Request for Approval for Collection 3038-0117, Exemption from Derivatives Clearing Organization Registration,” by any of the following methods:
• The Agency's website, at
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•
Please submit your comments using only one method. All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
Eileen Chotiner, Division of Clearing and Risk, Commodity Futures Trading Commission, (202) 418-5467; email:
Under the PRA, 44 U.S.C. 3501
With respect to the collection of information, the CFTC invites comments on:
• Whether the proposed collection of information is necessary for the proper performance of the functions of the CFTC, including whether the information will have a practical use;
• The accuracy of the CFTC's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Ways to enhance the quality, usefulness, and clarity of the information to be collected; and
• Ways to minimize the burden of collection of information on those who
You should submit only information that you wish to make available publicly. If you wish the CFTC to consider information that you believe is exempt from disclosure under the Freedom of Information Act (“FOIA”), a petition for confidential treatment of the exempt information may be submitted according to the procedures established in § 145.9 of the CFTC's regulations.
The CFTC reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from
There are no capital costs or operating and maintenance costs associated with this collection.
Institute of Education Sciences (IES), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act (PRA) of 1995, the Department is proposing a new information collection request (ICR).
Interested persons are invited to submit comments on or before July 31, 2023.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact Felicia Sanders, (202) 245-6264.
The Department, in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. The Department is soliciting comments on the proposed information collection request (ICR) that is described below. The Department is especially interested in public comment addressing the following issues: (1) is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
The evaluation will focus on measuring the toolkit's impact on three key outcomes: teacher self-efficacy for fraction computation and rate and ratio instruction, classroom practice for fraction computation and rate and ratio instruction, and students' ability to solve fraction computation and rate and ratio problems.
In addition to collecting data to measure teacher and student outcomes, the evaluation team will collect data to document the implementation of the
The evaluation will produce a publicly available report that summarizes evaluation findings. The findings from the evaluation will inform further refinement of the toolkit, to be released to the public after the evaluation.
Office of Environmental Management, Department of Energy.
Notice of availability; request for comments: extension of public comment period.
On May 2, 2023, a
The comment period for the NOA published on May 2, 2023 (88 FR 27495), and corrected on May 9, 2023 (88 FR 29896), is extended to July 3, 2023. DOE will consider all comments submitted or postmarked by July 3, 2023. Comments submitted to DOE concerning the Interim Guidance prior to this announcement do not need to be resubmitted as a result of this extension of the comment period.
Additional information regarding the Interim Guidance and other related documents are available online at:
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Questions concerning the Interim Guidance can be sent to David Haught, Office of Environmental Management, U.S. Department of Energy, EM-4.22, 1000 Independence Avenue SW, Washington, DC 20585, (301) 903-1765, or to
This document of the Department of Energy was signed on May 23, 2023, by Kristen G. Ellis, Acting Associate Principal Deputy Assistant Secretary for Regulatory and Policy Affairs, Office of Environmental Management. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the
Take notice that on May 22, 2023, Oncor Electric Delivery Company LLC submits tariff filing: TFO Tariff Rate Changes, to be effective May 1, 2023.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. On or before the comment date, it is not necessary to serve motions to intervene or protests on persons other than the Applicant.
In addition to publishing the full text of this document in the
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the “eFiling” link at
Hand delivered submissions in docketed proceedings should be delivered to Health and Human Services, 12225 Wilkins Avenue, Rockville, Maryland 20852.
As announced in the April 19, 2023 Notice in this proceeding, the Federal Energy Regulatory Commission (Commission) will convene a Commissioner-led forum to examine the PJM Interconnection, L.L.C. (PJM) capacity market in the above-captioned proceeding on June 15, 2023 from approximately 12:00 p.m. to 5:00 p.m. Eastern Time, following the Commission's scheduled open meeting. The forum will be held in-person at the Commission headquarters at 888 First Street NE, Washington, DC 20426 in the Commission Meeting Room.
The purpose of this forum is to solicit varied perspectives on the current state of the PJM capacity market, potential improvements to the market, and to consider related proposals to address resource adequacy. The forum will include three panels that will explore whether the PJM capacity market is achieving its objective of ensuring resource adequacy at just and reasonable rates, discuss potential market design reforms that may be needed to achieve this objective, and discuss state Commissioners' and state representatives' views on these issues. The agenda for this forum attached to this Supplemental Notice provides more detail for each panel.
While the forum is not for the purpose of discussing any specific matters before the Commission, some forum discussions may involve issues raised in proceedings that are currently pending before the Commission. These proceedings include, but are not limited to:
Attached to this Supplemental Notice is an agenda for the forum, which includes the forum program and expected panelists.
Panelists are asked to submit advance materials to provide any information related to their respective panel (
The forum will be open to the public and there is no fee for attendance. Information will also be posted on the Calendar of Events on the Commission's website,
The forum will be transcribed and webcast. Transcripts will be available for a fee from Ace Reporting (202-347-3700). A free webcast of this event is available through the Commission's website. Anyone with internet access who desires to view this event can do so by navigating to
Commission forums are accessible under section 508 of the Rehabilitation Act of 1973. For accessibility accommodations, please send an email to
For more information about this forum, please contact Katherine Scott at
This panel will explore whether the PJM capacity market is achieving its objective of ensuring resource adequacy at just and reasonable rates. To facilitate an open and thoughtful dialogue, we suggest panelists be prepared to discuss questions such as (1) is the PJM capacity market fulfilling its objectives? If not, why not?; (2) do changes to the resource mix and load, including wide-spread electrification and increased risks due to extreme weather, require changes to the structure of the capacity market?; (3) are there other drivers that may be
This panel will focus on market design reforms that could better achieve the objectives of PJM's capacity market, including those currently under consideration in PJM's Critical Issue Fast Path stakeholder process. We suggest panelists be prepared to discuss questions such as (1) what reforms might improve the capacity auction's ability to send efficient signals for entry and exit?; (2) what changes might send more efficient signals for resources to perform in real-time?; and (3) what other changes to PJM's current capacity market design might better achieve its objectives?
This panel will be a roundtable with state Commissioners and other state representatives that will reflect on discussions in the first and second panels. This panel may include discussion on how the PJM capacity market has been functioning and potential changes.
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system (
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission has received the following Natural Gas & Oil Pipeline Rate and Refund Report filings:
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
The filings are accessible in the Commission's eLibrary system (
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system (
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Federal Energy Regulatory Commission, DOE.
Notice of information collection and request for comments.
In compliance with the requirements of the Paperwork Reduction Act of 1995 (PRA), the Federal Energy Regulatory Commission (Commission or FERC) is soliciting public comment on FERC-521 (Payments for Benefits from Headwater Improvements).
Comments on the collection of information are due July 31, 2023.
You may submit comments (identified by Docket No. IC23-12-000) by one of the following methods:
•
• For those unable to file electronically, comments may be filed by USPS mail or by hand (including courier) delivery.
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Ellen Brown may be reached by email at
The total estimated annual cost burden to each respondent is $3,640 [40 hours * $91.00/hour = $3,640].
On May 8, 2023, Neptune Pumped Storage 2, LLC filed an application for a preliminary permit, pursuant to section 4(f) of the Federal Power Act (FPA), proposing to study the feasibility of the Soldier Camp Pumped Storage Project (or project). The project would be located on Lobster Creek in Curry County, OR, approximately 4 miles north of the Rogue River. The sole purpose of a preliminary permit, if issued, is to grant the permit holder priority to file a license application during the permit term. A preliminary permit does not authorize the permit holder to perform any land-disturbing activities or otherwise enter upon lands or waters owned by others without the owners' express permission.
Neptune Pumped Storage 2, LLC has proposed to construct: (1) an upper reservoir with a surface area of 50 acres and a storage volume of approximately 3,000 acre-feet created by a 5,600-foot-long, 70-foot-high rockfill embankment ring dike; (2) a lower reservoir with a surface area of 50 acres and a storage volume of approximately 3,000 acre-feet created by a 5,700-foot-long, 70-foot-high rockfill embankment ring dike; (3) a 1,825 foot-long steel and concrete penstock with a diameter of 22-feet; (4) a 550-foot-long, 120-foot-wide concrete powerhouse/pump station located on the lower reservoir shoreline containing 6 generating/pumping units for a total generating capacity of 550 MW; (5) an approximate 13-mile, 230-kilovolt (kV) transmission line from a proposed substation near the powerhouse to an existing substation on Nesika Beach Dump Rd that would interconnect to the regional transmission grid; (6) an approximately 1.7-mile-long underground pipeline with a 100 cfs capacity and a diameter of 2.5-feet diverting water from Lobster Creek for initial fill and annual maintenance fill; and, (7) appurtenant facilities. The proposed project would be operated as a closed-loop system and generate an estimated annual average of 1,606 gigawatt-hours.
Deadline for filing comments, motions to intervene, competing applications (without notices of intent), or notices of
The Commission strongly encourages electronic filing. Please file comments, motions to intervene, notices of intent, and competing applications using the Commission's eFiling system at
More information about this project, including a copy of the application, can be viewed or printed on the “eLibrary” link of Commission's website at
The Commission's Office of Public Participation (OPP) supports meaningful public engagement and participation in Commission proceedings. OPP can help members of the public, including landowners, environmental justice communities, Tribal members and others, access publicly available information and navigate Commission processes. For public inquiries and assistance with making filings such as interventions, comments, or requests for rehearing, the public is encouraged to contact OPP at (202) 502-6595 or
Take notice that on May 15, 2023, pursuant to Rule 207 of the Federal Energy Regulatory Commission's (Commission) Rules of Practice and Procedure, 18 CFR 385.207 (2022), Secure-the-Grid Coalition (Petitioner) filed a request to the Commission to direct that the North American Electric Reliability Corporation create a new or modified physical security Reliability Standard.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. All interventions, or protests must be filed on or before the comment date.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
In addition to publishing the full text of this document in the
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency is planning to submit an information collection request (ICR). “Recordkeeping and Reporting Requirements for Fuels Regulatory Streamlining (EPA ICR No. 2607.03, OMB Control No. 2060-0731) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act. Before doing so, EPA is soliciting public comments on specific aspects of the proposed information collection as described below. This is a proposed extension of the ICR, which is currently approved through January 31, 2024. An Agency may not conduct, or sponsor and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.
Comments must be submitted on or before July 31, 2023.
Submit your comments, referencing Docket ID No. EPA-HQ-OAR-2023-0239, online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential
Anne-Marie Pastorkovich, Mail Code 6405A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460; telephone number: (202) 343-9623; email address:
Supporting documents which explain in detail the information that the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
Pursuant to section 3506(c)(2)(A) of the Paperwork Reduction Act (PRA), EPA is soliciting comments and information to enable it to: (i) evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility; (ii) evaluate the accuracy of the Agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (iii) enhance the quality, utility, and clarity of the information to be collected; and (iv) minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated electronic, mechanical, or other technological collection techniques or other forms of information technology,
The recordkeeping and reporting associated with each party is directly related to that party's opportunity to create, control, or alter the product's characteristics. Parties who manufacture fuels (
The information under this ICR will be collected by the EPA's Compliance Division, within the Office of Transportation and Air Quality, Office of Air and Radiation, and by the EPA's Air Enforcement Division, within the Office of Civil Enforcement, Office of Enforcement and Compliance Assurance. The information collected will be used by the EPA to evaluate compliance with the fuel quality requirements of part 1090 under the final rule. This oversight by EPA is necessary to ensure the goals of the Clean Air Act are met. Proprietary information (
• Manufacturers of fuels—including refiners of gasoline and diesel.
• Manufacturers of regulated blendstocks, such as those who manufacturer butane, pentane, ethanol denaturant.
• Blenders, including those who blend oxygenate and detergent into gasoline.
• Transmix processors and blenders.
• Additive manufacturers, including those who produce oxygenate, detergent, or other additives.
• Parties in fuel distribution system, including pipelines, terminals, trucks, wholesale, and retail gasoline stations.
• Third parties who submit reports on behalf of the parties listed above, such as laboratories, auditors, and surveyors.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as
Written PRA comments should be submitted on or before July 31, 2023. If you anticipate that you will be submitting comments but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Cathy Williams, FCC, via email
For additional information about the information collection, contact Cathy Williams at (202) 418-2918.
Form 2100, Schedule 349, FM Translator or FM Booster Station Construction Permit Application, is used to apply for authority to construct a new FM translator or FM booster broadcast station, or to make changes in the existing facilities of such stations.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act of 1995 (PRA), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees. The FCC may not conduct or sponsor a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written PRA comments should be submitted on or before July 31, 2023. If you anticipate that you will be submitting comments but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Cathy Williams, FCC, via email
For additional information about the information collection, contact Cathy Williams at (202) 418-2918.
These reporting and third-party disclosure requirements aid the Commission monitoring advance marine vessel tracking and navigation information transmitted from Class B AIS devices to ensure that they are accurate and reliable, while promoting marine safety.
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, as required by the Paperwork Reduction Act (PRA) of 1995, the Federal Communications Commission (FCC or the Commission) invites the general public and other Federal Agencies to take this opportunity to comment on the following information collection. Pursuant to the Small Business Paperwork Relief Act of 2002, the FCC seeks specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.” The Commission may not conduct or sponsor a collection of information unless it displays a currently valid Office of Management and Budget (OMB) control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written comments and recommendations for the proposed information collection should be submitted on or before June 29, 2023.
Comments should be sent to
For additional information or copies of the information collection, contact Nicole Ongele at (202) 418-2991. To view a copy of this information collection request (ICR) submitted to OMB: (1) go to the web page
As part of its continuing effort to reduce paperwork burdens, as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the FCC invited the general public and other Federal Agencies to take this opportunity to comment on the following information collection. Comments are requested concerning: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. Pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the FCC seeks specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”
The liquidation of the assets for the receivership has been completed. To the extent permitted by available funds and in accordance with law, the Receiver will be making a final dividend payment to proven creditors. Based upon the foregoing, the Receiver has determined that the continued existence of the receivership will serve no useful purpose. Consequently, notice is given that the receivership shall be terminated, to be effective no sooner than thirty days after the date of this notice. If any person wishes to comment concerning the termination of the receivership, such comment must be made in writing, identify the receivership to which the comment pertains, and sent within thirty days of the date of this notice to: Federal Deposit Insurance Corporation, Division of Resolutions and Receiverships, Attention: Receivership Oversight Section, 600 North Pearl, Suite 700, Dallas, TX 75201. No comments concerning the termination of this receivership will be considered which are not sent within this time frame.
Thursday, June 1, 2023 at 10:30 a.m.
Hybrid Meeting: 1050 First Street NE, Washington, DC (12th Floor) and virtual.
For those attending the meeting in person, current COVID-19 safety protocols for visitors, which are based on the CDC COVID-19 hospital admission level in Washington, DC, will be updated on the commission's contact page by the Monday before the meeting. See the contact page at
The June 1, 2023 Open Meeting has been canceled.
Judith Ingram, Press Officer, Telephone: (202) 694-1220.
Individuals who plan to attend in person and who require special assistance, such as sign language interpretation or other reasonable accommodations, should contact Laura E. Sinram, Secretary and Clerk, at (202) 694-1040, at least 72 hours prior to the meeting date.
Centers for Medicare & Medicaid Services, Health and Human Services (HHS).
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (the PRA), federal agencies are required to publish notice in the
Comments must be received by July 31, 2023.
When commenting, please reference the document identifier or OMB control number. To be assured consideration, comments and recommendations must be submitted in any one of the following ways:
1.
2.
To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, please access the CMS PRA website by copying and pasting the following web address into your web browser:
William N. Parham at (410) 786-4669.
This notice sets out a summary of the use and burden associated with the following information collections. More detailed information can be found in each collection's supporting statement and associated materials (see
Under the PRA (44 U.S.C. 3501-3520), federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA requires federal agencies to publish a 60-day notice in the
1.
Centers for Medicare & Medicaid Services, Health and Human Services (HHS).
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (PRA), federal agencies are required to publish notice in the
Comments on the collection(s) of information must be received by the OMB desk officer by
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, please access the CMS PRA website by copying and pasting the following web address into your web browser:
William Parham at (410) 786-4669.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires federal agencies to publish a 30-day notice in the
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Section 1866F(c)(2)(B)(iii) specifies that in order to receive CMF and performance-based incentive payments under the Value in Treatment program, each participant shall report data necessary to: monitor and evaluate the Value in Treatment program; determine if criteria are met; and determine the performance-based incentive payment.
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EPCS requirements do not require prescribers or pharmacies to submit additional data to CMS; however, CMS did finalize one exception that requires data collection. The EPCS exception, at § 423.160(a)(5)(iv), requires a prescriber to apply for a waiver if the prescriber is unable to conduct EPCS due to circumstances beyond the prescriber's control. This collection of information is necessary to provide adequate and timely exception from the EPCS requirements if the prescriber is unable to conduct EPCS due to circumstances beyond the prescriber's control.
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The data reported on the CMS-2728 is used by the Federal Government, ESRD Networks, treatment facilities, researchers and others to monitor and assess the quality and type of care provided to end stage renal disease beneficiaries. The data collection captures the specific medical information required to determine the Medicare medical eligibility of End Stage Renal Disease claimants. It also collects data for research and policy on this population.
The three main data systems available for evaluating the ESRD program and for monitoring epidemiology, access, and quality and reimbursement effects on quality are: (1) The United States Renal Data System (USRDS) provides basic data on patterns of incidence of ESRD in the United States. The USRDS database is intended to be used for biomedical research by investigators throughout the United States and abroad. The USRDS data is intended to supplement (and not replace) public use files produced by CMS. (2) United Network for Organ Sharing (UNOS) focus is on organ donation, transplantation and educational activities. (3) The ESRD Program Management and Medical System (PMMIS), maintained by CMS, provide the foundation data for the USRDS. This system, as required by Public Law 95-292, section C(1)(A), is designed to serve the needs of the Department of Health and Human Services in support of program analysis, policy development, and epidemiological research.
The ESRD PMMIS includes information on both Medicare and non-Medicare ESRD patients and on Medicare approved ESRD hospitals and dialysis facilities. The methods of ESRD data collection (
Subsequent to publishing the 60-day
Children's Bureau; Administration for Children and Families; United States Department of Health and Human Services.
Request for public comment.
The Administration for Children and Families (ACF) is requesting a 3-year extension of the collection of information under the Child and Family Services Plan (CFSP), the Annual Progress and Services Report (APSR), and the Annual Budget Expenses Request and Estimated Expenditures (Child and Family Services (CFS)-101): Office of Management and Budget (OMB) #0970-0426, expiration September 30, 2023. There are minor changes to the CFS-101 form and no changes to the burden hours.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Office of Refugee Resettlement, Administration for Children and Families, Department of Health and Human Services.
Request for public comments.
The Office of Refugee Resettlement (ORR), Administration for Children and Families (ACF), U.S. Department of Health and Human Services is proposing to collect data for a new Operation Allies Welcome (OAW) Afghan Supplement Survey.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Health Resources and Services Administration (HRSA), Department of Health and Human Services.
Notice.
In compliance with the requirement for public comment on proposed data collection projects of the Paperwork Reduction Act of 1995, HRSA announces plans to submit an Information Collection Request (ICR), described below, to the Office of Management and Budget (OMB). Prior to submitting the ICR to OMB, HRSA seeks comments from the public regarding the burden estimate, below, or any other aspect of the ICR.
Comments on this ICR should be received no later than July 31, 2023.
Submit your comments to
To request more information on the proposed project or to obtain a copy of the data collection plans and draft instruments, email
When submitting comments or requesting information, please include the ICR title for reference.
The burden estimates below have changed from the estimates of burden provided in the previous notice (60-day notice published on August 12, 2020, vol. 85, No. 156, pp. 48708-09). The estimated burden total is significantly lower in this revised notice because it is based on the estimated total number of new users who will create accounts and publish profiles and does not include many existing program participants and site POCs who already have existing accounts.
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HRSA specifically requests comments on (1) the necessity and utility of the proposed information collection for the proper performance of the agency's functions, (2) the accuracy of the estimated burden, (3) ways to enhance the quality, utility, and clarity of the information to be collected, and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Health Resources and Services Administration (HRSA), Department of Health and Human Services.
Notice.
In compliance with the Paperwork Reduction Act of 1995, HRSA submitted an Information Collection Request (ICR) to the Office of Management and Budget (OMB) for review and approval. Comments submitted during the first public review of this ICR will be provided to OMB. OMB will accept further comments from the public during the review and approval period. OMB may act on HRSA's ICR only after the 30-day comment period for this notice has closed.
Comments on this ICR should be received no later than June 29, 2023.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
To request a copy of the clearance requests submitted to OMB for review, email Samantha Miller, the HRSA Information Collection Clearance Officer, at
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A 60-day notice was published in the
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable materials, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the Office of AIDS Research Advisory Council.
The meeting will be open to the public, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting. The meeting will be videocast and can be accessed from the NIH Videocasting and Podcasting website (
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
In the interest of security, NIH has procedures at
Information is also available on the Institute's/Center's home page:
Federal Emergency Management Agency, DHS
Notice of federal advisory committee meeting.
The Federal Emergency Management Agency (FEMA) Technical Mapping Advisory Council (TMAC) will hold an in-person public meeting with a virtual option on Tuesday, June 13, 2023, and Wednesday, June 14, 2023. The meeting will be open to the public in-person and via a Microsoft Teams Video Communications link.
The TMAC will meet on Tuesday, June 13, 2023, and Wednesday, June 14, 2023, from 8:00 a.m. to 5:00 p.m. Eastern Time (ET). Please note that the meeting will close early if the TMAC has completed its business.
The meeting will be held in-person at ADDRESS to be inserted at a later date], and virtually using the following Microsoft Teams Video Communications link (Tuesday Link:
To facilitate public participation, members of the public are invited to provide written comments on the issues to be considered by the TMAC, as listed in the
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A public comment period will be held on Tuesday, June 13, 2023, from 3:30 p.m. to 4:00 p.m. ET and Wednesday, June 14, 2023, from 12:00 p.m. to 12:30 p.m. ET. The public comment period will not exceed 30 minutes. Please note that the public comment period may end before the time indicated, following the last call for comments. Contact the individual listed below to register as a speaker by Wednesday, June 7, 2023, 5:00 p.m. ET. Please be prepared to submit a written version of your public comment.
FEMA is committed to ensuring all participants have equal access regardless of disability status. If you require a reasonable accommodation due to a disability to fully participate, please contact the individual listed in the
Brian Koper, Designated Federal Officer for the TMAC, FEMA, 400 C Street SW, Washington, DC 20472, telephone 202-646-3085, and email
Notice of this meeting is given under the
In accordance with the
Office of the Chief Information Officer, HUD.
Notice of order of succession.
In this notice, the Chief Information Officer (CIO) for the Department of Housing and Urban Development designates the Order of Succession for the Office of the Chief Information Officer. This Order of Succession supersedes all prior Orders of Succession for the Office of the Chief Information Officer, including the Order of Succession published in the
John B. Shumway, Assistant General Counsel for Administrative Law, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW, Room 9244, Washington, DC 20410, telephone number (202) 405-5190 (this is not a toll-free number). HUD welcomes and is prepared to
The CIO for the Department of Housing and Urban Development is issuing this Order of Succession of officials authorized to perform the functions and duties of the CIO when, by reason of absence, disability, or vacancy in office, the CIO is not available to exercise the powers or perform the duties of the office. This Order of Succession is subject to the provisions of the Federal Vacancies Reform Act of 1998 (5 U.S.C. 3345-3349d). This publication supersedes all prior orders of succession for the Office of the Chief Information Officer, including the Order of Succession published in the
Subject to the provisions of the Federal Vacancies Reform Act of 1998 during any period when, by reason of absence, disability, or vacancy in office, the Chief Information Officer for the Department of Housing and Urban Development is not available to exercise the powers or perform the duties of the Chief Information Officer, the following officials within the Office of the Chief Information Officer are hereby designated to exercise the powers and perform the duties of the Office, including the authority to waive regulations. No individual who is serving in an office listed below in an acting capacity may act as the Chief Information Officer pursuant to this Order of Succession. These officials shall perform the functions and duties of the office in the order specified herein, and no official shall serve unless all the other officials, whose position titles precede theirs in this order, are unable to serve by reason of absence, disability, or vacancy in office.
(1) Deputy Chief Information Officer;
(2) Assistant Chief Information Officer for IT Infrastructure and Operations;
(3) Chief Technology Officer;
(4) Chief Information Security Officer;
(5) Assistant Chief Information Officer for Business and IT Resource Management;
(6) Assistant Chief Information Officer for Customer Relationship and Performance Management.
This Order of Succession supersedes all prior Orders of Succession for the Office of the Chief Information Officer, including the Order of Succession published on September 14, 2016 (81 FR 63200).
Office of the Secretary, HUD.
Notice of delegation of authority.
Through this notice, the Secretary of the Department of Housing and Urban Development delegates to the Chief Information Officer (CIO) all authority and responsibility for the Department's information technology (IT) and authority to serve as the Department's Senior Information Technology Executive. This delegation of authority supersedes all prior delegations of authority for the Office of the Chief Information Officer, including the delegation of authority published in the
This delegation of authority is effective May 23, 2023.
John B. Shumway, Assistant General Counsel for Administrative Law, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW, Room 9244, Washington, DC 20410, telephone number (202) 405-5190 (this is not a toll-free number). HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit:
The Chief Information Officer is responsible for meeting the requirements of section 5125 of the Clinger-Cohen Act (40 U.S.C. 11315), which established the position of the Chief Information Officer. Additional responsibilities of the CIO derive from the Paperwork Reduction Act of 1995 (44 U.S.C. 3506), the Privacy Act of 1974 (5 U.S.C. 552(a)), and the E-Government Act of 2002. Accordingly, the Secretary delegates as follows:
The Secretary of HUD hereby delegates to the CIO all authority and responsibility for the Department's information technology (IT), except those already delegated to the Government National Mortgage Association (Ginnie Mae), including management of the Department's information technology resources and the authority to serve as the Department's Senior Information Technology Executive. In carrying out such duties and responsibilities, the CIO shall be responsible for meeting the requirements of section 5125 of the Clinger-Cohen Act (40 U.S.C. 11315), the Paperwork Reduction Act of 1995 (44 U.S.C. 3506), and the E-Government Act of 2002. The CIO shall, among other duties:
1. Ensure compliance by all HUD program offices with the prompt, efficient, and effective implementation of Information Resources Management responsibilities.
2. Provide advice and other assistance to the Secretary of HUD and other senior management personnel of HUD to ensure that information technology (IT) is acquired and information resources are managed effectively and efficiently.
3. Approve and implement all Technology Modernization Fund (TMF) funding and development activities including, but not limited to, the authority to sign Interagency Agreements.
4. Promote the effective and efficient design and operation of all major IT processes for HUD, including improvements to work processes of the Department. Monitor and evaluate the performance of IT programs of HUD based on applicable performance measurements, and advise the Secretary of HUD and IT Governance/Oversight Boards regarding whether to continue, modify, or terminate a program or project.
5. Serve as a member of the executive branch Chief Information Officers Council, participate in its functions, and monitor the Department's implementation of IT standards promulgated by the Secretary of Commerce.
6. Serve as a representative to the Interagency Committee on Government
7. Perform any additional duties that are assigned to the CIO by applicable law, including Office of Management and Budget (OMB) regulations and circulars.
8. Consistent with the roles and responsibilities of IT Governance/Oversight Boards, design, implement, and maintain HUD process for maximizing the value and assessing and managing the risks of IT acquisitions, in accordance with section 5122 of the Clinger-Cohen Act.
9. Monitor the Department's compliance with the policies, procedures, and guidance in OMB Circular A-130 (or equivalent guidance), and recommend or take appropriate corrective action in instances of failures to comply and, as required by the Circular, report to the OMB Director.
10. To meet the objectives of the Government Paperwork Elimination Act (Pub. L. 105-277), the CIO must ensure that the Department's methods for use and acceptance of electronic signatures are compatible with the relevant policies and procedures issued by the OMB Director.
11. Carry out duties pursuant to 44 U.S.C. 3506 including:
a. Carry out the agency's information resource management activities to improve agency productivity, efficiency, and effectiveness.
b. Comply with the requirements of this subchapter and related policies established by the Director of the Office of Management and Budget.
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12. Ensure that HUD web pages and the information contained on the web pages are accessible, available, and secure.
13. In consultation with OMB, OGC, and other agencies, as appropriate, the CIO will coordinate with the appropriate HUD offices to ensure that the Department implements sections 206(c) and 206(d) of the E-Government Act (electronic rulemaking submissions and electronic dockets).
14. The CIO will have ultimate responsibility for ensuring that the Department fulfills its responsibilities under Title III of the E-Government Act, the Federal Information Security Management Act, by:
a. Consistent with 44 U.S.C. 3544, designating a senior Department official who will report to the CIO and have responsibility for departmentwide information security as the official's primary duty, including the following responsibilities: Developing and maintaining an OMB-approved departmentwide information security program consistent with the requirements of 44 U.S.C. 3544(b), 44 U.S.C. 3543, and 40 U.S.C. 11331.
16. Consistent with section 207(d) of the E-Government Act, the CIO will ensure that the Department complies with all OMB policies relating to the categorization of information.
17. In coordination with OGC and OPA, the CIO will ensure that privacy notices posted on HUD websites comply with OMB guidance (see section 208(c) of the E-Government Act).
The authority delegated in this document does not include the authority to sue or be sued or to issue or waive regulations.
The CIO is authorized to redelegate to employees of HUD any of the authority delegated under section A above.
This delegation of authority supersedes all prior delegations of authority for the Office of the Chief Information Officer including the delegation of authority published on November 1, 2011 (76 FR 67471.) The Secretary may revoke the authority authorized herein, in whole or part, at any time.
Office of the Assistant Secretary for Public and Indian Housing, (PIH), HUD.
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting reinstatement without change of a previously approved collection for which approval has expired. The reinstatement of this previously approved PRA collection for which approval has expired is required in order to withdraw this PRA. The information collection required for the Family Unification Program (described below) is now covered under OMB# 2577-0169.
Interested persons are invited to submit comments regarding this proposal.
Written comments and recommendations for the proposed information collection can be sent within 60 days of publication of this notice to
Colette Pollard, Reports Management Officer, REE, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC 20410; email Colette Pollard at
Copies of available documents submitted to OMB may be obtained from Ms. Pollard.
This notice informs the public that HUD is seeking approval from OMB for the information collection described in section A.
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) The accuracy of the agency's estimate of the burden of the `proposed collection of information;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology,
HUD encourages interested parties to submit comments in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35.
Office of the Assistant Secretary for Public and Indian Housing, (PIH), HUD.
Notice.
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for 60 days of public comment.
Interested persons are invited to submit comments regarding this proposal. Written comments and recommendations for the proposed information collection can be submitted within 60 days of publication of this notice to
Erica Mahoney, Office of Policy, Programs and Legislative Initiatives, PIH, Department of Housing and Urban Development, 451 7th Street SW, (Room 3178), Washington, DC 20410; telephone 202-402-6488, (this is not a toll-free number). HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit
This notice informs the public that HUD is seeking approval from OMB for the information collection described in section A.
HUD collects information for the HUD-52723 and HUD-52722 through web-based forms in the Operating Fund Web Portal. HUD discontinued using VBA enhanced Excel tools to collect this data after CY 2022. Web-based forms improve the availability of the forms to PHAs, improve data integrity, and secure transfer of the data from the PHA to HUD. Web-based forms should not increase the burden to complete.
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) The accuracy of the agency's estimate of the burden of the proposed collection of information;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology,
HUD encourages interested parties to submit comments in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35.
Office of the Secretary, Department of Housing and Urban Development (HUD).
Final notice.
In accordance with the Build America, Buy America Act (BABA), this notice advises that HUD is extending the previously issued public interest, general applicability waiver for an
Applicable May 23, 2023 for HUD Tribal FFA obligated by HUD on or after the effective date of the waiver. In addition, in the case of FFA obligated by HUD in Tribal programs on or after May 14, 2023 but prior to the effective date of this Final Waiver, the waiver applies to all expenditures incurred on or after the effective date of the Final Waiver.
Faith Rogers, Department of Housing and Urban Development, 451 Seventh Street SW, Room 10126, Washington, DC 20410-5000, at (202) 402-7082 (this is not a toll-free number). HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech and communication disabilities. To learn more about how to make an accessible telephone call, please visit
The Build America, Buy America Act (“BABA” or “the Act”) was enacted on November 15, 2021, as part of the Infrastructure Investment and Jobs Act (“IIJA”) (Pub. L. 117-58). The Act establishes a domestic content procurement preference, the BAP, for Federal infrastructure programs. Section 70914(a) of the Act establishes that no later than 180 days after the date of enactment, HUD must ensure that none of the funds made available for infrastructure projects may be obligated by the Department unless it has taken steps to ensure that the iron, steel, manufactured products, and construction materials used in a project are produced in the United States. In section 70912, the Act further defines a project to include “the construction, alteration, maintenance, or repair of infrastructure in the United States” and includes within the definition of infrastructure those items traditionally included along with buildings and real property. Thus, starting May 14, 2022, new awards of HUD FFA, and any of those funds newly obligated by HUD then obligated by the grantee for infrastructure projects, are covered under BABA provisions of the Act, 41 U.S.C. 8301 note, unless covered by a waiver.
Since the enactment of the Act, HUD has worked diligently to develop a plan to fully implement the BAP across its FFA programs awarding funds to non-Tribal Recipients. HUD understands that advancing Made in America objectives is a continuous effort and believes setting forth a transparent schedule of future implementation in those programs provides industry partners and non-Tribal Recipients with the time and notice necessary to efficiently and effectively implement the BAP. HUD recently announced plans to move forward with the implementation of the new BAP requirements in connection with its award of FFA to non-Tribal Recipients in a manner designed to maximize coordination and collaboration to support long-term investments in domestic production. HUD continues its efforts to implement the Act in those programs consistent with the guidance and requirements of the Made in America Office of the Office of Management and Budget, including guidance concerning appropriate compliance with the BAP.
In order to ensure orderly implementation of the BAP across HUD's FFA programs awarding funds to non-Tribal Recipients, HUD has provided public interest, general applicability waivers in order to implement the BAP in phases in connection with the application of the BAP in such programs and announced a corresponding implementation plan for all non-Tribal Recipients. As part of those efforts, HUD has published two general applicability, public interest waivers covering Exigent Circumstances and De Minimis and Small Grants, which can be found at
Additionally, as noted above, HUD previously published a one-year general applicability, public interest waiver of the BAP in connection with FFA provided to Tribal Recipients
HUD is now moving forward with consultation on specific plans for implementation of the BAP in HUD's FFA provided to Tribal Recipients, in light of the comments received from the Tribal leaders and the progress the agency has made implementing the BAP in other FFA programs. In order to appropriately engage in consultation as described in HUD's Tribal Government-to-Government Consultation Policy,
Under section 70914(b), HUD and other Federal agencies have authority to waive the application of a domestic content procurement preference when (1) application of the preference would be contrary to the public interest, (2) the materials and products subject to the preference are not produced in the United States at a sufficient and reasonably available quantity or satisfactory quality, or (3) inclusion of domestically produced materials and products would increase the cost of the overall project by more than 25 percent. Section 70914(c) provides that a waiver under section 70914(b) must be published by the agency with a detailed written explanation for the proposed determination and provide a public comment period of not less than 15 days. Pursuant to section 70914(d)(2), when seeking to extend a waiver of general applicability, HUD is required to provide for a public comment period of not less than 30 days on the continued need for such waiver.
On May 14, 2022, HUD published a General Applicability Waiver of Build America, Buy America Provisions as Applied to Tribal Recipients of HUD Federal Financial Assistance for a period of one year. The current waiver expires on May 14, 2023. During this time period, HUD participated in an interagency Tribal Consultation on the implementation of BABA and participated in an interagency workgroup to address issues raised during the joint consultation.
Many Tribal communities still lack basic infrastructure such as roads, running water, and indoor plumbing. The need for safe, decent, and sanitary housing is immense. In its 2017 Housing Needs Study, HUD concluded that 68,000 new units were needed in Indian Country to replace inadequate units and eliminate severe overcrowding. That same study found that the lack of infrastructure was the number one barrier to housing development in many Tribal communities. Not only is infrastructure in many Tribal communities in dire need of repair and modernization, but Tribes also often find it difficult to locate available supplies, suppliers, and construction labor necessary to develop that infrastructure.
The COVID-19 pandemic compounded the infrastructure challenges faced by many Native American communities. Recent feedback from Tribal Recipients has disclosed the numerous challenges they experienced while implementing the various HUD COVID-19 relief programs. A lack of supplies and a lack of available contractors working in Tribal communities were identified as the primary challenges faced by Tribal Recipients. Tribal Recipients indicated to HUD that procuring supplies and materials can be very difficult at times, and this made HUD-funded infrastructure projects challenging to implement to completion and at budgeted cost. Even when supplies were available for purchase, increased costs for steel, lumber, and transportation combined with lack of developers to bid on projects led to a backlog of construction projects and severely impacted Tribes' ability to complete important infrastructure projects and construct new housing.
Unfortunately, many Tribes are more disconnected from American supply chains than the average HUD grantee due to their remoteness. For example, some Alaska Native villages are not on the road system, must develop infrastructure and housing during an extremely short construction season, and must grapple with unique transportation limitations, including having to ship basic construction materials only twice per year by barge at extremely elevated costs. These Tribes often report to HUD that it can be a major challenge to secure space on a barge for construction materials. At times, even when space is secured, any unexpected setbacks faced, such as loss of cargo, materials damaged through shipping, or miscalculation of the appropriate amount or quality of materials needed, can result in infrastructure and housing projects being delayed an entire construction season. These Tribes end up waiting for the next barge in six months and face cost overruns.
Annually, HUD provides over $1 billion in FFA to almost 600 sovereign Tribal Nations. Programs like the Indian Housing Block Grant (“IHBG”) and the Indian Community Development Block Grant (“ICDBG”) program are critical programs that allow the Federal Government to carry out its trust responsibilities and support affordable housing and infrastructure development in Tribal communities. Under these programs, HUD provides block grant funding to Tribal Recipients to help address these housing and infrastructure needs—particularly for the benefit of low- and moderate-income families. HUD anticipates that the BAP will apply to some projects funded under these programs. Accordingly, HUD must ensure that Tribal Recipients are able to effectively implement the BAP in a manner that ensures that the purposes of BABA are carried out, while at the same time preventing additional undue barriers to the development of Tribal infrastructure, which has suffered from decades of underinvestment.
HUD has determined that the prior one-year waiver period was insufficient to fully consult and assess the impacts that BAP will have on HUD's Tribal Recipients. While the interagency consultation webinar provided HUD with some additional insight into how the BAP will impact Tribal communities generally, HUD is particularly interested in seeking more tailored Tribal feedback on the impact of the BAP on infrastructure projects that are funded under HUD's various Tribal programs. Additionally, since the interagency webinar was held in 2022, HUD has determined to implement the BAP in a phased manner across its non-Tribal programs. With the benefit of this recent determination, HUD needs additional time to seek Tribal feedback on whether and when HUD should take a similar phased approach with respect to the implementation of the BAP under its Tribal programs. HUD will also assess the unique and diverse conditions of Tribal communities across Indian Country and determine how the BAP should be applied after taking those conditions into account. Additional time is needed to consult with Tribal Leaders.
HUD sought public comment on a limited, one-year extension of HUD's existing public interest, general applicability waiver of the BAP in connection with HUD's FFA to Tribal Recipients to provide the Department with sufficient time to complete consultation consistent with HUD's Tribal Government-to-Government Consultation Policy. HUD's `Tribal Government-to-Government Consultation Policy' was adopted in compliance with Executive Order 13175, “Consultation with Indian Tribal Governments,” and outlines the internal procedures and principles HUD must follow when communicating and coordinating on HUD programs and activities that affect Native American Tribes. HUD's Tribal Consultation policy recognizes the right of Tribes to self-government and facilitates Tribal
In fiscal year 2023, Tribal Entities received over $1 billion through the Department's programs. Infrastructure is an eligible activity under some of these programs and could be subject to the BAP. HUD believes that full compliance with the BAP will create ongoing demand for domestically produced products and deepen domestic supply chains. Because the potential application of BAP mandated by the Act would be new to all HUD Tribal FFA recipients, HUD has not had the benefit of engaging in fulsome consultation consistent with its Tribal Consultation policy concerning the application of the BAP to Tribal Recipients—particularly with respect to how the BAP should apply to HUD's various Tribal programs, how the BAP should be phased in to allow for successful implementation, and how compliance will be verified. While HUD participated in a general consultation session as part of a governmentwide interagency process regarding the general application of the BAP to Tribal Recipients, because of the significance and potentially wide scope of new requirements necessary to demonstrate compliance with BAP or to seek waivers of BAP for specific products or projects, it is imperative that HUD further engage in Tribal consultation on the specific intended application of the BAP to FFA awarded to HUD's Tribal Recipients.
HUD now has the benefit of having fully considered an appropriate method of phased implementation across its other FFA programs and has begun the methodical implementation of the BAP in those other FFA programs. With the benefit of this experience and the benefit of the governmentwide consultation efforts, HUD will conduct a more tailored consultation process with the Tribal Recipients of HUD FFA specifically focused on the BAP application to HUD's various Tribal housing and community development programs. HUD believes that the Tribal consultation process is necessary for the successful implementation of the BAP across its covered FFA programs funding infrastructure projects, that a full and meaningful Tribal consultation process will allow HUD to determine the potential impact of the Act's Buy America Preference on Tribal governments and communities and will inform a tailored implementation for Tribal Recipients that recognizes the sovereignty and unique status of Tribal governments. Accordingly, HUD has determined that it would be contrary to the public's interest to apply the BAP to FFA awards to Tribal Recipients prior to completion of further Tribal consultation. In addition, HUD published the proposed waiver in the
Similar to other HUD programs, HUD will seek Tribal feedback consistent with HUD's Tribal Government-to-Government Consultation Policy and Executive Order 13175 on when and how to phase in the BAP for FFA provided to Tribal Recipients. HUD will also solicit Tribal feedback on other related issues, including how to effectively implement the BAP for extremely remote communities, such as remote Native Alaskan Villages, that are more disconnected from traditional supply chains, have an extremely short construction seasons, are located off the road system, and are reliant on barges to ship construction materials. HUD acknowledges that rural Tribal communities and Alaska Native Villages have expressed major concerns about availability of American-made products and continue to struggle with challenges because of their proximity away from main supply sources. Tribes are already facing major challenges with accessing construction materials, and major cost overruns due to a lack of available materials—particularly in remote Tribal communities.
During the one-year waiver period, HUD has identified various scheduled national and regional convenings and conferences where HUD intends to host in-person Tribal consultation sessions with Tribal leaders to discuss the BAP. Currently, HUD is scheduled to present during the Forum on Affordable Housing and Community Development Annual Conference. Additionally, HUD will seek to engage with Tribes and Tribal housing practitioners at the various quarterly and semi-annual regional housing association meetings that are planned during the one-year waiver period. These association meetings are routinely attended by HUD Tribal Recipients who will be charged with complying with the BAP once it goes into effect. Consistent with past practice, HUD also intends to conduct some Tribal consultation virtually. HUD will do so by soliciting written feedback from Tribal leaders specifically addressing the impact of the BAP on HUD's Tribal programs.
After receiving Tribal feedback, HUD will seek to implement the BAP in a manner that advances the Made in America objectives while also ensuring that the BAP implementation does not serve as a major barrier to Tribal communities' efforts to develop critical infrastructure. Many Tribal communities lack running water, sewer, roads, and basic infrastructure. HUD will implement the BAP in a thoughtful manner that ensures that Tribal Recipients can effectively implement the BAP without substantial negative impacts on planned and ongoing critical infrastructure projects. HUD will also seek to provide additional technical assistance resources to ensure that Tribal Recipients can build capacity and be in a better position to comply with the BAP. Therefore, HUD is extending for a period of one year the waiver of its general applicability, public interest waiver of the application of the BAP in connection with FFA awards to Tribal Recipients that are obligated by HUD during the pendency of the waiver.
Under OMB Memorandum M-22-11, “Memorandum for Heads of Executive Departments and Agencies,” published on April 18, 2022, agencies are expected to assess “whether a significant portion of any cost advantage of a foreign-sourced product is the result of the use of dumped steel, iron, or manufactured products or the use of injuriously subsidized steel, iron, or manufactured products” as appropriate before granting a public interest waiver. HUD's analysis has concluded that this assessment is not applicable to this waiver, as this waiver is not based in the cost of foreign-sourced products.
HUD remains committed to the successful implementation of the important BAP across its programs providing covered FFA for infrastructure projects, while recognizing the unique government-to-government relationship it has with Tribal Recipients receiving HUD FFA for infrastructure projects. HUD is committed to engaging in a timely consultation process as noted above to further this goal.
As required under section 70914 of the Act, HUD solicited comment from the public on the waiver announced in a Notice on its website for a period of 30 days and published the proposed waiver in the
This Final Notice is applicable to Tribal FFA obligated by HUD on or after the effective date of this Final Notice throughout the one-year waiver period. This Final Notice is also applicable to any expenditures of Tribal FFA obligated by HUD between May 14, 2023 and the effective date of this Final Notice that occur on or after the effective date of this Final Notice.
Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h), that the Response of the United States to Public Comments on (a) the proposed Final Judgment as to Defendants Cargill Meat Solutions Corp. and Cargill, Inc. (“Cargill”), Wayne Farms, LLC (“Wayne”), and Sanderson Farms, Inc. (“Sanderson”) (collectively, “Processor Settling Defendants”); and (b) the proposed Final Judgment as to Webber, Meng, Sahl and Company, Inc., d/b/a WMS & Company, Inc. (“WMS”) and G. Jonathan Meng (“Meng”) (collectively, “Consultant Settling Defendants”) has been filed with the United States District Court for the District of Maryland in
Copies of the Public Comments and the United States' Response are available for inspection on the Antitrust Division's website at
Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h) (the “Tunney Act”), the United States of America responds to the public comments received by the United States about (a) the proposed Final Judgment in this case as to Defendants Cargill Meat Solutions Corp. and Cargill, Inc. (“Cargill”), Wayne Farms, LLC (“Wayne”), and Sanderson Farms, Inc. (“Sanderson”) (collectively, “Processor Settling Defendants”); and (b) the proposed Final Judgment in this case as to Webber, Meng, Sahl and Company, Inc., d/b/a WMS & Company, Inc. (“WMS”) and G. Jonathan Meng (“Meng”) (collectively, “Consultant Settling Defendants”). The Processor Settling Defendants and the Consultant Settling Defendants are collectively the “Settling Defendants.”
After this Response has been published in the
After careful consideration of the comments submitted, the United States continues to believe that the proposed remedies will address the harm alleged in the Complaint and are therefore in the public interest. The proposed Final Judgments will prevent the Settling Defendants from conspiring to (1) assist their competitors in making compensation decisions, (2) exchange current and future, disaggregated, and identifiable compensation information, and (3) facilitate this anticompetitive agreement. The United States appreciates that some commenters believe that other significant issues remain in the poultry industry. And the United States does not contend that the proposed Final Judgments address all potential issues in the poultry industry. The question before the court, however, is limited to whether the proposed Final Judgments appropriately address the antitrust claims alleged in the Complaint against the Settling Defendants. Upon a thorough review of the comments, the United States believes that the proposed Final Judgments do resolve those claims in the public interest.
On July 25, 2022, the United States filed a civil Complaint against the Settling Defendants to enjoin them from collaborating on decisions about poultry plant worker compensation, including through the exchange of compensation information, which suppressed competition in the nationwide and local labor markets for poultry processing. The Complaint alleges that this conduct is anticompetitive and violates Section 1 of the Sherman Act, 15 U.S.C. 1. The Complaint also alleges that Defendants Sanderson and Wayne acted deceptively in the manner in which they compensated poultry growers in violation of Section 202(a) of the Packers and Stockyards Act, 1921, as amended and supplemented, 7 U.S.C. 192(a) (the “PSA”). As explained below, the proposed settlement as to the PSA claim is not subject to review under the Tunney Act.
Contemporaneously, the United States filed the proposed Final Judgments as to the Processor Settling Defendants
The United States arranged for the publication of the Complaint, the proposed Final Judgments, and the Competitive Impact Statement in the
The Clayton Act, as amended by the Tunney Act, requires that proposed consent judgments in cases brought by the United States under the antitrust laws be subject to a 60-day comment period, after which the court shall determine whether entry of the proposed Final Judgments “is in the public interest.” 15 U.S.C. 16(e)(1). In making that determination, the court, in accordance with the statute as amended in 2004, is required to consider:
(A) the competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B).
In considering these statutory factors, the court's inquiry is necessarily a limited one, because the government is entitled to “rather broad discretion to settle with the defendant within the reaches of the public interest.”
As the United States Court of Appeals for the District of Columbia Circuit has held, under the Tunney Act, a court considers the relationship between the remedy secured and the specific allegations in the government's complaint, whether the decree is sufficiently clear, whether its enforcement mechanisms are sufficient, and whether the decree may positively harm third parties, among other factors.
In determining whether a proposed settlement is in the public interest, a district court “must accord deference to the government's predictions about the efficacy of its remedies, and may not require that the remedies perfectly match the alleged violations.”
Moreover, the court's role under the Tunney Act is limited to reviewing the remedy in relationship to the violations that the United States has alleged in its complaint, and does not authorize the court to “construct [its] own hypothetical case and then evaluate the decree against that case.”
In its 2004 amendments to the Tunney Act,
The proposed Final Judgments are the culmination of a thorough, comprehensive investigation conducted by the Antitrust Division of the U.S. Department of Justice regarding the Settling Defendants' conspiracy to collaborate on decisions about poultry plant worker compensation, exchange compensation information, and facilitate such conduct through data consultants. Based on the evidence gathered, the United States concluded that this collaboration and information-sharing was anticompetitive and violated Section 1 of the Sherman Act, 15 U.S.C. 1, because it suppressed competition in the nationwide and local labor markets for poultry processing plant workers. This conspiracy distorted the competitive process, disrupted the competitive mechanism for setting wages and benefits, and harmed a generation of poultry processing plant workers by unfairly suppressing their compensation.
Specifically, the United States concluded that, from 2000 or before, the Processor Settling Defendants, Consulting Settling Defendants, and their poultry processing and consultant co-conspirators exchanged compensation information through the dissemination of survey reports in which they shared current and future, detailed, and identifiable plant-level and job-level compensation information for poultry processing plant workers. The shared information allowed poultry processors to determine the wages and benefits their competitors were paying—and planning to pay—for specific job categories at specific plants.
The United States further concluded that the Processor Settling Defendants and their co-conspirators exchanged confidential, competitively sensitive information about poultry plant workers at annual meetings, which they attended in person. From at least 2000 to 2002 and 2004 to 2019, the Consultant Settling Defendants facilitated, supervised, and participated in these annual in-person meetings among the Processor Settling Defendants and their co-conspirators and facilitated their exchange of information about poultry processing worker compensation information.
The Processor Settling Defendants' and their co-conspirators' collaboration on compensation decisions and exchange of competitively sensitive compensation information extended beyond the shared survey reports and in-person annual meetings. The Processor Settling Defendants and their co-conspirators repeatedly contacted each other to seek and provide advice and assistance on poultry processing worker compensation decisions, including by sharing further non-public information regarding each other's wages and benefits. This demonstrates a clear agreement between competitors to ask for help with compensation decisions and to provide such help to others upon request.
In sum, this conspiracy enabled the Processor Settling Defendants and their co-conspirators to collaborate with and assist their competitors in making decisions about worker compensation, including wages and benefits, and to exchange information about current and future compensation plans. Through this conspiracy, the Processor Settling Defendants artificially suppressed compensation for poultry processing workers.
The proposed Final Judgments provide effective and appropriate remedies for this competitive harm. They have several components, which the Settling Defendants agreed to abide by during the pendency of the Tunney Act proceedings and which the Court ordered in the Stipulations and Orders of July 26, 2022 (ECF 11 & 12).
Among other terms, the proposed Final Judgment for the Processor Settling Defendants requires the Processor Settling Defendants to:
a. end their agreement to collaborate with and assist in making compensation decisions for poultry processing workers and their anticompetitive exchange of compensation information with other poultry processors;
b. submit to a monitor (determined by the United States in its sole discretion) for a term of 10 years, who will examine the Processor Settling Defendants' compliance with both the terms of the proposed Final Judgment and U.S. federal antitrust law generally, across their entire poultry businesses; and
c. provide significant and meaningful restitution to the poultry processing workers harmed by their anticompetitive conduct, who should have received competitive compensation for their valuable, difficult, and dangerous labor.
The proposed Final Judgment for the Processor Settling Defendants also prohibits the Processor Settling Defendants from retaliating against any employee or third party for disclosing information to the monitor, an antitrust enforcement agency, or a legislature, among other terms.
Under the proposed Final Judgment for the Consultant Settling Defendants, the Consultant Settling Defendants are restrained and enjoined from:
a. providing survey services involving confidential competitively sensitive information;
b. participating in non-public trade association meetings that involve either the exchange of confidential competitively sensitive information or involve the business of poultry processing; and
c. engaging in non-public communications with any person engaged in the business of poultry processing other than as a party or fact witness in litigation, among other terms.
Each proposed Final Judgment provides that it will expire 10 years from the date of its entry, except that after five years from the date of its entry, each Final Judgment may be terminated upon notice by the United States to the Court and the relevant Settling Defendants that continuation of the relevant Final Judgment is no longer necessary or in the public interest.
The United States did not receive any public comments concerning the proposed Final Judgment relating to the Consultant Settling Defendants and received five comments concerning the proposed Final Judgment relating to the Processor Settling Defendants. These comments were submitted by Professor Peter C. Carstensen (“Carstensen Comment”); Ms. Trina B. McClendon (“McClendon Comment”); Farm Action (“Farm Action Comment”); the Campaign for Family Farms and the Environment (“CFFE Comment”); and the Campaign for Contract Agriculture Reform (“CCAR Comment”).
Professor Carstensen is the Fred W. & Vi Miller Chair in Law Emeritus at University of Wisconsin Law School. While now retired, during his professional career Professor Carstensen specialized in antitrust law with a particular interest in competition issues in agricultural markets.
Ms. McClendon is the owner/operator of Trinity Poultry Farm, LLC, an eight-house poultry farm in Amite County, Mississippi, where she has grown chickens for Sanderson for two decades.
Farm Action is “a farmer-led advocacy organization dedicated to building a food and agriculture system that works for everyday people instead of a handful of powerful corporations.”
CFFE is a coalition of state and national organizations that works “to support family farmers, rural communities and a vibrant, sustainable food system.”
CCAR “represents farmers, ranchers, and poultry growers across the United States.”
While the United States takes seriously all of the issues raised in the public comments, much of the CCAR and CFFE Comments and all of the McClendon Comment focus on either the portion of the Processor Settling Defendants' proposed Final Judgment relating to the PSA or on the acquisition of Sanderson by Cargill and Wayne, rather than on whether the proposed Final Judgments adequately resolve the antitrust claims against the Settling Defendants for collaborating on decisions about poultry plant worker compensation, including through the exchange of compensation information, and facilitating this anticompetitive agreement.
The Tunney Act applies only to final judgments or decrees in proceedings brought by the United States under the antitrust laws.
Comments regarding the acquisition of Sanderson are also not subject to Tunney Act review in this matter because the Complaint does not challenge the Sanderson acquisition. Rather, the Complaint alleges that the Settling Defendants' multi-decade collaboration on compensation decisions, sharing of compensation information, and facilitation of such conduct was anticompetitive and that Wayne and Sanderson violated the Packers and Stockyards Act. Under the Tunney Act, the court reviews only whether the proposed remedies address the violations the United States has alleged in its complaint.
The United States understands that some of the commenters are advocating for additional enforcement in the poultry industry. Parts of the CCAR and CFFE Comments urge the United States to continue working to address “the antitrust implications of industry data sharing activities.”
The United States does not contend that the proposed Final Judgments resolve all issues in the poultry industry, but these comments are outside the scope of Tunney Act review. They concern conduct not challenged in the Complaint and thus do not provide a basis for measuring the relief included in the proposed Final Judgments.
Additionally, the United States believes the proposed Final Judgments demonstrate to companies both inside and outside the poultry industry that anticompetitive information-sharing risks significant legal consequences, and the broad scope of the monitor contained in the proposed Final Judgments provides protection against anticompetitive information-sharing in contexts other than poultry processing compensation. The United States takes the conduct alleged in the Complaint seriously; the investigation into such conduct is ongoing and the United States will pursue additional claims where the evidence and the law justifies action. Members of the public are encouraged to submit information about potentially unlawful exchanges of information between competitors to the Department of Justice Antitrust Division's Citizen Complaint Center (
After careful consideration of the public comments, the United States continues to believe the proposed Final Judgments provide an effective and appropriate remedy for the antitrust violations alleged in the Complaint and are therefore in the public interest. The United States will move this Court to enter the proposed Final Judgments after the public comments and this response are published as required by 15 U.S.C. 16(d).
On May 19, 2023, I issued and served on the parties a Decision and Order (the Decision and Order) revoking, effective 30 days from the date of publication in the
Upon consideration of the entire record before me, the public interest—in particular, the potential need for Respondent's customers and their patients to find new suppliers given the revocation of Respondent's registrations—and the possibility for renewed settlement negotiations, I hereby order that the May 19, 2023 Decision and Order will be effective on August 28, 2023—ninety days from the date of the Decision and Order's publication in the
This document of the Drug Enforcement Administration was signed on May 23, 2023, by Administrator Anne Milgram. That document with the original signature and date is maintained by DEA. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DEA Federal Register Liaison Officer has been authorized to sign and submit the
On May 2, 2018, the Drug Enforcement Administration (DEA or Government), issued an Order to Show Cause (OSC) and Immediate Suspension of Registration (ISO) to Morris & Dickson Co., LLC (Respondent), of Louisiana. Administrative Law Judge (ALJ) Exhibit (ALJX) 1, at 1. The OSC informed Respondent of the immediate suspension of its Certificates of Registration Nos. RM0314790 and RM0335732 (registrations)
Respondent requested a hearing before a DEA ALJ, which was conducted from May 13 to May 16, 2019. On August 29, 2019, the ALJ issued a Recommended Decision (RD), which was transmitted to the Agency along with the administrative record on November 26, 2019.
The Government presented a
After thoroughly reviewing the entire record, the Agency finds substantial record evidence that Respondent's continued registration is inconsistent with the public interest in light of the long-term, egregious failures of Respondent in its responsibility as a distributor to maintain effective controls against diversion of controlled substances. Furthermore, the Agency finds that Respondent has failed to demonstrate that the Agency should continue to entrust it with its controlled substance registrations.
1. The OSC primarily alleged that Respondent failed to maintain effective controls against diversion when it failed to report to DEA thousands of unusually large orders for hydrocodone and oxycodone, which constituted potential suspicious orders, and when it shipped orders to customers without resolving red flags of diversion or reporting the orders to DEA in violation of 21 U.S.C. 823(b)(1) and (e)(1) as well as 21 CFR 1301.71(a) and 1301.74(b). OSC, at 2. Further, the OSC alleged that Respondent failed to adequately design and operate a system to alert Respondent to suspicious orders of controlled substances and failed to report the suspicious orders to DEA in violation of 21 CFR 1301.74(b).
2. The allegations included that, from January 2014 until April 2018, Respondent shipped approximately 7,000 unusually large orders of oxycodone and almost 5,000 unusually large orders of hydrocodone. OSC, at 5; Govt Prehearing, at 8. During this time, Respondent filed a total of only three suspicious order reports with DEA.
3. Furthermore, the OSC alleged that, from approximately January 2014 to April 2018,
The Government presented its case through the testimony of six witnesses and the introduction of 70 exhibits. The Government's first witness was the Acting Section Chief of the Pharmaceutical Investigation Section of the DEA (the Section Chief), who testified generally regarding the regulatory requirements for distributors. Tr. 47-87. The Government also presented testimony from two Diversion Investigators (DI 1 and DI 2) regarding the history of the investigation and the identification of Government exhibits.
Respondent presented its case through the testimony of three witnesses and the introduction of ten exhibits. Respondent's first witness was Kenneth A. Weinstein, Tr. 501-689, who was the Vice President of the consulting firm Analysis Group, Inc. (AGI), and was accepted without objection as an expert in statistical analysis related to controlled substance distribution and in pharmacy ordering and inventory management. RD, at 22 (citing Tr. 513-14; 520-21). Weinstein authenticated Respondent Exhibit (RX) 14, pages 15-19, and RX 28 and 29. Tr. 506, 562-68. Weinstein testified generally regarding the use of the Tukey analytical model in developing Suspicious Order Monitoring systems and testified specifically regarding what he found to be deficiencies in G.R.'s statistical analysis in this case. Weinstein also testified regarding AGI's compliance work for Respondent after DEA had issued the OSC.
Respondent's second witness was Scott Irelan, Tr. 693-840, who had worked for Respondent for 31 years before becoming the Director of Corporate Compliance and Security in May 2018 after the OSC was issued. Irelan testified regarding his current role at Respondent, the remedial measures that Respondent had put in place since the issuance of the OSC, Respondent's preexisting compliance measures during the relevant time period, and Respondent's acceptance of responsibility.
Respondent's final witness was Louis Milione,
The Parties agree to 47 stipulations (Stips.), which are accepted as facts in these proceedings. The Agency incorporates all of these into the record—the most relevant of which are summarized here.
In 2017, while investigating pharmacies in Louisiana selling high volumes of oxycodone and hydrocodone, the DEA New Orleans Division discovered that some of those pharmacies were supplied by Respondent. Tr. 92. During a subsequent audit, Respondent told DEA that it used Pro Compliance Reports and its employees to identify suspicious orders. Tr. 93.
DEA served Respondent with three separate subpoenas and several requests for clarification between February 1, 2018, and April 2018.
Government Exhibit 11 is Respondent's (signed by Paul Dickson) supplemental undated response to DEA following up on subpoenas issued to Respondent. Tr. 144-45, 324; GX 11, at 2. This response states that “[b]ecause formal records are not kept in the regular course of business on the
At the same time, Respondent produced an external hard drive containing documents in response to the February subpoenas. Tr. 146. Again, DEA emailed Respondent to ensure a complete response, which Respondent generally affirmed and also then provided a phone log
21 CFR 1301.74(b) requires distributors to
Respondent received a copy of a letter sent on September 27, 2006, by DEA to distributors of controlled substances. Tr. 62-63; GX 3, at 1. The letter emphasized that “[d]istributors are, of course, one of the key components of the distribution chain. If the closed system is to function properly as Congress envisioned, distributors must be vigilant in deciding whether a prospective customer can be trusted to deliver controlled substances only for lawful purposes.” GX 3, at 1. The letter therefore, reminded distributors of their “responsibilities . . . in view of the prescription drug abuse problem our nation currently faces.”
Government Exhibit 4 is a December 20, 2007 letter that the DEA sent to every distributor of controlled substances. Tr. 63-64; GX 4, at 1. The stated purpose of this letter was to again remind distributors of the requirement to inform DEA of suspicious orders. GX 4, at 1. The letter reminded distributors that in addition to “maintain[ing] effective controls against diversion,” they are also required to “report suspicious orders of controlled substances.”
DEA maintains an Automation of Reports and Consolidated Orders System (ARCOS). Tr. 69-70. Distributors are required to report to ARCOS all shipments of controlled substances in schedules I and II and all narcotic controlled substances in schedule III. Stip. 9; Tr. 70. In April 2008, DEA met with Respondent's President Paul Dickson, Sr., and discussed Respondent's legal obligations and requirements as a distributor, including suspicious order requirements, the need to know its customers, and the need to conduct due diligence. Tr. 67-68. At the time, DEA reviewed its ARCOS data with Respondent to show customers who had anomalies and to demonstrate “things that [Respondent] should be looking at and questioning [its] customers [about].” Tr. 68-69. In 2013 and 2015, DEA conducted distributor conferences and Jacob Dickson, Respondent's compliance officer,
Respondent filed three suspicious order reports during the relevant time period. Stip. 7. The first, dated April 7, 2014, states that “[a]t this time, and pending further review by you or M&D, M&D has stopped selling schedule II through schedule V drugs to the captioned pharmacy.” GX 6, at 1. The next report is dated April 26, 2017, and states that the pharmacy in question “purchased a quantity of 60 cartons of prefilled 10 mg morphine sulphate syringes . . . This was a substantial increase over a total sales of one carton in the prior four months.” GX 6, at 35. The letter states that the order was investigated but does not discuss the resolution of this investigation, nor whether the order was filled.
Distributors are required to design and operate a suspicious order monitoring system that identifies suspicious orders. 21 CFR 1301.74(b). Suspicious orders include, but are not
Additionally, a distributor's general duty to prevent diversion includes the duty to perform due diligence on its customers.
The Agency's decision in
The record evidence establishes that customer red flags indicative of potential diversion include a pharmacy customer that: dispenses a high volume of narcotics; dispenses the trinity drug cocktail;
The Agency finds the exact percentage threshold to be largely irrelevant to determine in this case, because in every instance of the Government's allegations, this particular red flag was flagged by the Pro Compliance Reports that were created for Respondent. Furthermore, all of the pharmacy customers in the allegations were dispensing controlled substances at 20 percent or more of their total dispensing—with one customer at one point dispensing as high as 69 percent controlled substances,
Again, the Agency finds the exact percentage threshold for cash payments to be largely irrelevant to determine in this case, because in every instance of the Government's allegations, this particular red flag was flagged by the Pro Compliance Reports that were created for Respondent. As detailed herein, the percentages of cash paid by Respondent's customers at issue were also particularly high,
The GS testified that when Respondent received the Pro Compliance Reports in GX 20-56 that demonstrated red flags of diversion, it was obligated to resolve the red flags and document their resolution. Tr. 474-76. Based on the record testimony of the experts, and the
In conducting customer due diligence, Respondent used, at least up to and including during the hearing, Pro Compliance Reports,
The GS testified that he did not find evidence that Respondent ever rejected a controlled substance order from any of the exemplar pharmacies, nor did he find documentation that Respondent dispelled all of the red flags in these reports. Tr. 385-86, 316,
The record evidence demonstrates that the Pro Compliance Initial Risk Evaluation Report provided to Respondent for Folse Pharmacy designated the pharmacy as “high risk.” GX 22, at 5; Tr. 328. Further, Pro Compliance Reports for Folse Pharmacy in Respondent's possession demonstrated that during the time period of the allegations, Folse Pharmacy's dispensing practices raised numerous red flags, including: high percentages
Pro Compliance Reports for Bordelon's Super Save Pharmacy in Respondent's possession demonstrated that during the time period of the allegations, Bordelon's dispensing practices raised numerous red flags, including: high percentages
Pro Compliance Reports for Wallace in Respondent's possession demonstrated that during the time period of the allegations, Wallace's dispensing practices raised numerous red flags, including, but not limited to: high percentages of controlled substance prescriptions paid for in cash,
Pro Compliance Reports for Pharmacy Specialties in Respondent's possession demonstrated that during the time period of the allegations, Pharmacy Specialties' dispensing practices raised numerous red flags, including: high percentages
Pro Compliance Reports for Dave's Pharmacy in Respondent's possession demonstrated that during the time period of the allegations, Dave's dispensing practices raised numerous red flags, including: high percentages
A Pro Compliance Report for Hephzibah Pharmacy in Respondent's possession demonstrated that during the time period of the allegations, Hephzibah's dispensing practices raised numerous red flags, including: high percentages
Jacob Dickson sent an email to a DI stating that Respondent had ceased business with Hephzibah because Respondent did not support the customers who “wished to change their business model;” however, Respondent “did not find these accounts to exhibit suspicious activity or excessive orders.” GX 72, at 1. Respondent's phone logs state on March 17, 2017, that “they must work on clearing up issues that Pro Compliance found, high cash, trinity & high quantities on Hydrocodone and Oxycodone. Will re-run in 90 days.” GX 14, at 23. On March 21, 2017, there is a follow up entry that states, “After a couple of months, they decided they would rather change wholesalers than cooperate with our compliance program.”
Pro Compliance Reports for the Wellness Pharmacy in Respondent's possession demonstrated that during the time period of the allegations, Wellness's dispensing practices raised red flags of very high percentages of controlled substance prescriptions and high numbers of dosage units of hydrocodone and oxycodone.
Pro Compliance Reports for Wilkinson Family Pharmacy in Respondent's possession demonstrated that during the time period of the allegations, Wilkinson's dispensing practices raised numerous red flags, including: high percentages
The Government has presented substantial record evidence that Respondent distributed controlled substances to the exemplar pharmacies during the relevant time period in the face of red flags of diversion, including high percentages of controlled substance prescriptions, high percentages of controlled substance prescriptions paid for in cash, dispensing of trinity cocktail prescriptions, and increases and higher than average dosages of particular schedule II controlled substances. All of these red flags were specifically identified by Pro Compliance Reports in Respondent's possession. Although some of the notations provided by Respondent demonstrated that employees had suspicions about certain orders and had made some contacts, none of the notations adequately resolved the red flags and none of the orders were reported to DEA as suspicious. In the documents Respondent produced to DEA, the GS did not find any indication that the Compliance officer stopped shipment of any order of controlled substances identified as suspicious. Tr. 315-16, 385. It is noted that most of these customers displayed not just one red flag, but multiple red flags of diversion—most of them well over any arguable threshold that would require investigation,
The Government alleged that Respondent failed to design and operate an effective system to disclose to Respondent suspicious orders and to report those orders to DEA. OSC, at 8. DEA used statistical analysis of orders placed by Respondent's customers for oxycodone and hydrocodone to “identify extremely large individual pharmacy transactions and extremely large monthly volume totals,” in order to demonstrate the failures of Respondent's SOM system and reporting.
G.R. testified regarding the statistical analysis that he performed for the investigation, including his use of a statistical methodology called the Tukey method to identify outlier transactions that represented possible suspicious orders. Tr. 225; 236-37. G.R. testified that Tukey uses an interquartile range, which is the difference between the first and third quartiles, and then is multiplied by a factor of one-and-a-half to six (IQR multiplier). Tr. 202. Although there is no single multiplier to use, Tr. 523, the higher the IQR multiplier, the fewer outliers will be identified. Tr. 523-24. G.R. used an IQR multiplier of 3 to calculate a smaller group of outliers to identify “what are called far out or extreme outliers.” Tr. 203, 233, 242. G.R. testified that the transactions that he identified using three IQR above the 75th percentile represented unusually large transactions, which would normally occur less than one percent of the time. Tr. 238-39.
G.R. testified that he analyzed Respondent's sales of oxycodone and
Government Exhibits 65 and 66 contain all of the transactions concerning oxycodone shipments that Respondent reported to DEA between January 1, 2014, and April 30, 2018, as well as the results of G.R.'s corrected analysis using the above-described methodology. Tr. 71-72. GX 65, 66; Tr. 71-72, 211-12. G.R.'s corrected analysis identified the following amounts of Respondent's oxycodone and hydrocodone sales as outliers,
G.R.'s corrected analysis also identified approximately 450 potential outliers for Respondent's oxycodone and hydrocodone sales for seven
In response to criticism from Respondent's expert, G.R. also conducted a “look-back analysis,” which, according to G.R., produced results “consistent with what [he] found using the”
Respondent presented the testimony of its own expert, Weinstein, who opined that G.R.'s analysis failed to reliably identify unusually large or suspicious orders. Tr. 558. Weinstein based his criticism of G.R.'s analysis on four factors: (1) the use of a four-year fixed-frame as opposed to the look-back method; (2) the failure to consider the schedule change of hydrocodone in late 2014 from schedule III to schedule II; (3) the failure to consider package size and formulation; and (4) the use of the line item approach as opposed to a cumulative approach. RD, at 70; Tr. 525-28, 541-46, 558.
Weinstein credibly explained his criticisms of G.R.'s analysis in detail, opining that the factors he identified both over-estimated,
Weinstein notably “did not conduct an original analysis to determine, retrospectively, which of Respondent's orders from 2014 through 2018 should have been identified as suspicious.” Resp Exceptions, at 40;
Even if the Agency fully credits Weinstein's criticism of G.R.'s analysis, the Government has clearly demonstrated its
Respondent produced a Policies and Procedure Manual and a Standard Operating Procedures (SOP) Manual in response to DEA's investigation. GX 17 and 18. The Policies and Procedure Manual states, “Where a Compliance Officer sees a ratio of controlled drugs ordered out of the normal range, or the overall quantity is too high compared with the volume of the account, the Compliance Officer has a duty to investigate by calling the account. The Compliance Officer may stop shipment on any order if he or she finds the order to be unusually suspicious.” GX 17, at 12. The Policies and Procedures Manual notably does not indicate an obligation to report suspicious orders to DEA. The GS testified that in his review of Respondent's records, he did not see documentation of stopped suspicious orders. Tr. 315-16. The SOP Manual
Irelan testified that Respondent's SOM system during the time period comprising the allegations (former SOM System) was “not as robust as what we have today.” Tr. 738-40 (citing
Irelan testified that Respondent's former SOM system would send an email or text message to the compliance officer, C.G., when an order was flagged as suspicious and the order would ship if C.G. did not take action to stop it. Tr. 728, 778.
Irelan testified that Respondent's former SOM system was “not consistent with best practices . . . . because it didn't hold the order. It didn't give an opportunity to resolve red flags before shipping.” Tr. 729. Additionally, Irelan testified that “the calculation that the system was using [to identify potentially suspicious orders] was only using ten times a 90-day average,” which made it “inadequate.” Tr. 729;
Respondent also argues that as a result of its former SOM system, it had ceased supplying controlled substances to 42 pharmacies from 2014 to 2016. RX 11, at 14 (powerpoint slide); Tr. 871. Respondent's expert acknowledged that if those customers had been terminated based on Respondent's SOM program, it should have filed suspicious order reports with DEA. Tr. 1015-16;
Respondent requested confidentiality related to its current SOM system and policies; therefore, this Decision incorporates by reference the findings of the RD related to Respondent's system and summarizes herein at as high a level as possible while appropriately adjudicating the facts.
A distributor's registration may be suspended or revoked upon a finding that the distributor “has committed such acts as would render [its] registration under section 823 of this title inconsistent with the public interest as determined under such section . . . .” 21 U.S.C. 824(a)(4). With regard to distributors of schedule II controlled substances, Congress has set forth five factors to consider when determining whether the distributor's registration would be in the public interest. The factors to be considered are:
(1) maintenance of effective control against diversion of particular controlled substances into other than legitimate medical, scientific, and industrial channels;
(2) compliance with applicable State and local law;
(3) prior conviction record of applicant under Federal or State laws relating to the manufacture, distribution, or dispensing of such substances;
(4) past experience in the distribution of controlled substances; and
(5) such other factors as may be relevant to and consistent with the public health and safety.
The Agency considers these public interest factors in the disjunctive and may rely on any one or a combination of factors and give each factor the weight the Agency deems appropriate in determining whether to revoke a registration or to deny a pending application for renewal of a registration.
The Government bears the initial burden of proof and must justify revocation by a preponderance of the evidence.
In this case, the Government contends that Respondent's continued registrations are inconsistent with the public interest based on Factors One and Four. ALJ-90, at 27-29.
With respect to Factor One, concerning the maintenance of effective controls against diversion, DEA has promulgated regulations to guide the regulated community. Specifically,
All applicants and registrants shall provide effective controls and procedures to guard against theft and diversion of controlled substances. In order to determine whether a registrant has provided effective controls against diversion, the Administrator shall use the security requirements set forth in [21 CFR] 1301.72-1301.76 as standards for the physical security controls and operating procedures necessary to prevent diversion.
DEA's security regulations further provide that:
The registrant shall design and operate a system to disclose to the registrant suspicious orders of controlled substances. The registrant shall inform the Field Division Office of the Administration in his area of suspicious orders when discovered by the registrant. Suspicious orders include orders of unusual size, orders deviating substantially from a normal pattern, and orders of unusual frequency.
The OSC alleges that Respondent failed to maintain “effective controls against diversion of particular controlled substances into other than legitimate medical, scientific, and industrial channels,” in violation of 21 U.S.C. 823(b)(1) and 21 CFR 1301.71(a). ALJX 1, at 3, paras. 7, 10. Second, the OSC alleges that Respondent failed to adequately “design and operate a system to disclose to the registrant suspicious orders of controlled substances” and report them to DEA, in violation of 21 CFR 1301.74(b). ALJX 1, at 3, paras. 8, 10.
Factor Four involves a registrant's past experience in the distribution of controlled substances, which the Government has argued is appropriately considered along with its maintenance of effective controls against diversion.
To begin, the regulations require distributors to “design and operate a system to disclose to the registrant suspicious orders of controlled substances.” 21 CFR 1301.74(b). The regulations provide that, at minimum, a suspicious order includes “orders of unusual size, orders deviating substantially from a normal pattern, and orders of unusual frequency.”
In order to conclude that an order for controlled substances is suspicious, a “distributor is not required to establish, to a statistical certainty, that a pharmacy was likely diverting controlled substances.”
When a distributor's suspicious order monitoring (SOM) system places a hold on a customer's order for controlled substances because the order is of unusual size, pattern, or frequency, the order meets the specific criteria of being suspicious.
In this case, Respondent's SOM system during the relevant time period did not have the capability to hold an order that was flagged as “potentially suspicious.” Tr. 728, 778. Therefore, the system could not comply with the DEA legal requirements. Tr. 729 (Irelan testifying that the SOM system was “not consistent with best practices” because “[i]t didn't give an opportunity to resolve red flags before shipping.”)
Additionally, the witnesses were in agreement that Respondent's SOM system during the relevant time period was inadequate to identify orders of unusual size in that it only flagged orders that were “ten times a 90-day average,” Tr. 729-30, 321, 652.
Further, while Respondent had written policies and procedures, those policies and procedures only identified three suspicious orders over a period of four years and four months that were reported to the DEA. Respondent admits that its previous policies were inadequate. Tr. 720-21. Respondent had a policy of producing monthly and daily reports, yet none is apparent in the Administrative Record, and although Respondent maintained a proprietary database, RX 11, at 5, there is no record evidence from this database.
Finally, although Respondent argues that the record supports that it was conducting due diligence into its customers, Respondent admits that it did not adequately document that due diligence, nor did it apply that due diligence at an order level.
In sum, the Agency finds substantial record evidence that Respondent failed to design and operate an adequate SOM system in violation of 21 CFR 1301.74(b).
As explained above, DEA regulations obligate distributors of controlled substances to not only design and operate a system to identify suspicious orders, but to also report all suspicious orders to DEA. 21 CFR 1301.74(b). In other words, DEA regulations require distributors like Respondent “to alert DEA when their retail-pharmacy customers
The purpose of the DEA's reporting requirement is “to provide investigators in the field with information regarding potential illegal activity in an expeditious manner.”
Here, DEA presented evidence using the Tukey statistical model to determine a ballpark number of suspicious orders that an adequate SOM system might have identified during the time period in the allegations both for the eight exemplar pharmacies and for Respondent's customer base at large for two frequently abused controlled substances: oxycodone and hydrocodone. The ballpark estimate found numerous potential suspicious orders for seven out of the eight exemplar pharmacies, and for the overall customers, it found that 7,252 sales of oxycodone and 4,948 sales of hydrocodone during this time period should have possibly been reported as suspicious to DEA.
The ballpark numbers constitute substantial evidence that there were far more suspicious orders that should have been identified, investigated, or reported than the mere three that Respondent reported during the time period. Even taking into consideration all of the criticism levied on DEA's modeling by Respondent's expert, he himself admitted that the data run during the beginning of 2018 produced similar results to the quantity that Respondent was reporting under the new system, which, in a little over a year, amounted to 3,915 suspicious orders. As such, the Agency agrees with the ALJ that the three suspicious order reports filed during the relevant timeframe “barely scratched the surface,” RD, at 140, and finds it clear that the Government has proven by substantial evidence that Respondent failed to investigate or report potentially thousands of suspicious orders of oxycodone and hydrocodone to DEA.
Furthermore, the
It is inherent in the obligation under 21 CFR 1301.71(a) to maintain “effective controls” against diversion that “a registrant has an affirmative duty to protect against diversion by knowing its customers and the nature of [their controlled substances] sales.”
The record evidence and testimony from multiple experts in this case, the Pro Compliance Reports themselves, and prior DEA decisions have all clearly demonstrated that such suspicious circumstances, or red flags, include a pharmacy that: dispenses a high volume of narcotics;
When a customer demonstrates red flags of diversion, the distributor must report a suspicious order to DEA unless the distributor conducts a due diligence investigation, which “must dispel all red flags indicative that a customer is engaged in diversion.”
In upholding DEA's interpretation of the due diligence requirement in the
As we have emphasized throughout this opinion, it is not necessary for a distributor of controlled substances to investigate suspicious orders if it reports them to DEA and declines to fill them. But if a distributor chooses to shoulder the burden of dispelling suspicion in the hopes of shipping any it finds to be non-suspicious, and the distributor uses something like the SOMS Protocol to guide its efforts, then the distributor must actually undertake the
In this case, Respondent received numerous Pro Compliance Reports that raised multiple red flags for each of the relevant customers during the relevant time period.
Here, Respondent acknowledged the paucity of documentation in its records that might show that it had resolved red flags.
A distributor fails to conduct meaningful due diligence that satisfies its regulatory duties where it merely “accept[s] at face value whatever superficial explanation” the pharmacy offers and then fails to independently verify it.
There is substantial record evidence that Respondent failed to adequately design a suspicious order monitoring system and failed to report suspicious orders to DEA. Further, Respondent failed to report controlled substance orders from customers displaying red flags of diversion and in such cases failed to either cease shipment, or, alternatively, to investigate, resolve, and document the resolution of the red flags. Thus, the Agency finds that Respondent failed to maintain effective controls against diversion of controlled substances into other than legitimate medical, scientific, and industrial channels in violation of 21 CFR 1301.71(a). The Agency also finds that Respondent failed to adequately design and operate a system to disclose to the registrant suspicious orders of controlled substances and report those orders to DEA in violation of 21 CFR 1301.74(b).
DEA has requested revocation of both Respondent's registration at its distribution center in Shreveport, Louisiana, and Respondent's second registration in New Orleans (Jefferson Parish). Respondent argues that DEA has not “alleged any misconduct to have occurred at Respondent's Jefferson location or adduced any evidence or testimony at the hearing regarding Respondent's Jefferson registration.” Resp Exceptions, at 49.
The Agency has frequently “treat[ed] two separately organized business entities as one integrated enterprise . . . based on the overlap of ownership, management, and operations of the two entities.”
When a practitioner registrant acts in a manner inconsistent with the public interest, in determining whether to revoke, DEA looks to whether the practitioner can be entrusted with a registration.
The lens through which Congress has instructed the Agency to assess each distributor registration is whether or not such registration is consistent with the public interest. 21 U.S.C. 823(b). In this case, if Respondent was allowed to simply shift its operations to an entity with the same ownership, then the effect of the violations found herein against Respondent would be a nullity and there would be nothing to prevent Respondent's Jefferson location from continuing to act inconsistently with the public interest. It would be inconsistent with the intent of the CSA to permit such an easily implementable loophole, while it is consistent with Agency decisions to close the loophole by treating the two overlapping entities as one integrated enterprise for purposes of sanction.
Therefore, due to the uncontested commonality of ownership, management, and operations,
The Government has established a
Respondent contends that it has unequivocally accepted responsibility
Ultimately, as explained above, the Agency has long stated that when the Government has presented a
Here, Irelan accepted responsibility for Respondent failing to effectively apply its customer due diligence in assessing orders of controlled substances, Tr. 722-23, for Respondent failing to implement and maintain a suspicious order monitoring system “consistent with best practices for compliance,” Tr. 729, 731,
In discussing his acceptance of responsibility for Respondent's failure to apply its customer due diligence, Irelan specifically testified that, based on his review of Respondent's records before May 2018, Respondent conducted “a tremendous amount of due diligence” on its customers. Tr. 704-05, 710. Irelan caveated that Respondent did not keep the due diligence documentation “in such a way as to make it . . . easily accessible.” Tr. 705 (referring to “notes on paper,” “notes . . . kept in a database” and “limited notes in our enhanced customer profile”). Nonetheless, the Agency finds that Irelan's statements claiming a “tremendous amount of due diligence” were aimed at minimizing the extent of Respondent's misconduct, which the Agency has previously weighed against a finding of unequivocal acceptance of responsibility.
Further, Irelan's statements regarding whether Respondent's monitoring systems were “consistent with best practices” also clearly minimized the scope of Respondent's misconduct and did not demonstrate a full grasp of the breadth of the misconduct alleged—which was that Respondent had violated DEA regulations,
The requisite acceptance of responsibility hinges on the respondent demonstrating an understanding both of the past misconduct and its extent.
As Respondent stated in its Exceptions:
Multiple United States Courts of Appeal have upheld DEA's acceptance of responsibility requirement as rational on the grounds that if a respondent “does not understand the extent of the past misconduct or its current responsibilities under the law,
In contrast to Respondent's final statement above, there were a few times where Irelan's limited involvement and knowledge of the misconduct indisputably impeded his ability to accept full responsibility, such as when, regarding Wellness Pharmacy, he was unable to state what due diligence “specifically was performed for that account.” Tr. 831. The Agency finds that Irelan's admission that he had not familiarized himself with the specific due diligence performed by Respondent for the exemplar pharmacies demonstrates that he did not actually have the knowledge required to accept unequivocal responsibility on behalf of Respondent for the full extent of the violations found. Irelan's assertion that Respondent did conduct a “tremendous amount” of due diligence is also inconsistent with his stated lack of knowledge regarding the amount of due diligence conducted for the limited number of customers included in the OSC's allegations. It seems logical that in cultivating an understanding of Respondent's violations in order to adequately accept responsibility, Irelan would have focused his review on the customers most relevant to the allegations. Therefore, Irelan does not seem to have been equipped to meet Respondent's burden in accepting responsibility.
Although the Agency does not challenge Irelan's authority to act on behalf of Respondent in accepting responsibility, the burden is on
It is noted that the Agency has long held that the misconduct of an entity's principal is properly considered in determining whether to revoke the entity's registration.
Irelan opined that C.G. and Jacob Dickson, who were in charge of compliance during the relevant time period, were responsible for Respondent's misconduct, but was not sure enough of the “dynamics” or “reporting process” to opine about whether Paul Dickson, Sr., carried any responsibility. Tr. 808-09. The extent of the misconduct is an important factor in the Agency's ability to determine whether to entrust Respondent with a registration and Irelan's inability to testify to the level of involvement and knowledge of Respondent's principals in the misconduct demonstrates another reason why the Agency cannot deem his acceptance of responsibility to be adequate such that the Agency can entrust Respondent with a registration. In fact, Respondent's submitted evidence includes testimony from the Hearing on the Motion for Temporary Restraining Order
The Agency finds that Irelan's inability to describe Paul Dickson's involvement in the proven misconduct further demonstrates the inadequacy of Respondent's acceptance of responsibility in this proceeding. In all, Irelan's lack of understanding and recognition of the full scope of the misconduct and attempts to minimize the misconduct lead the Agency to conclude that Respondent's acceptance of responsibility was equivocal and insufficient to ensure that Respondent can be entrusted with a registration.
When a registrant fails to make the threshold showing of acceptance of responsibility, the Agency has stated that it need not address the registrant's remedial measures.
The ALJ characterized Respondent's remedial measures as “impressive.” RD, at 152. The Agency similarly credits the efforts that the record reflects Respondent undertook to improve its compliance with DEA's requirements after being served with the OSC. As the ALJ appropriately stated, the Agency has also made it abundantly clear that remediation alone is not adequate to avoid a sanction and that limited-to-no-weight is given to remedial measures when the effort is not made until after
Additionally, the ALJ found that, based on prior Agency decisions, he could give no weight to Respondent's remedial measures given the lack of Respondent's unequivocal acceptance of responsibility. RD, at 152.
In this case, even if the Agency gave weight to Respondent's remedial measures, the measures are outweighed by the fact that it has not adequately established that Respondent as an entity fully understands the scope of the misconduct such that it can be entrusted with regulatory compliance in the future.
The record demonstrates that Respondent's violations of the law were not isolated occurrences, but took place over the course of four years and involved multiple customers.
Finally, both specific and general deterrence strongly weigh in favor of revoking Respondent's registration.
Although Respondent has implemented remedial measures, it has not adequately demonstrated that its leadership can be entrusted to continue these measures and prevent reoccurrence of what happened prior to the issuance of the OSC, which amounted to a SOM system that was not designed or operated in a way that would adequately prevent diversion of controlled substances nor provide DEA with information critical to its mission. Respondent argues that the ALJ erred in finding that “the continued registration of a fully remediated registrant with an `impressive' anti-diversion regime, along with evidence of good faith desire to prevent diversion, does not serve the public interest.”
Having reviewed the record in its entirety, the Agency finds that Respondent cannot be entrusted with a DEA registration and orders that its registration be revoked. The Agency addresses collateral matters and additional issues raised in Respondent's Exceptions before issuing a final Order.
On January 5, 2022, Respondent filed a Motion to Reopen the Administrative Record. Respondent seeks to introduce evidence of post-hearing conduct that it argues demonstrates acceptance of responsibility and successful remediation.
The Agency finds that Respondent has not met its burden to reopen the record. In all DEA administrative proceedings, there is inevitably at least some delay between the hearing and the final decision of the Administrator.
Respondent had the opportunity to, and did, introduce evidence related to its acceptance of responsibility and remedial measures at the hearing. That evidence was entered into the record and considered in the ALJ's Recommended Decision and this Final Order.
The Agency has carefully considered Respondent's Exceptions to the Recommended Decision, has addressed them throughout the record, and addresses the remaining herein.
In its Exceptions, Respondent notes that “as [it] has repeatedly and consistently objected, including at the hearing, this entire proceeding was unconstitutional.” (citing Tr. 20:23-22:17). Respondent contends that “[t]he presiding ALJ in this matter was unconstitutionally appointed when these proceedings began and unconstitutionally continued to preside over these proceedings after the Attorney General purportedly ratified his appointment.” (citing
Respondent's Prehearing Statement, filed on August 3, 2018, averred, “Respondent may file a motion before this Tribunal related to the constitutionality of the DEA's administrative process given the U.S. Supreme Court's recent decision in [
On October 26, 2018, Respondent submitted a letter on the record alerting the Tribunal that it had commenced an action in the United States District Court for the Western District of Louisiana seeking an “injunction enjoining DEA and DOJ from requiring Morris & Dickson to appear in any administrative proceeding, including the upcoming hearing scheduled for November 13, 2018, unless and until a constitutionally valid administrative system has been established.” ALJX 26, at 1. On October 31, 2018, Respondent filed another letter with the Tribunal explaining that it did not file a motion with the ALJ because the Agency “has no authority to entertain a facial constitutional challenge” and that “[t]he Louisiana Court will resolve that question. Morris & Dickson simply provides this Tribunal notice of that filing and requests sufficient time to allow the Louisiana Court (and, if necessary, the Fifth Circuit Court of Appeals) to make its ruling.” ALJX 34, at 1-2.
On December 31, 2018, Respondent submitted a letter notifying the Tribunal that “[o]n December 28, 2018, the District Court in the Western District of Louisiana dismissed Respondent's complaint without prejudice, finding that it did not have jurisdiction to hear Morris & Dickson's claims” and attaching the decision. ALJX 47, at 1. The Decision stated that, although Respondent's argument was “somewhat close,” “in light of the policy problem created by crafting a `constitutional claim' exception to Congress's ability to channel initial review through agencies, the Court finds that Morris & Dickson's separation-of-powers claims are not `wholly collateral' to the proceeding before Judge Dorman because they were raised in an attempt to delay or defeat administrative enforcement of the CSA.”
On January 15, 2019, the ALJ issued an Order Lifting the Stay and Third Prehearing Ruling. ALJX 51. The Order stated that Respondent indicated during a telephonic conference on the previous day that it “w[ould] not seek to maintain the stay in this case pending its appeal to the United States Court of Appeals for the Fifth Circuit”
The next time Respondent raised the
On October 25, 2018, the Attorney General ratified the prior appointment of the DEA ALJs, including ALJ Dorman, and “approved their appointments as his own under the Constitution.”
Having found that Respondent cannot be entrusted with a DEA registration, the Agency issues the following Order revoking Respondent's DEA registrations.
Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 U.S.C. 824(a)(4) and 21 U.S.C. 823(b), (e), I hereby revoke DEA Certificates of Registration Nos. RM0314790 and RM0335732 issued to Morris & Dickson, Co., LLC. Further, pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 U.S.C. 824(a)(4) and 21 U.S.C.
This document of the Drug Enforcement Administration was signed on May 19, 2023, by Administrator Anne Milgram. That document with the original signature and date is maintained by DEA. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DEA Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of DEA. This administrative process in no way alters the legal effect of this document upon publication in the
Bureau of Labor Statistics, Department of Labor.
Notice of information collection; request for comment.
The Department of Labor, as part of its continuing effort to reduce paperwork and respondent burden, conducts a pre-clearance consultation program to provide the general public and Federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995. This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents can be properly assessed. The Bureau of Labor Statistics (BLS) is soliciting comments concerning the proposed revision of the “Current Population Survey (CPS).” A copy of the proposed information collection request can be obtained by contacting the individual listed below in the
Written comments must be submitted to the office listed in the
Send comments to Erin Good, BLS Clearance Officer, Division of Management Systems, Bureau of Labor Statistics, Room G225, 2 Massachusetts Avenue NE, Washington, DC 20212. Written comments also may be transmitted by email to
Erin Good, BLS Clearance Officer, at 202-691-7628 (this is not a toll free number). (See
The CPS has been the principal source of the official Government statistics on employment and unemployment for over 75 years. The CPS is a monthly sample survey of 60,000 eligible households. The labor force information gathered through the survey is of paramount importance in keeping track of the economic health of the Nation. The survey is the only source of monthly data on total employment and unemployment. The Employment Situation news release contains data from this survey and is designated as a Principal Federal Economic Indicator (PFEI). Moreover, the survey also yields data on the characteristics of persons not in the labor force. The CPS data are used monthly, in conjunction with data from other sources, to analyze the extent to which, and with what success, the various components of the American population are participating in the economic life of the Nation.
The labor force data gathered through the CPS are provided to users in the greatest detail possible, in conjunction with the demographic information obtained in the survey. In brief, the labor force data can be broken down by sex, age, race, ethnicity, marital status, family composition, educational level, veteran status, certification and licensing status, disability status, and other characteristics. Through such breakdowns, one can focus on the employment situation of specific population groups as well as on general trends in employment and unemployment. Information of this type can be obtained only through demographically oriented surveys such as the CPS.
The basic CPS data also are used as an important platform on which to base the data derived from the various supplemental questions that are administered in conjunction with the survey. By coupling the basic data from the monthly survey with the special data from the supplements, one can get valuable insights on the behavior of American workers and on the social and economic health of their families.
There is wide interest in the monthly CPS data among Government policymakers, legislators, economists, the media, and the general public. While the data from the CPS are used in conjunction with data from other surveys in assessing the economic health of the Nation, they are unique in various ways. Specifically, they are the basis for much of the monthly Employment Situation report, a PFEI. They provide a monthly, nationally representative measure of total employment, including farm work, self-employment, and unpaid family work; other surveys are generally restricted to the nonagricultural wage and salary sector, or provide less timely information. The CPS provides data on all job seekers, and on all persons outside the labor force, while payroll-based surveys cannot, by definition, cover these sectors of the population. Finally, the CPS data on employment, unemployment, and on persons not in the labor force can be linked to the demographic characteristics of the many groups that make up the Nation's population, while the data from other surveys often have limited demographic information. Many groups, both in the government and in the private sector, are eager to analyze this wealth of demographic and labor force data.
Office of Management and Budget clearance is being sought for a revision of the Current Population Survey. BLS is seeking approval to remove two questions that collected information about the impact of the COVID-19 pandemic on where people worked. These questions, which ask about telework or work at home in February 2020, have been included on the CPS since October 2022 to measure the impact of the COVID-19 pandemic on the labor force. BLS feels that enough time has passed since the onset of the pandemic and its impact on how people work. These questions would not provide meaningful data going forward.
The Bureau of Labor Statistics is particularly interested in comments that:
• Evaluate whether the proposed collection of information is necessary for the proper performance of the
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used.
• Enhance the quality, utility, and clarity of the information to be collected.
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget approval of the information collection request; they also will become a matter of public record.
Mine Safety and Health Administration, Labor.
Notice.
This notice is a summary of a petition for modification submitted to the Mine Safety and Health Administration (MSHA) by the party listed below.
All comments on the petition must be received by MSHA's Office of Standards, Regulations, and Variances on or before June 29, 2023.
You may submit comments identified by Docket No. MSHA-2023-0017 by any of the following methods:
1.
2.
3.
4.
S. Aromie Noe, Office of Standards, Regulations, and Variances at 202-693-9440 (voice),
Section 101(c) of the Federal Mine Safety and Health Act of 1977 and Title 30 of the Code of Federal Regulations (CFR) part 44 govern the application, processing, and disposition of petitions for modification.
Section 101(c) of the Federal Mine Safety and Health Act of 1977 (Mine Act) allows the mine operator or representative of miners to file a petition to modify the application of any mandatory safety standard to a coal or other mine if the Secretary of Labor determines that:
1. An alternative method of achieving the result of such standard exists which will at all times guarantee no less than the same measure of protection afforded the miners of such mine by such standard; or
2. The application of such standard to such mine will result in a diminution of safety to the miners in such mine.
In addition, sections 44.10 and 44.11 of 30 CFR establish the requirements for filing petitions for modification.
The petitioner states that:
(a) The mine utilizes the continuous mining and longwall methods of mining.
(b) Mining equipment,
(c) MSHA-approved permissible diagnostic and testing equipment is not available for all types of testing and diagnostics.
(d) Accurate testing of electrical systems and diagnosing problems with such systems in electric mining equipment in return air outby the last open crosscut is critical to miners' safety.
The petitioner proposes the following alternative method:
(a) Non-permissible electronic testing and diagnostic equipment to be used includes:
Other testing and diagnostic equipment may be used only if approved in advance by the MSHA District Manager.
(b) All non-permissible testing and diagnostic equipment used in return air
(c) A qualified person as defined in 30 CFR part 75.151 shall continuously monitor for methane immediately before and during the use of non-permissible electronic testing and diagnostic equipment in return air outby the last open crosscut.
(d) Non-permissible electronic testing and diagnostic equipment shall not be used if methane is detected in concentrations at or above 1.0 percent. When 1.0 percent or more methane is detected while the non-permissible electronic equipment is being used, the equipment shall be de-energized immediately and withdrawn from the return air outby the last open crosscut.
(e) All hand-held methane detectors shall be MSHA approved and maintained in permissible and proper operating condition as defined in 30 CFR 75.320.
(f) All electronic testing and diagnostic equipment shall be used in accordance with the safe use procedures recommended by the manufacturer.
(g) Qualified personnel who use electronic testing and diagnostic equipment shall be properly trained to recognize the hazards and limitations associated with use of the equipment.
In support of the proposed alternative method, the petitioner submitted a list and specifications of the low voltage, battery-powered non-permissible electronic testing and diagnostic equipment.
The petitioner asserts that the alternative method proposed will at all times guarantee no less than the same measure of protection afforded the miners under the mandatory standard.
Mine Safety and Health Administration, Labor.
Notice.
This notice is a summary of a petition for modification submitted to the Mine Safety and Health Administration (MSHA) by the party listed below.
All comments on the petition must be received by MSHA's Office of Standards, Regulations, and Variances on or before June 29, 2023.
You may submit comments identified by Docket No. MSHA-2023-0018 by any of the following methods:
1.
2.
3.
4.
S. Aromie Noe, Office of Standards, Regulations, and Variances at 202-693-9440 (voice),
Section 101(c) of the Federal Mine Safety and Health Act of 1977 and Title 30 of the Code of Federal Regulations (CFR) part 44 govern the application, processing, and disposition of petitions for modification.
Section 101(c) of the Federal Mine Safety and Health Act of 1977 (Mine Act) allows the mine operator or representative of miners to file a petition to modify the application of any mandatory safety standard to a coal or other mine if the Secretary of Labor determines that:
1. An alternative method of achieving the result of such standard exists which will at all times guarantee no less than the same measure of protection afforded the miners of such mine by such standard; or
2. The application of such standard to such mine will result in a diminution of safety to the miners in such mine.
In addition, sections 44.10 and 44.11 of 30 CFR establish the requirements for filing petitions for modification.
The petitioner states that:
(a) The mine utilizes the continuous mining and longwall methods of mining.
(b) Mining equipment,
(c) MSHA-approved permissible diagnostic and testing equipment is not available for all types of testing and diagnostics.
(d) Accurate testing of electrical systems and diagnosing problems with such systems in electric mining equipment on the longwall face or within 150 feet of pillar workings is critical to miners' safety.
The petitioner proposes the following alternative method:
(a) Non-permissible electronic testing and diagnostic equipment to be used includes:
Other testing and diagnostic equipment may be used if approved in advance by the MSHA District Manager.
(b) All non-permissible testing and diagnostic equipment used on the longwall face or within 150 feet of pillar workings shall be examined by a qualified person as defined in 30 CFR 75.153 prior to use to ensure the equipment is being maintained in a safe operating condition. The examination results shall be recorded in the weekly examination book and made available to MSHA and the miners at the mine.
(c) A qualified person as defined in 30 CFR part 75.151 shall continuously monitor for methane immediately before and during the use of non-permissible electronic testing and diagnostic equipment on the longwall face or within 150 feet of pillar workings.
(d) Non-permissible electronic testing and diagnostic equipment shall not be used if methane is detected in concentrations at or above 1.0 percent. When 1.0 percent or more methane is detected while the non-permissible electronic equipment is being used, the equipment shall be de-energized immediately and withdrawn from the longwall or more than 150 feet from pillar workings.
(e) All hand-held methane detectors shall be MSHA approved and maintained in permissible and proper operating condition as defined in 30 CFR 75.320.
(f) All electronic testing and diagnostic equipment shall be used in accordance with the safe use procedures recommended by the manufacturer.
(g) Qualified personnel who use electronic testing and diagnostic equipment shall be properly trained to recognize the hazards and limitations associated with use of the equipment.
In support of the proposed alternative method, the petitioner submitted a list and specifications of the low voltage, battery-powered non-permissible electronic testing and diagnostic equipment.
The petitioner asserts that the alternative method proposed will at all times guarantee no less than the same measure of protection afforded the miners under the mandatory standard.
Mine Safety and Health Administration, Labor.
Notice.
This notice is a summary of a petition for modification submitted to the Mine Safety and Health Administration (MSHA) by the party listed below.
All comments on the petition must be received by MSHA's Office of Standards, Regulations, and Variances on or before June 29, 2023.
You may submit comments identified by Docket No. MSHA-2023-0016 by any of the following methods:
1.
2.
3.
4.
S. Aromie Noe, Office of Standards, Regulations, and Variances at 202-693-9440 (voice),
Section 101(c) of the Federal Mine Safety and Health Act of 1977 and Title 30 of the Code of Federal Regulations (CFR) part 44 govern the application, processing, and disposition of petitions for modification.
Section 101(c) of the Federal Mine Safety and Health Act of 1977 (Mine Act) allows the mine operator or representative of miners to file a petition to modify the application of any mandatory safety standard to a coal or other mine if the Secretary of Labor determines that:
1. An alternative method of achieving the result of such standard exists which will at all times guarantee no less than the same measure of protection afforded the miners of such mine by such standard; or
2. The application of such standard to such mine will result in a diminution of safety to the miners in such mine.
In addition, sections 44.10 and 44.11 of 30 CFR establish the requirements for filing petitions for modification.
The petitioner states that:
(a) The mine utilizes the continuous mining and longwall methods of mining.
(b) Mining equipment,
(c) MSHA-approved permissible diagnostic and testing equipment is not available for all types of testing and diagnostics.
(d) Accurate testing of electrical systems and diagnosing problems with such systems in electric mining equipment in or inby the last open crosscut is critical to miners' safety.
The petitioner proposes the following alternative method:
(a) Non-permissible electronic testing and diagnostic equipment to be used includes:
Other testing and diagnostic equipment may be used if approved in advance by the MSHA District Manager.
(b) All non-permissible testing and diagnostic equipment used in or inby the last open crosscut shall be examined by a qualified person as defined in 30 CFR 75.153 prior to use to ensure the equipment is being maintained in a safe operating condition. The examination results shall be recorded in the weekly examination book and made available to MSHA and the miners at the mine.
(c) A qualified person as defined in 30 CFR part 75.151 shall continuously monitor for methane immediately before and during the use of non-permissible electronic testing and diagnostic equipment in or inby the last open crosscut.
(d) Non-permissible electronic testing and diagnostic equipment shall not be used if methane is detected in concentrations at or above 1.0 percent. When 1.0 percent or more methane is detected while the non-permissible electronic equipment is being used, the equipment shall be de-energized immediately and withdrawn outby the last open crosscut.
(e) All hand-held methane detectors shall be MSHA approved and maintained in permissible and proper operating condition as defined in 30 CFR 75.320.
(f) Except for time necessary to troubleshoot under actual mining conditions, coal production in the section shall cease. However, coal may remain in or on the equipment to test and diagnose the equipment under “load.”
(g) All electronic testing and diagnostic equipment shall be used in accordance with the safe use procedures recommended by the manufacturer.
(h) Qualified personnel who use electronic testing and diagnostic equipment shall be properly trained to recognize the hazards and limitations associated with use of the equipment.
In support of the proposed alternative method, the petitioner submitted a list and specifications of the low voltage, battery-powered non-permissible electronic testing and diagnostic equipment.
The petitioner asserts that the alternative method proposed will at all times guarantee no less than the same measure of protection afforded the miners under the mandatory standard.
Mine Safety and Health Administration, Labor.
Notice.
This notice is a summary of a petition for modification submitted to the Mine Safety and Health Administration (MSHA) by the party listed below.
All comments on the petition must be received by MSHA's Office of Standards, Regulations, and Variances on or before June 29, 2023.
You may submit comments identified by Docket No. MSHA-2023-0014 by any of the following methods:
1.
2.
3.
4.
S. Aromie Noe, Office of Standards, Regulations, and Variances at 202-693-9440 (voice),
Section 101(c) of the Federal Mine Safety and Health Act of 1977 and title 30 of the Code of Federal Regulations (CFR) part 44 govern the application, processing, and disposition of petitions for modification.
Section 101(c) of the Federal Mine Safety and Health Act of 1977 (Mine Act) allows the mine operator or representative of miners to file a petition to modify the application of any mandatory safety standard to a coal or other mine if the Secretary of Labor determines that:
1. An alternative method of achieving the result of such standard exists which will at all times guarantee no less than the same measure of protection afforded the miners of such mine by such standard; or
2. The application of such standard to such mine will result in a diminution of safety to the miners in such mine.
In addition, sections 44.10 and 44.11 of 30 CFR establish the requirements for filing petitions for modification.
The petitioner states that:
(a) The petitioner proposes to implement a clothes cleaning process.
(b) The alternative method provides a direct reduction of a miners' exposures to respirable dust, thus reducing their health risks.
(c) The proposed alternative method has been developed jointly between Unimin Corporation and the National Institute for Occupational Safety and Health (NIOSH) and has been successfully tested by NIOSH.
The petitioner proposes the following alternative method:
(a) The petitioner will use a clothes cleaning booth, CCB Elite I, serial number 5406, manufactured by S.K. Bowling, Inc.
(b) Only miners trained in the operation of the clothes cleaning booth (booth) will be permitted to use the booth to clean their clothes.
(c) The petitioner will incorporate the NIOSH Clothes Cleaning Process and
(d) Miners entering the booth shall examine valves and nozzles for damage or malfunction and will close the door fully before opening the air valve. Any defects shall be repaired prior to the booth being used.
(e) Miners entering the booth shall wear eye protection, ear plugs or muffs for hearing protection, and respiratory protection meaning a full-face or half-mask respirator that meets or exceeds the minimum requirements of an N95 filter to which the miner has been fit-tested. As an alternative, the use of a full-face respirator will also meet the requirement for eye protection. A sign will be conspicuously posted that states the above personal protective equipment is required when entering the booth.
(f) Air flow through the booth will be at least 2,000 cubic feet per minute (cfm) to maintain negative pressure during the use of the cleaning system in order to prevent contamination of the environment outside the booth. Airflow will be in a downward direction, thereby moving contaminants away from the miner's breathing zone.
(g) Air pressure through the spray manifold will be limited to 30 pounds per square inch or less. A lock box with a single, plant manager-controlled key will be used to prevent regulator tampering.
(h) The spray manifold will consist of a 2-inch square tube with
(i) Air nozzles shall not exceed 30 pound(s) per square inch gauge.
(j) The uppermost spray of the spray manifold will be located below the booth user's breathing zone. Some type of mechanical device can be used to cover the upper air nozzles to meet the specific height of the user.
(k) Air nozzles shall be guarded to eliminate the possibility of incidental contact, which could create mechanical damage to the air nozzles during the clothes cleaning process.
(l) The petitioner shall conduct periodic maintenance checks of the booth in accordance with the recommendations contained in the manufacturer's instruction manual.
(m) The air receiver tank supplying air to the manifold system will be of sufficient volume to permit no less than 20 seconds of continuous cleaning time.
(n) An appropriate hazard warning sign will be posted on the booth to state, at a minimum, “Compressed Air” and “Respirable Dust.”
(o) A pressure relief valve designed for the booth's air reservoir will be installed.
(p) The mine will exhaust dust-laden air from the booth into a local exhaust ventilation system or duct outside the facility while ensuring there is no re-entrainment back into the structure.
In support of the proposed alternative method, the petitioner submitted specifications of the dust booth; installation and operating instructions of the dust booth to be used; and The Dust Control Handbook for Industrial Minerals, Mining, and Processing.
The petitioner asserts that the alternate method proposed will at all times guarantee no less than the same measure of protection afforded the miners under the mandatory standard.
National Intelligence University (NIU), Office of the Director of National Intelligence (ODNI).
Notice of federal advisory committee meeting.
The ODNI is publishing this notice to announce that the following Federal Advisory Committee meeting of the National Intelligence University Board of Visitors will take place. This meeting is closed to the public.
Thursday June 8, 2023, 9:00 a.m. to 12:00 p.m., Bethesda, MD.
National Intelligence University, 4600 Sangamore Road, Bethesda, MD 20816.
Ms. Patricia “Patty” Larsen, Designated Federal Officer, (301) 243-2118 (Voice),
This meeting is being held under the provisions of the Federal Advisory Committee Act (FACA) of 1972 (5 U.S.C. 1001-1014), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b), and 41 CFR 102-3.140 and 102-3.150. The meeting includes the discussion of classified information and classified materials regarding intelligence education issues and the Director of National Intelligence, or her designee, in consultation with the ODNI Office of General Counsel, has determined the meeting will be closed to the public under the exemptions set forth in 5 U.S.C. 552b(c)(1) and 552b(c)(2).
National Transportation Safety Board (NTSB).
Notice and request for comments for a new information collection.
Under the Paperwork Reduction Act (PRA) of 1995, the NTSB invites public comment on the agency's intent to submit to the Office of Management and Budget (OMB) an Information Collection Request (ICR),
Submit written comments regarding this proposed collection of information by July 31, 2023.
You may send comments, identified by Docket Number (No.) NTSB-2023-0005, by any of the following methods:
•
•
•
•
Casey Blaine, Deputy General Counsel, (202) 314-6080,
To ensure that the NTSB's service delivery is effective and meets its customer needs, the NTSB seeks OMB approval of a generic clearance to collect qualitative feedback on the agency's service delivery. This proposed IC provides a means to garner qualitative feedback in an efficient, timely manner in accordance with the commitment to improving service delivery.
Qualitative feedback is information that will provide insights into stakeholder perceptions, experiences, and expectations; provide an early warning of issues with service; or focus attention on areas where communication, training, or changes in operations might improve delivery of products and services. This feedback will allow for ongoing, collaborative, and actionable communications between the NTSB and its stakeholders. It will also allow for feedback to contribute directly to the improvement of program management.
The feedback solicited will target areas that include, but are not limited to: timeliness, appropriateness, accuracy of information, courtesy, efficiency of service delivery, and resolution of issues with service delivery. Responses will be assessed to plan and inform efforts to improve or maintain the quality of service offered to the public. If this information is not collected, vital feedback from stakeholders on the agency's services will be unavailable.
The agency will only submit a collection for approval under this generic clearance if it meets the following conditions:
• The collection is voluntary;
• The collection is low-burden for respondents (based on considerations of total burden hours, total number of respondents, or burden-hours per respondent) and is low-cost for both the respondents and the Federal Government;
• The collection is non-controversial and does not raise issues of concern to other Federal agencies;
• Any collection is targeted to the solicitation of opinions from respondents who have experience with the program or may have experience with the program in the near-future;
• Personally identifiable information (PII) is collected only to the extent necessary and is not retained;
• Information gathered is intended to be used only internally for general service improvement and program management purposes and is not intended for release outside of the agency (if released, the agency must indicate the qualitative nature of the information);
• Information gathered will not be used for the purpose of substantially informing influential policy decisions; and
• Information gathered will yield qualitative information; the collections will not be designed or expected to yield statistically reliable results or used as though the results are generalizable to the population of study. The types of collections that this generic clearance covers include, but are not limited to:
• Customer comment cards/complaint forms;
• Qualitative customer satisfaction surveys (
• In-person observation testing (
Feedback collected under this generic clearance provides useful information, but it does not yield data that can be generalized to the overall population. This type of generic clearance for qualitative information will not be used for quantitative information collections that are designed to yield reliably actionable results, such as monitoring trends over time or documenting program performance. Such data uses require more rigorous designs that address: the target population to which generalizations will be made, the sampling frame, the sample design (including stratification and clustering), the precision requirements or power calculations that justify the proposed sample size, the expected response rate, methods for assessing potential non-response bias, the protocols for data collection, and any testing procedures that were or will be undertaken prior to fielding the study. Depending on the degree of influence the results are likely to have, such as collections may still be eligible for submission for other generic mechanisms that are designed to yield quantitative results.
As a general matter, information collections under this request will not result in any new system of records containing privacy information and will not ask questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private.
The 1,250 annual burden hours requested are based on the number of collections the NTSB expects to conduct over the requested three-year period for this generic clearance.
Participation in this collection is voluntary, and there are no costs to respondents beyond the time spent participating in the surveys.
Postal Service
Notice.
The Postal Service gives notice of filing a request with the Postal Regulatory Commission to add a domestic shipping services contract to the list of Negotiated Service Agreements in the Mail Classification Schedule's Competitive Products List.
Sean C. Robinson, 202-268-8405.
The United States Postal Service® hereby gives notice that, pursuant to 39 U.S.C. 3642 and 3632(b)(3), on May 22, 2023, it filed with the Postal Regulatory Commission a
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Cboe EDGX Exchange, Inc. (the “Exchange” or “EDGX”) proposes to amend its Fee Schedule. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend its Fee Schedule applicable to its equities trading platform (“EDGX Equities”) as follows: (1) by modifying and introducing certain Add/Remove Volume Tiers; (2) by eliminating certain Growth Tiers; (3) by modifying the criteria of the Non-Displayed Add Volume Tiers; (4) by eliminating certain Non-Displayed Step-Up Tiers; (5) by eliminating certain Retail Growth Tiers; and (6) by introducing new fee code DX and modifying the description and fee associated with fee code DQ. The Exchange proposes to implement these changes effective May 1, 2023.
The Exchange first notes that it operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. More specifically, the Exchange is only one of 16 registered equities exchanges, as well as a number of alternative trading systems and other off-exchange venues that do not have similar self-regulatory responsibilities under the Securities Exchange Act of 1934 (the “Act”), to which market participants may direct their order flow. Based on publicly available information,
Under footnote 1 of the Fee Schedule, the Exchange currently offers various Add/Remove Volume Tiers. In particular, the Exchange offers three Add Volume Tiers that each provide an enhanced rebate for Members' qualifying orders yielding fee codes B,
• Add Volume Tier 2 provides a rebate of $0.0025 per share for securities priced above $1.00 to qualifying orders (
The criteria for proposed Add Volume Tier 5 is as follows:
• Add Volume Tier 5 provides a rebate of $0.0029 per share for securities priced above $1.00 to qualifying orders (
The Exchange believes proposed Add Volume Tier 2 and proposed Add Volume Tier 5 provide rebates commensurate with the difficulty of meeting the criteria associated with the proposed tiers.
Second, the Exchange proposes to modify the criteria of existing Add Volume Tier 1. Currently, the criteria for Add Volume Tier 1 is as follows:
• Add Volume Tier 1 provides a rebate of $0.0020 per share for securities priced above $1.00 to qualifying orders (
Now, the Exchange proposes to exclude retail orders from the calculation of ADV, lower the TCV threshold, and add an additional prong of criteria that Members may satisfy to achieve the enhanced rebate. The proposed criteria is as follows:
• Add Volume Tier 1 provides a rebate of $0.0020 per share for securities priced above $1.00 to qualifying orders (
Third, the Exchange proposes to renumber current Add Volume Tiers 2 and 3 and modify the criteria of proposed Add Volume Tiers 3 and 4 (current Add Volume Tiers 2 and 3). Currently, Add Volume Tiers 2 and 3 (proposed Add Volume Tiers 3 and 4) read as follows:
• Add Volume Tier 2 provides a rebate of $0.0027 per share to qualifying orders (
• Add Volume Tier 3 provides a rebate of $0.0029 per share to qualifying orders (
Now, the Exchange proposes to exclude retail orders from the calculation of ADV. The proposed criteria for current Add Volume Tiers 2 and 3 (proposed Add Volume Tiers 3 and 4) is as follows:
• Proposed Add Volume Tier 3 provides a rebate of $0.0027 per share to qualifying orders (
• Proposed Add Volume Tier 4 provides a rebate of $0.0029 per share to qualifying orders (
The proposed modifications to current Add Volume Tier 1 and proposed Add Volume Tiers 3 and 4 removes retail orders from the calculation of ADV. By removing retail orders from the calculation of ADV, the Exchange is limiting the amount of orders that qualify for ADV. However, in Add Volume Tier 1 the Exchange has also proposed to lower the TCV percentage and provided additional criteria by which Members may receive an enhanced rebate. The Exchange has also proposed to introduce a new Add Volume Tier 2, which offers a slightly higher rebate for achieving criteria that is slightly more difficult than Add Volume Tier 1. The Exchange believes that by introducing proposed Add Volume Tier 2, decreasing the difficulty of the criteria under Add Volume Tier 1, and removing retail orders from the calculation of ADV in proposed Add Volume Tiers 3 and 4, Members are still incentivized to add volume on the Exchange, thereby contributing to a deeper and more liquid market, which benefits all market participants and provides greater execution opportunities on the Exchange.
In addition to the Add/Remove Volume Tiers offered under footnote 1, the Exchange also offers Growth Tiers that each provide an enhanced rebate for Members' qualifying orders yielding fee codes B, V, Y, 3, and 4, where a Member reaches certain add volume-based criteria, including “growing” its volume over a certain baseline month. The Exchange now proposes to discontinue Growth Tiers 1-3, as no Members have satisfied the criteria within the past six months and the Exchange no longer wishes to, nor is required to, maintain such tiers.
In addition to the Add/Remove Volume Tiers and Growth Tiers offered under footnote 1, the Exchange also offers Non-Displayed Add Volume Tiers that each provide an enhanced rebate for Members' qualifying orders yielding fee codes DM,
• Non-Displayed Add Volume Tier 1 provides a rebate of $0.0015 per share to qualifying orders (
• Non-Displayed Add Volume Tier 2 provides a rebate of $0.0020 per share to qualifying orders (
• Non-Displayed Add Volume Tier 3 provides a rebate of $0.0025 per share to qualifying orders (
Now, the Exchange proposes to revise the second prong of criteria in Non-Displayed Add Volume Tiers 1-3. The proposed criteria for Non-Displayed Add Volume Tiers 1-3 is as follows:
• Non-Displayed Add Volume Tier 1 provides a rebate of $0.0015 per share to qualifying orders (
• Non-Displayed Add Volume Tier 2 provides a rebate of $0.0020 per share to qualifying orders (
• Non-Displayed Add Volume Tier 3 provides a rebate of $0.0025 per share to qualifying orders (
The proposed modifications to Non-Displayed Add Volume Tiers 1-3 is intended to incentivize Members to add non-displayed retail volume on the Exchange by slightly increasing the difficulty of the criteria that must be achieved in order to receive an enhanced rebate. By increasing the difficulty of a criteria while keeping the enhanced rebate the same, the proposed criteria slightly increases the difficulty required for Members to meet the applicable tier threshold while continuing to encourage Members to add non-displayed liquidity to the Exchange, thereby contributing to a deeper and more liquid market, which benefits all market participants and provides greater execution opportunities on the Exchange.
In addition to the Add/Remove Volume Tiers, Growth Tiers, and the Non-Displayed Add Volume Tiers under footnote 1, the Exchange also offers Non-Displayed Step-Up Volume Tiers that each provide an enhanced rebate for Members' qualifying orders yielding fee codes DM, HA, MM, and RP, where a Member reaches certain volume-based criteria, including “growing” its volume over a certain baseline month. The Exchange now proposes to discontinue Non-Displayed Step-Up Tiers 1 and 2, as no Members have satisfied the criteria within the past six months and the Exchange no longer wishes to, nor is required to, maintain such tiers.
Pursuant to footnote 2 of the Fee Schedule, the Exchange offers Retail Volume Tiers which provide Retail Member Organizations (“RMOs”)
In the Exchange's March Filing, the Exchange proposed an amendment to fee code DQ, which is appended to Midpoint Discretionary Orders (“MDOs”)
As a result of the reversion back to the February 28, 2023, fee schedule, the Exchange now proposes to amend fee code DQ to be appended to MDOs entered with a QDP instruction that add liquidity to the Exchange. There would be no change to the fee associated with fee code DQ. Also as a result of the reversion back to the February 28, 2023, fee schedule, the Exchange also now proposes to introduce fee code DX, which would be appended to MDOs with a QDP instruction that remove liquidity from the Exchange. Orders appended with fee code DX would be assessed a fee of $0.0010 per share in securities at or above $1.00 and 0.30% of dollar value for securities priced below $1.00.
The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
As described above, the Exchange operates in a highly competitive market in which market participants can readily direct order flow to competing venues if they deem fee levels at a particular venue to be excessive or incentives to be insufficient. The Exchange believes that its proposal to: (1) introduce new Add Volume Tiers 2 and 5 and modify current Add Volume Tiers 1, 2, and 3; and (2) modify Non-Displayed Add Volume Tiers 1-3 reflects a competitive pricing structure designed to incentivize market participants to direct their order flow to the Exchange, which the Exchange believes would enhance market quality to the benefit of all Members. Additionally, the Exchange notes that relative volume-based incentives and discounts have been widely adopted by exchanges,
In particular, the Exchange believes its proposal to: (1) introduce new Add Volume Tiers 2 and 5 and modify current Add Volume Tiers 1, 2, and 3; and (2) modify Non-Displayed Add Volume Tiers 1-3 is reasonable because the revised tiers will be available to all Members and provide all Members with an additional opportunity to receive an enhanced rebate or a reduced fee. The Exchange further believes the proposed modifications to its Add/Remove Volume Tiers and Non-Displayed Add Volume Tiers will provide a reasonable means to encourage liquidity adding displayed orders and liquidity adding non-displayed orders, respectively, in Members' order flow to the Exchange and to incentivize Members to continue to provide liquidity adding volume to the Exchange by offering them an additional opportunity to receive an enhanced rebate or reduced fee on qualifying orders. An overall increase in activity would deepen the Exchange's liquidity pool, offers additional cost savings, support the quality of price discovery, promote market transparency and improve market quality, for all investors.
The Exchange believes that its proposal to eliminate Growth Tiers 1-3,
The Exchange believes the proposed addition of fee code DX and the revised applicability of fee code DQ are reasonable as the Exchange offers many other fee codes that are specifically designed for orders that add liquidity to the Exchange or remove liquidity from the Exchange.
The Exchange believes that the proposed changes to its Add/Remove Volume Tiers and Non-Displayed Add Volume Tiers are reasonable as they do not represent a significant departure from the criteria currently offered in the Fee Schedule. The Exchange also believes that the proposal represents an equitable allocation of fees and rebates and is not unfairly discriminatory because all Members will be eligible for the proposed new tiers and have the opportunity to meet the tiers' criteria and receive the corresponding enhanced rebate if such criteria is met. Without having a view of activity on other markets and off-exchange venues, the Exchange has no way of knowing whether this proposed rule change would definitely result in any Members qualifying the new proposed tiers. While the Exchange has no way of predicting with certainty how the proposed changes will impact Member activity, based on the prior months volume, the Exchange anticipates that at least one Member will be able to satisfy proposed Add Volume Tier 1, at least two Members will be able to satisfy proposed Add Volume Tier 2, at least two Members will be able to satisfy proposed Add Volume Tier 3, at least one Member will be able to satisfy proposed Add Volume Tier 4, at least 1 Member will be able to satisfy proposed Add Volume Tier 5, at least two Members will be able to satisfy proposed Non-Displayed Add Volume Tier 1, at least two Members will be able to satisfy proposed Non-Displayed Add Volume Tier 2, and at least one Member will be able to satisfy proposed Non-Displayed Add Volume Tier 3. The Exchange also notes that proposed changes will not adversely impact any Member's ability to qualify for enhanced rebates offered under other tiers. Should a Member not meet the proposed new criteria, the Member will merely not receive that corresponding enhanced rebate. Furthermore, the proposed rule change to eliminate Growth Tiers 1-3, Non-Displayed Step-Up Volume Tiers 1 and 2, and Retail Growth Tiers 1 and 2 enables the Exchange to redirect resources and funding into other programs and tiers intended to incentivize increased order flow.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Rather, as discussed above, the Exchange believes that the proposed changes would encourage the submission of additional order flow to a public exchange, thereby promoting market depth, execution incentives and enhanced execution opportunities, as well as price discovery and transparency for all Members. As a result, the Exchange believes that the proposed changes further the Commission's goal in adopting Regulation NMS of fostering competition among orders, which promotes “more efficient pricing of individual stocks for all types of orders, large and small.”
The Exchange believes the proposed rule changes do not impose any burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. Particularly, the proposed changes to the Exchange's Add/Remove Volume Tiers and Non-Displayed Add Volume Tiers will apply to all Members equally in that all Members are eligible for each of the Tiers, have a reasonable opportunity to
The Exchange believes the proposal to introduce the DX fee code does not impose a burden on intramarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed fees associated with fee code DX would apply to all Members equally in that all Members would be subject to the same flat fee for the execution of an MDO with a QDP instruction that removes liquidity from the Exchange. Although MDOs entered with the QDP instruction would be subject to the pricing described in this proposed rule change, the Exchange does not believe that pricing would impose any significant burden on intramarket competition as this fee would be applied in the same manner to the execution of any MDO entered with a QDP instruction that removes liquidity from the Exchange. Both MDO and the associated QDP instruction are available to all Members on an equal and non-discriminatory basis. As a result, any Member can decide to use (or not use) the QDP instruction based on the benefits provided by that instruction in potentially avoiding unfavorable executions, and the associated charge that the Exchange proposes to introduce. As discussed, any firm that chooses to use the QDP instruction with an MDO that removes liquidity would be charged the same flat fee for the execution of orders that are entered with this instruction. The proposal to modify fee code DQ to apply only to MDO orders using the QDP instruction that add liquidity to the Exchange similarly does not impose a burden on intramarket competition in that the applicability of the fee code will apply equally to all Members in that all Members would be subject to the same flat fee for the execution of an MDO with a QDP instruction that adds liquidity to the Exchange and the Exchange does not propose a change to the existing fee.
Next, the Exchange believes the proposed rule changes does not impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. As previously discussed, the Exchange operates in a highly competitive market. Members have numerous alternative venues that they may participate on and direct their order flow, including other equities exchanges, off-exchange venues, and alternative trading systems. Additionally, the Exchange represents a small percentage of the overall market. Based on publicly available information, no single equities exchange has more than 16% of the market share.
The Exchange neither solicited nor received comments on the proposed rule change.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Federal Aviation Administration (FAA), DOT.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, FAA invites public comments about our intention to request the Office of Management and Budget (OMB) approval to renew an information collection. The collection involves submittal of limits of validity of engineering data that supports the structural maintenance program (hereafter referred to as LOV) for certain airplane models. The information to be collected will be used to demonstrate compliance with FAA regulations requiring establishment and incorporation of LOV into the airplane's structural maintenance program.
Written comments should be submitted by July 31, 2023.
Please send written comments:
Kamruz Zaman by email at:
Office of Foreign Assets Control, Treasury.
Notice.
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC's Specially Designated Nationals and Blocked Persons List (SDN List) based on OFAC's determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
See
OFAC: Andrea Gacki, Director, tel.: 202-622-2490; Associate Director for Global Targeting, tel.: 202-622-2420; Assistant Director for Licensing, tel.: 202-622-2480; Assistant Director for Regulatory Affairs, tel.: 202-622-4855; or Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490.
The SDN List and additional information concerning OFAC sanctions programs are available on OFAC's website (
On May 23, 2023, OFAC determined that the property and interests in property subject to U.S. jurisdiction of the following persons are blocked under the relevant sanctions authorities listed below.
Office of Foreign Assets Control, Treasury.
Notice.
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing the names of one or more persons that have been placed on OFAC's Specially Designated Nationals and Blocked Persons List (SDN List) based on OFAC's determination that one or more applicable legal criteria were satisfied. All property and interests in property subject to U.S. jurisdiction of these persons are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
See
OFAC: Andrea Gacki, Director, tel.: 202-622-2490; Associate Director for Global Targeting, tel.: 202-622-2420; Assistant Director for Licensing, tel.: 202-622-2480; Assistant Director for Regulatory Affairs, tel.: 202-622-4855; or the Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490.
The SDN List and additional information concerning OFAC sanctions programs are available on OFAC's website (
On May 24, 2023, OFAC determined that the property and interests in property subject to U.S. jurisdiction of the following persons are blocked under the relevant sanctions authority listed below.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Internal Revenue Service, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning Form 1041, U.S. Income Tax Return for Estates and Trusts, and related Schedules D, I, J, K-1, and Form 1041-V.
Written comments should be received on or before July 31, 2023 to be assured of consideration.
Direct all written comments to Andres Garcia, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or by email to
Requests for additional information or copies of this collection should be directed to Jon Callahan, (737) 800-7639, at Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or through the internet at
The IRS is currently seeking comments concerning the following information collection tools, reporting, and record-keeping requirements:
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
Veterans Benefits Administration, Department of Veterans Affairs (VA), is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before July 31, 2023.
Submit written comments on the collection of information through Federal Docket Management System (FDMS) at
Maribel Aponte, Office of Enterprise and Integration, Data Governance Analytics (008), 810 Vermont Ave. NW, Washington, DC 20006, (202) 266-4688 or email
Under the PRA of 1995, Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, VBA invites comments on: (1) whether the proposed collection of information is necessary for the proper performance of VBA's functions, including whether the information will have practical utility; (2) the accuracy of VBA's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
No changes have been made to this form. The respondent burden has decreased due to the estimated number of receivables averaged over the past year.
By direction of the Secretary.
Pipeline and Hazardous Materials Safety Administration (PHMSA), Department of Transportation (DOT).
Notice of proposed rulemaking (NPRM).
PHMSA proposes to amend the Hazardous Materials Regulations to maintain alignment with international regulations and standards by adopting various amendments, including changes to proper shipping names, hazard classes, packing groups, special provisions, packaging authorizations, air transport quantity limitations, and vessel stowage requirements.
Comments must be received by July 31, 2023. To the extent possible, PHMSA will consider late-filed comments while a final rule is developed.
You may submit comments by any of the following methods:
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Candace Casey, Standards and Rulemaking, or Aaron Wiener, International Program, at 202-366-8553, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, 1200 New Jersey Avenue SE, East Building, 2nd Floor, Washington, DC 20590-0001.
The Pipeline and Hazardous Materials Safety Administration (PHMSA) proposes to amend certain sections of the Hazardous Materials Regulations (HMR; 49 CFR parts 171 to 180) to maintain alignment with international regulations and standards by adopting various changes, including changes to proper shipping names (PSN), hazard classes, packing groups (PG), special provisions (SP), packaging authorizations, air transport quantity limitations, and vessel stowage requirements. The proposed amendments are discussed in detail in “Section V. Section-by-Section Review of NPRM Proposals.”
Adoption of the regulatory amendments proposed in this NPRM will maintain the high safety standard currently achieved under the HMR. PHMSA also notes that because harmonization of the HMR with international regulations and consensus standards could reduce delays and interruptions of hazardous materials during transportation, the proposed amendments may also lower greenhouse gas (GHG) emissions and safety risks to minority, low-income, underserved, and other disadvantaged populations and communities in the vicinity of interim storage sites and transportation arteries and hubs.
The following list summarizes noteworthy proposals set forth in this NPRM:
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All the proposed amendments are expected to maintain the HMR's high safety standard for the public and the environment. Additionally, PHMSA anticipates that there are safety benefits to be derived from improved compliance related to consistency amongst domestic and international regulations. PHMSA solicits comment on the amendments proposed in this NPRM pertaining to the need, benefits, and costs of the proposed HMR revisions; impact on safety and the environment; impact on environmental justice and equity; and any other relevant information. In addition, PHMSA solicits comment regarding approaches to reducing the costs of this rule while maintaining or increasing safety benefits. As further explained in the PRIA, PHMSA expects that the aggregate benefits of the amendments proposed in this NPRM justify their aggregate costs. Nonetheless, PHMSA solicits comment on specific changes (
The Federal Hazardous Materials Transportation Law (49 U.S.C. 5101,
PHMSA participates in the development of international regulations and standards for the transportation of hazardous materials. It also adopts within the HMR international consensus standards and regulations consistent with PHMSA's safety mission. PHMSA reviews and evaluates each international standard it considers for incorporation within the HMR on its own merits, including the effects on transportation safety, the environmental impacts, and any economic impact. PHMSA's goal is to harmonize with international standards without diminishing the level of safety currently provided by the HMR or imposing undue burdens on the regulated community.
In final rule HM-181,
PHMSA has evaluated recent updates to the international standards, including review of numerous updated standards for the design, manufacture, testing, and use of packagings, and proposes to revise the HMR to adopt changes consistent with revisions to the 2023-2024 edition of the ICAO Technical Instructions, Amendment 41-22 to the IMDG Code, and the 22nd revised edition of the UN Model Regulations, all of which will be published by or in effect on January 1, 2023,
PHMSA issued an enforcement discretion on November 28, 2022,
According to the Office of Management and Budget (OMB), Circular A-119, “
PHMSA currently incorporates by reference into the HMR all or parts of numerous standards and specifications developed and published by standard development organizations (SDO). In general, SDOs update and revise their published standards every two to five years to reflect modern technology and best technical practices. The National Technology Transfer and Advancement Act of 1995 (NTTAA; Pub. L. 104-113) directs federal agencies to use standards developed by voluntary consensus standards bodies in lieu of government-written standards whenever possible. Voluntary consensus standards bodies develop, establish, or coordinate technical standards using agreed-upon procedures. OMB issued Circular A-119 to implement section 12(d) of the NTTAA relative to the utilization of consensus technical standards by federal agencies. This circular provides guidance for agencies participating in voluntary consensus standards bodies and describes procedures for satisfying the reporting requirements in the NTTAA. Accordingly, PHMSA is responsible for determining which standards currently referenced in the HMR should be updated, revised, or removed, and which standards should be added to the HMR. Revisions to materials incorporated by reference in the HMR are handled via the rulemaking process, which allows for the public and regulated entities to provide input. During the rulemaking process, PHMSA must also obtain approval from the Office of the Federal Register to incorporate by reference any new materials. The Office of the Federal Register issued a rulemaking
The UN Model Regulations, the United Nations Manual of Tests and Criteria (UN Manual of Tests and Criteria),
PHMSA determined that certain elements of updated international regulations and standards should not be adopted into the HMR because the structure of the HMR is such that it makes adoption unnecessary, or PHMSA has deemed it is a safer approach to authorize certain transport requirements through issuance of a special permit rather than allow for general applicability by adopting those requirements into the HMR. Use of a special permit allows for greater oversight and development of transport history and data prior to determining whether to adopt the terms of the special permit in the HMR for broad application.
The following is a list of international regulations and standards updates that PHMSA is not proposing for adoption in this NPRM, and the rationale for those decisions:
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The following is a section-by-section review of proposed amendments to harmonize the HMR with international regulations and standards.
Section 171.7 provides a listing of all voluntary consensus standards incorporated by reference into the HMR, as directed by the NTTAA. PHMSA evaluated updated international consensus standards pertaining to PSNs, hazard classes, PGs, special provisions, packaging authorizations, air transport quantity limitations, and vessel stowage requirements. PHMSA contributed to the development of those standards—each of which build on the well-established and documented safety histories of earlier editions—as it participated in the discussions and working group activities associated with their proposal, revision, and approval. Those activities, in turn, have informed PHMSA's evaluation of the effect the updated consensus standards would have on safety, when incorporated by reference and with provisions adopted into the HMR. Further, PHMSA notes that some of the consensus standards proposed for incorporation by reference within the HMR in this rulemaking have already been adopted into the regulatory schemes of other countries. Additionally, as noted above, PHMSA has issued past enforcement discretions authorizing their use of the consensus standards as an interim strategy for complying with current HMR requirements. PHMSA is not aware of adverse safety impacts from that operational experience. For these reasons, PHMSA expects their incorporation by reference will maintain the high safety standard currently achieved under the HMR. Therefore, PHMSA proposes to add or revise the following incorporation by reference materials.
• In paragraph (t)(1), incorporate by reference the 2023-2024 edition of the ICAO Technical Instructions, to replace the 2021-2022 edition, which is currently referenced in §§ 171.8; 171.22 through 171.24; 172.101; 172.202; 172.401; 172.407; 172.512; 172.519; 172.602; 173.56; 173.320; 175.10, 175.33; and 178.3. The ICAO Technical Instructions specify detailed instructions for the international safe transport of dangerous goods by air. The requirements in the 2023-2024 edition have been amended to align better with the 22nd revised edition of the UN Model Regulations and the International Atomic Energy Agency (IAEA) Regulations for the Safe Transport of Radioactive Material. Notable changes in the 2023-2024 edition of the ICAO Technical Instructions include new packing and stowage provisions, new and revised entries on its Dangerous Goods List, and editorial corrections. The 2023-2024 edition of the ICAO Technical Instructions is available for purchase on the ICAO website at
• In paragraph (v)(2), incorporate by reference the 2022 edition of the IMDG Code, Incorporating Amendment 41-22 (English Edition), to replace Incorporating Amendment 40-20, 2020 Edition, which is currently referenced in §§ 171.22; 171.23; 171.25; 172.101; 172.202; 172.203; 172.401; 172.407; 172.502; 172.519; 172.602; 173.21; 173.56; 176.2; 176.5; 176.11; 176.27; 176.30; 176.83; 176.84; 176.140; 176.720; 176.906; 178.3; and 178.274. The IMDG Code is a unified international code that outlines standards and requirements for the transport of dangerous goods by sea (
• In paragraph (w), incorporate by reference or remove the following ISO documents to include new and updated standards for the specification, design, construction, testing, and use of gas cylinders:
• Incorporate by reference the third edition of ISO 9809-1:2019(E), “
• Incorporate by reference the third edition of ISO 9809-2:2019(E), “
• Incorporate by reference the third edition of ISO 9809-3:2019(E), “
• In paragraph (aa)(3), incorporate by reference the OECD Guidelines for the Testing of Chemicals “Test No. 439: In Vitro Skin Irritation: Reconstructed Human Epidermis Test Method” (2015). This Test Guideline (TG) provides an in vitro procedure that may be used for the hazard identification of irritant chemicals. PHMSA proposes to reference this test in § 173.137, and to authorize the use of this test method in addition to those already referenced in that section. This test method is used to specifically exclude a material from classification as corrosive and to maintain alignment with the 22nd revised edition of the UN Model Regulations. This test method provides an in vitro procedure that may be used for the hazard identification of irritant chemicals (substances and mixtures). OECD test methods can be found in the OECD iLibrary available at
• In paragraph (dd), incorporate by reference United Nations standards including:
Section 171.12 prescribes requirements for shipments of hazardous materials in North America, including use of the Transport Canada (TC) Transportation of Dangerous Goods (TDG) Regulations. In rule HM-215N,
However, there are currently no TC specification cylinders corresponding to DOT specification cylinders listed in the table for DOT-8 and DOT-8AL cylinders used to transport acetylene. During the development of HM-215N, PHMSA conducted a comparative analysis of DOT and TC cylinder specifications and only those TC cylinder specifications that corresponded directly to DOT cylinder specifications were included. The result was that PHMSA did not include TC-8WM and TC-8WAM specifications for the transport of acetylene in the table of corresponding cylinders at § 171.12(a)(4)(iii). This omission was primarily due to concerns over differing solvent authorizations, calculations, and methods of construction for the design associated with the TC-8WM and TC-8WAM specifications. PHMSA conducted a second comparative analysis of DOT and TC cylinder specifications for transport of acetylene and concluded that the initial concerns were unwarranted. Therefore, PHMSA proposes to add TC-8WM and TC-8WAM specifications to the table of corresponding DOT specifications in § 171.12(a)(4)(iii) as comparable cylinders to DOT-8 and DOT-8AL, respectively.
PHMSA's supplemental review indicates the differences between the TC and DOT specifications for transport of acetylene are minor and the standard for safety of transportation of acetylene in cylinders under the HMR is maintained. This proposal would allow for TC acetylene cylinders manufactured in Canada to be filled, used, and requalified (including rebuild, repair, reheat-treatment) in the United States, facilitating cross border movement of acetylene and eliminates the need for a special permit to allow transport of acetylene in these TC-8WM and TC-8AWM cylinders while maintaining an equivalent level of safety. Additionally, this proposal would provide reciprocity to Transport Canada's authorized use of DOT-8 and DOT-8AL cylinders for acetylene transport.
Section 171.23 outlines the requirements for specific materials and packagings transported under the ICAO Technical Instructions, IMDG Code, Transport Canada TDG Regulations, or the IAEA Regulations. It also includes authorized use, under specific conditions, of pi-marked pressure receptacles that comply with the Agreement Concerning the International Carriage of Dangerous Goods by Road (ADR), and the EU Directive 2010/35/EU,
Section 171.25 outlines additional requirements for the use of the IMDG Code in addition to those found in § 171.22 and § 171.23. As discussed above in Section IV. Amendments Not Being Considered for Adoption, specifically Issue #1, PHMSA is not proposing to adopt provisions for UN FRP portable tanks in the HMR.
The HMT summarizes terms and conditions governing transportation of listed hazardous materials under the HMR. For each entry, the HMT identifies information such as the PSN, UN identification number, and hazard class. The HMT specifies additional information or reference requirements in the HMR such as hazard communication, packaging, quantity limits aboard aircraft, and stowage of hazardous materials aboard vessels. PHMSA proposes several changes to the HMT as discussed below. For purposes of the Government Publishing Office's typesetting procedures, proposed changes to the HMT appear under three sections of the HMT: “remove,” “add,” and “revise.” Certain entries in the HMT, such as those with revisions to the PSNs, appear as a “remove” and “add.” Proposed amendments to the HMT include the following:
PHMSA proposes to add new entry, “UN3550, Cobalt dihydroxide powder,
PHMSA proposes to make corrections to multiple HMT entries that were inadvertently modified in previous rulemakings. Specifically, for the PGII and PGIII entries for “UN3129, Water-reactive liquid, corrosive, n.o.s” and “UN3148, Water-reactive liquid, n.o.s”, the references to exceptions in § 173.151 in Column 8A were removed and replaced with the word “None”. While there are no exceptions these materials when assigned to PGI, PHMSA did not intend to remove the exceptions for PGII and III materials. Additionally, for the PGIII entry for “UN3148, Water-reactive liquid, n.o.s”, the “G” in Column 1, which indicates that a technical name must be provided in association with the proper shipping name, was also inadvertently deleted. PHMSA expects that making these editorial corrections will prevent frustrations in shipping due to the inadvertent removal of the reference to authorized shipping exceptions and confusion regarding the required shipping description. PHMSA also proposes a correction to the entry “UN0512, Detonators, electronic programmable for blasting”. In HM-215P, PHMSA added three new entries for electronic detonators to distinguish them from electric detonators, which have different functioning characteristics but similar regulatory provisions for their transport. PHMSA incorrectly assigned an obsolete special provision, Special Provision 103, which was removed from the HMR by final rule HM-219C.
Lastly, PHMSA proposes to make a correction to the HMT entry for “UN1791, Hypochlorite Solutions”. In HM-215O, PHMSA added stowage codes 53 and 58—which require stowage “separated from alkaline compounds” and “separated from cyanides,” respectively—to Column 10B of the HMT for several hazardous materials for consistency with changes included in Amendment 39-18 of the IMDG Code. These stowage codes were intended to be applied to several HMT entries to ensure proper segregation between acids and both amines and cyanides but should not have included UN1791. Therefore, PHMSA proposes to remove stowage codes 53 and 58 from Column 10B for this entry. PHMSA expects that this correction will remove the burden faced by shippers who have had to segregate hypochlorite solutions for compliance with the HMR, which is inconsistent with the requirements of the IMDG Code.
Section 172.101(c) describes column (2) of the HMT and the requirements for hazardous materials descriptions and PSNs. PHMSA proposes to consolidate two entries in the HMT that are currently listed under “UN1169, Extracts, aromatic, liquid” (PGII and PGIII) and “UN1197, Extracts, flavoring, liquid” (PGII and PGIII). Specifically, PHMSA proposes to remove the table entry for “UN1169, Extracts, aromatic, liquid” and modify the PSN associated with the table entry for UN1197 to reflect materials that have been historically transported separately under UN1169 and UN1197. The 22nd revised edition of the UN Model Regulations made these same changes, deleting UN1169 from the Dangerous Goods List and changing the PSN for UN1197 to “Extracts, liquid, for flavor or aroma” to remove confusion associated with selection of the appropriate PSNs across the various languages of nations engaged in international shipments of the material. It became apparent that, whether for a flavor extract or aroma extract, the PSNs were often used interchangeably as there is no difference between the two with regard to classification, hazard communication, and packaging for transport. PHMSA agrees that the existence of two interchangeable UN numbers does not provide any additional value and, therefore, proposes to remove the table entry for UN1169 and modify the PSN for UN1197 to read “Extracts, liquid,
Section 172.101(d) describes column (3) of the HMT, which designates the hazard class or division corresponding to the PSN of that entry. Consistent with changes adopted in the 22nd revised edition of the UN Model Regulations, PHMSA proposes to change the primary hazard classification for the entry “UN1891, Ethyl Bromide,” from a toxic liquid of Division 6.1 to a Class 3 flammable liquid. This change in classification is consistent with the change adopted in the 2023-2024 ICAO Technical Instructions as well as the UN Model Regulations and is based on new test data indicating that the flash point and boiling point of ethyl bromide has a core flammability hazard according to the Class 3 classification criteria of the ICAO Technical Instructions. More specifically, different data sources showed that its flash point of −20 °C (−4 °F) and its boiling point of 38 °C (100.4 °F) meet the criteria for assignment as a Class 3 at the PG II level—the criteria of which is having a flash point <23 °C and boiling point >35 °C. Additionally, rather than classifying ethyl bromide solely as a Class 3 flammable liquid, it was determined that the Division 6.1 hazard still applies and should remain assigned as a subsidiary hazard. This is consistent with the HMR precedence of the hazard table in § 173.2a that instructs for a material that meets criteria for classification as both Class 3 and Division 6.1 (except for when a material meets the PG I poison-by-inhalation criteria), the flammability hazard takes precedence and is the primary hazard. These changes in hazard class and associated packaging requirements were adopted to ensure that the hazards of ethyl bromide are accurately communicated and appropriately packaged. PHMSA reviewed these findings and agrees that it is appropriate to classify ethyl bromide as a flammable liquid, with a subsidiary Division 6.1 hazard. Because of this change in hazard class, additional conforming changes to the HMT entry for ethyl bromide are required in column (6), as discussed below. Additionally, PHMSA expects that clearly identifying the flammability hazard posed by this material will improve safety by ensuring that the material is handled appropriately before and during transport.
Section 172.101(g) describes column (6) of the HMT, which contains label codes representing the hazard warning labels required for a package filled with a material conforming to the associated hazard class and proper shipping name, unless the package is otherwise excepted from labeling. The first code is indicative of the primary hazard of the material. Additional label codes are indicative of subsidiary hazards. As discussed above, PHMSA proposes to modify the primary hazard class for “UN1891, Ethyl bromide” to Class 3. Consistent with this change, PHMSA proposes to assign Class 3 as the primary hazard label and Division 6.1 as a subsidiary hazard label. Consequently, PHMSA proposes to amend column (6) of the HMT for this entry to reflect the warning labels required for the transport of this hazardous material. PHMSA expects that this proposed change will improve safety by clearly communicating the transportation hazards of this material.
Section 172.101(h) describes column (7) of the HMT, which assigns special provisions for each HMT entry. Section 172.102 provides for the meaning and requirements of the special provisions assigned to entries in the HMT. The proposed revisions to column (7) of certain entries in the HMT are discussed below.
PHMSA proposes to add a new special provision, Special Provision 396, and assigning it to “UN3538, Articles containing non-flammable, non-toxic gas, n.o.s.” For additional information,
PHMSA proposes to assign a newly added special provision, Special Provision 398, which pertains to the potential classification of butylene and butylene mixtures as UN1012. This special provision clarifies that butylene mixtures and certain butylene isomers may be assigned to UN1012, while specifically excluding isobutylene from this UN classification. For additional
PHMSA proposes to assign Special Provision A4 to the entry “UN2922, Corrosive liquid, toxic, n.o.s.” and Special Provision A5 to the entry “UN2923, Corrosive solid, toxic, n.o.s.”. Special Provisions A4 and A5 address liquids and solids in PG I that also pose an inhalation toxicity hazard by limiting or prohibiting their transportation on aircraft. In principle, all liquids or solids that have an inhalation toxicity hazard, and assigned PG I, should be subject to one of the two special provisions, as appropriate. However, UN2922 and UN2923 are assigned Class 8 as the primary hazard and Division 6.1 as a subsidiary hazard because of classification guidelines which require hazardous materials that meet the criteria of Class 8 and that have an inhalation toxicity of dusts and mists (LC50) in the range of PG I, but toxicity through oral ingestion or dermal contact only in the range of PG III or less, must be assigned to Class 8 as the primary hazard rather than Division 6.1. In reviewing these provisions, the ICAO Dangerous Goods Panel (DGP) determined that additional restrictions should be implemented for these hazardous materials as the corrosive classification assigned to UN2922 and UN2923 does not negate the inhalation toxicity hazard. Because of the inhalation hazard posed by these materials, the 2023-2024 ICAO Technical Instructions included an amendment to impose quantity limits for transportation of these materials by air. PHMSA agrees with this determination and therefore proposes to assign Special Provision A4 to UN2922, which prohibits it from transport on passenger and cargo aircraft. PHMSA also proposes to assign Special Provision A5 to UN2923, which prohibits this material on passenger aircraft and limits the amount that may be transported on cargo aircraft. PHMSA expects that correcting this conflict will improve safety by prohibiting corrosive materials that also pose inhalation hazards on passenger aircraft and limiting their transport on cargo aircraft.
PHMSA proposes to add two new air special provisions, A224 and A225, and assign them to HMT entries “UN3548, Articles containing miscellaneous dangerous goods, n.o.s.” and “UN3538, Articles containing non-flammable, non-toxic gas, n.o.s.,” respectively. These special provisions would allow for transport on both passenger aircraft and cargo aircraft under certain conditions. For additional information,
Section 172.101(i) explains the purpose of column (8) in the HMT. Columns (8A), (8B), and (8C) specify the applicable sections for exceptions, non-bulk packaging requirements, and bulk packaging requirements, respectively. Columns (8A), (8B), and (8C) are completed in a manner which indicates that “§ 173.” precedes the designated numerical entry. Column (8A) contains exceptions from some of the requirements of this subchapter. The referenced exceptions are in addition to those specified in subpart A of part 173 and elsewhere in subchapter C. The word “None” in this column means no packaging exceptions are authorized, except as may be provided by special provisions in column (7). For example, the entry “151” in column (8A), associated with the proper shipping name “Nitrocellulose with water,” indicates that, for this material, packaging exceptions are provided in § 173.151 of this subchapter.
PHMSA proposes to remove references to § 173.151, which provide exceptions for Class 4 hazardous materials, in column (8A), and add the word “None” for three solid desensitized explosive entries: “UN2555, Nitrocellulose with water
Section 172.101(j) explains the purpose of column (9) in the HMT. Column (9) specifies quantity limitations for packages transported by air and rail. Column (9) is divided into two columns: column (9A) provides quantity limits for passenger aircraft/rail, and column (9B) provides quantity limits for cargo aircraft.
Consistent with changes adopted in the 2023-2024 edition of the ICAO Technical Instructions, PHMSA proposes to amend the quantity limitations for UN 1891, Ethyl bromide, when transported by passenger aircraft. Previously, the maximum net quantity per package for passenger aircraft was 5 L on the Dangerous Goods List of the ICAO Technical Instructions; this same quantity limit is currently in place for passenger aircraft, as indicated in column (9A) of the HMT. As a result of the reclassification of UN1891 as a Class 3 flammable liquid, the permitted quantity was reduced in the ICAO Technical Instructions to 1L per packaging. This change is in line with the quantity limits for many other Class 3 materials. PHMSA proposes to make a corresponding change for passenger
PHMSA also proposes to modify the packaging limits aboard cargo aircraft for three battery entries: “UN2794, Batteries, wet, filled with acid, electric storage”; “UN2795, Batteries, wet, filled with alkali, electric storage”; and “UN3292, Batteries, containing sodium.” Specifically, these changes would limit the quantity per packaging to 400 kg, as there is currently no limit for these items. Typically, these articles must be packed in UN specification packagings, and 400 kg is the maximum quantity permitted in such packagings. These proposed changes are consistent with changes made in the 2023-2024 ICAO Technical Instructions, which were made as a correction to an inconsistency between the ICAO Technical Instructions and the UN Model Regulations. Therefore, in column (9B) of the HMT, the words “no limit” will be replaced by 400 kg. PHMSA expects that this change will streamline packaging requirements by providing packaging limits for similar items in similar packagings, consistent with analogous international regulations. This streamlining will also increase safety by increasing clarity on the packaging limits for these similar items.
Section 172.102 lists special provisions applicable to the transportation of specific hazardous materials. Special provisions contain various provisions including packaging requirements, prohibitions, and exceptions applicable to particular quantities or forms of hazardous materials. PHMSA proposes the following revisions to the special provisions in this section:
Special Provision 78 currently states that “UN1002, Air, compressed” may not be used to describe compressed air which contains more than 23.5% oxygen. It also stipulates that compressed air containing more than 23.5% oxygen must be shipped using the description “UN3156, Compressed gas, oxidizing, n.o.s.” which has a Class 5 subsidiary hazard classification. PHMSA proposes to amend Special Provision 78, in order to provide additional clarity with regard to the permitted use of the proper shipping description UN1002. In an effort to address specific mixtures of nitrogen and oxygen that are commercially called “synthetic air,” the 22nd revised edition of the UN Model Regulations includes a new special provision that was intended to clarify that “synthetic air” may be transported under UN1002, provided that it does not contain more than 23.5% oxygen. “Synthetic air” is typically a mixture containing up to 23.5% oxygen with the balance being nitrogen. This mixture is used in a variety of applications, including medical and non-medical, and may be used when ambient air is not sufficient due to the presence of contaminants. This new special provision specifies that mixtures of nitrogen and oxygen containing not less than 19.5% and not more than 23.5% oxygen by volume may be transported under UN1002 when no other oxidizing gases are present. It also states that a Division 5.1 subsidiary hazard label is not required for any concentrations within this limit. While this language is not drastically different than the current language in the HMR, PHMSA expects that rewording Special Provision 78 to include the 19.5% lower bound for oxygen and the note regarding the use of the Division 5.1 subsidiary hazard label will improve safety by providing clearer and more useful instructions for shippers of compressed synthetic or ambient air.
PHMSA proposes to amend Special Provision 156 to require that, when transported by air, a shipping paper, such as an air waybill accompanying the shipment must indicate that the package containing asbestos is not restricted for shipment. Currently, this special provision excepts asbestos from the requirements of 49 CFR Subchapter C when it is immersed or fixed in a natural or artificial binder—such as cement, plastics, asphalt, resins, or mineral ore—in such a way that no escape of hazardous quantities of respirable asbestos fibers can occur. It was noted that confusion over whether a shipment was or was not excepted from the regulations had led to delays and frustrated shipments. The 2023-2024 ICAO Technical Instructions amended a similar special provision to assist in providing evidence of compliance with its requirements. PHMSA's proposed amendment to Special Provision 156 would require that, when transported by air, packages or shipping documentation be marked to indicate that the package containing asbestos is not restricted for shipment. PHMSA expects that this requirement will facilitate the safe shipment of asbestos by preventing them from being mistaken as fully regulated hazardous materials.
Special Provision 387 provides shippers of polymerizing substances with information regarding stabilization requirements for their shipments. As discussed below, in an earlier rulemaking, PHMSA placed sunset dates on the HMR provisions concerning transport provisions for polymerizing substances to allow time for the completion of research on various topics concerning their transport and to gather and review empirical evidence concerning the appropriate transport provisions for polymerizing substances. In line with other amendments proposed in this NPRM for the transport of polymerizing substances, PHMSA is proposing to amend Special Provision 387 to remove the sunset date of January 2, 2023. The result of this proposed amendment is that the existing stabilization requirements noted in this special provision remain and the sunset date is removed.
PHMSA proposes to add a new special provision, Special Provision 396, and assign it to “UN3538, Articles containing non-flammable, non-toxic gas, n.o.s,” to authorize the transport of large and robust articles (
PHMSA proposes to add Special Provision 398, pertaining to the classification of hazardous materials under UN1012, Butylene. This new special provision would clarify that butylene mixtures and certain butylene isomers may be assigned to UN1012, while specifically excluding UN1055, Isobutylene from this UN classification. Butylene, also known as butene, includes four different isomers, corresponding to one general chemical formula, C4H8. One of these isomers is isobutylene, which, while similar to the other three isomers, has been assigned a separate UN number, UN1055, which has its own set of packaging provisions. To avoid “UN1055, Isobutylene” being classified and transported under UN1012, this amendment would facilitate consistent and proper classification of this group of hazardous materials. This clarification for UN1012, Butylene, was added in the 22nd revised edition of the UN Model Regulations for consistency with European regulations, which made similar changes to avoid “UN1055, Isobutylene” being classified and transported under UN1012. PHMSA proposes to add this clarifying special provision with the expectation that it will facilitate consistent and proper classification of this group of hazardous materials.
Special Provision 421 is assigned to the four polymerizing substance entries in the HMT. Currently this special provision notes that these entries will no longer be effective on January 2, 2023, unless extended or terminated prior to this date. As discussed in the “Executive Summary” section of this rulemaking, PHMSA had placed sunset dates on the HMR provisions concerning transport provisions for polymerizing substances to allow time for the completion of research on various topics concerning their transport and to gather and review empirical evidence concerning the appropriate transport provisions for polymerizing substances. As we have completed this review, we are proposing to delete Special Provision 421 and to maintain the existing polymerizing substance HMT entries.
PHMSA proposes to add a new Special Provision 441, assigning it to “UN1045, Fluorine, compressed.” This new special provision would specifically address gas mixtures containing fluorine and inert gases in UN pressure receptacles in accordance with changes adopted in the 22nd revised edition of the UN Model Regulations. Specifically, this change would provide latitude with regard to the maximum allowable working pressure when fluorine is a part of a mixture, which contains less reactive gases, such as nitrogen, when the mixture is transported in UN pressure receptacles. As a strongly oxidizing gas, pure fluorine requires specific safety measures because it reacts spontaneously with many organic materials and metals. Additionally, because of its reactive properties, the UN Model Regulations limit the maximum allowable working pressure for pure fluorine in cylinders to 30 bar and a minimum test pressure of 200 bar is also required. However, prior to changes adopted in the 22nd revised edition of the UN Model Regulations, there was no guidance on the maximum allowable working pressure and minimum test pressure for mixtures of gases which contain fluorine. Commercially, these mixtures are often placed on the market and used in concentrations, which may include as little as one percent fluorine combined with noble gases, or ten to twenty percent fluorine mixed with nitrogen. Due to the lack of specific provisions addressing fluorine gas mixtures, such mixtures containing relatively inconsequential amounts of fluorine were subject to the same requirements (restrictive maximum allowable working pressures) as pure fluorine. Given that fluorine, in a mixture with inert gases or nitrogen, is less reactive towards materials than pure fluorine, the UNSCOE determined that gas mixtures containing less than 35% fluorine by volume should no longer be treated like pure fluorine and may use a higher maximum allowable working pressure. The new packing provision added in the 22nd revised edition of the UN Model Regulations allows for pressure receptacles containing mixtures of fluorine and inert gases (including nitrogen) to have higher working pressures by allowing for consideration of the partial pressures exerted by the other constituents in the mixture, rather than limiting the pressure in the receptacle based on fluorine alone. Specifically, the provision permits mixtures of fluorine and nitrogen with a fluorine concentration below 35% by volume to be filled in pressure receptacles up to a maximum allowable working pressure for which the partial pressure of fluorine does not exceed 31 bar absolute. Additionally, for mixtures of true inert gases and fluorine, where the concentration of fluorine is below 35% by volume, pressure receptacles may be filled up to a maximum allowable working pressure for which the partial pressure of fluorine does not exceed 31 bar absolute, provided that when calculating the partial pressure, the coefficient of nitrogen equivalency is determined and accounted for in accordance with ISO 10156:2017. Finally, the newly added provision for these two types of gas mixtures limits the working pressure to 200 bar or less
Special Provision A54 specifies that, irrespective of the quantity limits in column (9B) of the § 172.101 table, a lithium battery, including a lithium battery packed with, or contained in, equipment that otherwise meets the applicable requirements of § 173.185, may have a mass exceeding 35 kg, if approved by the Associate Administrator prior to shipment. PHMSA proposes to amend this special provision to require that, when this special provision is used, the special provision number must be indicated on the shipping paper. PHMSA expects that this amendment will enhance safety by improving the communication of potential hazards, as without such indication, the need for shipment acceptance staff to check and ensure a copy of the approval accompanying the shipment can potentially be missed.
The 2023-2024 ICAO Technical Instructions added two new special provisions permitting the transport of articles containing hazardous materials aboard passenger and cargo aircraft. Currently these articles are forbidden from transport on passenger and cargo aircraft, as specified in column (9) of the HMT. However, the ICAO DGP developed these packaging provisions, which include provisions that ensure appropriate gas containment during transport. The aim of these special provisions was to facilitate the transport of large articles containing environmentally hazardous substances (such as aircraft landing gear struts filled with hydraulic fluid) and large articles containing a non-flammable, non-toxic gas (such as new types of magnetic resonance imaging (MRI) scanners which often contain compressed helium as well as lithium cells or batteries). These amendments were adopted in the 2022-2023 ICAO Technical Instructions and PHMSA proposes to mirror these provisions by adding two new air-specific special provisions, A224 and A225, and assigning them to HMT entries “UN3548, Articles containing miscellaneous dangerous goods, n.o.s.” and “UN 3538, Articles containing non-flammable, non-toxic gas, n.o.s.” respectively.
These special provisions would allow for the transport of large articles containing a non-flammable, non-toxic gas or environmentally hazardous substances on both passenger aircraft and cargo aircraft only under certain conditions. Specifically, under Special Provision A224, “UN3548, Articles containing miscellaneous dangerous goods, n.o.s.” would be permitted on passenger and cargo aircraft, provided that the only dangerous goods in the article are environmentally hazardous substances with or without lithium cells or batteries that comply with § 173.185(c). Similarly, under Special Provision A225, “UN3538, Articles containing non-flammable, non-toxic gas, n.o.s.” would be permitted aboard passenger and cargo aircraft, provided that the article contains only a Division 2.2 gas that does not have a subsidiary hazard but excluding refrigerated liquefied gases and other gases forbidden for transport on passenger aircraft with or without lithium cells or batteries that comply with § 173.185(c). In addition to containing only the permitted hazardous materials, the special provision would also require that shippers comply with additional packaging requirements, specified in § 173.232, and that the special provision be indicated on shipping documentation.
The ICAO DGP agreed that these provisions were appropriate given that environmentally hazardous substances pose a very low hazard in air and that non-flammable, non-toxic gases without subsidiary hazard are already allowed on both passenger and cargo aircraft as well as certain other articles containing similar gases. PHMSA agrees and expects that, in addition to aligning the HMR with recent changes added to the 2023-2024 ICAO Technical Instructions, the addition of these provisions will facilitate the transport of these materials by air while maintaining the current level of safety for air transport of certain hazardous materials.
PHMSA proposes to amend the text of IP15 to clarify language pertaining to the authorized period of use of composite IBCs. Currently, IP15 states that for IBCs containing UN2031 with more than 55% nitric acid, rigid plastic IBCs and composite IBCs that have a rigid plastic inner receptacle are authorized for two years from the date of IBC manufacture. A change to a corresponding special provision was adopted in the 22nd revised edition of the UN Model Regulations to make clear that the authorized two-year period of use specifically refers to the duration of use of the inner receptacle of composite IBCs and not to the outer framework. The intent of this requirement is to limit the inner receptacle for composite IBCs to the two-year period of use when used for this specific corrosive material, rather than requiring that the outer framework be inspected as often. The entire composite IBC remains subject to the five-year inspection interval, prescribed in § 180.352. This change in the UN Model Regulations was in response to mistranslations of the UN Model Regulations, which led to inconsistent maintenance of composite IBCs. While PHMSA is not aware of any issues surrounding the language in IP15, PHMSA expects that making this editorial change will ensure that international users are not confused by the text of the HMR, and this clarification will enhance safe transport of hazardous materials in such IBCs.
As discussed earlier, PHMSA proposes to add a new IP code, IP22, for the new entry “UN 3550, Cobalt dihydroxide powder,
Section 173.4b specifies the hazard criteria and packaging requirements to qualify for the de minimis exception—
Section 173.21 describes situations in which offering for transport or transportation of certain materials or packages is forbidden. Examples of such forbidden shipments include materials designated as “Forbidden” in Column (3) of the HMT; electrical devices that are likely to generate sparks and/or a dangerous amount of heat; and materials that are likely to decompose or polymerize and generate dangerous quantities of heat or gas during decomposition or polymerization. This last group of materials is addressed in paragraph (f) of this section, which outlines the conditions under which materials which are likely to decompose or polymerize unless stabilized or inhibited in some manner (
PHMSA proposes to lower the temperature threshold at which transport of certain materials in portable tanks require temperature control. Specifically, this amendment would lower this threshold temperature for a material which is likely to decompose with a self-accelerated decomposition temperature (SADT) or polymerize with a self-accelerated polymerization temperature (SAPT) from 50 °C (122 °F) to 45 °C (113 °F) when transported in portable tanks. This means that if adopted, portable tanks containing materials likely to decompose or polymerize at temperatures greater than 45 °C will not be required to be stabilized or inhibited by temperature control and otherwise be forbidden from transport. In an earlier rulemaking, HM-215N, PHMSA gave notice that at that time, it would not adopt reductions in temperature thresholds for shipments in portable tanks and maintained a 50 °C (122 °F) threshold for requiring temperature control to allow for additional time to conduct research on the impacts of such a change and to allow additional time to fully consider the issue. However, PHMSA-sponsored research, which was completed in February 2021 by APT Research, Inc. (APT),
Additionally, to fully adopt these proposed changes, PHMSA proposes to remove the phaseout language currently found in (f)(1)(i), which states that the provisions concerning polymerizing substances in paragraph (f) will be effective until January 2, 2023. Finally, based on results of the research, PHMSA proposes to maintain the current defining criteria for polymerizing substances, in § 173.124, that a polymerizing substance must successfully pass the UN Test Series E at the “None” or “Low” level, or achieve equivalent criteria using an alternative test method with the approval of the Associate Administrator, prior to selection of an appropriate portable tank or IBC. While this rulemaking action is being completed through the final rule stage, PHMSA directs stakeholders to review the enforcement discretion notice available on the PHMSA website
Section 173.27 outlines general requirements for transportation by aircraft, including requirements and limitations for hazardous materials transported in limited quantities. Currently, the provisions for combination packagings in paragraph (f)(2) specify that materials or articles not authorized as a limited quantity for transportation by aircraft include all PG I materials; self-reactive flammable solids in Division 4.1; spontaneously combustible materials in Division 4.2; and liquids that are dangerous when wet in Division 4.3. The ICAO Technical Instructions included similar language for Division 4.1 materials by allowing non-self-reactive Division 4.1 materials assigned to PG II or PG III to be transported as limited quantities. However, the ICAO DGP identified a conflict with limited quantity provisions in the ICAO Technical Instructions and the limited quantity provisions in the UN Model Regulations pertaining to four Division 4.1 materials, assigned PG II: “UN 2555, Nitrocellulose with water with not less than 25 percent water by mass”; “UN 2556, Nitrocellulose with alcohol with not less than 25 percent alcohol by mass, and with not more than 12.6 percent nitrogen, by dry mass”; “UN 2557, Nitrocellulose, with not more than 12.6 percent nitrogen, by dry mass mixture with or without plasticizer, with or without pigment”; and “UN 2907, Isosorbide dinitrate mixture with not less than 60 percent lactose, mannose, starch or calcium hydrogen phosphate.” Despite not being defined as self-reactive, the UN Model Regulations have never included these specific Division 4.1 flammable solid materials for transport as limited quantities. The ICAO Technical Instructions were amended for consistency with the UN Model Regulations to clearly indicate that the transport of these four PG II materials in Division 4.1 are not authorized for transportation by aircraft as limited quantities. PHMSA proposes to add language in § 173.27(f)(2)(i)(D) to explicitly include the UN identification numbers for these materials, indicating that these materials may not be transported as limited quantities by aircraft. PHMSA expects that this change will add an additional level of safety by correcting this packaging provision, which has been inconsistent with those in place for materials that pose similar hazards.
Section 173.124 outlines defining criteria for Divisions 4.1 (Flammable solid), 4.2 (Spontaneously combustible), and 4.3 (Dangerous when wet material). In an earlier rulemaking, PHMSA placed phaseout dates on the HMR provisions concerning transport provisions for polymerizing substances to allow time for the completion of research on various topics concerning their transport and to gather and review empirical evidence concerning the appropriate transport provisions for polymerizing substances. In line with other amendments proposed in this NPRM for the transport of polymerizing substances, PHMSA is proposing to remove paragraph (a)(4)(iv), which is the phaseout date of January 2, 2023. The result of this proposed amendment will be to remove the phaseout date and keep the existing requirements—as outlined in paragraph (a)(4)—effective beyond the January 2, 2023, date.
Section 173.137 prescribes the requirements for assigning a packing group to Class 8 (corrosive) materials. PHMSA proposes to authorize the use of an additional test method, Test No. 439,
Currently, the HMR requires offerors to classify Class 8 materials and assign a packing group based on tests performed in accordance with various OECD Guidelines for the Testing of Chemicals (TG), including a skin corrosion test (
With regard to the editorial changes in this section, PHMSA proposes to amend the text of this section to provide clarity regarding the authorized OECD Testing of Chemicals. Additionally, PHMSA proposes to amend the last paragraph of the introductory text, which currently states that assignment to packing groups I through III must be made based on data obtained from tests conducted in accordance with OECD Guideline Number 404 or Number 435, to remove the reference to Test No. 435. Since its update in 2015, the criteria for packing group assignments in Test No. 435 are no longer the same as the criteria for Test Guideline 404. PHMSA expects that these amendments will enhance safety by providing clarity regarding the proper testing and assignment of packing groups and promote efficiency by streamlining the assignment of packing groups.
Section 173.167 contains the packaging instructions and exceptions for ID8000 consumer commodities. The ID8000 entry was added to the HMR in final rule HM-215K,
In consideration of P-1762 and consistent with these letters of interpretation regarding the requirements for ID8000 shipments, PHMSA proposes to revise the requirements in § 173.167 for ID8000, consumer commodity material. The intent of this proposed revision is to clearly address requirements for all modes of transportation, while continuing to recognize that the history and intent of the ID8000, consumer commodity, entry is closely tied to the ICAO Technical Instructions and air transportation.
First, PHMSA proposes editorial revisions to the title of the section and introductory language in paragraph (a). PHMSA proposes to rename the section “ID8000 consumer commodities” to distinguish this section from the historical “ORM-D, consumer commodity” HMT entry and an exception that ceased to be effective on December 31, 2020. PHMSA purposely phased out the “ORM-D, consumer commodity” classification and description to remove the dual system of shipping certain limited quantities domestically and internationally, as it was a source of confusion.
PHMSA acknowledges that there may be circumstances where persons need to transport ID8000 packages between locations—
More significantly, PHMSA proposes to revise the structure of the section by moving the two requirements in the currently effective language of paragraph (b)—applicable only to air transportation—to new subparagraphs (6) and (7) of paragraph (a). This would have the effect of making all packages of ID8000 material subject to the limited quantity marking requirements of § 172.315(b) to include the “Y” limited quantity marking, and other markings required by part 172 subpart D, including the ID number marking and PSN. This revision would also have the effect of requiring compliance with the § 173.27(c) pressure differential requirement for transportation by all modes. The intent of this proposed revision is two-fold:
1. Provide clarity to shippers on the hazard communication and pressure differential requirements for all shipments of ID8000, consumer commodity packages.
2. Ensure that ID8000, consumer commodity packages—wherever they are in the transportation stream—meet the requirements for air transportation.
As proposed, ID8000 packages would continue to be provided exceptions from shipping papers and labels when transported by highway and rail. PHMSA proposes to provide a labeling exception for ID8000 packages transported by vessel, which aligns with the labeling exception provided to
In addition to the revisions to § 173.167 requested in P-1762 discussed above, COSTHA submitted petition P-1761
Separately, in P-1761, COSTHA petitioned PHMSA to add a reference to the limited quantity marking section (§ 172.315) to the limited quantity packaging instructions in §§ 173.150, 173.151, 173.152, 173.153, 173.154, and 173.155. PHMSA does not propose to adopt the revision proposed in P-1761. Limited quantity shipments must be marked in accordance with § 172.315 (
Section 173.185 prescribes requirements for the transportation of lithium cells and batteries. PHMSA proposes numerous changes to this section as follows.
Additionally, PHMSA proposes to add a new paragraph (a)(5) to require marking the outer casing of lithium ion batteries with the Watt-hour (Wh) rating. This is consistent with the provisions for smaller cells or batteries in § 173.185(c)(1)(i), which require that “each lithium ion battery subject to this provision must be marked with the Watt-hour rating on the outside case.” PHMSA added this provision to the HMR in HM-224F.
PHMSA also proposes to add a new paragraph (b)(3)(iii)(C) to include a limitation for the number of batteries in the package, when transported by air. This is consistent with the provisions for smaller cells or batteries found in § 173.185(c)(4)(vi), which currently requires that for smaller cells or batteries contained in or packed with equipment and shipped by aircraft, the number allowed in each package is limited to the number required to power the piece of equipment, plus two spare sets. The original provision limiting the number in each packaging was added in HM-224F but did not apply to fully regulated shipments.
However, PHMSA notes that the limitation on the number of cells or batteries allowed in a package should apply to fully regulated shipments of lithium batteries packed with equipment, consistent with Section I.2 of Packing Instruction 966 (for UN3481) and Packing Instruction 969 (for UN3091) of the ICAO Technical Instructions. PHMSA did not intend to limit the scope of this requirement to just smaller cells or batteries, as a condition for the exception from full regulation under paragraph (c), as this packaging requirement is intended to limit the hazard of lithium battery shipments in air transportation. Limiting the number of batteries allowed to be packaged with equipment reduces hazard risks and increases safety.
Section 173.185(b)(4) contains packaging provisions for lithium cells or batteries contained in equipment. Consistent with the ICAO Technical Instructions, PHMSA proposes to add a new paragraph (b)(4)(iv) clarifying that for transportation by aircraft, when multiple pieces of equipment are packed in the same outer packaging, each piece of equipment must be packed to prevent contact with other equipment. This change is necessary because existing provisions in paragraph (b) could be interpreted to only apply to an outer packaging containing a single piece of equipment; however, an outer packaging may contain multiple pieces of equipment. This provision would more clearly communicate that for multiple pieces of equipment containing lithium cells or batteries in the same outer packaging, the equipment must be packed to prevent damage due to contact between the pieces of equipment.
Section 173.185(c) provides exceptions for smaller cells or batteries. Paragraph (c)(4) contains provisions for exceptions for smaller lithium cells and batteries offered by air transportation. PHMSA proposes to remove the exceptions applicable to small lithium cells and batteries when they are not packed with, or contained in, equipment. This change was also implemented on January 1, 2022, by the International Air Transport Association (IATA) and member airlines will no longer accept packages of lithium batteries prepared in accordance with Section II of Packing Instructions 965 and 968 of the ICAO Technical Instructions. These exceptions in § 173.185(c)(4), had been developed to facilitate the global transport of small lithium cells and batteries. However, these exceptions removed many of the regulatory safeguards that provide for the safe transport of lithium batteries, including requirements for air operators to perform an acceptance check, information to be provided to the pilot-in-command, and package hazard communication. Furthermore, the exceptions for small lithium cells and batteries limit the ability of air operators to conduct the necessary safety risk assessments. The reduced hazard communication also increases the risk of small lithium cells and battery packages restricted to transport on cargo aircraft only being inadvertently loaded on a passenger aircraft. This proposed removal of these exceptions would increase the visibility of these shipments to operators who could perform an acceptance check to ensure proper packaging and hazard communication and ensure the information regarding the number and location of packages containing lithium batteries will be provided to the pilot-in-command. The proposed changes do not apply to the exceptions for small lithium cells and batteries packed with, or contained in, equipment. Specifically, PHMSA proposes to remove the following provisions:
• Paragraph (c)(4)(i), including Table 1 regarding the number and net quantity of lithium batteries.
• In paragraph (c)(4)(ii), the first sentence with reference to (c)(4).
• Paragraph (c)(4)(iii), regarding limitation of one package per consignment.
• Paragraph (c)(4)(v), regarding offering packages and overpacks to an
• Paragraph (c)(4)(viii), regarding packing cells and batteries with other hazardous materials in the same package or overpack.
As a consequence, the remaining provisions in paragraph (c)(4) applicable to lithium cells or batteries packed with, or contained in, equipment would be reorganized and renumbered. The paragraph (c)(4) introductory text would be revised to read “Air Transportation. Smaller Lithium cell or batteries packed with, or contained in, equipment.” Further, consistent with the ICAO Technical Instructions, paragraph (c)(4)(ii), concerning overpacks, would be revised to add a packing instruction that when placed into an overpack, packages must be secured within the overpack, and the intended function of each package must not be impaired by the overpack. The general provisions for overpacks in Part 5; 1.1 of the ICAO Technical Instructions require that packages must be secured within the overpack, and that the intended function of the package must not be impaired by the overpack. However, with the current construction of the provisions for small batteries in Packing Instructions 966, 967, 969, and 970, the general Part 5 overpack provisions do not apply, which could lead to packages being unsecured or even damaged by being unrestrained within an overpack. Therefore, these overpack provisions from Part 5 were added to the respective packing instructions to ensure protection against damage of the packages and their contents. These changes are consistent with the elimination of “Section II” from Packing Instructions 965 and 968 in the ICAO Technical Instructions. These proposed amendments maintain the level of safety (
Section 173.185(c)(5), corresponding to Section IB in ICAO Technical Instructions Packing Instructions 965 and 968, provides an exception from specification packing requirements for smaller lithium cells and batteries, not exceeding the size prescribed in paragraph (c)(1) and subject to certain quantity limits. PHMSA proposes to revise the paragraph (c)(5) introductory text to “Air Transportation. Smaller lithium cell and batteries.” Combined with the revision of the (c)(4) introductory text, this will assist users of this section by identifying the subparagraphs in paragraph (c) containing additional air transport provisions for lithium batteries, packed with, or contained in, equipment, and those only applicable to lithium cells and batteries. PHMSA proposes to revise paragraph (c)(5) by requiring packages to be capable of withstanding a three-meter stack test for a duration of 24 hours. Because lithium cells and batteries offered in accordance with paragraph (c)(5) (which corresponds with IB of Packing Instructions 965 and 968 of the ICAO Technical Instructions) are excepted from the specification package requirements, they are not presently subject to a stack test. However, the general requirements for limited quantity packages by air in § 173.27(f)(2)(vi), which are also excepted from specification packaging requirements, do require that each package be capable of withstanding a three-meter stack test for a duration of 24 hours. In considering the packaging standards between limited quantity packages and those for smaller lithium cells and batteries, it was agreed by the DGP that packages must be capable of withstanding a stack test, in parallel with the requirement for limited quantity packages. PHMSA agrees with introducing a stack test as a preventative safety measure against potential damage to lithium battery packages from stacking of packages and proposes to include a stack test requirement in paragraph (c)(5).
Lastly, consistent with corresponding revisions to international standards, PHMSA is proposing editorial revisions in paragraphs (b)(5), (e)(5), (e)(6), and (e)(7), where references to “battery assemblies” are removed and replaced with the phrase “cells and batteries,” as used throughout the section. Paragraph 173.185(a)(1) requires each lithium cell or battery to be of the type proven to meet the criteria in part III, sub-section 38.3 of the UN Manual of Tests and Criteria. The 38.3.2.3 definition for “battery” states that:
“. . . Units that are commonly referred to as “battery packs,” “modules” or “battery assemblies” having the primary function of providing a source of power to another piece of equipment are, for the purposes of the Model Regulations and this Manual, treated as batteries.”
Use of “battery assemblies” may be a source of confusion, as the reader may understand it to have a separate meaning from “battery,” yet it is not specifically defined in the HMR. Further, based on the requirement above to comply with the UN Manual of Tests and Criteria and its associated meaning of “battery assemblies,” PHMSA considers that the use of the term “battery assemblies” is redundant with the term “battery” in the context of these transport requirements and proposes to revise the text to reduce confusion of the provisions in these paragraphs, regarding applicability to the assembly or to the cells and batteries contained within an assembly. PHMSA expects that the proposed changes to § 173.185 will provide clarity, thus enhancing the safety standard in the HMR for transportation of lithium batteries.
Section 173.224 establishes packaging and control and emergency temperatures for self-reactive materials. The Self-Reactive Materials Table in paragraph (b) of this section specifies self-reactive materials authorized for transportation without first being approved for transportation by the Associate Administrator for Hazardous Materials Safety and requirements for transporting these materials. As a result of new self-reactive materials formulations becoming commercially available, the 22nd revised edition of the UN Model Regulations includes updates to the list of specified self-reactive materials authorized for transportation without prior approval. To maintain consistency with the UN Model Regulations, PHMSA proposes to update the Self-Reactive Materials Table by adding a new entry for “(7-Methoxy-5-methyl-benzothiophen-2-yl) boronic acid”. PHMSA also proposes to correct the name of one of the listed self-reactive substances on the self-reactive substances table. Currently, “2-(N,N-Methylaminoethylcarbonyl)-4-(3,4-dimethyl-phenylsulphonyl)benzene diazonium zinc chloride” is listed, however this formulation name should be “2-(N,N-Methylaminoethylcarbonyl)-4-(3,4-dimethylphenylsulphonyl)benzenediazonium hydrogen sulphate”. While reviewing the self-reactive table in the UN Model Regulations and ICAO Technical Instructions, PHMSA discovered that “2-(N,N-Methylaminoethylcarbonyl)-4-(3,4-dimethyl-phenylsulphonyl)benzene diazonium zinc chloride” does not appear in any other international regulations but that “2-(N,N-
In addition, PHMSA proposes assigning a new “Note 6” to this entry among the list of notes following the table. “Note 6” would provide concentration limits of water and organic impurities for this new self-reactive material. PHMSA expects that adding provisions for the transport of (7-Methoxy-5-methyl-benzothiophen-2-yl) boronic acid formulations will facilitate its transport while maintaining the HMR's safe standard for transportation of self-reactive hazardous materials.
PHMSA also proposes to revise § 173.224(b)(4). In a previous final rule, HM-215O, PHMSA revised § 173.224 to authorize self-reactive materials to be transported and packed in accordance with packing method OP8 where transport in IBCs or portable tanks is permitted in accordance with § 173.225, provided that the control and emergency temperatures specified in the instructions are complied with. This change allowed materials that are authorized in bulk packagings to also be transported in appropriate non-bulk packagings. PHMSA proposes to make an editorial correction to a reference to the formulations listed in § 173.225. In the course of adding this provision, PHMSA incorrectly directed users to the Organic Peroxide IBC Table by referencing 173.225(f) however the table is found in 173.225(e); therefore, PHSMA proposes to correct that sentence to refer to 173.225(e).
Section 173.225 prescribes packaging requirements and other provisions for organic peroxides. As a result of new peroxide formulations becoming commercially available, the 22nd revised edition of the UN Model Regulations includes updates to the list of identified organic peroxides, which provides for formulations of these materials that are authorized for transportation without prior approval. To maintain consistency with the UN Model Regulations, PHMSA proposes to update the Organic Peroxide Table in § 173.225(c) by adding new entries for “tert-Butylperoxy isopropylcarbonate,” “tert-hexyl peroxypivalate,” and “acetyl acetone peroxide,” and identifying them as “UN3105, Organic peroxide type D, liquid”; “UN3117, Organic peroxide type E, liquid, temperature controlled”; and “UN3107, Organic peroxide type E, liquid,” respectively. Additionally, PHMSA proposes to add a “Note 32” following the table, in association with the new entry for “acetyl acetone peroxide,” to indicate that the active oxygen concentration for this formulation is limited to concentrations of 4.15% active oxygen or less. PHMSA also proposes to revise the Organic Peroxide Portable Tank Table in paragraph (g) to maintain alignment with the 22nd revised edition of UN Model Regulations by adding new formulation “tert-Butyl hydroperoxide, not more than 56% with diluent type B,” identified by “UN3109, Organic peroxide type F, liquid.” This amendment would also include the addition of “Note 2” following the table to specify that diluent type B is tert-Butyl alcohol. PHMSA expects that adding provisions for the transport of these newly available peroxide formulations will facilitate transportation of these materials, while maintaining the HMR's safety standard for transportation of organic peroxide hazardous materials.
Section 173.232 outlines the packaging requirements for articles containing hazardous materials. For the purposes of this section, an “article” means machinery, apparatus, or other device that contains one or more hazardous materials—or residues thereof—that are an integral element of the article, necessary for its functioning, and that cannot be removed for the purpose of transport. Currently, these articles are forbidden from transport on passenger and cargo aircraft, as specified in column (9) of the HMT. However, the 2023-2024 ICAO Technical Instructions include new provisions permitting the transport of certain articles containing hazardous materials aboard passenger and cargo aircraft. These new provisions allow articles described and classified as “UN3548, Articles containing miscellaneous dangerous goods, n.o.s., 9” or “UN 3538, Articles containing non-flammable, non-toxic gas, n.o.s., 2.2” to be transported by cargo and passenger aircraft under certain conditions. PHMSA proposes to make changes consistent with those provisions by adding two new packaging provisions in § 173.232, in addition to the new special provisions A224 and A225 discussed above in Section-by-Section Review of NPRM Proposals for § 172.102. Specifically, PHMSA proposes to specify in paragraph (h) that air transport is permitted for UN3548 articles containing less than 5 L or 5 kg of environmentally hazardous substances when all other conditions of § 173.232 are met. In a new paragraph (i), the same requirements are proposed for articles transported under UN3538, which: (1) do not have an existing proper shipping name; (2) contain only gases of Division 2.2 without a subsidiary hazard, except for refrigerated liquefied gases and other gases that are forbidden for transport on passenger aircraft, where the quantity of the Division 2.2 gas exceeds the quantity limits for UN 3363, as prescribed in § 173.222; (3) the quantity of gas in the article does not exceed 75 kg when transported by passenger aircraft or 150 kg when transported by cargo aircraft; and (4) gas containing receptacles within the article must meet the requirements of Part 173 and Part 175, as appropriate., or meet a national or regionally recognized pressure receptacle standard.
Additionally, both packaging provisions would also permit the transport of these articles, containing lithium cells or batteries, provided that the batteries meet the requirements specified in § 173.185. The aim of these new provisions is to facilitate the transport of large articles containing environmentally hazardous substances, such as aircraft landing gear struts filled with hydraulic fluid and large articles containing a non-flammable, non-toxic gas, such as new types of magnetic resonance imaging (MRI) scanners, which often contain compressed helium, as well as lithium cells or batteries. As a participant on the Dangerous Goods Panel, PHMSA expects that the proposed packaging provisions provide an appropriate level of safety to allow these items to be transported by air and are appropriate for incorporation in the HMR.
Section 173.301b outlines additional general requirements when shipping gases in UN pressure receptacles (
PHMSA also proposes to revise paragraph (c)(2), which requires UN pressure receptacles to have their valves protected from damage to prevent unintentional release of the contents of the receptacles. Various methods on how to achieve damage protection are provided, including equipping the container with a valve cap or guard that conforms to ISO 11117:2008, “Gas cylinders—Valve protection caps and guards—Design, construction and tests” and the Technical Corrigendum 1, a complementary document to the standard. As part of its regular review of its existing standards, in 2019, ISO published an updated version of this standard, 11117:2019, which was adopted in the 22nd revised edition of the UN Model Regulations as a permitted conformance standard for valve protection. This document updates the 2008 version, currently authorized in paragraphs (c)(2)(ii) and (c)(2)(iii). In accordance with the UN Model Regulations, PHMSA also proposes to authorize the continued use of ISO 11117:2008, in conjunction with the Technical Corrigendum, until December 31, 2026. Similarly, for metal hydride storage systems, damage protection of the valve must be provided in accordance with ISO 16111:2008, “Transportable gas storage devices—Hydrogen absorbed in reversible metal hydride.” As part of its regular review of its existing standards, in 2018, ISO published an updated version of this standard, which was adopted in the 22nd revised edition of the UN Model Regulations as a permitted conformance standard for valve protection. Therefore, to maintain alignment with the UN Model Regulations' requirements for UN metal hydride storage systems, PHMSA proposes to update the required standard for protection of valves to ISO 16111:2018 and include a phaseout date of December 31, 2026, for continued use of valve guards conforming to valve protection standards in ISO 16111:2008. PHMSA has reviewed the updated ISO standards as part of its regular participation in the review of amendments proposed for the UN Model Regulations and has determined use of the update ISO 16111 will maintain the HMR safety standard for protection of valves used in UN metal hydride storage systems.
Paragraph (d) requires that when the use of a valve is prescribed, the valve must conform to the requirements in ISO 11118:2015(E),
Updating references to these documents would align the HMR with changes adopted in the 22nd revised edition of the UN Model Regulations pertaining to the design and construction of UN pressure drums. PHMSA has reviewed this edition as part of its regular participation in the review of amendments proposed for the UN Model Regulations and does not expect any degradation of safety standards in association with its use.
Lastly, paragraph (f) of this section requires that for the transportation of hydrogen bearing gases, a steel UN pressure receptacle bearing an “H” mark must be used. The “H” marking indicates that the receptacle is compatible with hydrogen embrittling gases. However, some hydrogen bearing gases may also be transported in composite pressure receptacles with steel liners as provided in § 173.311. Therefore, PHMSA proposes to amend § 173.301b(f) to clarify that these compatibility provisions apply to steel UN cylinders as well as composite pressure receptacles that include steel liners. PHMSA expects that this amendment will add an additional level of safety by ensuring that suitability of materials is considered when shippers opt to use composite cylinders for the transport of hydrogen bearing gases.
Section 173.302c outlines additional requirements for the shipment of
Section 173.311 specifies requirements for transportable UN metal hydride storage systems (UN3468) that are comprised of pressure receptacles not exceeding 150 L (40 gallons) in water capacity and having a maximum developed pressure not exceeding 25 MPa (145 psi). Currently, the HMR requires that these metal hydride storage systems be designed, constructed, initially inspected, and tested in accordance with ISO 16111:2008, “Transportable gas storage devices—Hydrogen absorbed in reversible metal hydride.” However, the 22nd revised edition of the UN Model Regulations updated references to this standard to authorize the use of the updated 2018 version of ISO 16111, while allowing the 2008 version to remain authorized for use until December 31, 2026. Therefore, for consistency with the requirements for UN metal hydride storage systems, PHMSA proposes to adopt changes made in the 22nd revised edition of the UN Model Regulations to authorize the use of ISO 16111:2018 and add a phaseout date of December 31, 2026, for continued use of ISO 16111:2008. PHMSA has reviewed this edition as part of its regular participation in the review of amendments proposed for the UN Model Regulations and has determined the updated edition of ISO 16111 will maintain the HMR safety standards for the design, construction, initial inspection, and testing of UN metal hydride storage systems.
Section 175.1 outlines the purpose, scope, and applicability of the Part 175 requirements for the transport of hazardous materials by aircraft. Specifically, these requirements are in addition to other requirements contained in the HMR. The aircraft-level risk presented by hazardous materials depends on factors, such as the total quantity and type, potential interactions, and existing risk mitigation measures. When accepting hazardous materials for transportation by aircraft, aircraft operators (
PHMSA proposes to add a new paragraph (e) to the HMR that includes a reference that directs operators to the FAA's requirements to have an SMS in place, in accordance with 14 CFR part 121. Safety risk management is the process within the SMS composed of describing the system, identifying the hazards, and analyzing, assessing, and controlling risk. According to 14 CFR part 5, certain aircraft operators are certificated, in accordance with 14 CFR part 121, to the appropriate SMS requirements and a note referencing guidance for performing a safety risk assessment. This action will not introduce new regulatory burden, as these SMS requirements have been in place for several years. However, PHMSA expects that adding a reference to these requirements in the HMR will provide additional clarity for aircraft operators, with respect to the applicability of SMS to the acceptance and transport of hazardous materials at the aircraft level. Finally, PHMSA notes that FAA Advisory Circular (AC) 120-121
Section 175.10 specifies the conditions under which passengers, crew members, or an operator may carry hazardous materials aboard an aircraft. Consistent with revisions to the ICAO Technical Instructions, PHMSA proposes revisions in paragraphs (a)(15) and (a)(17) applicable to the carriage of wheelchairs or other mobility aids powered by batteries. Specifically, in paragraphs (a)(15)(v), (a)(15)(vi) and (a)(17)(v), which currently require that the battery be securely attached to the wheelchair or mobility aid or be removed and packed appropriately, PHMSA proposes to add the supplemental requirements that the battery is adequately protected against damage by the design of the wheelchair or mobility aid. The proposed revisions will enhance the safe carriage of these battery-powered items aboard passenger aircraft by requiring combined measures of protection against damage and securement of batteries or otherwise removed and packed appropriately. Furthermore, the proposed revisions will assist passengers traveling with battery-powered wheelchairs or mobility aids by providing better clarity on the required safety measures. Additionally, PHMSA proposes to revise introductory text to paragraphs (a)(14) and (a)(26) to specifically state that each lithium battery must be of a type which meets the requirements of UN Manual of Tests and Criteria, Part III, Subsection 38.3. Currently this requirement is outlined in every other subparagraph under paragraph (a) pertaining to lithium batteries but was inadvertently omitted in prior rulemakings for paragraphs (a)(14) and (a)(26). Therefore, for clarity and consistency with the ICAO Technical Instructions, PHMSA proposes this editorial change, and expects that it will improve safety by ensuring that it is understood that all batteries transported under the provisions of that paragraph are subject to UN testing.
PHMSA also proposes to revise paragraph (a)(18) regarding the carriage of portable electronic devices (
Additionally, PHMSA proposes to add clarification in paragraph (a) that the most appropriate exception from this section shall be selected when hazardous materials are carried by aircraft passengers or crewmembers. For example, paragraph (a)(19) specifies conditions for battery-powered smoking devices such that a person cannot opt to follow the more generalized portable electronic device conditions of paragraph (a)(18). PHMSA expects that this clarification will support the safe transport of excepted hazardous materials by ensuring that they will be transported in a manner that is most appropriate for the hazard they may pose.
Finally, PHMSA proposes to make a clarifying amendment to paragraph (a)(26) regarding baggage equipped with lithium batteries. Oftentimes, the baggage has built-in features that cannot be turned off and the intent of paragraph (a)(26) is the devices are not required to be turned off when the baggage is checked. Therefore, PHMSA proposes to clarify paragraph (a)(26) to state plainly that, under the conditions allowing baggage to be checked without removing the batteries, electronic features of the baggage do not have to be switched off.
Section 175.33 establishes requirements for shipping papers and for the notification of the pilot-in-command when hazardous materials are transported by aircraft. Consistent with the proposed removal of the exceptions applicable to small lithium cells and batteries, as discussed in the Section-by-Section Review discussion of changes in § 173.185(c), PHMSA proposes to revise paragraph (a)(13)(iii) to remove reference to UN3480, lithium ion batteries and UN3090 lithium metal batteries. Currently, paragraph (a)(13)(iii) conditionally excepts certain lithium batteries
Section 178.37 outlines the construction requirements for DOT specification 3AA and 3AAX seamless steel cylinders. As summarized in the Section IV. Section-by-Section Review discussion of changes to § 171.7, PHMSA proposes to incorporate by reference the revised third edition (published in 2019) of ISO 9809-1, “Gas cylinders—Design, construction and testing of refillable seamless steel gas cylinders and tubes—Part 1: Quenched and tempered steel cylinders and tubes with tensile strength less than 1100
Section 178.71 prescribes specifications for UN pressure receptacles. Several updates to referenced standards pertaining to the design, construction, and maintenance of UN pressure receptacles were added in the 22nd revised edition of the UN Model Regulations. To maintain consistency with the UN Model Regulations, PHMSA proposes similar updates to those ISO standards incorporated by reference in this section.
Paragraph (f) outlines required conformance to ISO design and construction standards, as applicable, for UN refillable welded cylinders and UN pressure drums in addition to the general requirements of the section. ISO 21172-1:2015, “
Additionally, PHMSA proposes to revise paragraphs (g), (k), and (n) which outline the design and construction requirements for UN refillable seamless steel cylinders, UN acetylene cylinders, and UN cylinders for the transportation of adsorbed gases, respectively. Currently this section requires that these UN cylinders conform to the second edition (published in 2010) of one or more of following ISO standards:
(1) ISO 9809-1:2010 “
(2) ISO 9809-2, “
(3) ISO 9809-3, “
This series of ISO standards specifies minimum requirements for the material, design, construction and workmanship, manufacturing processes, examination, and testing at time of manufacture for refillable seamless steel gas cylinders and tubes with water capacities up to and including 450 L (119 gallons). PHMSA proposes to modify the design and construction requirements for UN cylinders by authorizing the use of the revised third edition of ISO 9809, Parts 1 through 3. Additionally, PHMSA proposes to add a phaseout date of December 31, 2026, for continued design, construction, and testing of UN cylinders conforming to the second edition. Finally, PHMSA proposes to remove reference to the first edition of these standards as the authorized date (December 31, 2018) for continued manufacture in accordance with this edition has expired. PHMSA has reviewed these updated standards as part of its regular participation in the review of amendments proposed for the UN Model Regulations and expects their required use will maintain the HMR safety standard for manufacture of UN cylinders.
Paragraph (i) outlines required conformance to ISO design and construction standards for UN non-refillable metal cylinders. PHMSA proposes to remove reference to ISO 11118:1999 and add a reference to a supplemental amendment, ISO 11118:2015/Amd 1:2019. Current paragraph (i) requires, in addition to the general requirements of the section, conformance with ISO 11118:2015, “
Paragraph (m) outlines required conformance to ISO standards for the design and construction requirements of UN metal hydride storage systems. Currently this paragraph requires that metal hydride storage systems conform to ISO 16111:2008, “
Paragraph (n) prescribes the design and construction requirements for UN cylinders for the transportation of adsorbed gases. In addition to updating reference for required conformance with ISO 9809-1:2019 as discussed above, PHMSA also proposes to require conformance to an updated version of ISO 11513, “
Updating reference to this standard would align the HMR with changes adopted in the 22nd revised edition of the UN Model Regulations, pertaining to the design and construction of UN cylinders used for the transportation of adsorbed gases. PHMSA has reviewed this edition as part of its regular participation in the review of amendments proposed for the UN Model Regulations and expects that the required use will maintain the HMR
Section 178.75 prescribes specifications for multiple-element gas containers (MEGCs), which are assemblies of UN cylinders, tubes, or bundles of cylinders interconnected by a manifold and assembled within a framework. PHMSA proposes to revise paragraph (d)(3) which outlines the general design and construction requirements for MEGCs. Currently this paragraph requires that each pressure receptacle of a MEGC be of the same design type, seamless steel, and constructed and tested according to one of five ISO standards including the second editions of:
(1) ISO 9809-1 “Gas cylinders—Refillable seamless steel gas cylinders—Design, construction and testing—Part 1: Quenched and tempered steel cylinders with tensile strength less than 1100 MPa.”;
(2) ISO 9809-2, “Gas cylinders—Refillable seamless steel gas cylinders—Design, construction and testing—Part 2: Quenched and tempered steel cylinders with tensile strength greater than or equal to 1100 MPa.”; and
(3) ISO 9809-3, “Gas cylinders—Refillable seamless steel gas cylinders—Design, construction and testing—Part 3: Normalized steel cylinders.”
This series of ISO standards specify minimum requirements for the material, design, construction, workmanship, manufacturing processes, examination, and testing at time of manufacture for refillable seamless steel gas cylinders and tubes with water capacities up to and including 450 L (119 gallons). The standards were updated and revised, as discussed in the Section IV. Section-by-Section Review discussion of § 171.7 changes. PHMSA proposes to authorize the use of the third edition of ISO 9809, Parts 1 through 3, and to add a phaseout date of December 31, 2026, for continued manufacture of pressure receptacles using the second edition. Finally, PHMSA proposes to remove reference to the first edition of these standards, as the authorization date (December 31, 2018) for continued manufacture in accordance with this edition has expired. Authorizing the use of these updated references to this document would align the HMR with changes adopted in the 22nd revised edition of the UN Model Regulations, pertaining to the design and construction of pressure vessels, including MEGCs, while maintaining the HMR safety standard for use of MEGCs.
Section 178.609 provides test requirements for packagings intended for transport of infectious substances. PHMSA proposes an editorial change in paragraph (d) to clarify the drop testing requirements for these packagings. In rule HM-215P,
Section 178.706 prescribes construction standards for rigid plastic IBCs. PHMSA proposes to revise paragraph (c)(3) to allow the use of recycled plastic (
Section 178.707 prescribes construction standards for composite IBCs. PHMSA proposes to revise paragraph (c)(3)(iii) to allow the use of recycled plastic (
Section 180.207 outlines the requirements for requalification of UN
PHMSA also proposes to revise paragraph (d)(5) which requires that UN cylinders used for adsorbed gases be inspected and tested in accordance with § 173.302c and ISO 11513:2011. ISO 11513 specifies minimum requirements for the material, design, construction, workmanship, examination and testing at manufacture of refillable welded steel cylinders for the sub-atmospheric pressure storage of liquefied and compressed gases. The 22nd revised edition of the UN Model Regulations updated references to ISO 11513 to authorize the use of the second edition, ISO 11513:2019. This second edition has been updated to amend packing instructions and remove the prohibition on the use of ultrasonic testing during periodic inspection. PHMSA proposes authorizing the use of ISO 11513:2019 and adding a sunset date of December 31, 2024, until which the current edition of ISO 11513 may continue to be used.
Lastly, PHMSA proposes to add paragraph (d)(8) to reference ISO 23088:2020, “Gas cylinders—Periodic inspection and testing of welded steel pressure drums—Capacities up to 1,000 L,” to provide a requalification standard for UN pressure drums because requalification procedures may differ for pressure drums versus other UN pressure receptacles. The ISO 23088:2020 standard complements the design and construction standard ISO 21172-1, “Gas cylinders—Welded steel pressure drums up to 3,000
These revisions would align the HMR with changes adopted in the 22nd revised edition of the UN Model Regulations pertaining to industry consensus standards for requalification and maintenance procedures for UN pressure receptacles. PHMSA has reviewed this edition as part of its regular participation in the review of amendments proposed for the UN Model Regulations and does not expect any degradation of safety standards in association with its use. PHMSA expects that these amendments will enhance safety by providing cylinder and pressure drum users with the necessary guidelines for the continued use of UN pressure receptacles.
This NPRM is published under the authority of Federal Hazardous Materials Transportation Law. Section 5103(b) authorizes the Secretary of Transportation to prescribe regulations for the safe transportation, including security, of hazardous materials in intrastate, interstate, and foreign commerce. Additionally, 49 U.S.C. 5120 authorizes the Secretary to consult with interested international authorities to ensure that, to the extent practicable, regulations governing the transportation of hazardous materials in commerce are consistent with the standards adopted by international authorities. The Secretary has delegated the authority granted in the Federal Hazardous Materials Transportation Law to the PHMSA Administrator at 49 CFR 1.97(b).
Executive Order 12866 (“Regulatory Planning and Review”)
Executive Order 12866 and DOT Order 2100.6A require that PHMSA submit “significant regulatory actions” to the Office of Management and Budget (OMB) for review. This rulemaking is not considered a significant regulatory action under section 3(f) of Executive Order 12866 and, therefore, was not formally reviewed by OMB. This rulemaking is also not considered a significant rule under DOT Order 2100.6A.
The following is a brief summary of costs, savings, and net benefits of some of the amendments proposed in this notice. PHMSA has developed a more detailed analysis of these costs and benefits in the preliminary regulatory impact analysis (PRIA), a copy of which has been placed in the docket. PHMSA seeks public comment on its proposed revisions to the HMR and the preliminary cost and benefit analyses in the PRIA.
PHMSA proposes to amend the HMR to maintain alignment with international regulations and standards, thereby maintaining the high safety standard currently achieved under the HMR, facilitating the safe transportation of, and aligning HMR requirements with, anticipated increases in the volume of lithium batteries transported by interstate commerce from electrification of the transportation and other economic sectors. PHMSA examined the likely impacts of finalizing and implementing the provisions proposed in the NPRM in order to assess the benefits and costs of these amendments. This analysis allowed PHMSA to quantitatively assess the material effects of four of the
PHMSA estimates that the net annualized quantified net cost savings of this rulemaking, using a 7% discount rate, are between $5.5 million and $13.2 million per year. The following table presents a summary of the monetized impacts that these proposed changes may have upon codification.
The safety and environmental benefits of the proposed rule have not been quantified. However, PHMSA expects the proposed amendments would help to improve public safety and reduce the risk of environmental harm by maintaining consistency between these international regulations and the HMR. Harmonization of the HMR with international consensus standards as proposed could reduce delays and interruptions of hazardous materials during transportation, thereby lowering GHG emissions and safety risks to communities (including minority, low income, underserved, and other disadvantaged populations and communities) in the vicinity of interim storage sites and transportation arteries and hubs.
PHMSA analyzed this rulemaking in accordance with the principles and criteria contained in Executive Order 13132 (“Federalism”)
The rulemaking may preempt state, local, and Native American tribe requirements, but does not propose any regulation that has substantial direct effects on the states, the relationship between the national government and the states, or the distribution of power and responsibilities among the various levels of government. The Federal Hazardous Materials Transportation Law contains an express preemption provision at 49 U.S.C. 5125(b) that preempts state, local, and tribal requirements on certain covered subjects, unless the non-federal requirements are “substantively the same” as the federal requirements, including the following:
(1) The designation, description, and classification of hazardous material;
(2) The packing, repacking, handling, labeling, marking, and placarding of hazardous material;
(3) The preparation, execution, and use of shipping documents related to hazardous material and requirements related to the number, contents, and placement of those documents;
(4) The written notification, recording, and reporting of the unintentional release in transportation of hazardous material; and
(5) The design, manufacture, fabrication, inspection, marking, maintenance, recondition, repair, or testing of a packaging or container represented, marked, certified, or sold as qualified for use in transporting hazardous material in commerce.
This proposed rule addresses covered subject items (1), (2), (3), (4), and (5) above and would preempt state, local, and tribal requirements not meeting the “substantively the same” standard. In this instance, the preemptive effect of the proposed rule is limited to the minimum level necessary to achieve the objectives of the hazardous materials transportation law under which the final rule is promulgated. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.
PHMSA analyzed this rulemaking in accordance with the principles and criteria contained in Executive Order 13175 (“Consultation and Coordination with Indian Tribal Governments”)
PHMSA assessed the impact of the rulemaking and preliminarily determined that it would not significantly or uniquely affect tribal communities or Native American tribal governments. The changes to the HMR proposed in this NPRM are facially neutral and would have broad, national scope; PHMSA, therefore, expects this rulemaking to not significantly or uniquely affect tribal communities, much less impose substantial compliance costs on Native American tribal governments or mandate tribal action. And because PHMSA expects the rulemaking would not adversely affect the safe transportation of hazardous materials generally, PHMSA does not expect it would entail disproportionately high adverse risks for tribal communities. For these reasons, PHMSA does not expect the funding and consultation requirements of Executive Order 13175 and DOT Order 5301.1 to apply. However, PHMSA solicits comment from Native American tribal governments and communities on potential impacts of the proposed rulemaking.
The Regulatory Flexibility Act (5 U.S.C. 601,
This proposed rulemaking has been developed in accordance with Executive Order 13272 and with DOT's procedures and policies to promote compliance with the Regulatory Flexibility Act to ensure that potential impacts of draft rules on small entities are properly considered. This proposed rule facilitates the transportation of hazardous materials in international commerce by providing consistency with international standards. It applies to offerors and carriers of hazardous materials, some of whom are small entities, such as chemical manufacturers, users, and suppliers, packaging manufacturers, distributors, and training companies. As discussed at length in the PRIA found in the rulemaking docket, the amendments in this proposed rule should result in net cost savings that would ease the regulatory compliance burden for those and other entities engaged in domestic and international commerce, including trans-border shipments within North America. Additionally, the changes proposed in this NPRM would relieve U.S. companies, including small entities competing in foreign markets, from the burden of complying with a dual system of regulations. Therefore, PHMSA expects that these amendments will not, if adopted, have a significant economic impact on a substantial number of small entities. However, PHMSA solicits comments on the anticipated economic impacts to small entities.
Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501,
PHMSA has analyzed this NPRM in accordance with the Paperwork Reduction Act. PHMSA currently accounts for shipping paper burdens under OMB Control Number 2137-0034, “Hazardous Materials Shipping Papers and Emergency Response Information.” PHMSA proposes some amendments that may impact OMB Control Number 2137-0034, such as the requirement to indicate the use of Special Provisions A54 on the shipping papers, however PHMSA expects the overall impact to annual paperwork burden is negligible in relation to the number of burden hours currently associated with this information collection. While PHMSA expects this proposal to reduce the burden associated with this information collection, PHMSA anticipates the reduction is negligible in relation to the total burden hours associated with special permit applications.
Additionally, PHMSA is revising § 173.185(c)(4) to require that shippers and carriers of small lithium batteries not contained in equipment have shipping papers and perform NOPIC checks when transported by air. PHMSA estimates that 45 domestic airlines transporting 4,044 shipments of affected lithium batteries may be affected by this provision. PHMSA estimates a burden increase of 16 minutes per shipment, or 64,704 minutes (1,078 hours) in the first year. PHMSA estimates the increased burden for this information collection as follows:
PHMSA accounts for the burden from approval applications in OMB Control Number 2137-0557, “Approvals for Hazardous Materials.” PHMSA also proposes to add new entries to the § 173.224 Self Reactives Table and § 173.225 Organic Peroxide Table, which PHMSA expects estimates would decrease the number of annual approval applicants. However, PHMSA expects that these proposed changes are negligible to the overall impact of the total burden, in relation to the number of burden hours associated with this information collection. Based on estimates provided in the PRIA, PHMSA estimates that this proposal would reduce the number of approvals by one annually. PHMSA estimates the reduction in this information collection as follows:
PHMSA requests comments on the information collection and recordkeeping burdens associated with developing, implementing, and maintaining the proposed requirements in this NPRM. Address written comments to the DOT Docket Operations Office identified in the
The Unfunded Mandates Reform Act of 1995 (UMRA; 2 U.S.C. 1501,
As explained in the PRIA, this proposed rulemaking does not impose unfunded mandates under the UMRA. It is not expected to result in costs of $100 million or more in 1996 dollars to either state, local, or tribal governments, or to the private sector, in any one year. A copy of the PRIA is available for review in the docket.
The National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321,
This NPRM would amend the HMR to maintain alignment with international consensus standards by incorporating into the HMR various amendments, including changes to proper shipping names, hazard classes, packing groups, special provisions, packaging authorizations, air transport quantity limitations, and vessel stowage requirements. PHMSA notes that the amendments proposed in this NPRM are intended to result in cost savings and reduced regulatory burden for shippers engaged in domestic and international commerce, including trans-border shipments within North America. Absent adoption of the amendments proposed in the NPRM, U.S. companies—including numerous small entities competing in foreign markets—may be at an economic disadvantage because of their need to comply with a dual system of regulations. Further, among the HMR amendments introduced in this rulemaking are those aligning HMR requirements with anticipated increases in the volume of lithium batteries transported in interstate commerce, from electrification of the transportation and other economic sectors.
As explained at greater length above in the preamble of this NPRM and in the PRIA (each of which is incorporated by reference in this discussion of the environmental impacts of the Proposed Action Alternative), PHMSA expects that the adoption of the regulatory amendments proposed in this NPRM would maintain the high safety standard currently achieved under the HMR. PHMSA has evaluated the safety of each of the amendments proposed in this NPRM on its own merit, as well as the aggregate impact on transportation safety from adoption of those amendments.
In proposing this rulemaking, PHMSA is considering the following alternatives:
If PHMSA were to select the No Action Alternative, current regulations would remain in place and no provisions would be amended or added.
This alternative is the current proposal as it appears in this NPRM, applying to transport of hazardous materials by various transport modes (highway, rail, vessel, and aircraft). The proposed amendments included in this alternative are more fully discussed in the preamble and regulatory text sections of this NPRM.
If PHMSA were to select the No Action Alternative, the HMR would remain unchanged, and no provisions would be amended or added. However, any economic benefits gained through harmonization of the HMR with updated international consensus standards (including, but not limited to, the 22nd revised edition of the UN Model Regulations, the 2023-2024 ICAO Technical Instructions and amendment 41-22 of the IMDG Code) governing shipping of hazardous materials would not be realized.
Additionally, the No Action Alternative would not adopt enhanced and clarified regulatory requirements expected to maintain the high level of safety in transportation of hazardous materials provided by the HMR. As explained in the preamble to the NPRM, consistency between the HMR and current international standards can enhance safety by (1) ensuring that the HMR is informed by the latest best practices and lessons learned; (2) improving understanding of, and compliance with, pertinent requirements; (3) enabling consistent emergency response procedures in the event of a hazardous materials incident; and (4) facilitating the smooth flow of hazardous materials from their points of origin to their points of destination, thereby avoiding risks to the public and the environment from release of hazardous materials from delays or interruptions in the transportation of those materials. PHMSA would not capture those benefits if it were to pass on incorporating updated international standards into the HMR under the No Action Alternative.
PHMSA expects that the No Action Alternative could have a modest impact on GHG emissions. Because PHMSA expects that the differences between the HMR and international standards for transportation of hazardous materials could result in transportation delays or interruptions, PHMSA anticipates that there could be modestly higher GHG emissions from some combination of (1) transfer of delayed hazardous materials to and from interim storage, (2) return of improperly shipped materials to their point of origin, and (3) reshipment of returned materials. PHMSA notes that it is unable to quantify such GHG emissions because of the difficulty in identifying the precise quantity or characteristics of such interim storage or returns/re-shipments. PHMSA also submits that, as explained at greater length in Section IV.J., to the extent that there are any delays arising from inconsistencies between the HMR and recently updated international standards, there could also be adverse impacts from the No Action Alternative for minority populations, low-income populations, or other underserved and other disadvantaged communities.
As explained further in the discussions in each of the No Action Alternative above, the preamble, and the PRIA, PHMSA anticipates the changes proposed under the Proposed Action Alternative will maintain the high safety standards currently achieved under the HMR. Harmonization of the HMR with updated international consensus standards is also expected to capture economic efficiencies gained from avoiding shipping delays and compliance costs associated with having
PHMSA expects that the Proposed Action Alternative could realize modest reductions in GHG emissions. Because PHMSA expects that the differences between the HMR and international standards for transportation of hazardous materials could result in delays or interruptions, PHMSA anticipates that the No Action Alternative could result in modestly higher GHG emissions from some combination of (1) transfer of delayed hazardous materials to and from interim storage, (2) return of improperly shipped materials to their point of origin, or (3) reshipment of returned materials. The Proposed Action Alternative avoids those risks resulting from divergence of the HMR from updated international standards. PHMSA notes, however, that it is unable to quantify any GHG emissions benefits because of the difficulty in identifying the precise quantity or characteristics of such interim storage or returns/re-shipments. Lastly, PHMSA also submits that, as explained at greater length in Section IV.J., the Proposed Action Alternative would avoid any delayed or interrupted shipments arising from the divergence of the HMR from updated international standards under the No Action Alternative that could result in adverse impacts for minority populations, low-income populations, or other underserved and other disadvantaged communities.
PHMSA has coordinated with FAA, FMCSA, FRA, and USCG in the development of this proposed rule. PHMSA solicits, and will consider, comments on the NPRM's potential impacts on the human environment submitted by members of the public, state, and local governments, tribal communities, and industry.
PHMSA expects the adoption of the Proposed Action Alternative's regulatory amendments will maintain the HMR's current high level of safety for shipments of hazardous materials transported by highway, rail, aircraft, and vessel, and as such finds the HMR amendments in the NPRM would have no significant impact on the human environment. PHMSA expects that the Proposed Action Alternative will avoid adverse safety, environmental justice, and GHG emissions impacts of the No Action Alternative. Furthermore, based on PHMSA's analysis of these provisions described above, PHMSA proposes to find that codification and implementation of this rule would not result in a significant impact to the human environment.
PHMSA welcomes any views, data, or information related to environmental impacts that may result from NPRM's proposed requirements, the No Action Alternative, and other viable alternatives and their environmental impacts.
DOT Order 5610.2C (Department of Transportation Actions to Address Environmental Justice in Minority Populations and Low-Income Populations”) and Executive Orders 12898 (“Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations”),
PHMSA has evaluated this proposed rule under the above Executive Orders and DOT Order 5610.2C. PHMSA does not expect the proposed rule, if finalized, to cause disproportionately high and adverse human health and environmental effects on minority, low-income, underserved, and other disadvantaged populations and communities. The rulemaking is facially neutral and national in scope; it is neither directed toward a particular population, region, or community, nor is it expected to adversely impact any particular population, region, or community. And because PHMSA expects the rulemaking would not adversely affect the safe transportation of hazardous materials generally, PHMSA does not expect that the proposed revisions would entail disproportionately high adverse risks for minority populations, low-income populations, or other underserved and other disadvantaged communities.
PHMSA submits that the proposed rulemaking could in fact reduce risks to minority populations, low-income populations, or other underserved and other disadvantaged communities. Because the proposed HMR amendments could avoid the release of hazardous materials and reduce the frequency of delays and returned/resubmitted shipments of hazardous materials resulting from conflict between the current HMR and updated international standards, the proposed rule could reduce risks to populations and communities—including any minority, low-income, underserved and other disadvantaged populations and communities—in the vicinity of interim storage sites and transportation arteries and hubs. Additionally, as explained in the above discussion of NEPA, PHMSA expects that its proposed HMR amendments will yield modest GHG emissions reductions, thereby reducing the risks posed by anthropogenic climate change to minority, low-income, underserved, and other disadvantaged populations and communities.
PHMSA solicits comment from minority, low-income, underserved, and other disadvantaged populations and communities on potential impacts of the proposed rulemaking.
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit and including any personal information that the commenter includes, in the system of records notice. DOT's complete Privacy Act Statement is in the
Executive Order 13609 (“Promoting International Regulatory Cooperation”)
Similarly, the Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465) (as amended, the Trade Agreements Act), prohibits agencies from establishing any standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to the Trade Agreements Act, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standards have a legitimate domestic objective, such as providing for safety, and do not operate to exclude 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.
PHMSA participates in the establishment of international standards to protect the safety of the American public, and it has assessed the effects of the proposed rule to ensure that it does not cause unnecessary obstacles to foreign trade. In fact, the proposed rule is expected to facilitate international trade by harmonizing U.S. and international requirements for the transportation of hazardous materials so as to reduce regulatory burdens and minimize delays arising from having to comply with divergent regulatory requirements. Accordingly, this rulemaking is consistent with Executive Order 13609 and PHMSA's obligations under the Trade Agreements Act.
The National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) directs federal agencies to use voluntary consensus standards in their regulatory activities, unless doing so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (
Executive Order 13211 (“Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use”)
This proposed rule is not a significant action under Executive Order 12866, nor is it expected to have an annual effect on the economy of $100 million. Further, this action is not expected to have a significant adverse effect on the supply, distribution, or use of energy in the United States. The Administrator of OIRA has not designated the proposed rule as a significant energy action. For additional discussion of the anticipated economic impact of this rulemaking, please review the PRIA posted in the rulemaking docket.
Exports, Hazardous materials transportation, Hazardous waste, Imports, Incorporation by reference, Reporting and recordkeeping requirements.
Education, Hazardous materials transportation, Hazardous waste, Incorporation by reference, Labeling, Markings, Packaging and containers, Reporting and recordkeeping requirements.
Hazardous materials transportation, Incorporation by reference, Packaging and containers, Radioactive materials, Reporting and recordkeeping requirements.
Air carriers, Hazardous materials transportation, Incorporation by reference, Radioactive materials, Reporting and recordkeeping requirements.
Cargo vessels, Hazardous materials transportation, Incorporation by reference, Maritime carriers, Radioactive materials, Reporting and recordkeeping requirements.
Hazardous materials transportation, Incorporation by reference, Motor vehicle safety, Packaging and containers, Reporting and recordkeeping requirements.
Hazardous materials transportation, Incorporation by reference, Motor carriers, Motor vehicle safety, Packaging and containers, Reporting and recordkeeping requirements.
In consideration of the foregoing, PHMSA proposes to amend 49 CFR chapter I as follows:
49 U.S.C. 5101-5128, 44701; Pub. L. 101-410 section 4; Pub. L. 104-134, section 31001; Pub. L. 114-74 section 4 (28 U.S.C. 2461 note); 49 CFR 1.81 and 1.97.
The revisions and additions read as follows:
(t) * * *
(1) ICAO Doc 9284 Technical Instructions for the Safe Transport of Dangerous Goods by Air (ICAO Technical Instructions), 2023-2024 Edition, copyright 2021; into §§ 171.8; 171.22 through 171.24; 172.101; 172.202; 172.401; 172.407; 172.512; 172.519; 172.602; 173.56; 173.320; 175.10, 175.33; 178.3.
(v) * * *
(2) International Maritime Dangerous Goods Code (IMDG Code), Incorporating
(w) * * *
(32) ISO 9809-1:2019(E), Gas cylinders—Design, construction and testing of refillable seamless steel gas cylinders and tubes—Part 1: Quenched and tempered steel cylinders and tubes with tensile strength less than 1100 Mpa, Third Edition, 2019-08-01; into §§ 178.37; 178.71; 178.75.
(33) ISO 9809-2:2000(E): Gas cylinders—Refillable seamless steel gas cylinders—Design, construction and testing—Part 2: Quenched and tempered steel cylinders with tensile strength greater than or equal to 1 100 MPa., First edition, June 2000; into §§ 178.71; 178.75.
(34) ISO 9809-2:2010(E): Gas cylinders—Refillable seamless steel gas cylinders—Design, construction and testing—Part 2: Quenched and tempered steel cylinders with tensile strength greater than or equal to 1100 MPa., Second edition, 2010-04-15; into §§ 178.71; 178.75.
(35) ISO 9809-2:2019(E): Gas cylinders—Design, construction and testing of refillable seamless steel gas cylinders and tubes—Part 2: Quenched and tempered steel cylinders and tubes with tensile strength greater than or equal to 1100 MPa, Third edition, 2019-08; into §§ 178.71; 178.75.
(36) ISO 9809-3:2000(E): Gas cylinders—Refillable seamless steel gas cylinders—Design, construction and testing—Part 3: Normalized steel cylinders, First edition, December 2000; into §§ 178.71; 178.75.
(37) ISO 9809-3:2010(E): Gas cylinders—Refillable seamless steel gas cylinders—Design, construction and testing—Part 3: Normalized steel cylinders, Second edition, 2010-04-15; into §§ 178.71; 178.75.
(38) ISO 9809-3:2019(E), Gas cylinders—Design, construction and testing of refillable seamless steel gas cylinders and tubes—Part 3: Normalized steel cylinders and tubes, Third edition, 2018-08; into §§ 178.71; 178.75.
(39) ISO 9809-4:2014(E), Gas cylinders—Refillable seamless steel gas cylinders—Design, construction and testing—Part 4: Stainless steel cylinders with an Rm value of less than 1 100 MPa, First edition, 2014-07-15; into §§ 178.71; 178.75.
(40) ISO 9978:1992(E)—Radiation protection—Sealed radioactive sources—Leakage test methods. First Edition, (February 15, 1992); into § 173.469.
(41) ISO 10156:2017(E), Gas cylinders—Gases and gas mixtures—Determination of fire potential and oxidizing ability for the selection of cylinder valve outlets, Fourth edition, 2017-07; into § 173.115.
(42) ISO 10297:1999(E), Gas cylinders—Refillable gas cylinder valves—Specification and type testing, First Edition, 1995-05-01; into §§ 173.301b; 178.71.
(43) ISO 10297:2006(E), Transportable gas cylinders—Cylinder valves—Specification and type testing, Second Edition, 2006-01-15; into §§ 173.301b; 178.71.
(44) ISO 10297:2014(E), Gas cylinders—Cylinder valves—Specification and type testing, Third Edition, 2014-07-15; into §§ 173.301b; 178.71.
(45) ISO 10297:2014/Amd 1:2017(E), Gas cylinders—Cylinder valves—Specification and type testing—Amendment 1: Pressure drums and tubes, Third Edition, 2017-03; into §§ 173.301b; 178.71.
(46) ISO 10461:2005(E), Gas cylinders—Seamless aluminum-alloy gas cylinders—Periodic inspection and testing, Second Edition, 2005-02-15 and Amendment 1, 2006-07-15; into § 180.207.
(47) ISO 10462:2013(E), Gas cylinders—Acetylene cylinders—Periodic inspection and maintenance, Third Edition, 2013-12-15; into § 180.207.
(48) ISO 10462:2013/Amd 1:2019(E), “Gas cylinders—Acetylene cylinders—Periodic inspection and maintenance—Amendment 1, Third Edition, 2019-06; into § 180.207.
(49) ISO 10692-2:2001(E), Gas cylinders—Gas cylinder valve connections for use in the micro-electronics industry—Part 2: Specification and type testing for valve to cylinder connections, First Edition, 2001-08-01; into §§ 173.40; 173.302c.
(50) ISO 11114-1:2012(E), Gas cylinders—Compatibility of cylinder and valve materials with gas contents—Part 1: Metallic materials, Second edition, 2012-03-15; into §§ 172.102; 173.301b; 178.71.
(51) ISO 11114-1:2012/Amd 1:2017(E), Gas cylinders—Compatibility of cylinder and valve materials with gas contents—Part 1: Metallic materials—Amendment 1, Second Edition, 2017-01; into §§ 172.102, 173.301b, 178.71.
(52) ISO 11114-2:2013(E), Gas cylinders—Compatibility of cylinder and valve materials with gas contents—Part 2: Non-metallic materials, Second edition, 2013-04; into §§ 173.301b; 178.71.
(53) ISO 11117:1998(E): Gas cylinders—Valve protection caps and valve guards for industrial and medical gas cylinders—Design, construction and tests, First edition, 1998-08-01; into § 173.301b.
(54) ISO 11117:2008(E): Gas cylinders—Valve protection caps and valve guards—Design, construction and tests, Second edition, 2008-09-01; into § 173.301b.
(55) ISO 11117:2008/Cor.1:2009(E): Gas cylinders—Valve protection caps and valve guards—Design, construction and tests, Technical Corrigendum 1, 2009-05-01; into § 173.301b.
(56) ISO 11117:2019(E), “Gas cylinders—Valve protection caps and guards—Design, construction and tests, 2019-11-01; into § 173.301b.
(57) ISO 11118(E), Gas cylinders—Non-refillable metallic gas cylinders—Specification and test methods, First edition, October 1999; into § 178.71.
(58) ISO 11118:2015(E), Gas cylinders—Non-refillable metallic gas cylinders—Specification and test methods, Second edition, 2015-09-15; into §§ 173.301b; 178.71.
(59) ISO 11118:2015/Amd 1:2019(E), Gas cylinders—Non-refillable metallic gas cylinders—Specification and test methods—Amendment 1, Second edition, 2019-10; into §§ 173.301b; 178.71.
(60) ISO 11119-1(E), Gas cylinders—Gas cylinders of composite construction—Specification and test methods—Part 1: Hoop-wrapped composite gas cylinders, First edition, May 2002, into § 178.71.
(61) ISO 11119-1:2012(E), Gas cylinders—Refillable composite gas cylinders and tubes—Design, construction and testing—Part 1: Hoop wrapped fibre reinforced composite gas cylinders and tubes up to 450 L, Second edition, 2012-08-01; into §§ 178.71; 178.75.
(62) ISO 11119-2(E), Gas cylinders—Gas cylinders of composite construction—Specification and test methods—Part 2: Fully wrapped fibre reinforced composite gas cylinders with load-sharing metal liners, First edition, May 2002; into § 178.71.
(63) ISO 11119-2:2012(E), Gas cylinders—Refillable composite gas cylinders and tubes—Design, construction and testing—Part 2: Fully wrapped fibre reinforced composite gas cylinders and tubes up to 450 l with load-sharing metal liners, Second edition, 2012-07-15; into §§ 178.71; 178.75.
(64) ISO 11119-2:2012/Amd.1:2014(E), Gas cylinders—
(65) ISO 11119-3(E), Gas cylinders of composite construction—Specification and test methods—Part 3: Fully wrapped fibre reinforced composite gas cylinders with non-load-sharing metallic or non-metallic liners, First edition, September 2002; into § 178.71.
(66) ISO 11119-3:2013(E), Gas cylinders—Refillable composite gas cylinders and tubes—Design, construction and testing—Part 3: Fully wrapped fibre reinforced composite gas cylinders and tubes up to 450 l with non-load-sharing metallic or non-metallic liners, Second edition, 2013-04-15; into §§ 178.71; 178.75.
(67) ISO 11119-4:2016(E), Gas cylinders—Refillable composite gas cylinders—Design, construction and testing—Part 4: Fully wrapped fibre reinforced composite gas cylinders up to 150 l with load-sharing welded metallic liners, First Edition, 2016-02-15; into § 178.71; 178.75.
(68) ISO 11120(E), Gas cylinders—Refillable seamless steel tubes of water capacity between 150 l and 3000 l—Design, construction and testing, First edition, 1999-03; into §§ 178.71; 178.75.
(69) ISO 11120:2015(E), Gas cylinders—Refillable seamless steel tubes of water capacity between 150 l and 3000 l—Design, construction and testing, Second Edition, 2015-02-01; into §§ 178.71; 178.75.
(70) ISO 11513:2011(E), Gas cylinders—Refillable welded steel cylinders containing materials for sub-atmospheric gas packaging (excluding acetylene)—Design, construction, testing, use and periodic inspection, First edition, 2011-09-12; into §§ 173.302c; 178.71; 180.207.
(71) ISO 11513:2019(E), Gas cylinders—Refillable welded steel cylinders containing materials for sub-atmospheric gas packaging (excluding acetylene)—Design, construction, testing, use and periodic inspection, Second edition, 2019-09; into §§ 173.302c; 178.71; 180.207.
(72) ISO 11621(E), Gas cylinders—Procedures for change of gas service, First edition, April 1997; into §§ 173.302, 173.336, 173.337.
(73) ISO 11623(E), Transportable gas cylinders—Periodic inspection and testing of composite gas cylinders, First edition, March 2002; into § 180.207.
(74) ISO 11623:2015 (E), Gas cylinders—Composite construction—Periodic inspection and testing, Second edition, 2015-12-01; into § 180.207.
(75) ISO 13340:2001(E), Transportable gas cylinders—Cylinder valves for non-refillable cylinders—Specification and prototype testing, First edition, 2004-04-01; into § 178.71.
(76) ISO 13736:2008(E), Determination of flash point—Abel closed-cup method, Second Edition, 2008-09-15; into § 173.120.
(77) ISO 14246:2014(E), Gas cylinders—Cylinder valves—Manufacturing tests and examination, Second Edition, 2014-06-15; into § 178.71.
(78) ISO 14246:2014/Amd 1:2017(E), Gas cylinders—Cylinder valves—Manufacturing tests and examinations—Amendment 1, Second Edition, 2017-06; into § 178.71.
(79) ISO 16111:2008(E), Transportable gas storage devices—Hydrogen absorbed in reversible metal hydride, First Edition, 2008-11-15; into §§ 173.301b; 173.311; 178.71.
(80) ISO 16111:2018(E), Transportable gas storage devices—Hydrogen absorbed in reversible metal hydride, Second Edition, 2018-08; into §§ 173.301b; 173.311; 178.71.
(81) ISO 16148:2016(E), Gas cylinders—Refillable seamless steel gas cylinders and tubes—Acoustic emission examination (AT) and follow-up ultrasonic examination (UT) for periodic inspection and testing, Second Edition, 2016-04-15; into § 180.207.
(82) ISO 17871:2015(E), Gas cylinders—Quick-release cylinder valves—Specification and type testing, First Edition, 2015-08-15; into § 173.301b.
(83) ISO 17871:2020(E), Gas cylinders—Quick-release cylinder valves—Specification and type testing, Second Edition, 2020-07; into § 173.301b.
(84) ISO 17879: 2017(E), Gas cylinders—Self-closing cylinder valves—Specification and type testing, First Edition, 2017-07; into §§ 173.301b; 178.71.
(85) ISO 18172-1:2007(E), Gas cylinders—Refillable welded stainless steel cylinders—Part 1: Test pressure 6 MPa and below, First Edition, 2007-03-01; into § 178.71.
(86) ISO 20475:2018(E), Gas cylinders—Cylinder bundles—Periodic inspection and testing, First Edition, 2018-02; into § 180.207.
(87) ISO 20703:2006(E), Gas cylinders—Refillable welded aluminum-alloy cylinders—Design, construction and testing, First Edition, 2006-05-01; into § 178.71.
(88) ISO 21172-1:2015(E), Gas cylinders—Welded steel pressure drums up to 3,000 litres capacity for the transport of gases—Design and construction—Part 1: Capacities up to 1,000 litres, First edition, 2015-04-01; into § 178.71.
(89) ISO 21172-1:2015/Amd 1:2018(E), Gas cylinders—Welded steel pressure drums up to 3,000 litres capacity for the transport of gases—Design and construction—Part 1: Capacities up to 1,000 litres—Amendment 1, First Edition, 2018-11-01; into § 178.71.
(90) ISO 22434:2006(E), Transportable gas cylinders—Inspection and maintenance of cylinder valves, First Edition, 2006-09-01; into § 180.207.
(91) ISO 23088:2020, Gas cylinders—Periodic inspection and testing of welded steel pressure drums—Capacities up to 1,000 l, First Edition, 2020-02; into § 180.207.
(92) ISO/TR 11364:2012(E), Gas cylinders—Compilation of national and international valve stem/gas cylinder neck threads and their identification and marking system, First Edition, 2012-12-01; into § 178.71.
(aa) * * *
(3) Test No. 439:
(dd) * * *
(1) UN Recommendations on the Transport of Dangerous Goods, Model Regulations (UN Recommendations), 22nd revised edition, (2021); into §§ 171.8; 171.12; 172.202; 172.401; 172.407; 172.502; 172.519; 173.22; 173.24; 173.24b; 173.40; 173.56; 173.192; 173.302b; 173.304b; 178.75; 178.274 as follows:
(i) Volume I, ST/SG/AC.10/1/Rev.22 (Vol. I).
(ii) Volume II, ST/SG/AC.10/1/Rev.22 (Vol. II).
(2) Manual of Tests and Criteria; into §§ 171.24, 172.102; 173.21; 173.56; 173.57; 173.58; 173.60; 173.115; 173.124; 173.125; 173.127; 173.128; 173.137; 173.185; 173.220; 173.221; 173.224; 173.225; 173.232; part 173, appendix H; 175.10; 176.905; 178.274 as follows:
(i) Seventh revised edition (2019).
(ii) Seventh revised edition, Amendment 1 (2021).
(3) Globally Harmonized System of Classification and Labelling of Chemicals (GHS), 9th revised edition, ST/SG/AC.10/30/Rev.9 (2021); into § 172.401.
(4) Agreement concerning the International Carriage of Dangerous
(i) Volume I, ECE/TRANS/300 (Vol. I).
(ii) Volume II, ECE/TRANS/300 (Vol. II).
(iii) Corrigendum, ECE/TRANS/300 (Corr. 1).
(a) * * *
(4) * * *
(iii) Authorized CRC, BTC, CTC or TC specification cylinders that correspond with a DOT specification cylinder are as follows:
(a) * * *
(3)
(i) Filled cylinders imported for intermediate storage, transport to point of use, discharge, and export without further filling; and
(ii) Cylinders imported or domestically sourced for the purpose of filling, intermediate storage, and export.
(iii) The bill of lading or other shipping paper must identify the cylinder and include the following certification: “This cylinder (These cylinders) conform(s) to the requirements for pi-marked cylinders found in § 171.23(a)(3).”
To read as follows:
(c) * * *
(3) Except as specified in this subpart, for a material poisonous (toxic) by inhalation, the T Codes specified in Column 13 of the Dangerous Goods List in the IMDG Code may be applied to the transportation of those materials in IM, IMO, and DOT Specification 51 portable tanks, when these portable tanks are authorized in accordance with the requirements of this subchapter;
(4) No person may offer an IM or UN portable tank containing liquid hazardous materials of Class 3, PG I or II, or PG III with a flash point less than 100 °F (38 °C); Division 5.1, PG I or II; or Division 6.1, PG I or II, for unloading while it remains on a transport vehicle with the motive power unit attached, unless it conforms to the requirements in § 177.834(o) of this subchapter; and
(5) No person may offer a UN fiber-reinforced plastic portable tank meeting the provisions of Chapter 6.10 of the IMDG Code (IBR, see § 171.7), except for transportation falling within the single port area criteria in paragraph (d) of this section.
49 U.S.C. 5101-5128, 44701; 49 CFR 1.81, 1.96, and 1.97.
The additions and revisions read as follows:
(c) * * *
(12) * * *
(ii)
The additions and revisions read as follows:
(c) * * *
(1) * * *
78 Mixtures of nitrogen and oxygen containing not less than 19.5% and not more than 23.5% oxygen by volume may be transported under this entry when no other oxidizing gases are present. A Division 5.1 subsidiary hazard label is not required for any concentrations within this limit. Compressed air containing greater than 23.5% oxygen by volume must be shipped using the description “Compressed gas, oxidizing, n.o.s., UN3156.”
156 Asbestos that is immersed or fixed in a natural or artificial binder material, such as cement, plastic, asphalt, resins, or mineral ore, or contained in manufactured products, is not subject to the requirements of this subchapter, except that when transported by air, an indication of compliance with this special provision must be provided by including the words “not restricted” on a shipping paper, such as an air waybill accompanying the shipment.
387 When materials are stabilized by temperature control, the provisions of § 173.21(f) of this subchapter apply. When chemical stabilization is employed, the person offering the material for transport shall ensure that the level of stabilization is sufficient to prevent the material as packaged from dangerous polymerization at 50 °C (122 °F). If chemical stabilization becomes ineffective at lower temperatures within the anticipated duration of transport, temperature control is required and is forbidden by aircraft. In making this determination factors to be taken into consideration include, but are not limited to, the capacity and geometry of the packaging and the effect of any insulation present; the temperature of the material when offered for transport; the duration of the journey and the ambient temperature conditions typically encountered in the journey (considering also the season of year); the effectiveness and other properties of the stabilizer employed; applicable operational controls imposed by regulation (
396 Large and robust articles may be transported with connected gas cylinders with the valves open regardless of § 173.24(b)(1), provided:
a. the gas cylinders contain nitrogen of UN 1066 or compressed gas of UN 1956 or compressed air of UN1002;
b. the gas cylinders are connected to the article through pressure regulators and fixed piping in such a way that the pressure of the gas (gauge pressure) in the article does not exceed 35 kPa (0.35 bar);
c. the gas cylinders are properly secured so that they cannot shift in relation to the article and are fitted with strong and pressure resistant hoses and pipes;
d. the gas cylinders, pressure regulators, piping, and other components are protected from damage and impacts during transport by wooden crates or other suitable means;
e. the shipping paper must include the following statement: “Transport in accordance with special provision 396.”; and
f. cargo transport units containing articles transported with cylinders with open valves containing a gas presenting a risk of asphyxiation are well ventilated.
398 This entry applies to 1-butylene, cis-2-butylene and trans-2-butylene, and mixtures of butylenes. For isobutylene, see UN 1055.
421 [Reserved]
441 Mixtures of fluorine and nitrogen with a fluorine concentration below 35% by volume may be filled in pressure receptacles up to a maximum allowable working pressure for which the partial pressure of fluorine does not exceed 31 bar (abs.).
Mixtures of fluorine and inert gases with a fluorine concentration below 35% by volume may be filled in pressure receptacles up to a maximum allowable working pressure for which the partial pressure of fluorine does not exceed 31 bar (abs.), additionally taking the coefficient of nitrogen equivalency in accordance with ISO 10156:2017 into account when calculating the partial pressure.
However, the working pressure for mixtures of fluorine and inert gases shall not exceed 200 bar. The minimum test pressure of pressure receptacles for mixtures of fluorine and inert gases equals 1.5 times the working pressure or 200 bar, with the greater value to be applied.
A54 Irrespective of the quantity limits in Column 9B of the § 172.101 table, a lithium battery, including a lithium battery packed with, or contained in, equipment that otherwise meets the applicable requirements of § 173.185, may have a mass exceeding 35 kg if approved by the Associate Administrator prior to shipment in accordance with this special provision must be noted on the shipping papers.
A224 UN3548, Articles containing miscellaneous dangerous goods, n.o.s. may be transported on passenger and cargo aircraft, irrespective of the indication of “forbidden” in Columns (9A) and (9B) of the Hazardous Materials Table, provided: (a) the only dangerous good contained in the article is an environmentally hazardous substance, or lithium cells or batteries that comply with § 173.185; (b) the articles are packed in accordance with § 173.232; and (c) reference to Special Provision A224 is made on the shipping paper.
A225 UN3538, Articles containing non-flammable, non-toxic gas, n.o.s. may be transported on passenger and cargo aircraft irrespective of the indication of “forbidden” in Columns (9A) and (9B) of the Hazardous Materials Table, provided: (a) the only dangerous good contained in the article is a Division 2.2 gas without a subsidiary hazard, but excluding refrigerated liquefied gases and gases forbidden for transport on passenger aircraft, or lithium cells or batteries that comply with § 173.185; (b) the articles are packed in accordance with § 173.232 and limited to a maximum net quantity of gas of 75 kg by passenger aircraft and 150 kg by cargo aircraft; and (c) reference to Special Provision A225 is made on the shipping paper.
IP15 For UN2031 with more than 55% nitric acid, the permitted use of rigid plastic IBCs, and the inner receptacle of composite IBCs with rigid plastics, shall be two years from their date of manufacture.
IP22 UN3550 may be transported in flexible IBCs (13H3 or 13H4) with siftproof liners to prevent any egress of dust during transport.
49 U.S.C. 5101-5128, 44701; 49 CFR 1.81, 1.96, and 1.97.
(b) * * *
(1) The specimens are:
(i) Wrapped in a paper towel or cheesecloth moistened with alcohol, an alcohol solution, or a formaldehyde solution and placed in a plastic bag that is heat-sealed. Any free liquid in the bag must not exceed 30 mL; or
(ii) Placed in vials or other rigid containers with no more than 30 mL of alcohol, an alcohol solution, or a formaldehyde solution. The containers are placed in a plastic bag that is heat-sealed;
(f) A package containing a material which is likely to decompose with a self-accelerated decomposition temperature (SADT) or polymerize with a self-accelerated polymerization temperature (SAPT) of 50 °C (122 °F) or less, or 45 °C (113 °F) or less when offered for transportation in portable tanks, with an evolution of a dangerous quantity of heat or gas when decomposing or polymerizing, unless the material is stabilized or inhibited in a manner to preclude such evolution. For organic peroxides see paragraph (f)(2) of this section. The SADT and SAPT may be determined by any of the test methods described in Part II of the UN Manual of Tests and Criteria (IBR,
(1) A package meeting the criteria of paragraph (f) of this section may be required to be shipped under controlled temperature conditions. The control temperature and emergency temperature for a package shall be as specified in Table 1 in this paragraph based upon the SADT or SAPT of the material. The control temperature is the temperature above which a package of the material may not be offered for transportation or transported. The emergency temperature is the temperature at which, due to imminent danger, emergency measures must be initiated.
(2) For hazardous materials listed in the Self-Reactive Materials Table in § 173.224(b), control and emergency temperatures, where required, are shown in Columns 5 and 6, respectively. For hazardous materials listed in the Organic Peroxide Table in § 173.225, control and emergency temperatures, where required, are shown in Columns 7a and 7b of the table, respectively. In addition, the following organic peroxides shall be subjected to temperature control during transport:
(i) Organic peroxides type B and C with a SADT ≤50 °C;
(ii) Organic peroxides type D showing a medium effect when heated under confinement, as determined by test series E in Part II of the UN Manual of Tests and Criteria (IBR,
(iii) Organic peroxides types E and F with a SADT ≤45 °C.
12. In § 173.27, revise paragraph (f)(2)(i)(D) to read as follows:
(f) * * *
(2) * * *
(i) * * *
(D) Divisions 4.1 (self-reactive and UN2555, UN2556, UN2557, UN2907), 4.2 (spontaneously combustible) (primary or subsidiary risk), and 4.3 (dangerous when wet) (liquids);
The packing group of a Class 8 material is indicated in Column 5 of the table to § 172.101(of this subchapter). When the table to § 172.101 provides more than one packing group for a Class 8 material, the packing group must be determined using data obtained from tests conducted in accordance with the OECD Guidelines for the Testing of Chemicals, Test No. 435, “
Packages prepared under the requirements of this section may be offered for transportation and transported by all modes.
(a)
(1)
(i) Non-toxic aerosols, as defined in § 171.8 of this subchapter and constructed in accordance with § 173.306 of this part, in non-refillable, non-metal containers not exceeding 120 mL (4 fluid ounces) each, or in non-refillable metal containers not exceeding 820 mL (28 fluid ounces) each, except that flammable aerosols may not exceed 500 mL (16.9 fluid ounces) each;
(ii) Liquids, in inner packagings not exceeding 500 mL (16.9 fluid ounces) each. Liquids must not completely fill an inner packaging at 55 °C;
(iii) Solids, in inner packagings not exceeding 500 g (1.0 pounds) each; or
(iv) Any combination thereof not to exceed 30 kg (66 pounds) gross weight as prepared for shipment.
(2)
(3)
(4)
(5)
(6)
(7)
(b) Highway, rail, and vessel hazard communication exceptions. Packages prepared in accordance with the requirements of this section:
(1) are excepted from labeling when transported by highway, rail, and vessel; and
(2) are excepted from shipping papers when transported by highway and rail.
The amendments read as follows:
(a) * * *
(3) Each manufacturer and subsequent distributor of lithium cells or batteries, except for button cells installed in equipment (including circuit boards), manufactured on or after January 1, 2008, must make a test summary available. The test summary must include the following elements:
(5) Beginning [EFFECTIVE DATE OF FINAL RULE], each lithium ion battery must be marked with the Watt-hour rating on the outside case.
(b) * * *
(3) * * *
(iii) * * *
(A) Be placed in inner packagings that completely enclose the cell or battery, then placed in a packaging of a type that meets the Packing Group II performance requirements as specified in paragraph (b)(3)(ii) of this section, and then placed with the equipment in a strong, rigid outer packaging; or
(B) Be placed in inner packagings that completely enclose the cell or battery, then placed with the equipment in a packaging of a type that meets the Packing Group II performance requirements as specified in paragraph (b)(3)(ii) of this section.
(C) For transportation by aircraft, the number of cells or batteries in each package is limited to the minimum number required to power the piece of equipment, plus two spare sets. A set of cells or batteries is the number of individual cells or batteries that are required to power each piece of equipment.
(4) * * *
(ii) Equipment must be secured to prevent damage caused by shifting within the outer packaging and be packed so as to prevent accidental operation during transport;
(iii) Any spare lithium cells or batteries packed with the equipment must be packaged in accordance with paragraph (b)(3) of this section; and
(iv) For transportation by aircraft, where multiple pieces of equipment are packed in the same outer packaging, each piece of equipment must be packed to prevent contact with other equipment.
(5) Lithium cells or batteries that weigh 12 kg (26.5 pounds) or more and have a strong, impact-resistant outer casing, may be packed in strong outer packagings; in protective enclosures (for example, in fully enclosed or wooden slatted crates); or on pallets or other handling devices, instead of packages meeting the UN performance packaging requirements in paragraphs (b)(3)(ii) and (b)(3)(iii) of this section. Cells and batteries must be secured to prevent inadvertent shifting, and the terminals may not support the weight of other superimposed elements. Cells and batteries packaged in accordance with this paragraph may be transported by cargo aircraft if approved by the Associate Administrator.
(c) * * *
(3)
(i) The mark must indicate the UN number: “UN3090” for lithium metal cells or batteries, or “UN3480” for lithium ion cells or batteries. Where the lithium cells or batteries are contained in, or packed with, equipment, the UN number “UN3091” or “UN3481,” as appropriate, must be indicated. Where a package contains lithium cells or batteries assigned to different UN numbers, all applicable UN numbers must be indicated on one or more marks. The package must be of such size that there is adequate space to affix the mark on one side without the mark being folded.
(A) The mark must be in the form of a rectangle or a square with hatched edging. The mark must be not less than 100 mm (3.9 inches) wide by 100 mm (3.9 inches) high, and the minimum width of the hatching must be 5 mm (0.2 inches), except marks of 100 mm (3.9 inches) wide by 70 mm (2.8 inches) high may be used on a package containing lithium batteries when the package is too small for the larger mark;
(B) The symbols and letters must be black on white or visible contrasting background and the hatching must be red;
(C) The “*” must be replaced by the appropriate UN number(s); and
(D) Where dimensions are not specified, all features shall be in approximate proportion to those shown.
(ii) The lithium battery mark, in conformance with the requirements of this paragraph, in effect on [DATE
(iii) When packages are placed in an overpack, the lithium battery mark shall either be clearly visible through the overpack or be reproduced on the outside of the overpack, and the overpack shall be marked with the word “OVERPACK.” The lettering of the “OVERPACK” mark shall be at least 12 mm (0.47 inches) high.
(4)
(i) The number of cells or batteries in each package is limited to the minimum number required to power the piece of equipment, plus two spare sets, and the total net quantity (mass) of the lithium cells or batteries in the completed package must not exceed 5 kg. A set of cells or batteries is the number of individual cells or batteries that are required to power each piece of equipment.
(ii) When packages are placed in an overpack, the packages must be secured within the overpack, and the intended function of each package must not be impaired by the overpack.
(iii) Each shipment with packages required to display the paragraph (c)(3)(i) lithium battery mark must include an indication on the air waybill of compliance with this paragraph (c)(4) (or the applicable ICAO Technical Instructions Packing Instruction), when an air waybill is used.
(iv) Each person who prepares a package for transport containing lithium cells or batteries, packed with, or contained in, equipment in accordance with the conditions and limitations of this paragraph (c)(4), must receive instruction on these conditions and limitations, corresponding to their functions.
(5)
(i) A package prepared in accordance with the size limits in paragraph (c)(1) is subject to all applicable requirements of this subchapter, except that a package containing no more than 2.5 kg lithium metal cells or batteries, or 10 kg lithium ion cells or batteries, is not subject to the UN performance packaging requirements in paragraph (b)(3)(ii) of this section, when the package displays both the lithium battery mark in paragraph (c)(3)(i) and the Class 9 Lithium Battery label specified in § 172.447 of this subchapter. This paragraph does not apply to batteries or cells packed with, or contained in, equipment.
(ii) Each package must be capable of withstanding, without damage to the cells or batteries contained therein and without any reduction of effectiveness, a force applied to the top surface equivalent to the total weight of identical packages stacked to a height of 3 (including the test sample) for a duration of 24 hours.
(e) * * *
(5) Lithium batteries, including lithium batteries contained in equipment, that weigh 12 kg (26.5 pounds) or more and have a strong, impact-resistant outer casing, may be packed in strong outer packagings, in protective enclosures (for example, in fully enclosed or wooden slatted crates), or on pallets or other handling devices, instead of packages meeting the UN performance packaging requirements in paragraphs (b)(3)(ii) and (iii) of this section. The cell or battery must be secured to prevent inadvertent shifting, and the terminals may not support the weight of other superimposed elements;
(6) Irrespective of the limit specified in Column (9B) of the § 172.101 Hazardous Materials Table, the cell or battery prepared for transport in accordance with this paragraph may have a mass exceeding 35 kg gross weight when transported by cargo aircraft;
(7) Cells or batteries packaged in accordance with this paragraph are not permitted for transportation by passenger-carrying aircraft, and may be transported by cargo aircraft only if approved by the Associate Administrator prior to transportation; and
The revisions read as follows:
(b) * * *
(4)
5. This entry applies to the technical mixture in n-butanol within the specified concentration limits of the (Z) isomer.
6. The technical compound with the specified concentration limits may contain up to 12% water and up to 1% organic impurities.
(c) * * *
(g) * * *
(h) For transport by aircraft, the following additional requirements apply:
(i) Articles transported under UN3548, which do not have an existing proper shipping name, and which contain only environmentally hazardous substances where the quantity of the environmentally hazardous substance in the article exceeds 5 L or 5 kg, must be prepared for transport in accordance with this section for transport by air. In addition to the environmentally hazardous substances, the article may also contain lithium cells or batteries that comply with § 173.185(c)(4), as applicable.
(ii) Articles transported under UN3538, which do not have an existing proper shipping name, and which contain only gases of Division 2.2 without a subsidiary hazard, but excluding refrigerated liquefied gases and gases forbidden for transport on passenger aircraft, where the quantity of the Division 2.2 gas exceeds the quantity limits for UN 3363, as prescribed in § 173.222 must be prepared for transport in accordance with this section. Articles transported under this provision are limited to a maximum net quantity of gas of 75 kg by passenger aircraft and 150 kg by cargo aircraft. In addition to the Division 2.2 gas, the article may also contain lithium cells or batteries that comply with § 173.185(c)(4), as applicable.
(c) * * *
(1) When the use of a valve is prescribed, the valve must conform to the requirements in ISO 10297:2014(E) and ISO 10297:2014/Amd 1:2017 (IBR, see § 171.7 of this subchapter). Quick release cylinder valves for specification and type testing must conform to the requirements in ISO 17871:2020 or, until December 31, 2026, ISO 17871:2015(E) (IBR, see § 171.7 of this subchapter). Until December 31, 2026, a quick release valve conforming to the requirements in ISO 17871:2015(E) (IBR, see § 171.7 of this subchapter) continues to be authorized for use.
(2) * * *
(ii) By equipping the UN pressure receptacle with a valve cap conforming to the requirements in ISO 11117:2019 (IBR, see § 171.7 of this subchapter). Until December 31, 2026, the UN pressure receptacle may continue to be equipped with a valve cap conforming to the requirements in ISO 11117:2008(E) and Technical Corrigendum 1 (IBR, see § 171.7 of this subchapter);
(iii) By protecting the valves with shrouds or guards conforming to the requirements in ISO 11117:2019 (IBR; see § 171.7 of this subchapter). Until December 31, 2026, the valves may continue to be protected by shrouds or guards conforming to the requirements in ISO 11117:2008 and Technical Corrigendum 1 (IBR; see § 171.7 of this subchapter). For metal hydride storage systems, by protecting the valves in accordance with the requirements in ISO 16111:2018(E) or, until December 31, 2026, in accordance with ISO 16111:2008(E) (IBR; see § 171.7 of this subchapter).
(iv) By using valves designed and constructed with sufficient inherent strength to withstand damage, in accordance with Annex B of ISO 10297:2014(E)/Amd. 1:2017 (IBR; see § 171.7 of this subchapter);
(d)
(f)
(k) The filling procedure must be in accordance with Annex A of ISO 11513:2019 (IBR, see § 171.7 of this subchapter). Until December 31, 2026, filling may instead be in accordance with Annex A of ISO 11513:2011(E) (IBR, see § 171.7 of this subchapter).
The following packing instruction is applicable to transportable UN Metal hydride storage systems (UN3468) with pressure receptacles not exceeding 150 liters (40 gallons) in water capacity and having a maximum developed pressure not exceeding 25 MPa. UN Metal hydride storage systems must be designed, constructed, initially inspected, and tested in accordance with ISO 16111:2018 (IBR, see § 171.7 of this subchapter), consistent with § 178.71(m) of this subchapter. Until December 31, 2026, UN Metal hydride storage systems may instead conform to ISO 16111:2008(E) (IBR, see § 171.7 of this subchapter). Steel pressure receptacles or composite pressure receptacles with steel liners must be marked in accordance with § 173.301b(f), which specifies that a steel UN pressure receptacle displaying an “H” mark must be used for hydrogen-bearing gases or other gases that may cause hydrogen embrittlement. Requalification intervals must be no more than every five years, as specified in § 180.207 of this subchapter, in accordance with the requalification procedures prescribed in ISO 16111:2018 or ISO 16111:2008.
49 U.S.C. 5101-5128, 44701; 49 CFR 1.81 and 1.97.
(e) In addition to the requirements of this part, air carriers that are certificate holders authorized to conduct operations in accordance with 14 CFR part 121 are also required to have a Safety Management System meeting the conditions of 14 CFR part 5 and found to be acceptable to the Federal Aviation Administration (FAA).
(a) This subchapter does not apply to the following hazardous materials when
(14) Battery powered heat-producing devices (
(15) * * *
(v) * * *
(A) Adequately protected against damage by design of the wheelchair or mobility aid and securely attached to the wheelchair or mobility aid; or
(vi) * * *
(A) Adequately protected against damage by design of the wheelchair or mobility aid and securely attached to the wheelchair or mobility aid; or
(17) * * *
(ii) * * *
(C) The battery is adequately protected against damage by design of the wheelchair or mobility aid and securely attached to the wheelchair or other mobility aid; and
(18) Except as provided in § 173.21 of this subchapter, portable electronic devices (
(26) Baggage equipped with lithium batteries must be carried as carry-on baggage unless the batteries are removed from the baggage. Batteries must be of a type which meets the requirements of each test in the UN Manual of Tests and Criteria, Part III, Subsection 38.3 (IBR,
(a) * * *
(13) * * *
(iii) UN3481 and UN3091 are not required to appear on the information provided to the pilot-in-command when prepared in accordance with § 173.185(c)(4).
49 U.S.C. 5101-5128; 49 CFR 1.81 and 1.97.
(j) Flattening test. A flattening test must be performed on one cylinder, taken at random out of each lot of 200 or fewer, by placing the cylinder between wedge shaped knife edges, having a 60-degree included angle, rounded to
(f) * * *
(4) ISO 21172-1:2015(E) Gas cylinders—Welded steel pressure drums up to 3,000 litres capacity for the transport of gases—Design and construction—Part 1: Capacities up-to 1,000 litres (IBR,
(g)
(1) ISO 9809-1:2019(E), Gas cylinders—Refillable seamless steel gas cylinders—Design, construction, and testing—Part 1: Quenched and tempered steel cylinders with tensile strength less than 1100 MPa (IBR, see § 171.7 of this subchapter). Until December 31, 2026, a cylinder may instead conform to ISO
(2) ISO 9809-2:2019(E), Gas cylinders—Design, construction and testing of refillable seamless steel gas cylinders and tubes—Part 2: Quenched and tempered steel cylinders and tubes with tensile strength greater than or equal to 1100 MPa (IBR, see § 171.7 of this subchapter). Until December 31, 2026, a cylinder may instead conform to ISO 9809-2:2010 (IBR, see § 171.7 of this subchapter).
(3) ISO 9809-3:2019(E), Gas cylinders—Design, construction and testing of refillable seamless steel gas cylinders and tubes—Part 3: Normalized steel cylinders and tubes. (IBR, see § 171.7 of this subchapter). Until December 31, 2026, a cylinder may instead conform to ISO 9809-3:2010(E) (IBR, see § 171.7 of this subchapter).
(4) ISO 9809-4:2014(E), Gas cylinders—Refillable seamless steel gas cylinders—Design, construction and testing—Part 4: Stainless steel cylinders with an Rm value of less than 1 100 MPa (IBR, see § 171.7 of this subchapter).
(i)
(k) * * *
(1) * * *
(i) ISO 9809-1:2019(E) Gas cylinders—Refillable seamless steel gas cylinders—Design, construction, and testing—Part 1: Quenched and tempered steel cylinders with tensile strength less than 1100 MPa (IBR, see § 171.7 of this subchapter). Until December 31, 2026, a cylinder may instead conform to ISO 9809-1:2010(E) (IBR, see § 171.7 of this subchapter).
(ii) ISO 9809-3:2019(E) Gas cylinders—Design, construction and testing of refillable seamless steel gas cylinders and tubes—Part 3: Normalized steel cylinders and tubes. (IBR, see § 171.7 of this subchapter). Until December 31, 2026, a cylinder may instead conform to ISO 9809-3:2010(E) (IBR, see § 171.7 of this subchapter).
(m)
(n)
(1) ISO 11513:2019, Gas cylinders—Refillable welded steel cylinders containing materials for sub-atmospheric gas packaging (excluding acetylene)—Design, construction, testing, use and periodic inspection (IBR,
(2) ISO 9809-1:2019(E): Gas cylinders—Refillable seamless steel gas cylinders—Design, construction, and testing—Part 1: Quenched and tempered steel cylinders with tensile strength less than 1100 MPa (IBR,
(d) * * *
(3) Each pressure receptacle of a MEGC must be of the same design type, seamless steel, or composite, and constructed and tested according to one of the following ISO standards:
(i) ISO 9809-1:2019(E), Gas cylinders—Refillable seamless steel gas cylinders—Design, construction, and testing—Part 1: Quenched and tempered steel cylinders with tensile strength less than 1100 MPa (IBR, see § 171.7 of this subchapter). Until December 31, 2026, a pressure receptacle may instead conform to ISO 9809-1:2010(E) (IBR, see § 171.7 of this subchapter).
(ii) ISO 9809-2:2019(E), Gas cylinders—Design, construction and testing of refillable seamless steel gas cylinders and tubes—Part 2: Quenched and tempered steel cylinders and tubes with tensile strength greater than or equal to 1100 MPa (IBR, see § 171.7 of this subchapter). Until December 31, 2026, a pressure receptacle may instead conform to ISO 9809-2:2010(E) (IBR, see § 171.7 of this subchapter).
(iii) ISO 9809-3:2019(E), Gas cylinders—Design, construction and testing of refillable seamless steel gas cylinders and tubes—Part 3: Normalized steel cylinders and tubes. (IBR, see § 171.7 of this subchapter). Until December 31, 2026, pressure receptacle may instead conform to ISO 9809-3:2010(E) (IBR, see § 171.7 of this subchapter).
(d) * * *
(2) Where the samples are in the shape of a drum or jerrican, three samples must be dropped, one in each of the following orientations:
(i) Diagonally on the top edge, with the center of gravity directly above the point of impact;
(ii) Diagonally on the base edge; and
(iii) Flat on the body or side.
(c) * * *
(3) No used material other than production residues or regrind from the same manufacturing process may be used in the manufacture of rigid plastic IBCs unless approved by the Associate Administrator.
(c) * * *
(3) * * *
(iii) No used material, other than production residues or regrind from the same manufacturing process, may be used in the manufacture of inner receptacles unless approved by the Associate Administrator.
49 U.S.C. 5101-5128; 49 CFR 1.81 and 1.97.
(d) * * *
(3) Dissolved acetylene UN cylinders: Each dissolved acetylene cylinder must be requalified in accordance with ISO 10462:2013(E)/Amd 1:2019 (IBR, see § 171.7 of this subchapter). However, a cylinder may continue to be requalified in accordance with ISO 10462:2013(E) (IBR, see § 171.7 of this subchapter) without the supplemental amendment until December 31, 2024. Further, a cylinder requalified in accordance with ISO 10462:2013(E) until December 31, 2018, may continue to be used until its next required requalification. The porous mass and the shell must be requalified no sooner than three (3) years, six (6) months, from the date of manufacture. Thereafter, subsequent requalifications of the porous mass and shell must be performed at least once every 10 years.
(5) UN cylinders for adsorbed gases: Each UN cylinder for adsorbed gases must be inspected and tested in accordance with § 173.302c of this subchapter and ISO 11513:2019(E) (IBR, see § 171.7 of this subchapter). However, a UN cylinder may continue to be requalified in accordance with ISO 11513:2011(E) (IBR, see § 171.7 of this subchapter) until December 31, 2024.
(8) UN pressure drums: UN pressure drums must be inspected and tested in accordance with ISO 23088:2020 (IBR, see § 171.7 of this subchapter).
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Final rule.
The Energy Policy and Conservation Act, as amended (“EPCA”), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including consumer pool heaters. EPCA also requires the U.S. Department of Energy (“DOE” or “the Department”) to periodically determine whether more-stringent, standards would be technologically feasible and economically justified, and would result in significant energy savings. In this final rule, DOE is adopting new and amended energy conservation standards for consumer pool heaters. It has determined that the new and amended energy conservation standards for these products would result in significant conservation of energy, and are technologically feasible and economically justified.
The effective date of this rule is July 31, 2023. Compliance with the new and amended standards established for consumer pool heaters in this final rule is required on and after May 30, 2028.
The docket for this rulemaking, which includes
The docket web page can be found at
For further information on how to review the docket, contact the Appliance and Equipment Standards Program staff at (202) 287-1445 or by email:
Ms. Julia Hegarty, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (240) 597-6737. Email:
Mr. Nolan Brickwood, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 586-4498. Email:
The Energy Policy and Conservation Act,
Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the maximum improvement in energy efficiency that DOE determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must result in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m))
In accordance with these and other statutory provisions discussed in this document, DOE is adopting amended energy conservation standards for gas-fired pool heaters and new energy conservation standards for electric pool heaters. The adopted new and amended standards are expressed in terms of the integrated thermal efficiency (“TE
Table I.2 summarizes DOE's evaluation of the economic impacts of the adopted standards on consumers of consumer pool heaters, as measured by the average life-cycle cost (“LCC”) savings and the simple payback period (“PBP”).
DOE's analysis of the impacts of the adopted standards on consumers is described in section IV.F of this document.
The industry net present value (“INPV”) is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (2023-2057). Using a real discount rate of 7.4 percent,
DOE's analysis of the impacts of the adopted standards on manufacturers is described in sections IV.J and V.B.2 of this document.
DOE's analyses indicate that the adopted energy conservation standards for consumer pool heaters will save a significant amount of energy. Relative to the case without new or amended standards, the lifetime energy savings for consumer pool heaters purchased in the 30-year period that begins in the anticipated year of compliance with the new or amended standards (2028-2057), amount to 0.70 quadrillion British thermal units (“Btu”), or quads.
The cumulative net present value (“NPV”) of total consumer benefits of the standards for consumer pool heaters ranges from $1.18 billion (at a 7-percent discount rate) to $3.00 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product and installation costs for consumer pool heaters purchased in 2028-2057.
In addition, the adopted standards for consumer pool heaters are projected to yield significant environmental benefits. DOE estimates that the standards will result in cumulative emission reductions (over the same period as for energy savings) of 29 million metric tons (“Mt”)
DOE estimates the value of climate benefits from a reduction in greenhouse gases (“GHG”) using four different estimates of the social cost of CO
DOE estimated the monetary health benefits of SO
Table I.3 summarizes the economic benefits and costs expected to result from the new and amended standards for consumer pool heaters. There are
The benefits and costs of the adopted standards can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are (1) the reduced consumer operating costs, minus (2) the increase in product purchase prices and installation costs, plus (3) the monetized value of climate and health benefits of emission reductions, all annualized.
The national operating cost savings are domestic private U.S. consumer monetary savings that occur as a result of purchasing the covered products and are measured for the lifetime of consumer pool heaters shipped in 2028-2057. The benefits associated with reduced emissions achieved as a result of the adopted standards are also calculated based on the lifetime of consumer pool heaters shipped in 2028-2057. Total benefits for both the 3-percent and 7-percent cases are presented using the average GHG social costs with 3-percent discount rate. Estimates of SC-GHG values are presented for all four discount rates in section IV.L.1 of this document.
Table I.4 presents the total estimated monetized benefits and costs associated with the adopted standards, expressed in terms of annualized values. The results under the primary estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and health benefits from reduced NO
Using a 3-percent discount rate for all benefits and costs, the estimated cost of the standards is $75.3 million per year in increased equipment costs, while the estimated annual benefits are $252.7 million in reduced operating costs, $88.3 million in monetized climate benefits, and $133.1 million in monetized health benefits. In this case, the net monetized benefit will amount to $398.8 million per year.
DOE's analysis of the national impacts of the adopted standards is described in sections IV.H, IV.K, and IV.L of this document.
DOE concludes that the standards adopted in this final rule represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in the significant conservation of energy. Specifically, with regards to technological feasibility, products achieving these standard levels are already commercially available for all product classes covered by this proposal. As for economic justification, DOE's analysis shows that the benefits of the standards exceed, to a great extent, the burdens of the standards.
Using a 7-percent discount rate for consumer benefits and costs and NO
The significance of energy savings offered by a new or amended energy conservation standard cannot be determined without knowledge of the specific circumstances surrounding a given rulemaking.
As previously mentioned, the standards are projected to result in estimated national energy savings of 0.70 quads FFC, the equivalent of the primary annual energy use of 7.5 million homes. In addition, they are projected to reduce CO
The following section briefly discusses the statutory authority underlying this final rule, as well as some of the relevant historical background related to the establishment of standards for consumer pool heaters.
EPCA authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. Title III, Part B of
The energy conservation program under EPCA, consists essentially of four parts: (1) testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of the EPCA specifically include definitions (42 U.S.C. 6291), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), energy conservation standards (42 U.S.C. 6295), and the authority to require information and reports from manufacturers (42 U.S.C. 6296).
Federal energy efficiency requirements for covered products established under EPCA generally supersede State laws and regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal preemption in limited instances for particular State laws or regulations, in accordance with the procedures and other provisions set forth under EPCA. (
Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6295(o)(3)(A) and 42 U.S.C. 6295(r)) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test procedure for consumer pool heaters appears at title 10 of the Code of Federal Regulations (“CFR”) part 430, subpart B, appendix P (“appendix P”).
DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including consumer pool heaters. Any new or amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary of Energy determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)(B))
Moreover, DOE may not prescribe a standard (1) for certain products, including consumer pool heaters, if no test procedure has been established for the product, or (2) if DOE determines by rule that the standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after receiving comments on the proposed standard, and by considering, to the greatest extent practicable, the following seven statutory factors:
(1) The economic impact of the standard on manufacturers and consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the standard;
(3) The total projected amount of energy (or as applicable, water) savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered products likely to result from the standard;
(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (“Secretary”) considers relevant.
Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))
Additionally, EPCA specifies requirements when promulgating an energy conservation standard for a covered product that has two or more subcategories. DOE must specify a different standard level for a type or class of products that has the same function or intended use if DOE determines that products within such group (A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In determining whether a performance-related feature justifies a different standard for a group of products, DOE must consider such factors as the utility to the consumer of such a feature and other factors DOE deems appropriate.
Finally, pursuant to the amendments contained in the Energy Independence and Security Act of 2007 (“EISA 2007”), Public Law 110-140, any final rule for new or amended energy conservation standards promulgated after July 1, 2010, is required to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into a single
The current energy conservation standard for gas-fired pool heaters is set forth in DOE's regulations at 10 CFR 430.32(k) and is repeated in Table II.1 of this document. The current energy conservation standard for gas-fired pool heaters is in terms of thermal efficiency (E
On April 16, 2010, DOE published a final rule in which it concluded the first round of rulemaking required under EPCA and established an amended energy conservation standard for consumer pool heaters. 75 FR 20112 (“April 2010 Final Rule”).
On December 17, 2012, DOE published a final rule in the
On January 6, 2015, DOE published a final rule pertaining to its test procedures for direct heating equipment (“DHE”) and consumer pool heaters. 80 FR 792 (“January 2015 TP Final Rule”). In that final rule, DOE established test methods for measuring the integrated thermal efficiency of electric resistance and electric heat pump pool heaters.
To evaluate whether to propose amendments to the energy conservation standard for consumer pool heaters, DOE issued a request for information (“RFI”) in the
DOE subsequently published a notice of data availability (“NODA”) in the
Most recently, on April 15, 2022, DOE published a NOPR (“April 2022 NOPR”) for consumer pool heaters, in which DOE proposed new energy conservation standards for electric pool heaters and amended energy conservation standards for gas-fired pool heaters. 87 FR 22640. The new and amended standards proposed in the April 2022 NOPR were defined in terms of the TE
A parenthetical reference at the end of a comment quotation or paraphrase provides the location of the item in the public record.
DOE developed this final rule after considering oral and written comments, data, and information from interested parties that represent a variety of interests. The following discussion addresses issues raised by these commenters.
This section summarizes general comments received from interested parties regarding rulemaking timing and process.
The Gas Associations commented that DOE should adopt changes to its rulemaking process as outlined in a report by National Academies of Sciences, Engineering, and Medicine (“NASEM”)
AHRI and PHTA suggested that the Department perform another round of manufacturer interviews to determine if the data sources and methodology used are still accurate to ensure DOE's analyses capture products and conditions that best represent the current state of the market. (AHRI and PHTA, No. 20 at p. 6) BWC urged DOE to utilize the most recently available data when conducting its analysis for this rulemaking, stating that many sources cited throughout the April 2022 NOPR are outdated and may provide an inaccurate picture of current market impacts for manufacturers of consumer pool heaters. BWC specifically noted that the Department cited information that was gathered during manufacturer interviews conducted in 2015. BWC asserted that several major events have transpired since that time, which have had significant consequences for pool heater manufacturers (including significant pricing increases for components and materials that are utilized in manufacturing). Thus, BWC also recommended that DOE re-interview product manufacturers and conduct additional research to obtain updated costing information before issuing a final rule. (BWC, No. 12 at pp. 1-2)
Throughout the rulemaking process, DOE seeks feedback and insight from interested parties to improve the information used in the analyses. During Phase III of the manufacturer impact analysis (“MIA”) (see section IV.J of this document and chapter 12 of the final rule TSD), DOE interviews manufacturers to gather information on the effects of new and amended energy conservation standards on revenues and finances, direct employment, capital assets, and industry competitiveness. DOE also verifies findings from its other analyses with manufacturers. The Phase III analysis for the April 2022 NOPR occurred several years prior to this final rule, and given this unique circumstance, the Department conducted additional interviews after the publication of the April 2022 NOPR in order to collect the most recent information, as stakeholders suggested. The analysis conducted for this final rule takes into account the most recent feedback from manufacturers and other interested parties.
This final rule covers those consumer products that meet the statutory and regulatory definition of “pool heater,” as codified at 10 CFR 430.2. (
In the April 2022 NOPR, DOE initially concluded that further delineation by adding an input capacity limit is not necessary. 87 FR 22640, 22653. DOE maintained its position initially stated in the April 2010 Final Rule that pool heaters marketed as commercial equipment contain additional design modifications related to safety requirements for installation in commercial buildings, including being designed to meet a high volume flow and are matched with a pump from the point of manufacture to accommodate the needs of commercial facilities, which allows manufacturers to distinguish those units from pool heaters distributed to any significant extent for residential use, regardless of input capacity.
In response to the April 2022 NOPR, several commenters requested that DOE further clarify the distinction between consumer pool heaters and pool heaters which do not meet the definition of a consumer product (
Rheem supported the product classes DOE analyzed for this consumer pool heater rulemaking and agreed with DOE's interpretation on coverage of standards for consumer products. Specifically, Rheem indicated that it differentiates consumer and commercial pool heaters through marketing materials as well as unique design aspects such as: high-volume flow, matching with a pump, ASME standards certification, and voltage/phase. (Rheem, No. 19 at p. 3)
Comments from Hayward, Rheem, AHRI, and PHTA state that there are certain physical characteristics of pool heaters which indicate they are not distributed in commerce for personal use or consumption by individuals. This is not inconsistent with DOE's position that consumer pool heaters as products can presently be sufficiently distinguished from “commercial pool heaters.” DOE notes, however, that EPCA places no limitation on the physical characteristics for a pool heater to qualify as a consumer product, (42 U.S.C. 6291(25)), and has concluded that explicitly specifying design criteria to define consumer pool heaters is unnecessary at this time.
When evaluating and establishing energy conservation standards, DOE divides covered products into product classes by the type of energy used or by capacity or other performance-related features that justify differing standards. In determining whether a performance-related feature justifies a different standard, DOE must consider such factors as the utility of the feature to the consumer and other factors DOE determines are appropriate. (42 U.S.C. 6295(q)(1))
As discussed in section IV.A.1 of this document, this final rule considered consumer gas-fired pool heaters, oil-fired pool heaters, electric pool heaters, and electric spa heaters. However, DOE is establishing standards for only two product classes in this rulemaking: gas-fired pool heaters and electric pool heaters. DOE may, in a future rulemaking addressing energy conservation standards for consumer pool heaters, analyze standards for oil-fired pool heaters and/or electric spa heaters, or consider setting differential standards for new product classes that may be considered.
NYSERDA supported DOE's effort to set standards for electric pool heaters for the first time and concurred that the proposed standards are cost effective and technologically feasible. (NYSERDA, No. 10 at p. 1) Hayward stated that electric resistance heaters should be included in the scope of the rule to achieve the power usage and efficiency goals for all pool heating systems. (Hayward, No. 17 at p. 2)
As discussed in section IV.C.1.a of this document, the baseline efficiency level that DOE selected for electric pool heaters is based on use of electric resistance elements. See section IV.A.1 of this document for discussion of the product classes analyzed in this final rule.
EPCA sets forth generally applicable criteria and procedures for DOE's adoption and amendment of test procedures. (42 U.S.C. 6293) Manufacturers of covered products must use these test procedures to certify to DOE that their product complies with energy conservation standards and to quantify the efficiency of their product. DOE's current energy conservation standards for consumer pool heaters are expressed in terms of E
As discussed in section II.A of this document, EISA 2007 amended EPCA to require DOE to amend its test procedures for covered consumer products generally to include measurement of standby mode and off mode energy consumption. (42 U.S.C. 6295(gg)(2)(A)) The current test procedure established for fossil fuel-fired pool heaters determines an integrated thermal efficiency metric (TE
In this document, DOE is establishing new and amended energy conservation standards for consumer pool heaters in terms of TE
To the extent DOE is also making amendments to the test procedure, such amendments are limited to those necessary to accommodate the proposed definitions and the proposed product classes. As discussed further in sections III.G.1 and IV.A.1 of this document, DOE is amending appendix P to add definitions for “active electrical power,” “input capacity,” and “output capacity;” to add a calculation to
In response to the April 2022 NOPR, DOE received comments from stakeholders relating to the method of testing in the consumer pool heater test procedure. Specifically, AHRI and PHTA suggested that the Department use mass flow rate as an alternative calculation to using the mass of water in the test procedure, as the use of a mass flow meter would provide a significantly more accurate and repeatable data collection that would also allow for automation of the test procedure. AHRI and PHTA also encouraged DOE to update its references to the latest edition of ANSI Z21.56.
DOE will consider these comments further in the next revision of its consumer pool heater test procedure.
In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that are the subject of the rulemaking. As the first step in such an analysis, DOE develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in commercially available products or in working prototypes to be technologically feasible. Sections 6(b)(3)(i) and 7(b)(1) of appendix A to 10 CFR part 430 subpart C (“appendix A”).
After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) practicability to manufacture, install, and service; (2) adverse impacts on product utility or availability; (3) adverse impacts on health or safety and (4) unique-pathway proprietary technologies. Section 7(b)(2)-(5) of appendix A. Section IV.B of this document discusses the results of the screening analysis for consumer pool heaters, particularly the designs DOE considered, those it screened out, and those that are the basis for the standards adopted in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the final rule TSD.
When DOE adopts a new or amended standard for a type or class of covered product, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for consumer pool heaters, using the design parameters for the most efficient products available on the market or in working prototypes. The max-tech levels that DOE determined for this rulemaking are described in section IV.C of this document and in chapter 5 of the final rule TSD.
For each trial standard level (“TSL”), DOE projected energy savings from application of the TSL to consumer pool heaters purchased in the 30-year period that begins in the first full year of compliance with the new and amended standards (2028-2057).
DOE used its national impact analysis (“NIA”) spreadsheet models to estimate national energy savings (“NES”) from potential new and amended standards for consumer pool heaters. The NIA spreadsheet model (described in section IV.H of this document) calculates energy savings in terms of site energy, which is the energy directly consumed by products at the locations where they are used. For electricity, DOE reports national energy savings in terms of primary energy savings, which is the savings in the energy that is used to generate and transmit the site electricity. For natural gas, the primary energy savings are considered to be equal to the site energy savings. DOE also calculates NES in terms of FFC energy savings. The FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels (
To adopt any new or amended standards for a covered product, DOE must determine that such action would result in significant energy savings. (42 U.S.C. 6295(o)(3)(B))
The significance of energy savings offered by a new or amended energy conservation standard cannot be determined without knowledge of the specific circumstances surrounding a given rulemaking. For example, some covered products and equipment have most of their energy consumption occur during periods of peak energy demand. The impacts of these products on the energy infrastructure can be more pronounced than products with relatively constant demand. Accordingly, DOE evaluates the significance of energy savings on a case-by-case basis, taking into account the significance of cumulative FFC national energy savings, the cumulative FFC emissions reductions, and the need to confront the global climate crisis, among other factors.
The standard levels adopted in this final rule are projected to result in
As noted previously, EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)(VII)) The following sections discuss how DOE has addressed each of those seven factors in this final rule.
EPCA requires DOE to consider the economic impact of the standard on manufacturers and consumers of the product that would be subject to the standard. (42 U.S.C. 6295(o)(2)(B)(i)(I). In determining the impacts of potential amended standards on manufacturers, DOE conducts an MIA, as discussed in section IV.J of this document. DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step includes both a short-term assessment—based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation—and a long-term assessment over a 30-year period. The industry-wide impacts analyzed include (1) INPV, which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers, including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers.
For individual consumers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national net present value of the consumer costs and benefits expected to result from particular standards. DOE also evaluates the impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a standard.
EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered product that are likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analysis.
The LCC is the sum of the purchase price of a product (including its installation) and the operating cost (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. The LCC analysis requires a variety of inputs, such as product prices, product energy consumption, energy prices, maintenance and repair costs, product lifetime, and discount rates appropriate for consumers. To account for uncertainty and variability in specific inputs, such as product lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value.
The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost due to a more-stringent standard by the change in annual operating cost for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that consumers will purchase the covered products in the first full year of compliance with new or amended standards. The LCC savings for the considered efficiency levels are calculated relative to the case that reflects projected market trends in the absence of new or amended standards. DOE's LCC and PBP analysis is discussed in further detail in section IV.F of this document.
Although significant conservation of energy is a separate statutory requirement for adopting an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in section IV.H of this document, DOE uses the NIA spreadsheet models to project national energy savings.
In establishing product classes, and in evaluating design options and the impact of potential standard levels, DOE evaluates potential standards that would not lessen the utility or performance of the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards adopted in this document will not reduce the utility or performance of the products under consideration in this rulemaking.
EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine the impact, if any, of any lessening of competition likely to result from a standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) To assist the Department of Justice (“DOJ”) in making such a determination, DOE transmitted copies of its proposed rule and the NOPR TSD to the Attorney General for review, with a request that the DOJ provide its determination on this issue. In its assessment letter responding to DOE, DOJ concluded that the proposed energy conservation standards for consumer pool heaters are unlikely to have a significant adverse impact on competition. DOE is publishing the Attorney General's assessment at the end of this final rule.
DOE also considers the need for national energy and water conservation in determining whether a new or amended standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the adopted standards are likely to provide improvements to the security and reliability of the Nation's energy system. Reductions in the demand for electricity also may result in reduced costs for
DOE maintains that environmental and public health benefits associated with the more efficient use of energy are important to take into account when considering the need for national energy conservation. The adopted standards are likely to result in environmental benefits in the form of reduced emissions of air pollutants and GHGs associated with energy production and use. DOE conducts an emissions analysis to estimate how potential standards may affect these emissions, as discussed in section IV.K of this document; the estimated emissions impacts are reported in section V.B.6 of this document. DOE also estimates the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L of this document.
In determining whether an energy conservation standard is economically justified, DOE may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To the extent DOE identifies any relevant information regarding economic justification that does not fit into the other categories described previously, DOE could consider such information under “other factors.”
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard is less than three times the value of the first full year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the effect potential amended energy conservation standards would have on the payback period for consumers. These analyses include, but are not limited to, the 3-year payback period contemplated under the rebuttable-presumption test. In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to consumers, manufacturers, the Nation, and the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section IV.F of this document.
This final rule establishes amended standards for gas-fired pool heaters and new standards for electric pool heaters in terms of TE
Given the dependency of TE
• Use values measured during the active mode test described in Section 2.10.1 of ANSI.Z21.56-2006 (
• Clarify that active electrical power is represented by the variable PE; and
• Provide a calculation for output capacity so that the product class for an electric pool heater can be appropriately determined.
87 FR 22640, 22651.
In response, Rheem suggested DOE add provisions to appendix P to describe how to appropriately calculate input capacity for gas-fired pool heaters at standard temperature and pressure conditions. (Rheem, No. 19 at p. 2) AHRI and PHTA provided similar feedback, requesting that DOE specify values for barometric pressure, as this value can vary depending on numerous factors including test location and environmental conditions. (AHRI and PHTA, No. 20 at p. 3)
Section 2.10.1 of ANSI Z21.56-2006, the industry test standard that is incorporated by reference into appendix P for gas-fired pool heaters, includes the use of a correction factor (“CF”) “to correct observed gas volume to the conditions of pressure and temperature at which the heating value of the gas is specified [normally 30 inches mercury column (101.6 kPa) and 60 °F (15.5 °C)]”. As such, the standard temperature and pressure is already specified as 60 degrees Fahrenheit (“°F”) and 30 inches of mercury (“in. Hg”) for the calculation of Q
Rheem also requested that DOE clarify whether coefficient of performance (“COP”) representations in manufacturer literature may continue to be made at ambient conditions other than the “High Air Temperature—Mid Humidity” condition in AHRI Standard 1160. (Rheem, No. 19 at p. 10)
Section 3.1.3 of appendix P states that the test conditions for electric heat pump pool heaters shall be at the “High Air Temperature—Mid Humidity (63% RH)” level specified in section 6 of AHRI 1160-2009, the industry test standard that is incorporated by reference into appendix P for heat pump pool heaters. EPCA mandates that no manufacturer, distributor, retailer, and or private labeler may make any representation with respect to the energy use or efficiency of a covered product to which a test procedure is applicable unless such product has been tested in accordance with such test procedure and such representation fairly discloses the results of such testing. (42 U.S.C. 6293(c)(1)(A)-(B)) Therefore, although manufacturers may make representations of COP according to the test conditions in appendix P, manufacturers may not make representations for heat pump pool heaters at test conditions which are not included in appendix P.
Taking into consideration the feedback received on the necessary updates to the test procedure to accommodate the transition to TE
The Department codifies product-specific enforcement provisions at 10 CFR 429.134 to indicate how DOE would conduct certain aspects of assessment or enforcement testing on covered products and equipment.
In the April 2022 NOPR, DOE proposed that the input capacity or active electrical power (as applicable) for enforcement testing would be measured pursuant to appendix P and compared against the rated value certified by the manufacturer. If the measured input capacity or active electrical power (as applicable) is within ±2 percent of the certified value, then DOE would use the certified value when determining the applicable standard. The ±2 percent threshold was chosen because it is already used for commercial water heating equipment (
In the April 2022 NOPR, DOE proposed that, for an electric pool heater, it would not take any steps to modify the unit to bring the active electrical power of the unit within the ±2 percent threshold. Rather, if the active electrical power is not within ±2 percent of the certified value, DOE would use the measured active electrical power (either for a single unit sample or the average for a multiple unit sample) when determining the applicable standard for the basic model.
AHRI and PHTI commented that the Department's suggested ±2 percent threshold is appropriate for the certified value of input capacity or active electrical power for gas-fired pool heaters because adjustment of the valve should be allowed to achieve input rate. However, AHRI and PHTA recommended that DOE should apply the ±5 percent threshold that is specified in section 6.3
DOE agrees with Rheem that electrical power cannot be readily adjusted on a pool heater the way gas input is designed to be adjusted for a field-installed unit, and thus, for electric pool heaters, inherent product variability is not able to be compensated for with in-field adjustments to energy input, as is possible for gas-fired pool heaters. For this reason, DOE concludes that a higher threshold for electrical power in the enforcement testing provisions for electrical pool heaters as compared to the input capacity threshold for gas-fired pool heaters is warranted. Section 6.3 of AHRI 1160-2006 states that measured test results for heating capacity and COP shall not be less than 95 percent of published ratings. Based on these considerations, DOE agrees that the ±5 percent threshold recommended by stakeholders is appropriate for enforcement testing of electric pool heaters. In this final rule, DOE is establishing product-specific enforcement provisions for consumer pool heaters which allow a ±2 percent threshold for gas-fired pool heaters and a ±5 percent threshold for electric pool heaters.
Rheem also recommended changing the title to 10 CFR 429.134(s)(2) to “Verification of active electrical power for electric pool heaters.” (Rheem, No. 19 at p. 2) DOE understands this to be a typographical correction to the title proposed in the April 2022 NOPR, which read, “Verification of active electrical power for pool heaters.” 87 FR 22640, 22716. Due to the additions of several product-specific enforcement provisions since the April 2022 NOPR, the enforcement provisions for pool heaters have been relocated to 10 CFR 429.134(dd). Because the title suggested by Rheem clarifies that the provision applies only to electric pool heaters and not all pool heaters, DOE is adopting the suggested title for 10 CFR 429.134(cc)(2).
In the April 2022 NOPR, DOE stated that if new and amended energy conservation standards were adopted in this rulemaking, the Department would review and revise the certification provisions accordingly to establish certification provisions for electric pool heaters and to allow for appropriate reporting of TE
In response, Rheem generally recommended DOE update the certification provisions at 10 CFR 429.24 to require certification of integrated thermal efficiency and either input capacity or active electrical power as necessary. (Rheem, No. 19 at p. 2) Rheem also requested that DOE add certification provisions which allow for the propane gas version of a basic model to be rated using the natural gas version if the propane gas input rate is within 10 percent of the natural gas input rate. (Rheem, No. 19 at p. 10)
DOE is considering these comments in a separate rulemaking addressing certification requirements for consumer pool heaters and other products and equipment. Interested parties may find this rulemaking at Docket No. EERE-2023-BT-CE-0001. Compliance with the energy conservation standards promulgated by this final rule must be demonstrated on and after May 30, 2028.
This section addresses the analyses DOE has performed for this final rule with regard to consumer pool heaters. Separate subsections address each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the standards considered in this document. The first tool is a spreadsheet that calculates the LCC savings and PBP of potential amended or new energy conservation standards. The national impacts analysis uses a second spreadsheet set that provides shipments projections and
DOE develops information in the market and technology assessment that provides an overall picture of the market for the products concerned, including the purpose of the products, the industry structure, manufacturers, market characteristics, and technologies used in the products. This activity includes both quantitative and qualitative assessments, based primarily on publicly-available information. The subjects addressed in the market and technology assessment for this rulemaking include (1) a determination of the scope of the rulemaking and product classes, (2) manufacturers and industry structure, (3) existing efficiency programs, (4) shipments information, (5) market and industry trends, and (6) technologies or design options that could improve the energy efficiency of consumer pool heaters. The key findings of DOE's market assessment are summarized in the following sections. See chapter 3 of the final rule TSD for further discussion of the market and technology assessment.
When evaluating and establishing energy conservation standards, DOE may establish separate standards for a group of covered products (
Under EPCA, pool heaters are covered products. (42 U.S.C. 6292(a)(11)) EPCA defines “pool heater” as an appliance designed for heating nonpotable water contained at atmospheric pressure, including heating water in swimming pools, spas, hot tubs and similar applications. (42 U.S.C. 6291(25)) This includes electric pool heaters, gas-fired pool heaters, and oil-fired pool heaters. However, energy conservation standards have been previously established only for gas-fired pool heaters.
As discussed in the April 2022 NOPR, some commenters responding to the March 2015 RFI suggested DOE consider atmospherically vented gas-fired pool heaters separately from fan-assisted gas-fired pool heaters or to consider condensing and non-condensing products separately. 87 FR 22640, 22653. As previously noted by DOE, the standard for gas-fired pool heaters proposed in the April 2022 NOPR, and adopted in this final rule, can be achieved by atmospherically vented and/or non-condensing gas-fired pool heaters.
In the March 2015 RFI, DOE sought comment on whether capacity or other performance related features that may affect efficiency would justify the establishment of consumer pool heater product classes that would be subject to different energy conservation standards. Specifically, DOE sought comment on whether heat pump technology was a viable design for applications which typically utilize electric resistance pool heaters. 80 FR 15922, 15925. As discussed in the April 2022 NOPR, some commenters recommended DOE create separate product classes for electric resistance and electric heat pump pool heaters, and others urged DOE to regulate both under one product class covering all electric pool heaters. 87 FR 22640, 22654. In the April 2022 NOPR, DOE noted that although heat pump pool heaters perform best when operating within an environment with high air temperature and high air humidity, they are nonetheless capable of operating effectively in cooler climates during the swimming season. Additionally, rare cases in which the ambient temperature is too low for the heat pump pool heater to work effectively could be accommodated through the incorporation of electric resistance backup elements. Therefore, DOE proposed to maintain a single product class for electric pool heaters.
In response to the April 2022 NOPR, the Joint Advocates stated their support of a single product class for all electric pool heaters because electric resistance heaters provide no unique utility. (Joint Advocates, No. 13 at p. 1-2) The CA IOUs also agreed with DOE that separate product classes for electric resistance and electric heat pump pool heaters are not justified. (CA IOUs, No. 16 at p. 6) DOE received no other comments in response to the April 2022 NOPR on this issue and, for the reasons discussed, maintains a single product class for electric pool heaters in this final rule.
In the April 2022 NOPR, DOE proposed definitions for electric pool heaters (note that “electric spa heater” is defined later in this section), gas-fired pool heaters, and oil-fired pool heaters. 87 FR 22640, 22656. The proposed definitions were as follows:
In response to the April 2022 NOPR, BWC agreed with DOE's proposal to clarify regulations by adding a definition for “gas-fired pool heater” at 10 CFR 430.2. (BWC, No. 12 at p. 2) AHRI and PHTA stated their general agreement with DOE's proposed definitions, but urged the Department to create separate definitions for electric heat pump and electric resistance pool heaters, and provided a recommended definition for electric heat pump pool heaters. (AHRI and PHTA, No. 20 at p. 4)
DOE acknowledges that there are differences in the components and operation of electric resistance pool heaters and electric heat pump pool heaters. However, because DOE is
The definition of an electric pool heater adopted by this final rule specifically excludes pool heaters meeting the definition of an “electric spa heater”. In the April 2022 NOPR, DOE explained that lower capacity
87 FR 22640, 22656.
In the April 2022 NOPR, DOE also proposed a definition for “portable electric spa,” because at that time, DOE had not codified such a definition.
87 FR 22640, 22656.
Commenting in response to the April 2022 NOPR, the CA IOUs stated their agreement with DOE's decision to exclude electric spa heaters from this rulemaking due to differences in consumer utility, but suggested DOE modify the definition for electric spa heater by replacing the phrase “to be installed” with “and marketed for use as an electric pool heater.” The CA IOUs explained that “designed and marketed” means that the equipment is designed to fulfill the indicated application and, when distributed in commerce, is marketed for that application, with the designation on the packaging and any publicly available documents, citing a definition from 10 CFR 431.462 (related to DOE's regulations for commercial pumps). (CA IOUs, No. 16 at pp. 5-6)
Rheem recommended aligning the definitions for portable electric spas from the coverage determination for portable electric spas (Docket No. EERE-2022-BT-DET-0006) and the NOPR prior to the publication of either the final portable electric spa determination or consumer pool heaters standards final rule. (Rheem, No. 19 at p. 3) AHRI and PHTA sought clarification on whether swim spas are captured within the definition of portable electric spas. (AHRI and PHTA, No. 20 at p. 4)
On September 2, 2022, DOE published a final determination (“September 2022 Final Determination”) that established portable electric spas as a covered consumer product and included the following definition to be codified in 10 CFR 430.2:
87 FR 54123, 54129.
This newly established definition is substantively the same as the one DOE proposed in the April 2022 NOPR and thus, DOE is not adopting any amendments to that definition in this final rule.
In response to the comment from AHRI and PHTA, DOE notes that swim spas are captured by the newly established definition for portable electric spa to the extent that they meet the description included in the definition. DOE also notes that portable electric spas are not within the scope of this rulemaking and will not be subject to the energy conservation standards adopted in this final rule. DOE appreciates the suggested definitional change for electric spa heaters from the CA IOUs but notes that the cited definition for commercial pumps is not relevant to consumer products, including electric spa heaters, a type of consumer pool heater. EPCA defines a consumer product, in relevant part, as any article of a type which, to any significant extent, is distributed in commerce for personal use or consumption by individuals; without regard to whether such article of such type is in fact distributed in commerce for personal use or consumption by an individual. (42 U.S.C. 6291(1)) As such, the design of an electric spa heater is sufficient to determine whether the product is a covered consumer product; coverage does not hinge on how the product is marketed. For this reason, DOE is not incorporating the language suggested by the CA IOUs in the definition of “electric spa heater” in this final rule.
Hayward suggested that DOE define pool heaters by technology (
In response the suggestion from Hayward, DOE notes that EPCA provides that product classes shall be defined if the Secretary determines that covered products with the class consume a different kind of energy from that consumed by other covered products within such type (or class); or have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard from that which applies (or will apply) to other products within such type (or class). (42 U.S.C. 6295(q)(1)) Accordingly, DOE is adopting separate definitions and analyzed different energy conservation standards for gas-fired and electric pool heaters, which consume different kinds of energy. However, among the technologies listed by Hayward that consume electricity, DOE was unable to identify, nor did Hayward suggest, a correlation between technology type and capacity or other performance-related feature that would constitute a “feature” under 42 U.S.C. 6295(q)(1). Therefore, DOE is declining to additionally define consumer pool heater products by technology type.
In the April 2022 NOPR, DOE proposed a definition for output capacity along with equations for its calculation for electric pool and spa heaters to be incorporated in the consumer pool heaters test procedure at appendix P. The proposed calculation for output capacity for an electric pool or spa heater utilizes measurements already taken for other calculations in appendix P and therefore DOE would not consider the provision to result in any additional test procedure burden. 87 FR 22640, 22656. DOE proposed to define output capacity for electric pool and spa heaters as follows:
DOE proposed separate equations for the calculation of output capacity of an electric resistance pool heater and electric heat pump pool heater. 87 FR 22640, 22656. For electric pool heaters that rely on electric resistance heating elements, DOE proposed that the output capacity be calculated as:
DOE proposed that the output capacity of an electric pool heater that uses heat pump technology be calculated as:
DOE did not receive any comments pertaining to the definition and calculations for output capacity proposed in the April 2022 NOPR and therefore will adopt them, as proposed, in this final rule.
In the April 2022 NOPR, DOE tentatively determined that the creation of a separate product class for heat pump pool heaters with cooling capability was not necessary, and requested comment on its assumption that electric pool heaters with cooling capabilities do not suffer diminished efficiency performance in heating mode. 87 FR 22640, 22655-22656.
Responding to the April 2022 NOPR, Hayward commented that heat pump pool heaters with heating and cooling need to have some efficiency offset to accommodate additional system components that affect efficiency in heating mode; the alternatives to heat pumps with cooling include evaporative coolers, which consume both energy and water, and are not currently regulated by DOE. (Hayward, No. 17 at p. 1) AHRI and PHTA stated that the efficiency and performance for a heat pump with cooling capabilities should be evaluated independently, as the pressure drop from the reversing valve could have negative impacts on overall performance compared to a similar model without cooling capabilities. (AHRI and PHTA, No. 20 at p. 3) Hayward commented that heat pump pool heaters that have both heating and cooling capabilities suffer diminished efficiency performance in heating mode due to pressure drops from the reversing valve and heat exchanger designs. Therefore, Hayward argued that the standards for heat pumps with heating and cooling should be lower than those for heating-only heat pumps. (Hayward, No. 17 at p. 3) Rheem stated that its heat pump pool heaters with cooling capability experience minimal effect on efficiency performance when in heating mode, but any difference is captured in performance ratings. (Rheem, No. 19 at p. 3)
DOE's market assessment performed for this rulemaking included both heating-only and heating- and cooling-capable consumer pool heaters. Of the models DOE identified, differences in COP are negligible between the heating- and cooling-capable pool heaters and the heating-only pool heaters. As such, DOE maintains that the creation of a separate product class for heat pump pool heaters with cooling capability is not warranted and does not establish one in this final rule.
In the April 2022 NOPR, DOE identified nine technology options for electric pool heaters and eight technology options for gas-fired pool heaters that would be expected to improve the efficiency as measured by DOE test procedure. 87 FR 22640, 22656-22657. Table IV.1 below lists all technology options identified.
In the April 2022 NOPR, DOE discussed comments it received from interested parties requesting the Department consider fan motor improvements as a technology option to improve efficiency at multiple load conditions. DOE noted that these improvements are unlikely to yield improvements because heat pump pool heaters operate at full capacity to satisfy the call for heat. Heat pump pool heaters on the market use permanent split capacitor (“PSC”) motors and do not currently utilize brushless permanent magnet (“BPM”) fan
Responding to the April 2022 NOPR, Fluidra stated it generally agreed with the technology options analyzed. (Fluidra, No. 18 at p. 2) Hayward suggested consideration of modulating heaters, as they can provide both improved efficiency and a better user experience, and recommended further analysis on average energy or part load energy consumption to provide credit for variable-capacity (modulating) pool heaters. (Hayward, No. 17 at pp. 4-5) Hayward added that variable-capacity heat pump pool heaters and gas-fired pool heaters, which would allow for efficiency calculations at part loads, should be considered for additional efficiency levels. Hayward also suggested that a variable-capacity heat pump pool heater would constitute a new max-tech electric pool heater efficiency level, and a variable-capacity gas-fired pool heater would fall between 84-percent and 95-percent thermal efficiency. (Hayward, No. 17 at p. 2) Conversely, AHRI and PHTA stated that their testing shows variable-speed fans have minimal impact on heat pump efficiency, and that the current efficiency metric does not benefit from variable-capacity equipment. In addition, these commenters noted that variable-capacity equipment will have higher standby mode and off mode losses. (AHRI and PHTA, No. 20 at p. 4)
Rheem stated that fan motor efficiency improvements will affect only the active mode testing in the current DOE test procedure. Rheem noted that the current DOE test procedure does not address part-load efficiency, which could be improved with fan motor efficiency (
In order for a given technology to be considered a technology option by DOE for the purposes of evaluating potential new or amended energy conservation standards, the technology must be expected to improve the efficiency or energy consumption as measured by DOE test procedure. Appendix P does not capture part-load performance; therefore, DOE is unable to determine the efficiency impacts of modulating heaters or variable-capacity heat pumps for consumer pool heaters. Thus, DOE did not evaluate either of these technologies as a technology option for this final rule.
In response to the comment from Hayward, DOE acknowledges that the energy consumed by the fan motor is generally smaller than that of the compressor in an electric heat pump water heater. However, DOE agrees with Rheem that improvements in fan motor efficiency will improve the efficiency of a consumer pool heater as measured by appendix P and, therefore, continued to consider fan motor improvements as part of the general fan improvements technology option for this final rule. As discussed in section III.C of this document, DOE may consider comments related to part-load efficiency provisions in appendix P in its next test procedure rulemaking for consumer pool heaters.
In summary, DOE retains the same list of technology options from the April 2022 NOPR in this final rule. After considering all identified potential technology options for improving the efficiency of consumer pool heaters, DOE performed the screening analysis (see section IV.B of this document and chapter 4 of the final rule TSD) on these technologies to determine which were considered further in the final rule analysis.
DOE uses the following four screening criteria to determine which technology options are suitable for further consideration in an energy conservation standards rulemaking:
(1)
(2)
(3)
(4)
(5)
In sum, if DOE determines that a technology, or a combination of technologies, fails to meet one or more of the listed five criteria, it will be excluded from further consideration in the engineering analysis. The reasons for eliminating any technology are discussed in the following sections.
The subsequent sections describe DOE's evaluation of each technology option against the screening analysis criteria, and whether DOE determined that a technology option should be excluded (“screened out”) based on the screening criteria.
In the April 2022 NOPR, DOE proposed eliminating condensing pulse combustion from its analysis, having tentatively determined that this technology option is not technologically feasible and not practicable to manufacture, install, and service. DOE stated that, although condensing pulse combustion technology shows promising results in increasing efficiency, it has not yet penetrated the consumer pool heater market, and similar efficiencies are achievable with other technologies that have already been introduced on the market. 87 FR 22640, 22657. BWC agreed with screening out condensing pulse combustion technology. (BWC, No. 12 at p. 2) For the reasons stated, DOE screened out the condensing pulse combustion technology option in the final rule analysis. Although condensing pulse combustion technology shows promising results in increasing efficiency, it has not yet penetrated the consumer pool heater market, and similar efficiencies are achievable with
Through a review of each technology, DOE concludes that all of the other identified technologies listed in section IV.B.2 of this document met all five screening criteria to be examined further as design options in DOE's final rule analysis. In summary, DOE did not screen out the following technology options shown in Table IV.2:
BWC agreed that the technology options identified by DOE in Table IV.2 of the April 2022 NOPR (which are the same as those retained for this final rule) are comprehensive and appropriate in assessing gas-fired pool heaters, although many of the retained technologies are unlikely to lead to significant overall energy efficiency improvements for these consumer pool heaters. (BWC, No. 12 at p. 2)
DOE determined that these technology options are technologically feasible because they are being used or have previously been used in commercially-available products or working prototypes. DOE also found that all of the remaining technology options meet the other screening criteria (
The purpose of the engineering analysis is to establish the relationship between the efficiency and cost of consumer pool heaters. There are two elements to consider in the engineering analysis; the selection of efficiency levels to analyze (
DOE typically uses one of two approaches to develop energy efficiency levels for the engineering analysis: (1) relying on observed efficiency levels in the market (
In this final rule, DOE relied on the efficiency-level approach. Efficiency levels for electric pool heaters were initially identified in the October 2015 NODA based on a review of products on the market and then revised in the April 2022 NOPR. DOE applied the same analytical approach for the efficiency analysis of gas-fired pool heaters in the April 2022 NOPR. 87 FR 22640, 22658.
As discussed in the April 2022 NOPR, the efficiency-level approach enabled DOE to identify incremental improvements in efficiency resulting from design options that consumer pool heater manufacturers already incorporate in commercially available models. 87 FR 22640, 22658. However, as of this final rule, manufacturers have not yet begun publishing ratings in terms of TE
The TE
To account for this, in the April 2022 NOPR, DOE developed efficiency levels in which the TE
In response to the April 2022 NOPR, Hayward argued that standards for heat pump and gas-fired pool heaters should be strictly focused on thermal efficiency and not include standby power. Hayward suggested that standby mode power could be considered in a future revision when these other requirements are more mature and understood. (Hayward, No. 17 at p. 2) Rheem stated the methodology used to estimate standby energy use was appropriate. Rheem also supported the use of the integrated thermal efficiency metric as it would allow manufacturers to make tradeoffs between active mode, standby mode, and off mode energy use regarding the overall efficiency and other features. (Rheem, No. 19 at p. 6) BWC agreed with the Department's estimates for standby mode and off mode power consumption for gas-fired pool heaters, as well as the assertion that this energy consumption accounts for a very small amount of the total overall annual energy use for such products, and will not increase with higher input products. (BWC, No. 12 at p. 3)
DOE notes first that EPCA requires that any final rule for new or amended energy conservation standards promulgated after July 1, 2010, must address standby mode and off mode energy use, (42 U.S.C. 6295(gg)(3)), in that when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into a single standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)). The TE
For this final rule, DOE revisited market energy efficiency distributions (see chapter 3 of the final rule TSD) and performed another round of manufacturer interviews (see section IV.J.3 of this document) to determine that the same efficiency levels from the April 2022 NOPR remain representative of the current consumer pool heater market. The following subsections detail the baseline, intermediate, and max-tech efficiency levels addressed in this final rule. Further discussion can be found in chapter 5 of the final rule TSD.
For each product class, DOE generally selects a baseline model as a reference point for each class, and measures changes resulting from potential energy conservation standards against the baseline. The baseline model in each product class represents the characteristics of a product typical of that class (
DOE uses the baseline model for comparison in several analyses, including the engineering analysis, LCC analysis, PBP analysis, and NIA. To determine energy savings that will results from a new or amended energy conservation standard, DOE compared energy use at each of the higher energy efficiency levels to the energy consumption of the baseline unit. Similarly, to determine the change sin price to the consumer that will result from an amended energy conservation standard, DOE compares the price of a baseline unit to the price of a unit at each higher efficiency level.
For gas-fired pool heaters, DOE analyzed a baseline efficiency level corresponding to a product which is minimally compliant with the current standard (82-percent E
For electric pool heaters, DOE analyzed a baseline efficiency level corresponding to electric resistance heating, which was found to be the least efficient electric pool heater design on the market. Table IV.4 depicts the baseline efficiency level for electric pool heaters analyzed for the April 2022 NOPR and this final rule.
BWC believed that the baseline efficiency levels established in the April 2022 NOPR were appropriate based on the DOE test procedure for these products. (BWC, No. 12 at p. 2)
DOE did not receive any other comments specifically on the baseline efficiency levels proposed in the April 2022 NOPR. Comments relating to energy use in standby mode and off mode power, which factor into the baseline TE
Additional details on the selection of baseline models and the development of the baseline efficiency equations may be found in chapter 5 of the final rule TSD.
As part of DOE's analysis, the maximum available efficiency level is the highest efficiency unit currently available on the market. DOE also defines a “max-tech” efficiency level to represent the maximum possible efficiency for a given product. For consumer pool heaters, the max-tech efficiency levels are achieved by gas-fired pool heaters that utilize condensing technology and by electric pool heaters that utilize heat pump technology.
As discussed in section IV.C.1 of this document, efficiency levels for electric pool heaters were initially analyzed in the October 2015 NODA. DOE requested comment on these efficiency levels and reviewed stakeholder feedback in the April 2022 NOPR. In response to that feedback, DOE incorporated additional design options in the April 2022 NOPR to decrease the standby mode and off mode energy consumption at the max-tech levels and to further improve TE
Between the baseline efficiency level and the max-tech efficiency level, DOE analyzed several intermediate higher efficiency levels for gas-fired pool heaters and electric pool heaters in the April 2022 NOPR. 87 FR 22640, 22659-22660. These efficiency levels, and corresponding major design options to achieve these efficiency levels, are shown in Table IV.5 through Table IV.8. As discussed in this section, the Department is using these efficiency levels and design options for this final rule analysis.
The April 2022 NOPR requested comment on the proposed efficiency levels above the baseline and the typical technological changes associated with each efficiency level. 87 FR 22640, 22663.
In response, the Joint Advocates encouraged DOE to consider additional efficiency levels for both electric and gas-fired pool heaters that include designs employing seasonal off switches and switch mode power supplies. The Joint Advocates suggested that adding seasonal off switches would increase energy savings with minimal cost, and cited State regulations for heat pump pool heaters in California, Connecticut, and Florida which already require an off switch mounted on the pool heater that permits shutoff without adjusting the thermostat. The Joint Advocates commented that the proposed standard levels should be adjusted to include seasonal off switches and/or a switch mode power supply and that the analysis include the reduced standby mode and off mode energy consumption associated with the use of these technology options. (Joint Advocates, No. 13 at pp. 2-3) Similarly, the CA IOUs recommended that DOE consider incorporating the assumption that all consumer pool heaters are equipped with a seasonal off switch and updating the efficiency levels as appropriate. The CA IOUs indicated that heat pump pool heaters certified in the California Energy Commission's Modernized Appliance Efficiency Database System (“MAEDbS”) all have an on/off switch as California's Appliance Efficiency Regulations (Title 20) adopted this as a prescriptive design requirement for all consumer pool heaters sold in the state. CA IOUs suggested that the seasonal off switch would be a cost effective means for many models to reach the EL 4 level without needing to redesign for a higher COP. (CA IOUs, No. 16 at pp. 3-5)
AquaCal suggested that the proposed efficiency level for electric pool heaters was more stringent, in terms of relative level of technological advancement required, than that for gas-fired pool heaters. AquaCal recommended DOE should consider proposing efficiency levels that are more comparable, in terms of the relative level of technological advancement required, for electric and gas-fired pool heaters. (AquaCal, No. 11 at p. 1) However, as results have shown, the benefits and burdens for higher efficiency levels of gas-fired pool heaters are not equivalent to the benefits and burdens for higher efficiency levels of electric pool heaters, and DOE accounts for this when constructing TSLs.
Rheem generally supported the technology changes associated with each efficiency level. However, Rheem stated that the off-mode energy use may not actually be zero when there is a seasonal off switch, and the commenter recommended DOE either amend appendix P to require that any non-zero off mode energy use be measured or provide clarification on whether seasonal off switches with non-zero off mode energy use meet the definition of a seasonal off switch within appendix P. (Rheem, No. 19 at pp. 4-5)
Section 1.7 of appendix P defines “off mode” as the condition during the pool non-heating season in which the consumer pool heater is connected to the power source, and neither the main burner, nor the electric resistance elements, nor the heat pump is activated, and the seasonal off switch, if present, is in the “off” position. Section 1.8 defines “seasonal off switch” as a switch that results in different energy consumption in off mode as compared to standby mode. Thus, there is no requirement for a seasonal off switch to result in a measured energy consumption of zero in off mode in order to meet the definition in section 1.8 of appendix P. However, feedback from manufacturers and DOE's own testing has led the Department to conclude that 0 watts is a representative value for P
DOE reviewed the regulations and building codes in California,
AHRI and PHTA stated that a unit disconnect is required in these installations, and this typically functions as the off switch. AHRI and PHTA opposed using seasonal off switches at lower efficiency levels in DOE's analysis. (AHRI and PHTA, No. 20 at p. 3)
As such, it is unclear whether manufacturers are responding to State mandates for “readily accessible on-off switches” by introducing seasonal off switches which meet DOE's definition in appendix P.
DOE agrees that seasonal off switches and switch mode power supplies can improve the TE
Furthermore, the CA IOUs suggested increasing the max-tech efficiency level for electric pool heaters, given the presence of such products with AHRI-certified COP values that exceed the max-tech COP level analyzed in the April 2022 NOPR. (CA IOUs, No. 16 at pp. 4-5) In response to this, DOE notes that it evaluated the efficiencies of electric pool heaters on the basis of the TE
The Department also received comments regarding the efficiency levels chosen for analysis of gas-fired pool heaters. The Joint Advocates urged DOE to evaluate an efficiency level for gas pool heaters with an active mode thermal efficiency of 85 percent. The Joint Advocates claimed that there exist non-condensing gas-fired products from multiple manufacturers with 85-percent thermal efficiency at capacities ranging from 150,000 to 750,000 Btu/h, which can be found in DOE's Compliance Certification Database (“CCD”) and MAEDbS. (Joint Advocates, No. 13 at p. 2) AHRI and PHTA, by contrast, claimed that the current Efficiency Level 2 (“EL 2”) (corresponding to an active mode E
AHRI and PHTA, along with the Gas Associations, encouraged DOE to adopt a standard based on a thermal efficiency of 83 percent to avoid venting re-configurations due to this potential condensing operation that could occur at the proposed standard that corresponds to 84-percent thermal efficiency. (AHRI and PHTA, No. 20 at pp. 2 and 5; Gas Associations, No. 15 at p. 2) Fluidra provided similar comments, indicating that 84-percent thermal efficiency is too close to the functional limit for non-condensing gas-fired pool heaters, and suggesting that the standard should be set at a level which corresponds to a thermal efficiency of 83 percent in order to ensure a margin of efficiency is used to prevent new products from operating in condensing mode when installed as a non-condensing product. They noted this approach would minimize disruption to consumers and industry by increasing the minimum thermal efficiency, while allowing adequate transition time for gas-fired pool heaters to reach EL 3 in the future. (Fluidra, No. 18 at pp. 1-2) At the NOPR public meeting, DOE also received comments that 84 percent is the threshold of condensing operation, and any thermal efficiency higher than 84 percent would inevitably result in condensation. (Pentair, Public Meeting Transcript, No. 9 at pp. 5-6)
In manufacturer interviews since the April 2022 NOPR, stakeholders have elaborated that at an 84-percent E
Given these considerations, DOE did not consider an efficiency level of 85-percent E
Although several parties indicated that near-condensing operation is also an issue at 84-percent E
Rheem and AHRI and PHTA stated that copper and cupronickel heat exchangers are not suitable for condensing operation because they are not resistant to the corrosion from condensate and thus should not be considered for EL 3. (Rheem, No. 19 at pp. 4-5; AHRI and PHTA, No. 20 at p. 5) In response, DOE notes that it observed condensing cupronickel-based pool heaters in its teardown analysis.
Fluidra also commented that gas-fired pool heaters at EL 0 and EL 1, which were based on a model with 82-percent E
Hayward suggested that DOE analyze additional efficiency levels for both gas-fired pool heaters and electric pool heaters with variable-capacity technologies (
AquaCal claimed that the EL 4 level chosen by DOE for electric pool heaters, while possible to achieve, only represents 10 percent of the existing market because of the price increase for products at that level of efficiency. (AquaCal, No. 11 at p. 1) EL 4 for electric pool heaters corresponds to a COP of 6.0 or an E
With respect to the description of technologies implemented at higher efficiency levels for electric pool heaters, AHRI and PHTA stated that the description for EL 1 is too specific for the heat exchanger and does not account for a wide variety of heat exchanger technologies on the market at this level. (AHRI and PHTA, No. 20 at p. 5)
In the initial October 2015 NODA engineering analysis, DOE associated straight titanium tube coils in submerged water tanks as the main heat exchanger type for achieving a TE
DOE reiterates its assertion in the April 2022 NOPR that its association of specific technology options with efficiency levels is based on observed designs in commercially available products, and that the Department does not assume
AHRI and PHTA stated that the descriptions for electric pool heaters at EL 2 to EL 4 are too simple, and that other designs must be implemented beyond increased evaporator surface area, such as increased condenser surface area. AHRI and PHTA requested more information from DOE regarding how the measured efficiency increases articulated in the different ELs were derived via the increased evaporator surface area and urged DOE to consider the impacts of reduced standby mode and off mode energy consumption. AHRI and PHTA also encouraged DOE to investigate the impact on efficiency levels due to the required change in refrigerants. (AHRI and PHTA, No. 20 at p. 5)
To clarify, efficiency increases for heat pump pool heaters were not numerically derived: DOE conducted teardown analyses on products which were rated at these efficiency levels and observed that the designs differed by evaporator surface area. This trend was verified through teardowns of multiple samples spanning a range of efficiencies. DOE did not observe condenser coil increases to contribute to intermediate efficiency levels across all manufacturers' designs. Specifically, several condenser coil lengths were observed for products meeting similar efficiencies, and vice-versa: similar condenser coil lengths were observed for products meeting different intermediate efficiencies. This would indicate that manufacturers did not rely on this design option to improve efficiency. The only case where DOE observed significant increases in condenser length and coil diameter was in the model representing the max-tech efficiency level. Thus, DOE determined that condenser coil improvements are necessary to achieve EL 5.
In response to AHRI and PHTA's request for DOE to consider the impact of standby mode and off mode energy consumption, DOE notes that its estimated typical standby mode and off mode energy consumption values for the engineering analysis do not mandate that manufacturers must meet these values in order to comply with potential standards. Because TE
With respect to changes in refrigerant, products torn down by DOE utilized R-410A refrigerant. While several low-GWP replacements for R-410A, such as R-441A, R-290, and R-32, are currently being developed and implemented in other refrigeration-based consumer products, that refrigerant changeover is being driven in part by regulations such as those in California. Consumer pool heaters are not subject to those regulations at this time and thus the consumer pool heater market has not yet experienced a similar shift to other refrigerants. Moreover, commenters did not provide any specifics for replacement refrigerants that DOE should consider during manufacturer interviews. As such, DOE assumes that manufacturers will opt to continue to use R-410A refrigerant as long as possible, and thereafter use drop-in replacements using an alternative refrigerant wherever feasible to limit product and capital conversion costs. Because these drop-in replacements have not been taken up by the consumer pool heater market at this time, it is uncertain what the MPC of an alternative refrigerant system would be, nor whether there would be efficiency impacts. Therefore, DOE maintained R-410A as the basis for heat pump pool heater efficiency levels and MPCs in this final rule.
Further details of the efficiency analysis are found in chapter 5 of the final rule TSD.
The cost analysis portion of the engineering analysis is conducted using one or a combination of cost approaches. The selection of cost approach depends on a suite of factors, including the availability and reliability of public information, characteristics of the regulated product, the availability and timeliness of purchasing the product on the market. The cost approaches are summarized as follows:
•
•
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At the start of the engineering analysis, DOE identified the energy efficiency levels associated with consumer pool heaters on the market using data gathered in the market assessment. DOE also identified potential technologies and features that are typically incorporated into products at the baseline level and at the various efficiency levels analyzed above the baseline. Next, DOE selected products for a physical teardown analysis having characteristics of typical products on the market at the representative capacity and used these teardowns to verify technology options implemented at each efficiency level. DOE chose a representative size of 250,000 Btu/h input capacity for gas-fired pool heaters and 110,000 Btu/h output capacity for electric pool heaters. As explained in the April 2022 NOPR, DOE selected these representative capacities based on the number of available models on the market and by referencing a number of sources, including information collected for the market and technology assessment, as well as information obtained from product literature. DOE then sought feedback on the representative capacities during confidential manufacturer interviews. 87 FR 22640, 22664. DOE gathered information from performing a physical teardown to create detailed bills of materials (“BOMs”), which included all components and processes used to manufacture the products. The resulting BOMs provide the basis for the MPC estimates. MPCs are estimated spanning the full range of efficiencies from the baseline to the maximum technology available. For this rulemaking, DOE held interviews with manufacturers to gain insight into the consumer pool heater industry and to request feedback on the engineering analysis presented in the April 2022 NOPR. DOE used the information gathered from these interviews, along with the data obtained through teardown analysis and insights from public stakeholder comments, to refine its MPC estimates.
To assemble BOMs and to calculate the manufacturing costs for the different components in consumer pool heaters, DOE primarily relied upon physical teardowns. Using the data gathered from the physical teardowns, DOE characterized each component according to its weight, dimensions, material, quantity, and the manufacturing processes used to fabricate and assemble it. DOE also used catalog teardowns to supplement physical teardown data. For the catalog teardowns DOE examined published manufacturer catalogs and supplementary component data to estimate the major physical differences (such as dimensions, weight, design features) between a product that was physically disassembled and a similar product that was not.
The teardown analysis allowed DOE to identify the technologies that manufacturers typically incorporate into their products, along with the efficiency levels associated with each technology or combination of technologies. The BOMs from the teardown analysis were then used as inputs to calculate the MPC for each product that was torn down. These individual model MPCs take into account the cost of materials, fabrication, labor, overhead, depreciation, and all other aspects that make up a production facility.
Fluidra claimed that product pricing has gone up year over year since the initial 2015 analysis, and component shortages over the last few years have had a significant cost impact to both manufacturers and consumers due to decrease of supply and increase of demand. Fluidra stated that due to the smaller economy of scale for the consumer pool heater market, price breaks for volume are not as large as other heating, ventilation, and air-conditioning equipment. (Fluidra, No. 18 at p. 3)
DOE collected information on labor rates, tooling costs, raw material prices, and other factors as inputs to the cost estimates. For fabricated parts, the prices of raw metal materials
The MPCs resulting from the teardowns were used to develop an industry average MPC for each efficiency level of each product class analyzed.
For gas-fired pool heaters, DOE's industry average MPCs reflect a weighted average of costs for gas-fired pool heaters which use different heat exchanger materials (
In response to the April 2022 NOPR, Hayward claimed that the fraction of cupronickel heat exchangers in the market would likely be reduced as a result of amended standards, but not to zero. (Hayward, No. 17 at p. 4) AHRI and PHTA, stated that amended standards would greatly reduce the number of products available on the market, and this would in turn drive a large number of redesigns requiring cupronickel heat exchangers. (AHRI and PHTA, No. 20 at p. 6)
Given the uncertainty in the outlook for copper versus cupronickel heat exchangers in an amended standards case scenario, DOE maintained its approach to assume that these fractions would remain the same as they are currently.
To account for manufacturers' non-production costs and profit margin, DOE applies a multiplier (the manufacturer markup) to the MPC. The resulting manufacturer selling price (“MSP”) is the price at which the manufacturer distributes a unit into commerce. To meet new or amended energy conservation standards, manufacturers typically redesign their baseline products. These design changes typically increase MPCs relative to those of previous baseline MPCs. Depending on the competitive environment for these particular products, some or all of the increased production costs may be passed from manufacturers to retailers and eventually to customers in the form of higher purchase prices. As production costs increase, manufacturers may also incur additional overhead (
The manufacturer markup has an important bearing on profitability. A high markup under a standards scenario suggests manufacturers can readily pass along the increased variable costs and some of the capital and product conversion costs (the one-time expenditures) to consumers. A low markup suggests that manufacturers will have greater difficulty recovering their investments, product conversion costs, and/or incremental MPCs.
In the April 2022 NOPR analysis, DOE used a manufacturer markup of 1.33 for gas-fired pool heaters and a manufacturer markup of 1.28 for electric pool heaters. DOE conducted interviews with manufacturers after the publication of the April 2022 NOPR, during which several manufacturers stated the estimated manufacturer markup for each product class of consumer pool heaters used in the NOPR analysis were lower than their manufacturer markup for those products. Based on these additional inputs, DOE revised its markup calculations for this final rule, increasing the gas-fired pool heater manufacturer markup from 1.33 used in the April 2022 NOPR analysis to 1.44 and increasing the electric pool heater manufacturer markup from 1.28 used in the April 2022 NOPR analysis to 1.39.
See chapter 12 of the final rule TSD for more details about the manufacturer markup calculation.
The results of the engineering analysis are reported as cost-efficiency data (or “curves”) in the form of TE
The markups analysis develops appropriate markups (
For consumer pool heaters, the main parties in the distribution chain are: (1) manufacturers; (2) wholesalers or distributors; (3) pool contractors; (4) pool retailers; (5) buying groups;
For the NOPR, DOE characterized how pool products pass from the manufacturer to residential and commercial consumers
The distribution channels for installation of consumer pool heaters in a new swimming pool or spa are characterized as follows:
Lochinvar stated that the distribution channels for pool heaters sold for commercial applications are similar to those used in commercial packaged boiler and commercial water heater rulemakings. (Lochinvar, No. 2 at p. 2) Lochinvar did not provide specific fractions of shipments for each distribution channel. For the final rule analysis, DOE estimated that half of consumer pool heaters installed in commercial applications would use similar distribution channels to commercial packaged boilers and commercial water heaters (Manufacturer → Wholesaler → Mechanical Contractor → Consumer for replacements and new owners; and Manufacturer → Wholesaler → Mechanical Contractor → General Contractor → Consumer for new swimming pool construction),
Rheem and BWC stated that the distribution channels appear appropriate. Rheem also noted that the market share through each distribution channel may change from manufacturer to manufacturer. BWC noted that, however, in the residential distribution channel there are circumstances where a product passes from a retailer to a contractor before the consumer takes possession of the product and that, in the commercial distribution channel, there are scenarios where a wholesaler never takes ownership of the pool heater prior to it being installed. (Rheem, No. 19 at p. 5; BWC, No. 12 at p. 3) Additionally, AHRI and PHTA stated that the share of products moving through each channel is a constantly moving target. (AHRI and PHTA, No. 20 at p. 6)
In response to Rheem's and AHRI and PHTA comment, DOE uses PKdata to estimate the distribution channel market shares, which account for variability of the market shares for each manufacturer. In response to BWC comments, for this final rule DOE added a distribution channel to account for the cases when the product passes from a retailer to a contractor to customer, without involving a wholesaler. For commercial pool heater applications, DOE already takes into account “national accounts”, where the wholesaler never takes ownership of the pool heater prior to it being installed. For the final rule, DOE updated its distribution channel market shares by using the latest PKdata available.
AHRI and PHTA noted that there would be a slight difference between the distribution channels for gas fired pool
As stated previously, DOE uses the latest PKData data available to estimate the distribution channel market shares which is not disaggregated by gas-fired pool heaters and heat pump pool heaters. At this time, DOE does not have data to account for slight differences between the distribution channels for gas fired pool heaters and heat pump pool heaters.
DOE developed baseline and incremental markups for each actor in the distribution chain. Baseline markups are applied to the price of products with baseline efficiency, while incremental markups are applied to the difference in price between baseline and higher-efficiency models (the incremental cost increase). The incremental markup is typically less than the baseline markup and is designed to maintain similar per-unit operating profit before and after new or amended standards.
To estimate average baseline and incremental markups, DOE relied on several sources, including: (1) form 10-K from U.S. Securities and Exchange Commission (“SEC”) for Pool Corp (pool wholesaler)
In addition to the markups, DOE obtained state and local taxes from data provided by the Sales Tax Clearinghouse.
Chapter 6 of the final rule TSD provides details on DOE's development of markups for consumer pool heaters.
The purpose of the energy use analysis is to determine the annual energy consumption of consumer pool heaters at different efficiencies in representative U.S. single-family homes, multi-family residences, and commercial buildings, and to assess the energy savings potential of increased consumer pool heaters efficiency. The energy use analysis estimates the range of energy use of consumer pool heaters in the field (
DOE created individual consumer samples for seven pool heater market types: (1) pool heaters in single family homes that serve a swimming pool only (pool type 1); (2) pool heaters in single family homes that serve both a swimming pool and spa (pool type 2); (3) pool heaters in single family homes that serve a spa only (pool type 3);
For the NOPR, DOE used the EIA's 2015 Residential Energy Consumption Survey (“RECS 2015”) to establish a sample of single family homes that use an electric or gas-fired pool heater in a swimming pool or spa or both.
BWC suggested that DOE utilize the CBECS 2018 and RECS 2020 to update its analysis for gas-fired pool heaters. (BWC, No. 12 at p. 2) AHRI and PHTA requested that DOE review and incorporate the latest RECS data as data from 2009 is not a valid basis for today's market. (AHRI and PHTA, No. 20 at pp. 8-9)
The energy consumption and expenditures data for RECS 2020 and CBECS 2018 were not yet available at the time the final rule analysis was performed. Only the housing characteristics data were available. As a result, DOE continued to rely on the RECS 2015 and CBECS 2012 energy consumption and expenditures data to develop its energy use analysis. For this final rule, DOE did use the RECS 2020 and CBECS 2018 stock and housing characteristics by state to update the sample weighting and shipments analysis. It also updated the sample weighting factors using the latest swimming pool and spa data from PKdata.
AHRI and PHTA also noted that the analysis does not consider second or vacation rental homes with pools and spas that utilize pool heaters that will operate only when the home is occupied. (AHRI and PHTA, No. 20 at pp. 6-7)
DOE notes that such homes are not part of RECS, which only considers occupied housing units. U.S. Census American Housing Survey (AHS) does include second or vacation rental homes. The 2015 AHS shows that there are about half a million such units which have swimming pools or spas. A fraction of these likely include a pool heater. DOE notes that a fairly large fraction of these units are rented out and likely have significant pool and spa usage, since this is seen as a valuable feature for these rentals.
Table IV.11 shows the estimated weights for the samples of electric pool heaters and gas-fired pool heaters by the seven pool heater market types. See chapter 7 of the final rule TSD for more details about the creation of the samples and the regional breakdowns.
For the NOPR, DOE's energy use analysis was based on all available data including RECS 2015,
For each household or building with a consumer pool heater, DOE matched the pool heating load to the sampled swimming pool based on household or building geographical location and an assumption of whether the pool is covered or not. DOE then used the pool heating load together with the consumer pool heater output
For heat pump pool heaters, DOE accounted for the potential increase in pump electricity use due to longer operating hours of these products (see discussion). For heat pump pool heaters, to account for variations of output capacity, input capacity, and COPs observed in the field, DOE
Rheem stated that they appreciated DOE's efforts to adjust pool operating hours by geographical location using RECS data. Rheem recommended expanding this information by using heating degree days or a similar approach to more finely predict pool operating hours throughout the United States. (Rheem, No. 19 at p. 6) BWC expressed concerns about DOE conducting its analysis with the assumption that (gas-fired) pool heaters run approximately 190 hours per year. BWC stated that the figure is reliant on a number of installation-specific factors, including the size of the pool being heated, whether the pool is located indoors or outdoors, and the type of application the pool heater is installed in. BWC recommended that DOE utilize the most recently available data to learn more about where these products are often installed and to recalculate an average run time for each common installation for the purposes of this rulemaking. (BWC, No. 12 at p. 3) AHRI and PHTA stated that there are many factors that can cause a large variance in operating hours including geographic location and use preference. (AHRI and PHTA, No. 20 at p. 7) Hayward stated that there are many factors that come into play when determining pool heater hours of operation that can cause a large variance in hours including geographic location and use preference. (Hayward, No. 17 at p. 5)
DOE notes that the operating hours vary significantly based on several factors including geographic location (which accounts for ambient temperature conditions), consumer preference in terms of pool or spa usage (limited usage to year-round usage), installation location (indoor vs. outdoor pools), application (swimming pool only, spa only, swimming pool and spa using the pool heater), market segment (residential and commercial applications), and whether a pool cover is used, etc. Also, operating hours are driven by the output capacity of the pool heater. For this final rule analysis, DOE improved its sizing methodology to match PKdata swimming pool sizing data and assigned appropriate pool heater output capacity sizes for each assumed swimming pool and/or spa size. The NOPR analysis assigned only two sizes, one for residential (250 kBtu/h input capacity for gas-fired pool heaters and 110 kBtu/h output capacity for electric pool heaters) and one for commercial applications (500 kBtu/h input capacity for gas-fired pool heaters and 220 kBtu/h output capacity for electric pool heaters). The final rule analysis, expanded to all available model input capacities up to 2 MMBtu/hr for gas-fired pool heaters and 800 kBtu/h output capacity for heat pump pool heaters.
For residential applications, DOE's pool heating load calculations are based directly on the RECS 2015 energy use estimates, which show a significant variation between different household installations (see chapter 7 of the final rule TSD). To improve the energy usage by month DOE used typical pool heating load calculators for multiple locations around the country.
Rheem agreed with DOE's statement in section 7.3.3.3 of the TSD that burner operating hours in the field are much higher than assumed in the DOE test procedure which states (section 7.3.3.3) that electric pool heaters operate an estimated 353 hours per year but also stated that electric resistance and heat pump pool heaters have different annual operating hours. Rheem requested that electric resistance and heat pump pool heater hours of operation be separately provided. (Rheem, No. 19 at p. 6) Rheem and AHRI and PHTA both agreed that the heat pump pool heaters will have higher hours of operation than gas-fired pool heaters. (Rheem, No. 19 at p. 6, AHRI and PHTA, No. 20 at p. 7) Fluidra stated that the operating times for both electric and gas pool heaters vary widely based on geographical location, user preferences, and the difference in heating time between gas heaters and electric heaters and that, in general, heat pump pool heater run time hours are significantly higher than those of gas-fired pool heaters. (Fluidra, No. 18, p. 2)
For the final rule, DOE accounted for differences in operating hours for electric resistance, heat pump, and gas-fired pool heaters. As noted by stakeholders these differences account for geographical location, user preferences, and the difference in output capacity between electric and gas-fired pool heaters. In addition, DOE took into account differences between electric resistance vs. heat pump heaters. On average electric resistance pool heaters are used in installations with lower pool heating load compared to heat pump pool heaters (on average 9 MMBtu/yr for electric resistance vs. 15 MMBtu/yr for heat pump pool heaters). For heat pump pool heaters, DOE also considered that the output capacity varies by ambient air temperature conditions around the heat pump pool heater. In contrast, for electric resistance and gas-fired pool heaters, output is assumed to not vary with ambient temperature. See chapter 7 of the final rule TSD for more information and for disaggregated operating hours by pool heater type and application.
Rheem noted that many heat pump pool heaters can operate at various input rates depending on the ambient conditions and desired pool temperature. Rheem stated that DOE appears to have accounted for this somewhat in section 7.3.3.2 of the TSD by assigning an ambient condition to different geographical locations, however heating load can change between the various ambient conditions in the same geographical location within the same pool heating season. (Rheem, No. 19 at p. 6) AHRI and PHTA specifically requested information from the Department on how the outdoor air effects on heat pumps have been
For the NOPR, DOE accounted for heat pump pool heater differences in performance due to ambient temperatures by using the ambient temperature data to determine heat pump pool heater COP field values based on the geographical location of the sampled household. 87 FR 22640, 22670 For example, for EL 2 the weighted COPs by region are 5.44 for the Hot Humid region, 5.20 for the Warm region, and 3.76 for the Cold region. For this final rule, DOE improved its methodology by adding additional weather location data by assigned weather stations to refine its approach by estimating monthly field adjusted average COP values using ambient temperatures (see chapter 7 of the final rule TSD for more details).
Hayward stated that modulating heaters run considerably more hours (at lower capacity and higher efficiency) than their single speed counterparts. (Hayward, No. 17 at p. 5) Rheem added that conditions change throughout the pool heating season and part load or variable speed operation provides more control and allows the heat pump pool heater to adjust its output based on demand. (Rheem, No. 19 at p.4) Hayward recommended further analysis on average energy use or part load energy consumption to provide credit for dual or variable capacity products because at part load conditions, the efficiency of these units is improved significantly relative to single speed units (especially for heat pumps). Hayward stated that for modulating capacity appliances, the standby power should be reduced and the methodology should be reassessed to consider this new technology where the heater can be run longer at lower capacity (and higher efficiency). (Hayward, No. 17 at p. 5) AHRI and PHTA noted that operating hours can change for modulating units compared to single speed units. (AHRI and PHTA, No. 20 at p. 7)
DOE agrees that for certain applications modulating pool heaters could operate at increased operating hours, which would impact the electricity use and might increase the overall efficiency if the part load efficiency is greater than the full load efficiency. In contrast, longer operating hours could also lead to more electrical consumption if the pump and auxiliary equipment does not operate at a reduced wattage in the part-load or variable speed operation. DOE does not currently have test data and has not found any references to assess the part-load efficiency of modulating units (either heat pump or gas-fired equipment). DOE also notes that the current test procedure does not account for part-load efficiency. Overall, DOE at this time did not assess the energy use impact of modulating units compared to single speed units due to lack of data and uncertainty related to decreased or increased field fuel and electricity usage.
Rheem stated that the methodology used to measure standby energy use is appropriate. Rheem also noted that there are currently “seasonal off switches” which reduce power consumption as compared to standby mode, but that do not reduce the electrical power consumption to zero. (Rheem, No. 19 at p. 6) BWC also stated that it agrees with the Department's estimate of off mode and standby mode power consumption for gas-fired pool heaters and that off mode and standby mode power consumption for these products will not increase in products with higher inputs. (BWC, No. 12 at p. 3) AHRI and PHTA stated that for heat pump pool heaters and gas-fired pool heaters the overall standby hours will be different and that the off mode hours are essentially identical. (AHRI and PHTA, No. 20 at p. 7)
DOE agrees with the stakeholders input regarding standby and off-mode and did not change its standby and off mode analysis for the final rule.
Chapter 7 of the final rule TSD provides details on DOE's energy use analysis for consumer pool heaters.
DOE conducted LCC and PBP analyses to evaluate the economic impacts on individual consumers of potential energy conservation standards for consumer pool heaters. The effect of new or amended energy conservation standards on individual consumers usually involves a reduction in operating cost and an increase in purchase cost. DOE used the following two metrics to measure consumer impacts:
• The LCC is the total consumer expense of an appliance or product over the life of that product, consisting of total installed cost (manufacturer selling price, distribution chain markups, sales tax, and installation costs) plus operating costs (expenses for energy use, maintenance, and repair). To compute the operating costs, DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product.
• The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost at higher efficiency levels by the change in annual operating cost for the year that amended or new standards are assumed to take effect.
For any given efficiency level, DOE measures the change in LCC relative to the LCC in the no-new-standards case, which reflects the estimated efficiency distribution of consumer pool heaters in the absence of new or amended energy conservation standards. In contrast, the PBP for a given efficiency level is measured relative to the baseline product.
For each considered efficiency level in each product class, DOE calculated the LCC and PBP for a nationally representative set of consumers. As stated previously, DOE developed household samples primarily from the 2015 RECS and 2012 CBECS.
Inputs to the calculation of total installed cost include the cost of the product—which includes MPCs, manufacturer markups, retailer and distributor markups, and sales taxes—and installation costs. Inputs to the calculation of operating expenses include annual energy consumption, energy prices and price projections, repair and maintenance costs, product lifetimes, and discount rates. DOE created distributions of values for product lifetime, discount rates, and sales taxes, with probabilities attached to each value, to account for their uncertainty and variability.
The computer model DOE uses to calculate the LCC relies on a Monte Carlo simulation to incorporate uncertainty and variability into the analysis. The Monte Carlo simulations randomly sample input values from the probability distributions and consumer
Table IV.12 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations. The subsections that follow provide further discussion. Details of the spreadsheet model, and of all the inputs to the LCC and PBP analyses, are contained in chapter 8 of the final rule TSD and its appendices.
To calculate consumer product costs, DOE multiplied the MPCs developed in the engineering analysis by the markups described previously (along with sales taxes). DOE used different markups for baseline products and higher-efficiency products, because DOE applies an incremental markup to the increase in MSP associated with higher-efficiency products. Many 82-percent thermal efficiency (EL 0 and EL 1) gas-fired pool heaters without low-NO
Rheem stated that low NO
For the final rule, DOE increased the fraction of installations outside California, Utah, and Texas that have a low-NO
For the NOPR, DOE developed separate product price projections for baseline electric resistance pool heaters, heat pump pool heaters, and gas-fired pool heaters using shipment-weighted wholesaler listed prices from 2003-2019 from the 2020 Pkdata report.
AHRI and PHTA recommended that DOE reevaluate the price trends based on the current economic and supply chain challenges. (AHRI and PHTA, No. 20 at p. 7) Fluidra stated that the equipment pricing goes up year over year since the 2015 analysis. They added that electronic component shortages and electrification codes have had a significant cost impact to both manufacturers and consumers due to decrease of supply and increase of demand. Fluidra noted that the economy of scale for the pool industry compared to space heating HVAC is significantly smaller, therefore pool equipment manufacturers do not see the same price breaks for volume as other industries. (Fluidra, No. 18, p. 3)
DOE updated its analysis using the latest PKdata, which shows that since 2015 prices have been going up slightly for electric resistance, heat pump, and gas-fired pool heaters. In contrast, between 2003 and 2014 prices of this equipment had been decreasing. Given that it is uncertain to project what the commodity prices and economic and supply chain challenges will be in the future, DOE decided to use a constant price assumption as the default price factor index to project future pool heater prices for the final rule. DOE performed a sensitivity analysis on price trend as detailed in appendix 8C of the final rule TSD. Further details about the development of the price trends can be found in chapter 8 and appendix 8C of the final rule TSD.
Installation cost includes labor, overhead, and any miscellaneous materials and parts needed to install the product. DOE estimates all the installation costs associated with fitting a consumer pool heater in a new housing unit, as a replacement for an existing pool heater, or in an existing pool without a pool heater (new owners). This includes any additional costs, such as electric modifications that would be required to install equipment at various efficiency levels. Installation cost includes labor, overhead, and any miscellaneous materials and parts needed to install the product. DOE used data from RS Means 2022
Rheem recommends installations be performed by a licensed professional and that the installation must be in accordance with local codes, or, in the absence of local codes, with the latest edition of the National Fuel Gas Code, ANSI Z223.1/NFPA54 and National Electrical Code, ANSI/NFPA 70, and for Canada, the latest edition of CAN/CSA-B149 Installation Codes, and Canadian Electrical Code, CSA C22.1 Part 1 and Part 2. (Rheem, No. 19 at p. 7)
DOE's analysis assumes that pool heater installations are performed by licensed professionals and DOE's labor costs are for the appropriate crew type based on RS Means data.
For electric pool heaters, DOE accounted for the increased cost of additional electrical requirements for new swimming pool and new owner installations. For new electric pool heater owners (including owners of new swimming pools and owners of existing swimming pools), DOE assumed that an electric resistance pool heater would have higher electrical connection installation costs in comparison to the electrical requirements for a heat pump pool heater. For replacements in outdoor swimming pools, DOE assumed that the installation costs would be the same for all efficiency levels because the old consumer pool heater already has adequate electrical service for the new pool heater. For replacements in indoor installations, DOE assumed that they are all electrical resistance and that replacement with a heat pump pool heater would add a significant cost to run water piping and an electrical connection to outside the building, where the heat pump pool heater will be installed.
Rheem stated that for gas-fired pool heaters it supports the proposed EL 2 to the extent it is applied to outdoor installations not requiring added venting systems. Rheem added that although 84% thermal efficiency is close to the condensing efficiency threshold, for outdoor installations it can be achieved without the risk of increased vent system corrosion. (Rheem, No. 19 at p. 4) Rheem stated that for gas fired heaters, there are different required clearances from combustible surfaces for indoor and outdoor installations and that for indoor installations, venting is required and increasing thermal efficiency too high poses a risk of increased vent corrosion due to condensation. In addition, Rheem stated that the venting system varies by installation configuration and climate. (Rheem, No. 19 at p. 7)
DOE's analysis for gas-fired pool heater installations does not include any added cost for a venting systems for EL2 and EL 3 for outdoor installations. For EL 0 and EL 1 with atmospheric venting, DOE added the cost of a draft hood for a fraction of outdoor installations in a high wind environment. For gas-fired pool heater installations (mainly for commercial applications), DOE took into account the added cost of venting for all gas-fired pool heaters, which varies by climate and installation configuration. See appendix 8D of the final rule TSD for more details.
Rheem stated that for heat pump pool heaters, installation must be at ≥3 feet from a gas heater, ≥60 inches of clearance above the heater, ≥12 inches from any wall, gutters above the heater to prevent roof runoff into the top of the unit, and redirection of lawn irrigation away from the unit and that Texas and Florida mandate the use of a minimum 3-inch-thick concrete pad, where the minimum edge distance to the unit is 6 inches. Further, if installing hurricane tie down brackets then the pad may need to be wider. (Rheem, No. 19 at p. 7) AHRI and PHTA stated that most electric pool heater installations are located in a space-constrained area (within 2 feet of an obstruction), which significantly increases the cost of installation. In many of these situations it is difficult to maintain enough clearance for the product itself without including the required clearance from obstructions for a heat pump to properly function. (AHRI and PHTA, No. 20 at p. 7) AHRI and PHTA noted that many
For the NOPR analysis, DOE included significant costs associated with space constraints for heat pump pool heaters installed to replace an electric resistance pool heater, including installing the heat pump pool heater far away (outdoors) from the current installation location. 87 FR 22640, 22674. In order to take into account stakeholder comments and regional code requirements, for this final rule, DOE refined its installation cost methodology to include additional costs associated with installing a heat pump pool heater as a replacement of an electric resistance pool heater, especially in space constrained installations. The additional costs account for the requirements such as clearance and concrete pads. On average the installation cost associated with installing a heat pump pool heater in a space constrained installation increased from $549 in the NOPR to $1,039 in the final rule. The fraction of installations assigned space constrained costs also increased from 15 percent to 20 percent. See appendix 8D of the final rule TSD for more details.
For each sampled consumer pool heater installation, DOE determined the energy consumption for a consumer pool heaters at different efficiency levels using the approach described previously in section E.2 of this document.
Higher-efficiency consumer pool heaters reduce the operating costs for a consumer, which can lead to greater use of the consumer pool heater. A direct rebound effect occurs when a product that is made more efficient is used more intensively, such that the expected energy savings from the efficiency improvement may not fully materialize. At the same time, consumers benefit from increased utilization of products due to rebound. Overall consumer welfare (taking into account additional costs and benefits) is generally understood to increase from rebound. DOE did not find any data on the rebound effect that is specific to consumer pool heaters. In the April 2010 final rule, DOE estimated a rebound of 10 percent for pool heaters for the NIA, but did not include rebound in the LCC analysis. 75 FR 20112, 20165. Because of the uncertainty and lack of data specific to pool heaters necessary to generate a representative analysis, DOE does not include the rebound effect in the LCC analysis for this final rule. DOE does include the rebound effect in the NIA, for a conservative estimate of national energy savings (see section H.2).
Because marginal energy price more accurately captures the incremental savings associated with a change in energy use from higher efficiency, it provides a better representation of incremental change in consumer costs than average energy prices. Therefore, DOE applied average energy prices for the energy use of the product purchased in the no-new-standards case, and marginal energy prices for the incremental change in energy use associated with the other efficiency levels considered.
DOE derived residential and commercial average monthly marginal electricity and natural gas prices by state using 2021 data from EIA
DOE's methodology allows energy prices to vary by sector, state, and season. In the analysis, variability in energy prices is chosen to be consistent with the way the consumer economic and energy use characteristics are defined in the LCC analysis. See chapter 8 of the final rule TSD for details.
To estimate energy prices in future years, DOE multiplied the 2021 energy prices by the projection of annual average price changes for each of the nine census divisions from the Reference case in
Joint Advocates stated that DOE underestimated cost savings from higher efficiency gas pool heaters by underestimating the future gas prices. Joint Advocates stated that as the movement towards electrification grows and the efficiencies of gas appliances improve, both customer base and overall natural gas sales will likely decline over time. Joint Advocates pointed to a 2022 analysis conducted by the NRDC which estimated the impact of customer exits (
DOE's analysis uses the latest AEO energy price scenarios, which take into account the dynamics of the entire energy system, to project future energy prices. While DOE notes that future switching away from gas appliances may affect natural gas prices, at the present these dynamics, and policy
AHRI and PHTA stated that DOE may want to consider that for equipment such as pool heaters, where they may only need to operate a few hours a day, many consumers will be able to heat their pools at “off-peak” electric rates that are much lower than the average rates cited by the Department. Therefore, the costs of heating pool water would be lower than those estimated by DOE, and the subsequent savings are lower by the same percentage. AHRI and PHTA stated that more consumers have smart electric meters that may not have been considered in the Department's approach and that the consumers with smart electric meters will be able to take advantage of time of use and other variable electric rates to lower their electric costs. (AHRI and PHTA, No. 20 at p. 8)
While DOE agrees that consumers could possibly take advantage of “off-peak” electric rates in some installation applications, in reality there are limited data showing how customers will use “off-peak” electric rates. “Off-peak” rates might not coincide with the actual usage of the pool and vary from utility to utility. For example, PG&E offers “off-peak” rates that are designed to coincide with the electricity produced by solar generators (outside of the 4-9 p.m. peak pricing),
Repair costs are associated with repairing or replacing product components that have failed in an appliance; maintenance costs are associated with maintaining the operation of the product. Typically, small incremental increases in product efficiency entail no, or only minor, changes in repair and maintenance costs compared to baseline efficiency products. DOE included additional repair costs for higher efficiency heat pump pool heaters and gas-fired pool heaters (including repair costs associated with electronic ignition, controls, and blowers for fan-assisted designs, compressor, evaporator fan) based on 2022 RS Means data.
AHRI and PHTA noted that the costs for repairs and parts have increased compared to the data used in this analysis, so the analysis should be updated. Additionally, AHRI and PHTA stated that DOE should consider a separate labor rate for the different pool heater applications when calculating maintenance and repair costs as well. They cited industry estimates as $90/hour—gas service and $120/hour—heat pump service. (AHRI and PHTA, No. 20 at pp. 8-9)
DOE's analysis uses RS Means labor rates that vary by state, but does not assign a different labor rate for the maintenance and repair costs for a gas-fired pool heater compared to a heat pump pool heater.
AHRI and PHTA stated that pool heating equipment is more likely to be repaired then replaced. AHRI and PHTA agreed with the DOE's repair and maintenance approach, specifically, that higher efficiency gas-fired pool heaters are more expensive to maintain—condensation neutralization adds costs, they are more complex and more likely to have technical issues and the heat pumps cost more to service and repair as they require technicians with refrigeration certification—therefore costs are higher as this work takes more time and an increased level of expertise. (AHRI and PHTA, No. 20 at pp. 8-9) BWC also noted that condensing gas-fired pool heaters will be more difficult and more expensive to maintain since these products are more complex, which makes them more likely to experience technical issues. (BWC, No. 12 at p. 4) Rheem supported the AHRI and PHTA comment on this topic. (Rheem, No. 19 at p.8)
DOE maintained its repair and maintenance cost methodology for the final rule. The methodology and data sources are described in detail in appendix 8F of the final rule TSD.
For the NOPR analysis, DOE used lifetime estimates from historical shipments data and pool heater stock data from RECS 1987-2015 and 2020 Pkdata. 87 FR 22640, 22676 This data allowed DOE to develop a survival function, which provides a distribution of lifetime ranging from 1 to 30 years with a mean value of 11 years. DOE assumes that the distribution of lifetimes accounts for the impact of the pool water quality on the life of the product, the level of maintenance of a consumer pool heater, and the fraction of consumers winterizing the consumer pool heater.
AHRI and PHTA supported the use of RECS and Pkdata to calculate lifetime estimates, but suggested that DOE should also consider regional impacts to lifetime estimates, since not including these regional impacts could mean that the lifetime is potentially over inflated compared to the real lifetime for these units. In addition, AHRI and PHTA stated that improper winterization of a heat pump could shorten the life of a heat pump. (AHRI and PHTA, No. 20 at p. 9) Rheem supported the AHRI and PHTA's comments on regional impacts to lifetime estimates. Rheem found that lower efficiency (legacy) units typically have a longer life than higher efficiency units, and noted that consumers who don't perform routine maintenance, especially winterization, will see lower lifetimes. (Rheem, No. 19 at p. 8) BWC generally agreed with DOE's lifetime average of 11 years for gas-fired pool heaters that are identified as representative models and recommended that DOE utilize most recently available data to learn more about common applications for these products and recalculate average product lifetimes for each common installation type. (BWC, No. 12 at p. 4) For the final rule, DOE updated its methodology to include the latest data including RECS 2020, CBECS 2018, and shipment and other data from 2022 PKdata. This resulted in the same average lifetime value of 11 years.
Appendix 8G of the final rule of the TSD includes a sensitivity analysis of higher and lower lifetime estimates as well as a table of consumer pool heater lifetime estimates from published literature and manufacturer input.
In the calculation of LCC, DOE applies discount rates appropriate to households to estimate the present value of future operating cost savings. DOE estimated a distribution of discount rates for consumer pool heaters based on the opportunity cost of consumer funds.
DOE applies weighted average discount rates calculated from consumer debt and asset data, rather than marginal or implicit discount rates.
To establish residential discount rates for the LCC analysis, DOE identified all relevant household debt or asset classes in order to approximate a consumer's opportunity cost of funds related to appliance energy cost savings. It estimated the average percentage shares of the various types of debt and equity by household income group using data from the Federal Reserve Board's triennial Survey of Consumer Finances
To establish commercial discount rates for the fraction of instances where businesses are using consumer pool heaters, DOE estimated the weighted-average cost of capital using data from Damodaran Online.
The average rate across all types of household debt and equity and income groups and commercial building business activity types, weighted by the shares of each type, is 3.9 percent for electric and gas-fired pool heaters. See chapter 8 of the final rule TSD for further details on the development of consumer discount rates.
To accurately estimate the share of consumers that would be affected by a potential energy conservation standard at a particular efficiency level, DOE's LCC analysis considered the projected distribution (market shares) of product efficiencies under the no-new-standards case (
To estimate the energy efficiency distribution of consumer pool heaters for 2021 and the compliance year, DOE used the 2022 AHRI Directory of Certified Product Performance,
The fraction of heat pump pool heaters was adjusted to take into account codes in Florida
During manufacturer interviews for the NOPR, DOE received input that consumer pool heaters with standing pilot only represented about 4 percent of gas-fired pool heater shipments. In addition, DOE accounted for the ban on pilot lights in gas-fired pool heaters in California,
The estimated market shares in the no-new-standards case for consumer pool heaters used for the final rule are shown in Table IV.14 and Table IV.15. See chapter 8 of the final rule TSD for further information on the derivation of the efficiency distributions.
The LCC Monte Carlo simulations draw from the efficiency distributions and randomly assign an efficiency to the consumer pool heater purchased by each sample household or building in the no-new-standards case. The resulting percent shares within the sample match the market shares in the efficiency distributions.
While DOE acknowledges that economic factors may play a role when consumers, commercial building owners, or builders decide on what type of pool heater to install, assignment of pool heater efficiency for a given installation, based solely on economic measures such as life-cycle cost or simple payback period most likely would not fully and accurately reflect actual real-world installations. There are a number of market failures discussed in the economics literature that illustrate how purchasing decisions with respect to energy efficiency are unlikely to be perfectly correlated with energy use, as described below. DOE maintains that the method of assignment, which is in part random, is a reasonable approach, one that simulates behavior in the pool heater market, where market failures and other consumer preferences result in purchasing decisions not being perfectly aligned with economic interests, more realistically than relying only on apparent cost-effectiveness criteria derived from the limited information in CBECS or RECS. DOE further emphasizes that its approach does not assume that all purchasers of pool heaters make economically irrational decisions (
First, consumers are motivated by more than simple financial trade-offs. There are consumers who are willing to pay a premium for more energy-efficient products because they are environmentally conscious.
The first of these market failures is the split-incentive or principal-agent problem. The principal-agent problem is a market failure that results when the consumer that purchases the equipment does not internalize all of the costs associated with operating the equipment. Instead, the user of the product, who has no control over the purchase decision, pays the operating costs. There is a high likelihood of split incentive problems in the case of rental properties where the landlord makes the choice of what pool heater to install, whereas the renter is responsible for paying energy bills. In new construction, builders influence the type of water heater used in many homes but do not pay operating costs. Finally, contractors install a large share of pool heaters in replacement situations, and they can exert a high degree of influence over the type of pool heater purchased.
In addition to the split-incentive problem, there are other market failures that are likely to affect the choice of pool heater efficiency made by consumers. For example, emergency replacements of pool heaters are strongly biased toward like-for-like replacement (
Additionally, Davis and Metcalf
In part because of the way information is presented, and in part because of the way consumers process information, there is also a market failure consisting of a systematic bias in the perception of equipment energy usage, which can affect consumer choices. Attari et al.
These market failures affect a sizeable share of the consumer population. A study by Houde
There are market failures relevant to consumer pool heaters installed in commercial or community applications as well. It is often assumed that because commercial or community customers are businesses or organizations that have trained or experienced individuals making decisions regarding investments in cost-saving measures, some of the commonly observed market failures present in the general population of residential customers should not be as prevalent in a commercial setting. However, there are many characteristics of organizational structure and historic circumstance in commercial settings that can lead to underinvestment in energy efficiency.
First, a recognized problem in commercial settings is the principal-agent problem, where the building owner (or building developer) selects the equipment and the tenant (or subsequent building owner) pays for energy costs.
Second, the nature of the organizational structure and design can influence priorities for capital budgeting, resulting in choices that do not necessarily maximize profitability.
Stole, L.A., and Zwiebel, J. (1996). “Organizational design and technology choice under intrafirm bargaining,”
Takahashi, M and Asano, H (2007). “Energy Use Affected by Principal-Agent Problem in Japanese Commercial Office Space Leasing,” In
Visser, E and Harmelink, M (2007). “The Case of Energy Use in Commercial Offices in the Netherlands,” In
Bjorndalen, J. and Bugge, J. (2007). “Market Barriers Related to Commercial Office Space Leasing in Norway,” In
Schleich, J. (2009). “Barriers to energy efficiency: A comparison across the German commercial and services sector,”
Muthulingam, S.,
Boyd, G.A., Curtis, E.M. (2014). “Evidence of an `energy management gap' in US manufacturing: Spillovers from firm management practices to energy efficiency,”
Third, there are asymmetric information and other potential market failures in financial markets in general, which can affect decisions by firms with regard to their choice among alternative investment options, with energy efficiency being one such option.
Cummings, J.G., Hassett, K.A., Hubbard, R.G., Hall, R.E., and Caballero, R.J. (1994). “A reconsideration of investment behavior using tax reforms as natural experiments,”
DeCanio, S.J., and Watkins, W.E. (1998). “Investment in energy efficiency: do the characteristics of firms matter?”
Hubbard R.G. and Kashyap A. (1992). “Internal Net Worth and the Investment Process: An Application to U.S. Agriculture,”
Jollands, N., Waide, P., Ellis, M., Onoda, T., Laustsen, J., Tanaka, K., and Meier, A. (2010). “The 25 IEA energy efficiency policy recommendations to the G8 Gleneagles Plan of Action,”
In sum, the commercial sector faces many market failures that can result in an under-investment in energy efficiency. This means that discount rates implied by hurdle rates
The existence of market failures in the residential and commercial sectors is well supported by the economics literature and by a number of case studies. If DOE developed an efficiency distribution that assigned pool heater efficiency in the no-new-standards case solely according to energy use or economic considerations such as life-cycle cost or payback period, the resulting distribution of efficiencies within the building sample would not reflect any of the market failures or behavioral factors above. DOE thus concludes such a distribution would not be representative of the pool heater market. Further, even if a specific household/building/organization is not subject to the market failures above, the purchasing decision of pool heater efficiency can be highly complex and influenced by a number of factors not captured by the building characteristics available in the RECS or CBECS samples. These factors can lead to households or building owners choosing a pool heater efficiency that deviates from the efficiency predicted using only energy use or economic considerations such as life-cycle cost or payback period (as calculated using the information from RECS 2015 or CBECS 2012).
Responding to the April 2022 NOPR, Fluidra suggested that, for gas-fired pool heaters in 2028, the market share for EL2 should be significantly higher than that for EL1, adding that the new market share significantly favors EL2 gas-fire pool heaters. Fluidra also suggested that the EL0 market share for gas-fired pool heaters should be zero, stating that this level would not comply with the existing minimum efficiency requirement of 82 percent thermal efficiency. (Fluidra, No. 18 at p. 3).
In response, DOE notes that EL0 is defined as products which minimally comply with the existing thermal efficiency standards and include a standing pilot ignition system (see section IV.C.1.a for details), and therefore, in a no-new-standards case, these products would continue to be sold in the market. DOE assumed that the market share of EL 0 would decrease over time, compared to the 8 percent market share assumed in the 2010 Heating Products Final Rule based on manufacturer input. DOE does not currently have shipments data by efficiency to distinguish between EL 1 and EL 2, but based on available model data, the market shares appear to be similar. These model data informed the efficiency distribution used in the analysis.
The payback period is the amount of time (expressed in years) it takes the consumer to recover the additional installed cost of more-efficient products, compared to baseline products, through energy cost savings. Payback periods that exceed the life of the product mean that the increased total installed cost is not recovered in reduced operating expenses.
The inputs to the PBP calculation for each efficiency level are the change in total installed cost of the product and the change in the first-year annual operating expenditures relative to the baseline. DOE refers to this as a “simple PBP” because it does not consider changes over time in operating cost savings. The PBP calculation uses the same inputs as the LCC analysis when deriving first-year operating costs.
As noted previously, EPCA establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the first full year's energy savings resulting from the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency level, DOE determined the value of the first year's energy savings by calculating the energy savings in accordance with the applicable DOE test procedure, and multiplying those savings by the average energy price projection for the year in which compliance with the new and amended standards would be required.
DOE uses projections of annual product shipments to calculate the national impacts of potential amended or new energy conservation standards on energy use, NPV, and future manufacturer cash flows.
For the NOPR, DOE estimated consumer pool heater shipments by projecting shipments in three market segments: (1) replacements; (2) new swimming pool owners; and (3) new owners with an existing swimming pool that did not previously have a pool heater (both in residential and commercial applications),
(1) To project consumer pool heater replacement shipments in the residential and commercial sectors, DOE developed retirement functions for consumer pool heaters from the lifetime estimates (see section IV.F.6 of this document) and applied them to the existing products in the stock. DOE estimated the existing stock of products using estimated historical shipments
(2) To project shipments to the new swimming pool and spa market in the residential and commercial sector, DOE utilized projected new swimming pool (inground and above ground) installations and saturation rates. DOE estimated projected new swimming pool (inground and above ground) installations based on 2016 Pkdata,
(3) To project shipments to new owners in existing swimming pools that did not previously have a consumer pool heater in the residential sector, DOE estimated that a small fraction of existing swimming pools would add a consumer pool heater.
AHRI and PHTA supported the fact that DOE updated its analysis based on 2015 feedback that resulted in a lower average annual growth and acknowledged that many unknown factors exist that could impact this projection. (AHRI and PHTA, No. 20 at p. 9)
For the final rule, DOE kept the same methodology for projecting shipments and updated its shipments estimates based on the latest data available, including 2022 Pkdata,
Because the standards-case projections take into account the increase in purchase price and the decrease in operating costs caused by amended standards, projected shipments for a standards case typically deviate from those for the no-new-standards case. Because purchase price tends to have a larger impact than operating cost on appliance purchase decisions, standards-case projections typically show a decrease in product shipments relative to the no-new-standards case.
Rheem generally supported the relative price elasticity approach and agrees that an increase in energy conservation standards will result in a reduction of shipments for a period, as compared to the no new standards case. (Rheem, No. 19 at p. 8) In response, DOE maintained its approach to estimate the impact of the considered standards on consumer pool heater shipments. Appendix 10C of the final rule TSD describes this analysis, which includes a sensitivity analysis.
BWC suggested that the Department consider ongoing building electrification efforts in cities and states
DOE agrees with Joint Advocates that the costs associated with switching from an electric pool heater to a gas-fired pool heater (such as extending the gas line, adding a propane tank, or accounting for venting) would tend to limit such switching. However, it also agrees with Rheem that extending the gas line and accounting for venting would not prevent a consumer to switch from electric resistance to gas in installations where gas is already available. DOE also agrees that ongoing electrification efforts could impact the decision to switch from gas, but has limited data on the potential fraction of shipments that might switch from gas-fired pool heaters to electric pool heaters in the no-new amended standards case.
For the final rule analysis, assumptions regarding future policies encouraging electrification of households and electric pool heating were speculative at the time of analysis, so such policies were not incorporated into the shipments projection. DOE agrees that ongoing electrification policies at the Federal, State, and local level are likely to encourage installation of electric pool heaters in new homes and adoption of electric pool heaters in homes that currently use gas-fired pool heaters. However, there are many uncertainties about the timing and impact of these policies that make it difficult to fully account for their likely impact on gas and electric pool heater market shares in the time frame for this analysis (
DOE acknowledges that these and other electrification policies may result in a larger decrease in shipments of gas-fired water heaters than projected in this final rule, especially if stronger policies are adopted in coming years. However, this would occur in the no-new-standards case, and thus would only reduce the energy savings estimated to result from this proposed rule. For example, if incentives and rebates shifted 5 percent of shipments in the no-new-amended standards case from gas-fired pool heaters to heat pump pool heaters, then the energy savings estimated for gas-fired pool heaters that would result from this proposed rule would decline by approximately 5 percent. The estimated consumer impacts are likely to be similar, however, except that the percentage of consumers with no impact at a given efficiency level would increase. However, at this time the impact of many of these policies remains too uncertain to be included in the shipments analysis.
The NIA assesses the national energy savings (“NES”) and the NPV from a national perspective of total consumer costs and savings that would be expected to result from new or amended standards at specific efficiency levels.
DOE evaluates the impacts of new or amended standards by comparing a case without such standards with standards-case projections. The no-new-standards case characterizes energy use and consumer costs for each product class in the absence of new or amended energy conservation standards. For this projection, DOE considers historical trends in efficiency and various forces that are likely to affect the mix of efficiencies over time. DOE compares the no-new-standards case with projections characterizing the market for each product class if DOE adopted new or amended standards at specific energy efficiency levels (
DOE uses a spreadsheet model to calculate the energy savings and the national consumer costs and savings from each TSL. Interested parties can review DOE's analyses by changing various input quantities within the spreadsheet. The NIA spreadsheet model uses typical values (as opposed to probability distributions) as inputs.
Table IV.16 summarizes the inputs and methods DOE used for the NIA
A key component of the NIA is the trend in energy efficiency projected for the no-new-standards case and each of the standards cases. Section IV.F.8 of this document describes how DOE developed an energy efficiency distribution for the no-new-standards case (which yields a shipment-weighted average efficiency) for each of the considered product classes for the year of anticipated compliance with an amended or new standard. To project the trend in efficiency absent amended standards for consumer pool heaters over the entire shipments projection period, DOE used available historical shipments data and manufacturer input. The approach is further described in chapter 10 of the final rule TSD.
For the standards cases, DOE used a “roll-up” scenario to establish the shipment-weighted efficiency for the year that standards are assumed to become effective (2028). In this scenario, the market shares of products in the no-new-standards case that do not meet the standard under consideration would “roll up” to meet the new standard level, and the market share of products above the standard would remain unchanged.
To develop no-new standards case efficiency trends after 2020, DOE assumed an annual decreasing trend of negative 2 percent in the market share for the minimum efficiency levels (EL 0) for both electric and gas-fired pool heaters. This resulted in a market share for EL 0 of 8 percent in 2028 and 4 percent in 2057 for electric pool heaters and 4 percent in 2028 and 2 percent in 2057 for gas-fired pool heaters.
The national energy savings analysis involves a comparison of national energy consumption of the considered products between each potential standards case (“TSL”) and the case with no new or amended energy conservation standards. DOE calculated the national energy consumption by multiplying the number of units (stock) of each product (by vintage or age) by the unit energy consumption (also by vintage). DOE calculated annual NES based on the difference in national energy consumption for the no-new-standards case and for each higher efficiency standard case. DOE estimated energy consumption and savings based on site energy and converted the electricity consumption and savings to primary energy (
Use of higher-efficiency products is sometimes associated with a direct rebound effect, which refers to an increase in utilization of the product due to the increase in efficiency. For the NOPR, DOE did not include the rebound effect in the NPV analysis. 87 FR 22640, 22681. DOE did not find any data on the rebound effect specific to consumer pool heaters. DOE applied a rebound effect of 10 percent for consumer pool heaters used in residential applications, based on studies of other residential products, and 0 percent for consumer pool heaters used in commercial applications (see section IV.F.3.a of this document for more details). The calculated NES at each efficiency level is therefore reduced by 10 percent in residential applications. For the final rule analysis, DOE included the rebound effect in the NPV analysis by accounting for the additional net benefit from increased consumer pool heaters usage, as described in section IV.H.3 of this document.
Rheem agreed that there could be some rebound effect if energy conservation standards are increased. While it is unlikely that a consumer would increase the temperature of their pool, it is possible that a consumer will be less diligent with shutting off pool heating between periods of pool usage during the heating season. (Rheem, No. 19 at p.7) BWC agreed with DOE's estimate that there will be very little, if any, rebound effect for these products installed in commercial applications. (BWC, No. 12 at p. 4) AHRI and PHTA did not believe the approach of using other residential products to determine the rebound effect is appropriate for pool heating because consumers who choose to install pool heating will use them the same regardless of product efficiency. (AHRI and PHTA, No. 20 at p. 8) They stated that they did not believe there is a rebound effect for pool heaters.
DOE continued to incorporate a rebound effect in order to have a conservative estimate of the potential energy savings from an energy conservation standard on pool heaters. DOE notes that an estimated rebound of 10 percent is modest and comparable to several other residential end uses, which typically range from 0 to 15 percent. While the inclusion of the rebound effect at the energy savings level reduces energy savings and the inclusion in the net present value analysis increases the net present value,
In 2011, in response to the recommendations of a committee on “Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards” appointed by the National Academy of Sciences, DOE announced its intention to use FFC measures of energy use and greenhouse gas and other emissions in the national impact analyses and emissions analyses included in future energy conservation standards rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the approaches discussed in the August 18, 2011 notice, DOE published a statement of amended policy in which DOE explained its determination that EIA's National Energy Modeling System (“NEMS”) is the most appropriate tool for its FFC analysis and its intention to use NEMS for that purpose. 77 FR 49701 (Aug. 17, 2012). NEMS is a public domain, multi-sector, partial equilibrium model of the U.S. energy sector
The inputs for determining the NPV of the total costs and benefits experienced by consumers are (1) total annual installed cost, (2) total annual operating costs (energy costs and repair and maintenance costs), and (3) a discount factor to calculate the present value of costs and savings. DOE calculates net savings each year as the difference between the no-new-standards case and each standards case in terms of total savings in operating costs versus total increases in installed costs. DOE calculates operating cost savings over the lifetime of each product shipped during the projection period.
As discussed in section IV.F.1 of this document, DOE developed consumer pool heaters price trends based on 2022 PKData. DOE applied the same constant trend to project prices for each product class at each considered efficiency level. DOE's projection of product prices is described in appendix 10C of the final rule TSD.
To evaluate the effect of uncertainty regarding the price trend estimates, DOE investigated the impact of different product price projections on the consumer NPV for the considered TSLs for consumer pool heaters. In addition to the default price trend, DOE considered two product price sensitivity cases: (1) a declining price trend case based on 2003-2014 price data and (2) an increasing price trend case based on 2015-2021 data. The derivation of these price trends and the results of these sensitivity cases are described in appendix 10C of the final rule TSD.
The operating cost savings are the sum of the differences in energy cost savings, maintenance, and repair costs. The maintenance and repair costs derivation is described in section IV.F.5 of this document. The energy cost savings are calculated using the estimated energy savings in each year and the projected price of the appropriate form of energy. To estimate energy prices in future years, DOE multiplied the average regional energy prices by the projection of annual national-average residential energy price changes in the Reference case from
In considering the consumer welfare gained due to the direct rebound effect, DOE accounted for change in consumer surplus attributed to additional heating from the purchase of a more efficient unit. Overall consumer welfare is generally understood to be enhanced from rebound. The net consumer impact of the rebound effect is included in the calculation of operating cost savings in the consumer NPV results. See appendix 10F of the final rule TSD for details on DOE's treatment of the monetary valuation of the rebound effect.
In calculating the NPV, DOE multiplies the net savings in future years by a discount factor to determine their present value. For this final rule, DOE estimated the NPV of consumer benefits using both a 3-percent and a 7-percent real discount rate. DOE uses these discount rates in accordance with guidance provided by the Office of Management and Budget (“OMB”) to Federal agencies on the development of regulatory analysis.
In analyzing the potential impact of new or amended energy conservation standards on consumers, DOE evaluates the impact on identifiable subgroups of consumers that may be disproportionately affected by a new or amended national standard. The purpose of a subgroup analysis is to determine the extent of any such disproportional impacts. DOE evaluates impacts on particular subgroups of consumers by analyzing the LCC impacts and PBP for those particular consumers from alternative standard levels. For this final rule, DOE analyzed the impacts of the considered standard levels on two subgroups: (1) senior-only and (2) small business. The analysis used subsets of the RECS 2015 sample composed of households and CBECS 2012 sample composed of commercial buildings that meet the criteria for the considered subgroups. DOE used the LCC and PBP spreadsheet model to estimate the impacts of the considered efficiency levels on these subgroups. Chapter 11 in the final rule TSD describes the consumer subgroup analysis.
DOE performed an MIA to estimate the financial impacts of new and amended energy conservation standards on manufacturers of consumer pool heaters and to estimate the potential
The quantitative part of the MIA primarily relies on the Government Regulatory Impact Model (“GRIM”), an industry cash flow model with inputs specific to this rulemaking. The key GRIM inputs include data on the industry cost structure, unit production costs, product shipments, manufacturer markups, and investments in R&D and manufacturing capital required to produce compliant products. The key GRIM outputs are the INPV, which is the sum of industry annual cash flows over the analysis period, discounted using the industry-weighted average cost of capital, and the impact to domestic manufacturing employment. The model uses standard accounting principles to estimate the impacts of more-stringent energy conservation standards on a given industry by comparing changes in INPV and domestic manufacturing employment between a no-new-standards case and the various standards cases (
The qualitative part of the MIA addresses manufacturer characteristics and market trends. Specifically, the MIA considers such factors as a potential standard's impact on manufacturing capacity, competition within the industry, the cumulative impact of other DOE and non-DOE regulations, and impacts on manufacturer subgroups. The complete MIA is outlined in chapter 12 of the final rule TSD.
DOE conducted the MIA for this rulemaking in three phases. In Phase 1 of the MIA, DOE prepared a profile of the consumer pool heaters manufacturing industry based on the market and technology assessment, preliminary manufacturer interviews, and publicly available information. This included a top-down analysis of consumer pool heaters manufacturers that DOE used to derive preliminary financial inputs for the GRIM (
In Phase 2 of the MIA, DOE prepared a framework industry cash-flow analysis to quantify the potential impacts of new and amended energy conservation standards. The GRIM uses several factors to determine a series of annual cash flows starting with the announcement of the standard and extending over a 30-year period following the compliance date of the standard. These factors include annual expected revenues, costs of sales, SG&A and R&D expenses, taxes, and capital expenditures. In general, energy conservation standards can affect manufacturer cash flow in three distinct ways: (1) creating a need for increased investment, (2) raising production costs per unit, and (3) altering revenue due to higher per-unit prices and changes in sales volumes.
In addition, during Phase 2, DOE developed interview guides to distribute to manufacturers of consumer pool heaters in order to develop other key GRIM inputs, including product and capital conversion costs, and to gather additional information on the anticipated effects of energy conservation standards on revenues, direct employment, capital assets, industry competitiveness, and subgroup impacts.
In Phase 3 of the MIA, DOE conducted structured, detailed interviews with representative manufacturers. During these interviews, DOE discussed engineering, manufacturing, procurement, and financial topics to validate assumptions used in the GRIM and to identify key issues or concerns. See section IV.J.3 of this document for a description of the key issues raised by manufacturers during the interviews. As part of Phase 3, DOE also evaluated subgroups of manufacturers that may be disproportionately impacted by new and amended standards or that may not be accurately represented by the average cost assumptions used to develop the industry cash flow analysis. Such manufacturer subgroups may include small business manufacturers, low-volume manufacturers (“LVMs”), niche players, and/or manufacturers exhibiting a cost structure that largely differs from the industry average. DOE identified one subgroup for a separate impact analysis: small business manufacturers. The small business subgroup is discussed in section VI.B, “Review under the Regulatory Flexibility Act” and in chapter 12 of the final rule TSD.
DOE uses the GRIM to quantify the changes in cash flow due to new and amended standards that result in a higher or lower industry value. The GRIM uses a standard, annual discounted cash-flow analysis that incorporates manufacturer costs, manufacturer markups, shipments, and industry financial information as inputs. The GRIM models changes in costs, distribution of shipments, investments, and manufacturer margins that could result from new and amended energy conservation standard. The GRIM spreadsheet uses the inputs to arrive at a series of annual cash flows, beginning in 2023 (the base year of the analysis) and continuing to 2057. DOE calculated INPVs by summing the stream of annual discounted cash flows during this period. For manufacturers of consumer pool heaters, DOE used a real discount rate of 7.4 percent, which was derived from industry financials and then modified according to feedback received during manufacturer interviews.
The GRIM calculates cash flows using standard accounting principles and compares changes in INPV between the no-new-standards case and each standards case. The difference in INPV between the no-new-standards case and a standards case represents the financial impact of the new and amended energy conservation standards on manufacturers. As discussed previously, DOE developed critical GRIM inputs using a number of sources, including publicly available data, results of the engineering analysis, and information gathered from industry stakeholders during the course of manufacturer interviews. The GRIM results are presented in section V.B.2 of this document. Additional details about the
Manufacturing more efficient products is typically more expensive than manufacturing baseline products due to the use of more complex components, which are typically more costly than baseline components. The changes in the MPCs of covered products can affect the revenues, gross margins, and cash flow of the industry.
In the MIA, DOE used the MPCs calculated in the engineering analysis, as described in section IV.C of this document. DOE used information from its teardown analysis, described in section IV.C.3 of this document to disaggregate the MPCs into material, labor, depreciation, and overhead costs. To calculate the MPCs for products above the baseline, DOE added incremental material, labor, depreciation, and overhead costs from the engineering cost-efficiency curves to the baseline MPCs. These cost breakdowns were validated with manufacturers during manufacturer interviews.
For a complete description of the MPCs, see chapter 5 of the final rule TSD.
The GRIM estimates manufacturer revenues based on total unit shipment projections and the distribution of those shipments by efficiency level. Changes in sales volumes and efficiency mix over time can significantly affect manufacturer finances. For this analysis, the GRIM uses the NIA's annual shipment projections derived from the shipments analysis from 2023 (the base year) to 2057 (the end year of the analysis period). See chapter 9 of the final rule TSD for additional details.
New and amended energy conservation standards could cause manufacturers to incur conversion costs to bring their production facilities and product designs into compliance. DOE evaluated the level of conversion-related expenditures that would be needed to comply with each considered efficiency level in each product class. For the MIA, DOE classified these conversion costs into two major groups: (1) product conversion costs; and (2) capital conversion costs. Product conversion costs are investments in research, development, testing, marketing, and other non-capitalized costs necessary to make product designs comply with new and amended energy conservation standards. Capital conversion costs are investments in property, plant, and equipment necessary to adapt or change existing production facilities such that new compliant product designs can be fabricated and assembled.
To evaluate the level of capital conversion costs manufacturers would likely incur to comply with new and amended energy conservation standards, DOE used data gathered from manufacturer interviews as well as information derived from the product teardown analysis and engineering model. In developing its conversion cost estimates, DOE conservatively assumed manufacturers would redesign all noncompliant consumer gas-fired and heat pump pool heaters to comply with new and amended energy conservation standards (electric resistance pool heaters are discussed further in this section). Manufacturers could choose to drop some models that do not meet the levels prescribed by new and amended standards. Therefore, total product and capital conversion costs may be lower than the estimates calculated as part of this analysis.
In response to the April 2022 NOPR, several interested parties commented on the conversion cost estimates used in the April 2022 NOPR analysis. BWC stated that DOE underestimated the amount of time and resources required to meet compliance of the proposed consumer pool heater standards and test procedures. (BWC, No. 12 at pp. 4-5) Fluidra stated they could provide information regarding industry capital and product conversion costs of compliance associated with the analyzed energy conservation standards for consumer pool heaters evaluated in this NOPR only in a confidential manufacturer interview. (Fluidra, No. 18 at p. 4) Rheem also stated that they are willing to discuss DOE's conversion cost analysis with DOE's consultant during a confidential meeting. (Rheem, No. 19 at p. 9) AquaCal also claimed that the EL 4 proposed by DOE for electric consumer pool heaters would have a major impact on the heat pump pool heater industry from cost to engineer and produce. (AquaCal, No. 11 at p. 1)
After the April 2022 NOPR was published, DOE interviewed several manufacturers to discuss specific conversion costs their companies would likely incur at each efficiency level. BWC stated that the DOE significantly underestimated the burden that manufacturers would face to redesign products. They claimed that redesigning gas-fired consumer pool heaters to meet the EL 2 levels would require more time and resources than the 18 months of engineering time per model that DOE estimated in the April 2022 NOPR analysis. As this would require modifications to input rates and heat exchanger designs, and product testing, all of which would require more than 18 months of engineering time. BWC also stated that manufacturers would need to conduct a variety of testing including combustion, emissions, and certification testing in addition to redesigning non-compliant models. (BWC, No. 12 at pp. 2-3)
DOE updated the conversion cost estimates for this final rule analysis based on these comments and the confidential manufacturer interviews conducted after the publication of the April 2022 NOPR.
Product conversion costs are calculated on a per model basis and are primarily driven by engineering R&D costs and testing costs. R&D costs include engineering time necessary to redesign non-compliant consumer pool heater models. DOE assumed that manufacturers would discontinue all their electric resistance consumer pool heater models for any standard level above baseline for electric consumer pool heaters, because electric resistance consumer pool heaters use different technologies and designs than heat pump consumer pool heaters. Consequently, no redesign costs are assigned to the redesign of electric resistance consumer pool heater models.
For heat pump consumer pool heaters, all design options include growing the size of the evaporator. DOE assumed that the per model redesign effort, for electric heat pump consumer pool heaters, is the same to redesign a product to meet EL 2 and EL 3 but would require more engineering design time to redesign a product to meet EL 4 and EL 5. However, the number of models that would be required to be redesigned would vary for each EL required by the analyzed standard. In the April 2022 NOPR analysis, DOE estimated six months of engineering time per model for electric heat pump consumer pool heaters to meet all analyzed ELs. 87 FR 22640, 22684-22685. However, based on confidential interviews with manufacturers conducted after the publication of the April 2022 NOPR, manufacturers stated that there would be a higher per model redesign effort to meet standards at EL 4 and EL 5, compared to meeting standards at EL 2 or EL 3. Manufacturers stated that more complicated engineering designs would be required to be used at EL 4 and EL 5 as well as tighter manufacturing tolerances that would require more engineering time. Therefore, DOE increased the engineering effort for electric heat pump
For gas-fired consumer pool heaters, DOE estimated that the redesign effort varies for each efficiency level. The design option analyzed at EL 1 replaces the standing pilot with an electronic ignition system. This entails a component swap and requires the addition of a sparker. DOE estimates a total of two months of engineering time per model to redesign a model with a standing pilot to an electronic ignition. The design option analyzed at EL 2 incorporates a blower. Product conversion costs involve the selection, qualification, and safety testing of the blower. In the April 2022 NOPR analysis DOE estimated 18 months of engineering time per model to meet EL 2, and 24 months of engineering time per model to meet EL 3 for gas-fired consumer pool heaters. 87 FR 22640, 22685. However, based on confidential interviews with manufacturer conducted after the publication of the April 2022 NOPR, DOE increased the engineering effort for gas-fired consumer pool heaters to meet EL 2 and EL 3. Manufacturers stated that at EL 2 there would be a much smaller margin between the standards required at EL 2 and efficiencies at which gas-fired pool heater will condense. Therefore, there will be a significant engineering effort to ensure both product reliability and compliance at EL 2. Therefore, in this Final Rule analysis, DOE estimated a redesign effort of 24 months of engineering time to redesign a gas-fired consumer pool heater model to meet EL 2 (per model). The design option analyzed at max-tech level incorporates condensing technology, which requires a significant amount of redesign to fine tune the gas-fired consumer pool heater such that it can accommodate condensate. Manufacturers stated that they will have to change the material for most of their heat exchangers, which would require substantially more resources than estimated in the April 2022 NOPR analysis. Therefore, in this Final Rule analysis, DOE estimated a redesign effort of 48 months of engineering time to redesign a gas-fired consumer pool heater model to meet EL 3 (per model). Based on this additional, and more recent, information provided during manufacturers interviews DOE increased the estimated per model conversion costs for gas-fired consumer pool heaters at EL 2 and EL 3.
In addition to these redesign costs, DOE estimated a variety of testing costs including certification testing, verification testing, and combustion and emissions testing (for gas-fired consumer pool heaters). DOE estimated that gas-fired consumer pool heaters would require approximately 100 hours of testing to meet EL 1; 1,200 hours of testing to meet EL 2; and 3,500 hours of testing to meet EL 3 for each model that would need to be redesigned due to energy conservation standards. These testing costs include engineers, lab technicians, and all other employees involved in the testing process. For electric heat pump consumer pool heaters DOE estimated testing costs would be approximately $6,500 per model for all efficiency levels analyzed that would need to be redesigned due to energy conservation standards.
Capital conversion costs are estimated on a per manufacturer basis. DOE developed a list of manufacturers of gas-fired, heat pump, and electric resistance consumer pool heaters using manufacturer's websites and public databases such as AHRI,
For electric heat pump consumer pool heaters, DOE estimated that a manufacturer that makes their own heat exchangers would be required to make approximately $2.5 million in capital investments (per manufacturer) to meet EL 3 and above. For a manufacturer that does not make their own heat exchangers, would be required to make approximately $130,000 in tooling costs to be able to incorporate a larger heat exchanger into their products.
Lastly, for this final rule analysis DOE updated the model database of consumer pool heaters from the database that was used in the NOPR analysis, to reflect all consumer pool heater models that are currently available on the market. DOE used the most recent data available from DOE's CCD, CEC's MAEDbS, and AHRI's certification database for this final rule analysis. DOE identified a total of 79 unique basic models for gas-fired consumer pool heaters, 190 unique basic models for electric heat pump consumer pool heaters, and 20 unique basic models for electric resistance consumer pool heaters. These unique basic model counts, along with their estimated ELs, were used when estimating the total industry product and capital conversion costs used in this final rule analysis.
DOE assumed all conversion costs will occur between the year of publication of the final rule and the year by which manufacturers must comply with new and amended energy conservation standards. Additionally, for the final rule analysis DOE updated the conversion cost estimates from 2020 dollars into 2021 dollars.
The conversion cost estimates used in the GRIM can be found in Table IV.17 and in section IV.J.2.c of this document. For additional information on the estimated capital and product conversion costs, see chapter 12 of the final rule TSD.
In addition to capital and product conversion costs, new and amended energy conservation standards could create stranded assets (
DOE assumed that manufacturers discontinue all electric resistance consumer pool heaters for any electric consumer pool heater standard established above baseline. Manufacturers of electric resistance consumer pool heaters typically purchase components from vendors and assemble them in-house. These manufacturers do not own capital equipment or machinery and therefore stranded assets are limited for electric resistance consumer pool heater manufacturers.
In response to the NOPR, AHRI and PHTA stated they have no information at this time to suggest that the estimates provided for stranded assets are inaccurate. (AHRI and PHTA, No. 20 at p. 9) Rheem stated that it was willing to discuss DOE's stranded asset analysis with DOE's consultant during a confidential meeting. (Rheem, No. 19 at p. 9)
For the final rule analysis DOE converted the April 2022 NOPR stranded asset estimates from 2020$ into 2021$. DOE did not make any other updates to these stranded asset estimates.
MSPs include direct manufacturing production costs (
In the April 2022 NOPR analysis DOE used a manufacturer markup of 1.33 for gas-fired consumer pool heaters and a manufacturer markup of 1.28 for electric consumer pool heaters. 87 FR 22640, 22686. AHRI and PHTA encouraged DOE to conduct additional manufacturer interviews to ensure it captures products and conditions that best represent the current state of markups. (AHRI and PHTA, No. 20 at p. 6) As stated previously, DOE conducted interviews with manufacturers after the publication of the April 2022 NOPR. During these manufacturer interviews, several manufacturers stated the estimated manufacturer markups for each product class of consumer pool heaters used in the April 2022 NOPR analysis were lower than their manufacturer markups for those products. To address this, DOE revisited all publicly traded consumer pool heater manufacturer's financial statements for the past 5 years. For this time frame, all publicly traded consumer pool heater manufacturers had a corporate-level manufacturer markups greater than 1.33 (the highest manufacturer markup used in the April 2022 NOPR analysis) and during manufacturer interviews conducted after the publication of the April 2022 NOPR, all manufacturers stated that the manufacturer markups used in the April 2022 NOPR analysis should be increased. DOE recognizes that corporate-level manufacturer markups can significantly vary by products (for manufacturers that manufacture multiple products). However, DOE revised the manufacturer markups for this final rule analysis, based on the public corporate-level data and the confidential product-specific data provided by manufacturers during manufacturer interviews. DOE increased the gas-fired consumer pool heater manufacturer markup from 1.33 used in the April 2022 NOPR analysis to 1.44 and increased the electric consumer pool heater manufacturer markup from 1.28 used in the April 2022 NOPR analysis to 1.39 for this final rule analysis.
For the MIA, DOE modeled two standards-case markup scenarios to represent uncertainty regarding the potential impacts on prices and profitability for manufacturers following the implementation of new and amended energy conservation standards: (1) a preservation of gross margin scenario; and (2) a preservation of operating profit scenario. These scenarios lead to different manufacturer margins that, when applied to the MPCs, result in varying revenue and cash flow impacts.
Under the preservation of gross margin scenario, DOE applied a single uniform “gross margin” across all efficiency levels, which assumes that manufacturers would be able to maintain the same amount of profit as a percentage of revenues at all efficiency levels within a product class. As MPCs increase with efficiency, this scenario implies that the absolute dollar markup will increase as well. Therefore, DOE assumes that this scenario represents the upper bound to industry profitability under energy conservation standards.
Under the preservation of operating profit scenario, DOE modeled a situation in which manufacturers are not able to increase per-unit operating profit in proportion to increases in MPCs. Under this scenario, as the MPCs increase, manufacturers are generally required to reduce the manufacturer markup to maintain a cost competitive offering in the market. Therefore, gross margin (as a percentage) shrinks in the standards cases. This manufacturer markup scenario represents the lower bound to industry profitability under new and amended energy conservation standards.
A comparison of industry financial impacts under the two manufacturer markup scenarios is presented in section V.B.2.a of this document.
DOE conducted interviews with manufacturers following the October 2015 NODA, which was used to conduct parts of the April 2022 NOPR analysis. Additionally, DOE conducted interviews with manufacturers
Additionally, manufacturers identified two areas of concern regarding the April 2022 NOPR analysis during manufacturer interviews conducted after the publication of the April 2022 NOPR: (1) analyzed MPCs, MSPs, and manufacturer markups being low and needing to reflect the latest economic status; and (2) conversion costs estimated in the April 2022 NOPR analysis being too low.
Manufacturer interviews are conducted under non-disclosure agreements (“NDAs”), so DOE does not document these discussions in the same way that it does public comments in the comment summaries and DOE's responses throughout the rest of this document.
Manufacturers stated that there have been increases in costs of shipping, materials, and labor due to disruptions in the global supply chains, inflation, and other factors related to COVID-19 since the analysis was conducted for the April 2022 NOPR. Manufacturers urged DOE to update specific costs to be more reflective of the current market conditions. Additionally, manufacturers stated that the manufacturer markups used in the April 2022 NOPR were smaller than the manufacturer markups in the current consumer pool heater market. As discussed in section IV.C.2 of this document, DOE increased the MPCs used in this final rule analysis to better reflect the current market conditions consumer pool heater manufacturers are facing. Additionally, as discussed in section IV.J.2.e of this document, DOE increased the manufacturer markups used in this final rule analysis to better represent the current consumer pool heater market.
Manufacturers stated that DOE underestimated the conversion costs that manufacturers would incur for both gas-fired and electric consumer pool heater manufacturers that were estimated in the April 2022 NOPR. Manufacturers claimed that, in addition to underestimating the redesign costs, DOE also did not accurately account for the additional combustion, emissions, and other safety testing that manufacturers would have to conduct if they had to redesign a gas-fired consumer pool heater model. As discussed in section IV.J.2.c of this document, DOE increased the estimated conversion costs used in this final rule analysis and included additional testing costs associated with redesigning gas-fired consumer pool heater models.
The emissions analysis consists of two components. The first component estimates the effect of potential energy conservation standards on power sector and site (where applicable) combustion emissions of CO
The analysis of electric power sector emissions of CO
The on-site operation of consumer pool heaters involves combustion of fossil fuels and results in emissions of CO
FFC upstream emissions, which include emissions from fuel combustion during extraction, processing, and transportation of fuels, and “fugitive” emissions (direct leakage to the atmosphere) of CH
The emissions intensity factors are expressed in terms of physical units per MWh or MMBtu of site energy savings. For power sector emissions, specific emissions intensity factors are calculated by sector and end use. Total emissions reductions are estimated using the energy savings calculated in the national impact analysis.
AHRI and PHTA noted that the proposed EL for electric pool heaters requires the use of heat pump technology. Therefore, DOE should consider refrigerant leaks in its emissions analysis. (AHRI and PHTA, No. 20 at pp. 910)
In response, given that the vast majority of the electric pool heater market is already at efficiency levels using heat pumps, any analysis including refrigerant leaks would not alter the economic justification for the rule. DOE also notes that refrigerant leaks are not captured within the scope of DOE's emissions analysis, which focuses on power plant emissions and emissions from site combustion.
DOE's no-new-standards case for the electric power sector reflects the
SO
However, beginning in 2016, SO
CSAPR also established limits on NO
The MATS limit mercury emissions from power plants, but they do not include emissions caps and, as such, DOE's energy conservation standards would be expected to slightly reduce Hg emissions. DOE estimated mercury emissions reduction using emissions factors based on
As part of the development of this final rule, for the purpose of complying with the requirements of Executive Order 12866, DOE considered the estimated monetary benefits from the reduced emissions of CO
To monetize the benefits of reducing GHG emissions this analysis uses the interim estimates presented in the
DOE estimates the monetized benefits of the reductions in emissions of CO
DOE exercises its own judgment in presenting monetized climate benefits as recommended by applicable Executive orders, and DOE would reach the same conclusion presented in this proposed rulemaking in the absence of the social cost of greenhouse gases. That is, the social costs of greenhouse gases, whether measured using the February 2021 interim estimates presented by the Interagency Working Group on the Social Cost of Greenhouse Gases or by another means, did not affect the rule ultimately proposed by DOE.
DOE estimated the global social benefits of CO
The SC-GHGs estimates presented here were developed over many years, using transparent process, peer-reviewed methodologies, the best science available at the time of that process, and with input from the public. Specifically, in 2009, the IWG, that included the DOE and other executive branch agencies and offices was established to ensure that agencies were using the best available science and to promote consistency in the social cost of carbon (SC-CO
In 2015, as part of the response to public comments received to a 2013 solicitation for comments on the SC-CO
On January 20, 2021, President Biden issued Executive Order 13990, which re-established the IWG and directed it to ensure that the U.S. Government's estimates of the social cost of carbon and other greenhouse gases reflect the best available science and the recommendations of the National Academies (2017). The IWG was tasked with first reviewing the SC-GHG estimates currently used in Federal analyses and publishing interim estimates within 30 days of the E.O. that reflect the full impact of GHG emissions, including by taking global damages into account. The interim SC-GHG estimates published in February 2021 are used here to estimate the climate benefits for this proposed rulemaking. The E.O. instructs the IWG to update the interim SC-GHG estimates by January 2022, taking into consideration the advice of the National Academies of Science, Engineering, and Medicine as reported in Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide (2017) and other recent scientific literature. The February 2021 SC-GHG TSD provides a complete discussion of the IWG's initial review conducted under E.O. 13990. In particular, the IWG found that the SC-GHG estimates used under E.O. 13783 fail to reflect the full impact of GHG emissions in multiple ways.
First, the IWG found that the SC-GHG estimates used under E.O. 13783 fail to fully capture many climate impacts that affect the welfare of U.S. citizens and residents, and those impacts are better reflected by global measures of the SC-GHG. Examples of omitted effects from the E.O. 13783 estimates include direct effects on U.S. citizens, assets, and investments located abroad, supply chains, U.S. military assets and interests abroad, and tourism, and spillover pathways such as economic and political destabilization and global migration that can lead to adverse impacts on U.S. national security, public health, and humanitarian concerns. In addition, assessing the benefits of U.S. GHG mitigation activities requires consideration of how those actions may affect mitigation activities by other countries, as those international mitigation actions will provide a benefit to U.S. citizens and residents by mitigating climate impacts that affect U.S. citizens and residents. A wide range of scientific and economic experts have emphasized the issue of reciprocity as support for considering global damages of GHG emissions. If the United States does not consider impacts on other countries, it is difficult to convince other countries to consider the impacts of their emissions on the United States. The only way to achieve an
Second, the IWG found that the use of the social rate of return on capital (7 percent under current OMB Circular A-4 guidance) to discount the future benefits of reducing GHG emissions inappropriately underestimates the impacts of climate change for the purposes of estimating the SC-GHG. Consistent with the findings of the National Academies (2017) and the economic literature, the IWG continued to conclude that the consumption rate of interest is the theoretically appropriate discount rate in an intergenerational context,
Furthermore, the damage estimates developed for use in the SC-GHG are estimated in consumption-equivalent terms, and so an application of OMB Circular A-4's guidance for regulatory analysis would then use the consumption discount rate to calculate the SC-GHG. DOE agrees with this assessment and will continue to follow developments in the literature pertaining to this issue. DOE also notes that while OMB Circular A-4, as published in 2003, recommends using 3% and 7% discount rates as “default” values, Circular A-4 also reminds agencies that “different regulations may call for different emphases in the analysis, depending on the nature and complexity of the regulatory issues and the sensitivity of the benefit and cost estimates to the key assumptions.” On discounting, Circular A-4 recognizes that “special ethical considerations arise when comparing benefits and costs across generations,” and Circular A-4 acknowledges that analyses may appropriately “discount future costs and consumption benefits . . . at a lower rate than for intragenerational analysis.” In the 2015 Response to Comments on the Social Cost of Carbon for Regulatory Impact Analysis, OMB, DOE, and the other IWG members recognized that “Circular A-4 is a living document” and “the use of 7 percent is not considered appropriate for intergenerational discounting. There is wide support for this view in the academic literature, and it is recognized in Circular A-4 itself.” Thus, DOE concludes that a 7% discount rate is not appropriate to apply to value the social cost of greenhouse gases in the analysis presented in this analysis.
To calculate the present and annualized values of climate benefits, DOE uses the same discount rate as the rate used to discount the value of damages from future GHG emissions, for internal consistency. That approach to discounting follows the same approach that the February 2021 TSD recommends “to ensure internal consistency—
Environmental Advocates suggested that DOE consider including additional justification for adopting the range of discount rates endorsed by the Working Group and appropriately deciding not to apply a 7% capital-based discount rate to climate impacts. Environmental Advocates stated that DOE should provide additional justification for combining climate effects discounted at an appropriate consumption-based rate with other costs and benefits discounted at a capital-based rate. Environmental Advocates stated that DOE should also argue that it is appropriate generally to focus its analysis of this rule on consumption-based rates given that most costs and benefits are projected to fall to consumption rather than to capital investments. Environmental Advocates suggested that DOE consider providing additional sensitivity analysis using discount rates of 2% or lower for climate impacts. (Environmental Advocates, No. 14 at p. 2)
DOE notes that it presents its results using four different discount rates for the SC-GHG, combined with consumer impacts at both 3 and 7 percent, in section V.B.8. For presentational purposes, DOE uses the climate benefits associated with the average SC-GHG at a 3-percent discount rate when summarizing national impacts. DOE does not have a single central SC-GHG point estimate and it emphasizes the importance and value of considering the benefits calculated using all four SC-GHG estimates.
As a member of the IWG involved in the development of the February 2021 SC-GHG TSD, DOE agrees with the above assessment and will continue to follow developments in the literature pertaining to this issue. While the IWG works to assess how best to incorporate the latest, peer reviewed science to develop an updated set of SC-GHG estimates, it set the interim estimates to be the most recent estimates developed by the IWG prior to the group being disbanded in 2017. The estimates rely on the same models and harmonized
There are a number of limitations and uncertainties associated with the SC-GHG estimates. First, the current scientific and economic understanding of discounting approaches suggests discount rates appropriate for intergenerational analysis in the context of climate change are likely to be less than 3 percent, near 2 percent or lower.
DOE's derivations of the SC-CO
The SC-CO
For 2051 to 2070, DOE used SC-CO
DOE multiplied the CO
The SC-CH
DOE multiplied the CH
For the final rule, DOE estimated the monetized value of NO
DOE also estimated the monetized value of NO
DOE multiplied the site emissions reduction (in tons) in each year by the associated $/ton values, and then discounted each series using discount rates of 3 percent and 7 percent as appropriate.
The utility impact analysis estimates the changes in installed electrical capacity and generation projected to result for each considered TSL. The analysis is based on published output from the NEMS associated with
The output of this analysis is a set of time-dependent coefficients that capture the change in electricity generation, primary fuel consumption, installed capacity and power sector emissions due to a unit reduction in demand for a given end use. These coefficients are multiplied by the stream of electricity savings calculated in the NIA to provide estimates of selected utility impacts of potential new or amended energy conservation standards.
The utility analysis also estimates the impact on gas utilities in terms of projected changes in natural gas deliveries to consumers for each TSL.
DOE considers employment impacts in the domestic economy as one factor in selecting a standard. Employment impacts from new or amended energy conservation standards include both direct and indirect impacts. Direct employment impacts are any changes in the number of employees of manufacturers of the products subject to
One method for assessing the possible effects on the demand for labor of such shifts in economic activity is to compare sector employment statistics developed by the Labor Department's Bureau of Labor Statistics (“BLS”). BLS regularly publishes its estimates of the number of jobs per million dollars of economic activity in different sectors of the economy, as well as the jobs created elsewhere in the economy by this same economic activity. Data from BLS indicate that expenditures in the utility sector generally create fewer jobs (both directly and indirectly) than expenditures in other sectors of the economy.
DOE estimated indirect national employment impacts for the standard levels considered in this final rule using an input/output model of the U.S. economy called Impact of Sector Energy Technologies version 4 (“ImSET”).
DOE notes that ImSET is not a general equilibrium forecasting model, and that the uncertainties involved in projecting employment impacts, especially changes in the later years of the analysis. Because ImSET does not incorporate price changes, the employment effects predicted by ImSET may over-estimate actual job impacts over the long run for this rule. Therefore, DOE used ImSET only to generate results for near-term timeframes (2028-2033), where these uncertainties are reduced. For more details on the employment impact analysis, see chapter 16 of the final rule TSD.
The following section addresses the results from DOE's analyses with respect to the considered energy conservation standards for consumer pool heaters. It addresses the TSLs examined by DOE, the projected impacts of each of these levels if adopted as energy conservation standards for consumer pool heaters, and the standards levels that DOE is adopting in this final rule. Additional details regarding DOE's analyses are contained in the final rule TSD supporting this document.
In general, DOE typically evaluates potential amended standards for products and equipment by grouping individual efficiency levels for each class into TSLs. Use of TSLs allows DOE to identify and consider manufacturer cost interactions between the product classes, to the extent that there are such interactions, and market cross elasticity from consumer purchasing decisions that may change when different standard levels are set.
In the analysis conducted for this final rule, DOE analyzed the benefits and burdens of six TSLs for consumer pool heaters. DOE developed TSLs that combine efficiency levels for each analyzed product class. DOE presents the results for the TSLs in this document, while the results for all efficiency levels that DOE analyzed are in the final rule TSD.
Table V.1 presents the TSLs and the corresponding efficiency levels that DOE has identified for potential amended energy conservation standards for consumer pool heaters.
TSL 6 represents the maximum technologically feasible (“max-tech”) energy efficiency for all product classes. TSL 5 represents efficiency levels below max-tech for both electric and gas-fired pool heaters and represents the maximum energy savings excluding max-tech efficiency levels. A much greater fraction of gas-fired pool heater consumers experience a net cost compared to electric pool heater consumers at TSL 5. Therefore, TSL 4 is constructed with the same efficiency level for electric pool heaters (
DOE analyzed the economic impacts on consumer pool heaters consumers by looking at the effects that potential new and amended standards at each TSL would have on the LCC and PBP. DOE also examined the impacts of potential standards on selected consumer subgroups. These analyses are discussed in the following sections.
In general, higher-efficiency products affect consumers in two ways: (1) purchase price increases and (2) annual operating costs decrease. Inputs used for calculating the LCC and PBP include total installed costs (
Table V.2 through Table V.5 show the LCC and PBP results for the TSLs considered for each product class. In the first of each pair of tables, the simple payback is measured relative to the baseline product. In the second table, the impacts are measured relative to the efficiency distribution in the in the no-new-standards case in the compliance year (see section IV.F.8 of this document). Because some consumers purchase products with higher efficiency in the no-new-standards case, the average savings are less than the difference between the average LCC of the baseline product and the average LCC at each TSL. The savings refer only to consumers who are affected by a standard at a given TSL. Those who already purchase a product with efficiency at or above a given TSL are not affected. Consumers for whom the LCC increases at a given TSL experience a net cost.
In the consumer subgroup analysis, DOE estimated the impact of the considered TSLs on senior-only households and small businesses. Table V.6 and Table V.7 compare the average LCC savings and PBP at each efficiency level for the consumer subgroups with similar metrics for the entire consumer sample for Electric Pool Heaters and Gas-fired Pool Heaters. In most cases, the average LCC savings and PBP for senior-only households and small business at the considered efficiency levels are not substantially different from the average for all households. Chapter 11 of the final rule TSD presents the complete LCC and PBP results for the subgroups.
As discussed in section III.F.2 of this document, EPCA establishes a rebuttable presumption that an energy conservation standard is economically justified if the increased purchase cost for a product that meets the standard is less than three times the value of the first-year energy savings resulting from the standard. In calculating a rebuttable presumption payback period for each of the considered TSLs, DOE used discrete values, and, as required by EPCA, based the energy use calculation on the DOE test procedures for consumer pool heaters. In contrast, the PBPs presented in section V.B.1.a of this document were calculated using distributions that reflect the range of energy use in the field.
Table V.8 presents the rebuttable-presumption payback periods for the considered TSLs for consumer pool heaters. While DOE examined the rebuttable-presumption criterion, it considered whether the standard levels considered for this rule are economically justified through a more detailed analysis of the economic impacts of those levels, pursuant to 42 U.S.C. 6295(o)(2)(B)(i), that considers the full range of impacts to the consumer, manufacturer, Nation, and environment. The results of that analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level, thereby supporting or rebutting the results of any preliminary determination of economic justification.
DOE performed an MIA to estimate the impact of new and amended energy conservation standards on manufacturers of consumer pool heaters. The next section describes the expected impacts on manufacturers at each considered TSL. Chapter 12 of the final rule TSD explains the analysis in further detail.
In this section, DOE provides GRIM results from the analysis, which examines changes in the industry that would result from new and amended energy conservation standards. The following tables summarize the estimated financial impacts (represented by changes in INPV) of potential new and amended energy conservation standards on manufacturers of consumer pool heaters, as well as the conversion costs that DOE estimates manufacturers of consumer pool heaters would incur at each TSL.
As discussed in section IV.J.2.e of this document, DOE modeled two manufacturer markup scenarios to evaluate a range of cash flow impacts on the consumer pool heater industry: (1) the preservation of gross margin scenario and (2) the preservation of operating profit scenario. DOE considered the preservation of gross margin scenario by applying a “gross margin percentage” for each product class across all efficiency levels. As MPCs increase with efficiency, this scenario implies that the absolute dollar markup will increase. DOE assumed a manufacturer markup of 1.44 for gas-fired consumer pool heaters and 1.39 for electric consumer pool heaters. This manufacturer markup is consistent with the one DOE assumed in the engineering analysis and the no-new-standards case of the GRIM. Because this scenario assumes that a manufacturer's absolute dollar markup would increase as MPCs increase in the standards cases, it represents the upper-bound to industry profitability under potential new and amended energy conservation standards.
The preservation of operating profit scenario reflects manufacturers' concerns about their inability to maintain margins as MPCs increase to reach more-stringent efficiency levels. In this scenario, while manufacturers make the necessary investments required to convert their facilities to produce compliant products, operating profit remains the same in absolute
Each of the modeled manufacturer markup scenarios results in a unique set of cash-flows and corresponding industry values at each TSL. In the following discussion, the INPV results refer to the difference in industry value between the no-new-standards case and each standards case resulting from the sum of discounted cash-flows from 2023 through 2057. To provide perspective on the short-run cash-flow impact, DOE includes in the discussion of results a comparison of free cash flow between the no-new-standards case and the standards case at each TSL in the year before new and amended standards are required.
Table V.9 and Table V.10 show the MIA results for both product classes at each TSL using the manufacturer markup scenarios previously described.
At TSL 1, DOE estimates that impacts on INPV will range from −$2.2 million to −$0.6 million, or a change in INPV of −0.4 to −0.1 percent. At TSL 1, industry free cash-flow is $50.5 million, which is a decrease of approximately $0.5 million compared to the no-new-standards case value of $51.0 million in 2027, the year leading up to the adopted standards.
TSL 1 would set the energy conservation standard for both gas-fired consumer pool heaters and electric consumer pool heaters at EL 1. DOE estimates that 96 percent of gas-fired consumer pool heater shipments and 92 percent of electric consumer pool heater shipments already meet or exceed the efficiency levels analyzed at TSL 1. Gas-fired consumer pool heater manufacturers would likely need to redesign any models with a standing pilot light. DOE assumed this would require approximately two months of engineering time per model, which would cost manufacturers approximately $0.1 million. Electric heat pump consumer pool heater manufacturers would incur approximately $1.2 million in product conversion costs primarily to test all compliant electric consumer pool heater models to demonstrate compliance with standards at TSL 1. DOE estimates consumer pool heater manufacturers will incur minimal to no capital conversion costs at TSL 1.
Furthermore, no electric resistance pool heaters meet or exceed the electric consumer pool heater efficiency level analyzed at TSL 1 or above. DOE estimates manufacturers will not incur conversion costs for electric resistance pool heaters, because of the expectation that these consumer pool heater products will be discontinued, as described in section IV.J.2.c of this document.
At TSL 1, the shipment-weighted average MPC for all consumer pool heaters increases by 0.5 percent relative to the no-new-standards case shipment-weighted average MPC for all consumer pool heaters in 2028. In the preservation of gross margin scenario, manufacturers are able to fully pass on this slight cost increase to consumers. The slight increase in shipment-weighted average MPC for consumer pool heaters is slightly outweighed by the $1.3 million in conversion costs, causing a slightly negative change in INPV at TSL 1 under the preservation of gross margin scenario.
Under the preservation of operating profit scenario, manufacturers earn the same per-unit operating profit as would be earned in the no-new-standards case, but manufacturers do not earn additional profit from their investments. In this scenario, the 0.5 percent shipment-weighted average MPC increase results in a reduction in the manufacturer margin after the compliance year. This reduction in the manufacturer margin and the $1.3 million in conversion costs incurred by manufacturers cause a slightly negative change in INPV at TSL 1 under the preservation of operating profit scenario.
At TSL 2, DOE estimates that impacts on INPV will range from −$3.9 million to −$1.2 million, or a change in INPV of −0.7 percent to −0.2 percent. At TSL 2, industry free cash-flow is $49.7 million, which is a decrease of approximately $1.3 million compared to the no-new-standards case value of
TSL 2 would set the energy conservation standard at EL 1 for gas-fired consumer pool heaters and at EL 2 for electric consumer pool heaters. DOE estimates that 96 percent of gas-fired consumer pool heater shipments and 81 percent of electric consumer pool heater shipments already meet or exceed the efficiency levels analyzed at TSL 2. Gas-fired consumer pool heater manufacturers would likely need to redesign any models with a standing pilot light. DOE assumed this would cost manufacturers approximately $0.1 million. To bring non-compliant electric heat pump consumer pool heaters into compliance and to test all electric heat pump consumer pool heaters to demonstrate compliance with standards at TSL 2, electric heat pump consumer pool heater manufacturers would incur approximately $2.6 million in product conversion costs and $0.8 million in capital conversion costs at TSL 2.
At TSL 2, the shipment-weighted average MPC for all consumer pool heaters increases by 0.8 percent relative to the no-new-standards case shipment-weighted average MPC for all consumer pool heaters in 2028. In the preservation of gross margin scenario, the slight increase in shipment-weighted average MPC for consumer pool heaters is slightly outweighed by the $3.4 million in conversion costs, causing a slightly negative change in INPV at TSL 2 under the preservation of gross margin scenario.
Under the preservation of operating profit scenario, the 0.8 percent shipment-weighted average MPC increase results in a reduction in the manufacturer margin after the compliance year. This reduction in the manufacturer margin and the $3.4 million in conversion costs incurred by manufacturers cause a slightly negative change in INPV at TSL 2 under the preservation of operating profit scenario.
At TSL 3, DOE estimates that impacts on INPV will range from −$15.0 million to −$8.7 million, or a change in INPV of −2.6 percent to −1.5 percent. At TSL 3, industry free cash-flow is $43.5 million, which is a decrease of approximately $7.5 million compared to the no-new-standards case value of $51.0 million in 2027, the year leading up to the adopted standards.
TSL 3 would set the energy conservation standard at EL 1 for gas-fired consumer pool heaters and at EL 3 for electric consumer pool heaters. DOE estimates that 96 percent of gas-fired consumer pool heater shipments and 22 percent of electric consumer pool heater shipments already meet or exceed the efficiency levels analyzed at TSL 3. Gas-fired consumer pool heater manufacturers would likely need to redesign any models with a standing pilot light. DOE assumed this would cost manufacturers approximately $0.1 million. To bring non-compliant electric heat pump consumer pool heaters into compliance and to test all electric heat pump consumer pool heaters to demonstrate compliance with standards at TSL 3, electric heat pump consumer pool heater manufacturers would incur approximately $9.0 million in product conversion costs and $9.5 million in capital conversion costs at TSL 3.
At TSL 3, the shipment-weighted average MPC for all consumer pool heaters increases by 1.9 percent relative to the no-new-standards case shipment-weighted average MPC for all consumer pool heaters in 2028. In the preservation of gross margin scenario, the increase in shipment-weighted average MPC for consumer pool heaters is outweighed by the $18.6 million in conversion costs, causing a slightly negative change in INPV at TSL 3 under the preservation of gross margin scenario.
Under the preservation of operating profit scenario, the 1.9 percent shipment-weighted average MPC increase results in a reduction in the manufacturer margin after the compliance year. This reduction in the manufacturer margin and the $18.6 million in conversion costs incurred by manufacturers cause a slightly negative change in INPV at TSL 3 under the preservation of operating profit scenario.
At TSL 4, DOE estimates that impacts on INPV will range from −$22.8 million to −$10.7 million, or a change in INPV of −3.9 percent to −1.8 percent. At TSL 4, industry free cash-flow is $39.6 million, which is a decrease of approximately $11.4 million compared to the no-new-standards case value of $51.0 million in 2027, the year leading up to the adopted standards.
TSL 4 would set the energy conservation standard at EL 1 for gas-fired consumer pool heaters and at EL 4 for electric consumer pool heaters. DOE estimates that 96 percent of gas-fired consumer pool heaters and 12 percent of electric consumer pool heaters meet or exceed the efficiency levels analyzed at TSL 4. Gas-fired consumer pool heater manufacturers would likely need to redesign any models with a standing pilot light. DOE assumed this would cost manufacturers approximately $0.1 million. To bring non-compliant electric heat pump consumer pool heaters into compliance and to test all electric heat pump consumer pool heaters to demonstrate compliance with standards at TSL 4, electric heat pump consumer pool heater manufacturers would incur approximately $19.9 million in product conversion costs and $9.5 million in capital conversion costs at TSL 4.
At TSL 4, the shipment-weighted average MPC for all consumer pool heaters increases by 3.6 percent relative to the no-new-standards case shipment-weighted average MPC for all consumer pool heaters in 2028. In the preservation of gross margin scenario, the increase in shipment-weighted average MPC for consumer pool heaters is outweighed by the $29.4 million in conversion costs, causing a slightly negative change in INPV at TSL 4 under the preservation of gross margin scenario.
Under the preservation of operating profit scenario, the 3.6 percent shipment-weighted average MPC increase results in a reduction in the manufacturer margin after the compliance year. This reduction in the manufacturer margin and the $29.4 million in conversion costs incurred by manufacturers causing a slightly negative change in INPV at TSL 4 under the preservation of operating profit scenario.
At TSL 5, DOE estimates that impacts on INPV will range from −$37.3 million to $2.0 million, or a change in INPV of −6.4 percent to 0.3 percent. At TSL 5, industry free cash-flow is $32.4 million, which is a decrease of approximately $18.6 million compared to the no-new-standards case value of $51.0 million in 2027, the year leading up to the adopted standards.
TSL 5 would set the energy conservation standard at EL 2 for gas-fired consumer pool heaters and at EL 4 for electric consumer pool heaters. DOE estimates that 50 percent of gas-fired consumer pool heaters and 12 percent of electric consumer pool heaters meet or exceed the efficiency levels analyzed at TSL 5. Gas-fired consumer pool heater manufacturers would likely need to incorporate a blower for gas-fired pool heaters. DOE assumed this would cost manufacturers approximately $14.1 million in product conversion costs and $5.0 million in capital conversion costs. To bring non-compliant electric heat pump consumer pool heaters into compliance and to test all electric heat pump consumer pool heaters to demonstrate compliance with standards at TSL 5, electric heat pump consumer pool heater manufacturers would incur approximately $19.9 million in product conversion costs and $9.5 million in capital conversion costs at TSL 5.
At TSL 5, the shipment-weighted average MPC for all consumer pool heaters increases by 10.0 percent relative to the no-new-standards case shipment-weighted average MPC for all consumer pool heaters in 2028. In the preservation of gross margin scenario, the increase in shipment-weighted average MPC for consumer pool heaters outweighs the $48.4 million in conversion costs, causing a slightly positive change in INPV at TSL 5 under the preservation of gross margin scenario.
Under the preservation of operating profit scenario, the 10.0 percent shipment-weighted average MPC increase results in a reduction in the manufacturer margin after the compliance year. This reduction in manufacturer margin and the $48.4 million in conversion costs incurred by manufacturers cause a moderately negative change in INPV at TSL 5 under the preservation of operating profit scenario.
At TSL 6, DOE estimates that impacts on INPV will range from −$103.0 million to $45.9 million, or a change in INPV of −17.6 percent to 7.8 percent. At TSL 6, industry free cash-flow is $2.4 million, which is a decrease of approximately $48.6 million compared to the no-new-standards case value of $51.0 million in 2027, the year leading up to the adopted standards.
TSL 6 would set the energy conservation standard at EL 3 for gas-fired consumer pool heaters and at EL 5 for electric consumer pool heaters. This represents max-tech for both product classes. DOE estimates 9 percent of gas-fired consumer pool heaters and 3 percent of electric consumer pool heaters meet the efficiency levels analyzed at TSL 6. Gas-fired consumer pool heater manufacturers would likely need to incorporate condensing technology and electrical upgrades for standby mode and off mode power consumption for all gas-fired pool heaters. DOE assumed this would cost manufacturers approximately $63.1 million in product conversion costs and $29.0 million in capital conversion costs. To bring non-compliant electric heat pump consumer pool heaters into compliance and to test all electric heat pump consumer pool heaters to demonstrate compliance with standards at TSL 6, electric heat pump consumer pool heater manufacturers would likely need to incorporate heat pump component improvements and electrical upgrades for standby mode and off mode power consumption for all electric pool heaters. DOE assumed this would incur approximately $24.8 million in product conversion costs and $9.5 million in capital conversion costs at TSL 6.
At TSL 6, the shipment-weighted average MPC for all consumer pool heaters significantly increases by 37.0 percent relative to the no-new-standards case shipment-weighted average MPC for all consumer pool heaters in 2028. In the preservation of gross margin scenario, the large increase in shipment-weighted average MPC for consumer pool heaters outweighs the $126.4 million in conversion costs, causing a moderately positive change in INPV at TSL 6 under the preservation of gross margin scenario.
Under the preservation of operating profit scenario, the 37.0 percent shipment-weighted average MPC increase results in a significant reduction in the manufacturer margin after the compliance year. This large reduction in manufacturer margin and the significant $126.4 million in conversion costs incurred by manufacturers cause a moderately negative change in INPV at TSL 6 under the preservation of operating profit scenario.
To quantitatively assess the potential impacts of new and amended energy conservation standards on direct employment in the consumer pool heaters industry, DOE used the GRIM to estimate the domestic labor expenditures and number of direct employees in the no-new-standards case and in each of the standards cases during the analysis period.
Production employees are those who are directly involved in fabricating and assembling products within an original equipment manufacturer facility. Workers performing services that are closely associated with production operations, such as materials handling tasks using forklifts, are included as production labor, as well as line supervisors.
DOE used the GRIM to calculate the number of production employees from labor expenditures. DOE used statistical data from the U.S. Census Bureau's 2019 Annual Survey of Manufacturers (“ASM”) and the results of the engineering analysis to calculate industry-wide labor expenditures. Labor expenditures related to product manufacturing depend on the labor intensity of the product, the sales volume, and an assumption that wages remain fixed in real terms over time. The total labor expenditures in the GRIM were then converted to domestic production employment levels by dividing production labor expenditures by the annual payment per production worker.
Non-production employees account for those workers that are not directly engaged in the manufacturing of the covered product. This could include sales, human resources, engineering, and management. DOE estimated non-production employment levels by multiplying the number of consumer pool heater production workers by a scaling factor. The scaling factor is calculated by taking the ratio of the total number of employees, and the total production workers associated with the industry North American Industry Classification System (“NAICS”) code 333414, which covers consumer pool heater manufacturing.
Using the GRIM, DOE estimates that there would be 875 domestic production workers, and 505 non-production workers for consumer pool heaters in 2028 in the absence of new and amended energy conservation standards. Table V.11 shows the range of the impacts of energy conservation standards on U.S. production on consumer pool heaters.
The direct employment impacts shown in Table V.11 represent the potential changes in direct employment that could result following the compliance date for consumer pool heaters. Employment could increase or decrease due to the labor content of the various products being manufactured domestically that meet the analyzed standards or if manufacturers decided to move production facilities abroad because of the new and amended standards. At one end of the range, DOE assumes that all manufacturers continue to manufacture the same scope of the products domestically after new and amended standards are required. However, since the labor content of consumer pool heaters varies by efficiency level, this can either result in an increase or decrease in domestic employment, even if all domestic product remains in the U.S.
DOE identified potential manufacturing production capacity constraints at max-tech for both gas-fired consumer pool heaters and electric consumer pool heaters. There are 18 consumer pool heater manufacturers that manufacture electric consumer pool heaters covered by this rulemaking. Only three electric consumer pool heater manufacturers currently offer models that meet the efficiency level required at max-tech for electric consumer pool heaters, and each of these three electric consumer pool heater manufacturers only offer a single model that meets the efficiency level required at max-tech for electric consumer pool heaters. All other electric consumer pool heater models offered by electric consumer pool heater manufacturers do not meet the efficiency level required at max-tech for electric pool heaters covered by this rulemaking.
There are six consumer pool heater manufacturers that manufacture gas-fired consumer pool heaters covered by this rulemaking. Only one gas-fired consumer pool heater manufacturer currently offers a model that meet the efficiency level required at max-tech for gas-fired pool heaters. All other gas-fired consumer pool heater models offered by gas-fired consumer pool heater manufacturers do not meet the efficiency level required at max-tech for gas-fired pool heaters covered by this rulemaking.
At max-tech (for both gas-fired consumer pool heaters and electric consumer pool heaters), most consumer pool heater manufacturers would therefore be required to redesign every consumer pool heater model covered by this rulemaking. It is unclear if most manufacturers would have the engineering capacity to complete the necessary redesigns (required to meet energy conservation standards at max-tech) within the 5-year compliance period. If some manufacturers require more than 5 years to redesign all their covered consumer pool heater models, they will likely prioritize redesigns based on sales volume. There is risk that some consumer pool heater models will become either temporarily or permanently unavailable after the compliance date.
DOE did not identify any significant manufacturing production capacity constraints for the design options below max-tech that were being evaluated for this final rule. All gas-fired consumer pool heater manufacturers offer products that meet the EL below max-tech for gas-fired pool heaters, and more than half of the electric consumer pool heater manufacturers offer products that meet the EL below max-tech for electric consumer pool heaters. The design options below max-tech evaluated for this final rule are readily available as products that are on the market currently. The materials used to manufacture models at all ELs below max-tech are widely available on the market. As a result, DOE does not anticipate that the industry will likely experience any capacity constraints directly resulting from energy conservation standards at any of the ELs that are below max-tech.
As discussed in section IV.J.1 of this document, using average cost assumptions to develop an industry cash-flow estimate may not be adequate for assessing differential impacts among manufacturer subgroups. Small manufacturers, niche manufacturers, and manufacturers exhibiting a cost structure substantially different from the industry average could be affected disproportionately. DOE used the results of the industry characterization to group manufacturers exhibiting similar characteristics. Consequently, DOE identified small business manufacturers as a subgroup for a separate impact analysis.
For the small business subgroup analysis, DOE applied the small business size standards published by the Small Business Administration (“SBA”) to determine whether a company is considered a small business. The size standards are codified at 13 CFR part 121. To be categorized as a small business under NAICS code 333414, “heating equipment (except warm air furnaces) manufacturing,” a consumer pool heater manufacturer and its affiliates may employ a maximum of 500 employees. The 500-employee threshold includes all employees in a business's parent company and any other subsidiaries. Based on this classification, DOE identified six potential manufacturers that qualify as domestic small businesses.
All six small businesses manufacture electric consumer pool heaters and none of them manufacture gas-fired consumer pool heaters. Therefore, only new standards set for electric consumer pool heaters would impact any of the small businesses. Five of the six small businesses exclusively manufacture electric heat pump consumer pool heaters, while the other small business exclusively manufacturers electric resistance consumer pool heaters.
The small business subgroup analysis is discussed in more detail in chapter 12 of the final rule TSD. DOE examines the potential impacts on small business manufacturers in section VI.B of this document.
One aspect of assessing manufacturer burden involves looking at the cumulative impact of multiple DOE standards and the regulatory actions of other Federal agencies and States that affect the manufacturers of a covered product or equipment. While any one regulation may not impose a significant burden on manufacturers, the combined effects of several existing or impending regulations may have serious consequences for some manufacturers, groups of manufacturers, or an entire industry. Multiple regulations affecting the same manufacturer can strain profits and lead companies to abandon product lines or markets with lower expected future returns than competing products. For these reasons, DOE conducts an analysis of cumulative regulatory burden as part of its rulemakings pertaining to appliance efficiency.
BWC commented that a large amount regulatory burden will be placed on their company and other consumer pool heater manufacturers since DOE has multiple rulemaking cycles happening for other products manufactured by consumer pool heater manufacturers concurrently, including residential water heaters, commercial water heaters, and residential boilers, in addition to this consumer pool heater rulemaking. BWC claims that all of these amended standards, along with DOE underestimating the amount of time and resources required to meet compliance of the proposed consumer pool heater standards and test procedures will place an overwhelming regulatory burden on these manufacturers and the market. (BWC, No. 12 at pp. 4-5)
Rheem indicated it would experience a high degree of cumulative regulatory burden because almost all of the products and equipment it manufactures are subject to ongoing DOE rulemakings. Rheem stated that it expects compliance with new and amended standards for consumer pool heaters to require significant product redesign and reset of production facilities between 2026 and 2029. Thus, Rheem urged DOE to take steps to alleviate cumulative regulatory burden, for instance, considering the AIM Act phasedown of high GWP refrigerants. (Rheem, No. 19 at pp. 9-10)
Fluidra provided a list of applicable codes and standards for pool heaters that represent a cumulative regulatory burden to manufacturers including: ANSI/CSA—Gas Appliance Standard; UL Electrical Standard; California Energy Commission; Florida Energy Code; DOE Federal Efficiency; ASME; AHRI; ASHRAE; NSF; and FCC/IC. (Fluidra, No. 18 at p. 4)
DOE evaluates product-specific regulations that will take effect approximately 3 years before or after the estimated 2028 compliance date of any new and amended energy conservation standards for consumer pool heaters. This information is presented in Table V.12.
In addition to the rulemaking listed in Table V.12 DOE has ongoing rulemakings for other products or equipment that consumer pool heater manufacturers produce, including consumer furnaces (oil, electric, and weatherized gas);
This section presents DOE's estimates of the national energy savings and the NPV of consumer benefits that would result from each of the TSLs considered as potential amended standards.
To estimate the energy savings attributable to potential new and amended standards for consumer pool heaters, DOE compared their energy consumption under the no-new-standards case to their anticipated energy consumption under each TSL. The savings are measured over the entire lifetime of products purchased in the 30-year period that begins in the year of anticipated compliance with amended standards (2028-2057). Table V.13 presents DOE's projections of the national energy savings for each TSL considered for consumer pool heaters. The savings were calculated using the approach described in section IV.H of this document.
OMB Circular A-4
DOE estimated the cumulative NPV of the total costs and savings for consumers that would result from the TSLs considered for consumer pool heaters. In accordance with OMB's guidelines on regulatory analysis,
The NPV results based on the aforementioned 9-year analytical period are presented in Table V.16. The impacts are counted over the lifetime of products purchased in 2028-2036. As mentioned previously, such results are presented for informational purposes only and are not indicative of any change in DOE's analytical methodology or decision criteria.
The previous results reflect the use of a default trend to estimate the change in price for consumer pool heaters over the analysis period (see section IV.F.1 of this document). DOE also conducted a sensitivity analysis that considered one scenario with an increasing rate of price change than the reference case and one scenario with a decreasing rate of price change compared to the reference case. The results of these alternative cases are presented in appendix 10C of the final rule TSD. In the decreasing-price case, the NPV of consumer benefits is higher than in the default case. In the increasing-price case, the NPV of consumer benefits is lower than in the default case.
DOE estimates that amended energy conservation standards for consumer pool heaters will reduce energy expenditures for consumers of those products, with the resulting net savings being redirected to other forms of economic activity. These expected shifts in spending and economic activity could affect the demand for labor. As described in section IV.N of this document, DOE used an input/output model of the U.S. economy to estimate indirect employment impacts of the TSLs that DOE considered. There are uncertainties involved in projecting employment impacts, especially changes in the later years of the analysis. Therefore, DOE generated results for near-term timeframes (2028-2033), where these uncertainties are reduced.
The results suggest that the adopted standards are likely to have a negligible impact on the net demand for labor in the economy. The net change in jobs is so small that it would be imperceptible in national labor statistics and might be offset by other, unanticipated effects on employment. Chapter 16 of the final rule TSD presents detailed results regarding anticipated indirect employment impacts.
As discussed in section IV.C.1.b of this document, DOE has concluded that the standards adopted in this final rule will not lessen the utility or performance of the consumer pool heaters under consideration in this rulemaking. Manufacturers of these products currently offer units that meet or exceed the adopted standards.
DOE considered any lessening of competition that would be likely to result from new or amended standards. As discussed in section III.F.1.e of this document, EPCA directs the Attorney General of the United States (“Attorney General”) to determine the impact, if any, of any lessening of competition likely to result from a proposed standard and to transmit such determination in writing to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. To assist the Attorney General in making this determination, DOE provided the Department of Justice (“DOJ”) with copies of the NOPR and the TSD for review. In its assessment letter responding to DOE, DOJ concluded that the proposed energy conservation standards for consumer pool heaters are unlikely to have a significant adverse impact on competition. DOE is publishing the Attorney General's assessment at the end of this final rule.
Enhanced energy efficiency, where economically justified, improves the Nation's energy security, strengthens the economy, and reduces the environmental impacts (costs) of energy production. Reduced electricity demand due to energy conservation standards is also likely to reduce the cost of maintaining the reliability of the electricity system, particularly during peak-load periods. Chapter 15 in the final rule TSD presents the estimated impacts on electricity generating capacity, relative to the no-new-standards case, for the TSLs that DOE considered in this rulemaking.
Energy conservation resulting from potential energy conservation standards for consumer pool heaters is expected to yield environmental benefits in the form of reduced emissions of certain air pollutants and greenhouse gases. Table V.17 provides DOE's estimate of cumulative emissions reductions expected to result from the TSLs considered in this rulemaking. The emissions were calculated using the multipliers discussed in section IV.K of this document. DOE reports annual emissions reductions for each TSL in chapter 13 of the final rule TSD.
The NPV results based on the aforementioned 9-year analytical period are presented in. The impacts are counted over the lifetime of products purchased in 2028-2036. As mentioned previously, such results are presented for informational purposes only and are not indicative of any change in DOE's analytical methodology or decision criteria.
As part of the analysis for this rule, DOE estimated monetary benefits likely to result from the reduced emissions of CO
As discussed in section IV.L.2 of this document, DOE estimated the climate benefits likely to result from the reduced emissions of methane and N
DOE is well aware that scientific and economic knowledge about the contribution of CO
DOE also estimated the monetary value of the economic benefits associated with NO
DOE has not considered the monetary benefits of the reduction of Hg for this final rule. Not all the public health and environmental benefits from the reduction of greenhouse gases, NO
The Secretary of Energy, in determining whether a standard is economically justified, may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No other factors were considered in this analysis.
Table V.23 presents the NPV values that result from adding the estimates of the economic benefits resulting from
When considering new or amended energy conservation standards, the standards that DOE adopts for any type (or class) of covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining whether a standard is economically justified, the Secretary must determine whether the benefits of the standard exceed its burdens by, to the greatest extent practicable, considering the seven statutory factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or amended standard must also result in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B))
For this final rule, DOE considered the impacts of new and amended standards for consumer pool heaters at each TSL, beginning with the maximum technologically feasible level, to determine whether that level was economically justified. Where the max-tech level was not justified, DOE then considered the next most efficient level and undertook the same evaluation until it reached the highest efficiency level that is both technologically feasible and economically justified and saves a significant amount of energy.
To aid the reader as DOE discusses the benefits and/or burdens of each TSL, tables in this section present a summary of the results of DOE's quantitative analysis for each TSL. In addition to the quantitative results presented in the tables, DOE also considers other burdens and benefits that affect economic justification. These include the impacts on identifiable subgroups of consumers who may be disproportionately affected by a national standard and impacts on employment.
DOE also notes that the economics literature provides a wide-ranging discussion of how consumers trade off upfront costs and energy savings in the absence of government intervention. Much of this literature attempts to explain why consumers appear to undervalue energy efficiency improvements. There is evidence that consumers undervalue future energy savings as a result of (1) a lack of information; (2) a lack of sufficient salience of the long-term or aggregate benefits; (3) a lack of sufficient savings to warrant delaying or altering purchases; (4) excessive focus on the short term, in the form of inconsistent weighting of future energy cost savings relative to available returns on other investments; (5) computational or other difficulties associated with the evaluation of relevant tradeoffs; and (6) a divergence in incentives (for example, between renters and owners, or builders and purchasers). Having less than perfect foresight and a high degree of uncertainty about the future, consumers may trade off these types of investments at a higher than expected rate between current consumption and uncertain future energy cost savings.
In DOE's current regulatory analysis, potential changes in the benefits and costs of a regulation due to changes in consumer purchase decisions are included in two ways. First, if consumers forego the purchase of a product in the standards case, this decreases sales for product manufacturers, and the impact on manufacturers attributed to lost revenue is included in the MIA. Second, DOE accounts for energy savings attributable only to products actually used by consumers in the standards case; if a standard decreases the number of products purchased by consumers, this decreases the potential energy savings from an energy conservation standard. DOE provides estimates of shipments and changes in the volume of product purchases in chapter 9 of the final rule TSD. However, DOE's current analysis does not explicitly control for heterogeneity in consumer preferences, preferences across subcategories of products or specific features, or consumer price sensitivity variation according to household income.
While DOE is not prepared at present to provide a fuller quantifiable framework for estimating the benefits and costs of changes in consumer purchase decisions due to an energy conservation standard, DOE is committed to developing a framework that can support empirical quantitative tools for improved assessment of the consumer welfare impacts of appliance standards. DOE has posted a paper that discusses the issue of consumer welfare impacts of appliance energy conservation standards, and potential enhancements to the methodology by which these impacts are defined and estimated in the regulatory process.
Table V.24 and Table V.25 summarize the quantitative impacts estimated for each TSL for consumer pool heaters. The national impacts are measured over the lifetime of consumer pool heaters purchased in the 30-year period that begins in the anticipated year of compliance with amended standards (2028-2057). The energy savings, emissions reductions, and value of emissions reductions refer to full-fuel-cycle results. DOE is presenting monetized benefits in accordance with the applicable Executive orders and DOE would reach the same conclusion presented in this notice in the absence of the social cost of greenhouse gases, including the Interim Estimates presented by the Interagency Working Group. The efficiency levels contained in each TSL are described in section V.A of this document.
DOE first considered TSL 6, which represents the max-tech efficiency levels for all product classes. Approximately 3.0 percent of electric pool heaters and 8.6 percent of gas-fired pool heaters are estimated to meet these levels in 2028 (as shown in Table IV.14 and Table IV.15). The max-tech efficiency levels are achieved using the most efficient heat pump technology for electric pool heaters and condensing technology for gas-fired pool heaters (as well as electrical upgrades to reduce the standby mode and off mode power consumption of electric pool heaters and gas-fired pool heaters). TSL 6 would save an estimated 3.07 quads of energy, an amount DOE considers significant. Under TSL 6, the NPV of consumer benefit would be $3.5 billion using a discount rate of 7 percent, and $9.6 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 6 are 156 Mt of CO
Using a 7-percent discount rate for consumer benefits and costs, health benefits from reduced SO
At TSL 6, the average LCC impact is a savings of $946 for electric pool heaters and $497 for gas-fired pool heaters. The simple payback period is 0.6 years for electric pool heaters and 4.2 years for gas-fired pool heaters. The fraction of consumers experiencing a net LCC cost is 62.9 percent for electric pool heaters and 72.6 percent for gas-fired pool heaters. This is driven largely by variation in hours of use across consumer subgroups.
At TSL 6, the projected change in INPV ranges from a decrease of $103.0 million to an increase of $45.9 million, which corresponds to a decrease of 17.6 percent and an increase of 7.8 percent, respectively. DOE estimates that industry must invest $126.4 million to comply with standards set at TSL 6. DOE estimates that approximately 8.6 percent of gas-fired consumer pool heater shipments and 3.0 percent of electric consumer pool heater shipments would meet the efficiency levels analyzed at TSL 6.
There are 18 consumer pool heater manufacturers that manufacture electric consumer pool heaters covered by this rulemaking. Only three electric consumer pool heater manufacturers currently offer a model that meets the efficiency level required at TSL 6 for electric consumer pool heaters. All other electric consumer pool heater models offered by consumer pool heater manufacturers do not meet the efficiency level required at TSL 6 for electric pool heaters covered by this rulemaking.
There are six consumer pool heater manufacturers that manufacture gas-fired consumer pool heaters covered by this rulemaking. One gas-fired consumer pool heater manufacturer currently offers one model that meets the efficiency level required at TSL 6 for gas-fired pool heaters. All other gas-fired consumer pool heater models offered by the other five gas-fired consumer pool heater manufacturers do not meet the efficiency level required at TSL 6 for gas-fired pool heaters covered by this rulemaking.
At TSL 6, most consumer pool heater manufacturers would be required to redesign every consumer pool heater model covered by this rulemaking. It is unclear if most manufacturers would have the engineering capacity to complete the necessary redesigns within the 5-year compliance period. If manufacturers require more than 5 years to redesign all their covered consumer pool heater models, they will likely prioritize redesigns based on sales volume.
The Secretary concludes that at TSL 6 for consumer pool heaters, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the economic burden on a high percentage of consumers, and the impacts on manufacturers, including the large conversion costs, profit margin
DOE then considered TSL 5, which represents efficiency level 4 for electric consumer pool heaters and efficiency level 2 for gas-fired consumer pool heaters. Approximately 12.3 percent of electric pool heaters and 49.7 percent of gas-fired pool heaters are estimated to meet these levels in 2028 (as shown in Table IV.14 and Table IV.15). For electric pool heaters, this level utilizes heat pump technology. For gas-fired pool heaters, the level utilizes electronic ignition and blower driven gas/air mix (as shown in Table IV.6). TSL 5 would save an estimated 0.70 quads of energy, an amount DOE considers significant. Under TSL 5, the NPV of consumer benefit would be $1.2 billion using a discount rate of 7 percent, and $3.0 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 5 are 29 Mt of CO
Using a 7-percent discount rate for consumer benefits and costs, health benefits from reduced SO
At TSL 5, the average LCC impact is a savings of $1,130 for electric pool heaters and $80 for gas-fired pool heaters. The simple payback period is 0.5 years for electric pool heaters and 2.3 years for gas-fired pool heaters. The fraction of consumers experiencing a net LCC cost is 45.3 percent for electric pool heaters and 39.1 percent for gas-fired pool heaters.
At TSL 5, the projected change in INPV ranges from a decrease of $37.3 million to an increase of $2.0 million, which correspond to a decrease of 6.4 percent and an increase of 0.3 percent, respectively. DOE estimates that industry must invest $48.4 million to comply with standards set at TSL 5. DOE estimates that approximately 49.7 percent of gas-fired consumer pool heater shipments and 12.3 percent of electric consumer pool heater shipments would meet or exceed the efficiency levels analyzed at TSL 5. All 6 gas-fired consumer pool heater manufacturers and 10 of the 18 electric consumer pool heater manufacturers currently offer models that meet or exceed the efficiency levels required at TSL 5.
After considering the analysis and weighing the benefits and burdens, the Secretary has concluded that at a standard set at TSL 5 for consumer pool heaters would be economically justified. At this TSL, the average LCC savings for both electric and gas-fired pool heater consumers are positive. The FFC national energy savings are significant, and the NPV of consumer benefits is positive using both a 3-percent and 7-percent discount rate. Notably, the benefits to consumers outweigh the cost to manufacturers. At TSL 5, the NPV of consumer benefits, even measured at the more conservative discount rate of 7 percent, is over 32 times higher than the maximum estimated manufacturers' loss in INPV. The standard levels at TSL 5 are economically justified even without weighing the estimated monetary value of emissions reductions, representing $1.5 billion in climate benefits (associated with the average SC-GHG at a 3-percent discount rate), and $0.9 billion (using a 3-percent discount rate) or $2.3 billion (using a 7-percent discount rate) in health benefits.
Accordingly, the Secretary has concluded that TSL 5 would offer the maximum improvement in efficiency that is technologically feasible and economically justified and would result in the significant conservation of energy.
As stated, DOE conducts the walk-down analysis to determine the TSL that represents the maximum improvement in energy efficiency that is technologically feasible and economically justified as required under EPCA. The walk-down is not a comparative analysis, as a comparative analysis would result in the maximization of net benefits instead of the maximum improvement in energy efficiency that is technologically feasible and economically justified, which would be contrary to the statute. 86 FR 70892, 70908. Although DOE has not conducted a comparative analysis to select the new and amended energy conservation standards, DOE notes that, as compared to TSL 6, TSL 5 has higher average LCC savings for consumers of electric pool heaters, significantly smaller percentages of consumers of electric pool heaters and gas-fired pool heaters experiencing a net cost, a lower maximum decrease in INPV, and lower manufacturer conversion costs.
Although results are presented here in terms of TSLs, DOE analyzed and evaluated all possible ELs for each product class in its analysis. For both gas-fired pool heaters and electric pool heaters, TSL 5 is comprised of the highest efficiency level below max-tech. Therefore, DOE below considers the max-tech efficiency levels for both gas-fired pool heaters and electric pool heaters.
For gas-fired pool heaters, the max-tech efficiency level results in a large percentage of consumers that experience a net LCC cost due to the increases in purchase costs. While the average LCC would be positive, this is due to a small segment of consumers receiving the bulk of the benefits. Additionally, there would be a significant impact to manufacturers at EL 3, as most gas-fired pool heater manufacturers would be required to redesign every gas-fired pool heater model covered by this rulemaking. Most of the costs to manufacturers at TSL 6 is driven by the increased cost to gas-fired pool heater manufacturers, as indicated in the analysis in Section V.2. of this document. It is unclear if most
For electric pool heaters the max-tech efficiency level is currently only achieved by three of the 18 manufacturers, resulting in large conversion costs and potentially significant reductions in INPV. The max-tech efficiency level also results in a large percentage of consumers that experience a net LCC cost due to the increases in purchase costs.
Additionally, at the max-tech efficiency levels for both electric pool heaters and gas-fired pool heaters there is a substantial risk of manufacturers being unable to offer a competitive range of equipment across the range of input capacities currently available. The benefits of max-tech efficiency levels for electric pool heaters and gas-fired pool heaters do not outweigh the negative impacts to consumers and manufacturers. Therefore, DOE has concluded that the max-tech efficiency levels are not justified. The ELs one level below max-tech, representing the finalized standard levels in TSL 5, significantly reduce the number of consumers experiencing a net cost and reduce the potential decrease in INPV and conversion costs to the point where DOE has concluded these levels are economically justified, as discussed for TSL 5 in the preceding paragraphs.
Therefore, based on the previous considerations, DOE adopts the energy conservation standards for consumer pool heaters at TSL 5. The amended energy conservation standards for consumer pool heaters, which are expressed as TE
DOE understands that pool heater use can vary widely depending on a number of factors, including climate, size of the pool, whether it serves as a commercial facility, and annual usage. As the annual usage increases, the economics of purchasing more-efficient pool heaters improve. For example, for high-usage pool heaters such as those serving recreation centers or indoor pool facilities that are operated year round, condensing pool heaters would provide higher than average utility bill savings as compared to the increase in first cost to purchase the more-efficient equipment. While DOE is not adopting a standard requiring condensing technology for gas-fired pool heaters in this final rule, DOE believes there is merit to voluntary programs and education campaigns highlighting the value of these more-efficient options for high-use pool heater operations, in terms of both the net cost savings available for such consumers and the public benefits flowing from the energy savings. DOE encourages trade associations and other groups representing consumers likely to have relatively higher annual usage of their pool heaters—such as hotels and other lodging facilities, gymnasiums and spas, community pools, and schools—to communicate with their members about the private and public benefits of considering more-efficient options and also to engage, to the extent appropriate, with manufacturers and distributors to discuss the market interest in more-efficient options. Outside the context of this final rule, DOE will consider whether it can facilitate further consumer education about these products. Related to these efforts, DOE may explore additional information collection such as notices of data availability (NODAs) or requests for information (RFIs) to further inform TSL analyses regarding hours of use assumptions and price elasticity variations across consumer subgroups. This information may be helpful both in improving underlying analyses including regarding distributional impacts in future ECS, and may also improve the effectiveness of agency outreach regarding voluntary adoption for high-use consumers of appliances.
The benefits and costs of the adopted standards can also be expressed in terms of annualized values. The annualized net benefit is (1) the annualized national economic value (expressed in 2021$) of the benefits from operating products that meet the adopted standards (consisting primarily of operating cost savings from using less energy), minus increases in product purchase costs, and (2) the annualized monetary value of the climate and health benefits.
Table V.27 shows the annualized values for consumer pool heaters under TSL 5, expressed in 2021$. The results under the primary estimate are as follows.
Using a 7-percent discount rate for consumer benefits and costs and health benefits from reduced NO
Using a 3-percent discount rate for all benefits and costs, the estimated cost of the standards is $75.3 million per year in increased equipment costs, while the estimated annual benefits are $252.7 million in reduced operating costs, $88.3 million in climate benefits, and $133.1 million in health benefits. In this case, the net benefit will amount to $398.8 million per year.
Executive Order (“E.O.”) 12866, “Regulatory Planning and Review,” as supplemented and reaffirmed by E.O. 13563, “Improving Regulation and Regulatory Review, 76 FR 3821 (Jan. 21, 2011), requires agencies, to the extent permitted by law, to (1) propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public. DOE emphasizes as well that E.O. 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, the Office of Information and Regulatory Affairs (“OIRA”) in the Office of Management and Budget (“OMB”) has emphasized that such techniques may include identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes. For the reasons stated in this preamble, this final regulatory action is consistent with these principles.
Section 6(a) of E.O. 12866 also requires agencies to submit “significant regulatory actions” to OIRA for review. OIRA has determined that this final regulatory action constitutes a “significant regulatory action” within the scope of section 3(f)(1) of E.O. 12866. Accordingly, pursuant to section 6(a)(3)(C) of E.O. 12866, DOE has provided to OIRA an assessment, including the underlying analysis, of benefits and costs anticipated from the final regulatory action, together with, to the extent feasible, a quantification of those costs; and an assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, and an explanation why the planned regulatory action is preferable to the identified potential alternatives. These assessments are summarized in this preamble and further detail can be found in the technical support document for this rulemaking.
The Regulatory Flexibility Act (5 U.S.C. 601
For manufacturers of consumer pool heaters, the SBA has set a size threshold, which defines those entities classified as “small businesses” for the purposes of the statute. DOE used the SBA's small business size standards to
DOE has undertaken this rulemaking pursuant to 42 U.S.C. 6295(e)(4)(B), which requires DOE to conduct a second round of amended standards rulemaking for consumer pool heaters. The Energy Policy and Conservation Act, as amended (EPCA), also requires that not later than six years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of the determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including new proposed energy conservation standards. (42 U.S.C. 6295(m)(1)) This rulemaking is in accordance with DOE's obligations under EPCA.
As discussed previously in section II, Title III, Part B of EPCA, sets forth a variety of provisions designed to improve energy efficiency and established the Energy Conservation Program for Consumer Products Other Than Automobiles, a program covering most major household appliances and certain industrial and commercial equipment. The National Appliance Energy Conservation Act of 1987 (NAECA), Public Law 100-12, amended EPCA to establish energy conservation standards for residential pool heaters and set requirements to conduct two cycles of rulemaking to determine whether these standards should be amended. (42 U.S.C. 6295(e)(2) and (4)) The first of these two rulemakings, which amended standards for gas-fired pool heaters, concluded with the promulgation of a final rule on April 16, 2010. 75 FR 20112. (Codified at 10 CFR 430.32(k)). This rulemaking satisfies the statutory requirements under EPCA to conduct a second round of review of the pool heaters standard. (42 U.S.C. 6295(e)(4)(B)) This rulemaking is also in accordance the six-year review required under 42 U.S.C. 6295(m)(1).
For manufacturers of consumer pool heaters, the SBA has set a size threshold, which defines those entities classified as “small businesses” for the purposes of the statute. DOE used the SBA's small business size standards to determine whether any small entities would be subject to the requirements of this proposed rule.
Manufacturing of consumer pool heaters is classified under NAICS code 333414, “heating equipment (except warm air furnaces) manufacturing.” The SBA sets a threshold of 500 employees or fewer for an entity to be considered as a small business for this category.
DOE reviewed the potential standard levels considered in this final rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. During its market survey, DOE used publicly available information to identify potential small manufacturers. DOE's research involved industry trade association membership directories (
DOE identified 20 companies manufacturing consumer pool heaters covered by this rulemaking. Of these manufacturers, DOE identified six companies that meet SBA's definition of a small business. All six domestic small businesses only manufacture electric pool heaters. DOE did not identify any domestic small businesses that manufacture gas-fired pool heaters.
DOE was able to reach and discuss potential standards with two of the six small businesses. Additionally, DOE requested information about small businesses and potential impacts on small businesses while interviewing large manufacturers.
Gas-fired pool heaters account for most of the consumer pool heater market, with approximately 72 percent of all consumer pool heater units shipped annually. Within the electric consumer pool heater market, approximately 92 percent of shipments are heat pump pool heaters and only a small fraction of the shipments are electric resistance consumer pool heaters. (See chapter 9 of the final rule TSD for more information on the shipments analysis conducted for this rulemaking.) Although the electric consumer pool heater market is smaller than the gas-fired consumer pool heater market, it is also more fragmented. Whereas DOE identified six manufacturers of gas-fired consumer pool heaters, DOE identified 18 manufacturers of electric consumer pool heaters (four of the companies make both gas-fired and electric consumer pool heaters).
Four manufacturers dominate the market for electric pool heaters, three large manufacturers and one small business. The rest of the market is served by a combination of large and small businesses with market shares estimated to be in the single digits. Of these manufacturers, DOE identified six as domestic small businesses. All six domestic small businesses only manufacture electric pool heaters. Of those six, five only manufacture electric heat pump pool heaters. The other small business only manufactures electric resistance pool heaters. DOE did not identify any domestic small businesses that manufacture gas-fired pool heaters.
As stated previously, DOE identified six small manufacturers of electric consumer pool heaters and no small manufacturers of gas-fired consumer pool heaters. Accordingly, this analysis of small business impacts focuses exclusively on the electric consumer pool heater industry.
This final rule adopts minimum energy conservation standards for electric consumer pool heaters at efficiency levels above those capable of being achieved by electric resistance pool heaters. Given that the designs of electric heat pump pool heaters and electric resistance pool heaters use different types of technology, DOE assumes manufacturers of electric resistance consumer pool heaters would
As described in section IV.J.2.c of this document, there are two types of conversion costs that small businesses could incur due to the adopted standard for electric consumer pool heaters: product conversion costs and capital conversion costs. Product conversion costs are investments in R&D, testing, marketing, and other non-capitalized costs necessary to make product designs comply with new and amended energy conservation standards. Capital conversion costs are investments in property, plant, and equipment necessary to adapt or change existing production facilities such that new compliant product designs can be fabricated and assembled. Manufacturers will only need to make these investments if they have products that do not meet the adopted energy conservation standards. Testing costs are costs manufacturers must make to test their electric consumer pool heaters in accordance with DOE's test procedure to demonstrate compliance with adopted energy conservation standards. Manufacturers must do this for all compliant electric consumer pool heaters that are in the scope of this rulemaking.
DOE estimates there are two small businesses that do not have any electric heat pump consumer pool heater models that would meet the adopted standard for electric consumer pool heaters. DOE applied the conversion cost methodology described in section IV.J.2.c of this document to calculate each small business's estimate product and capital conversion costs. To calculate product conversion costs, DOE estimated it would take 12 months of engineering time to redesign a single electric heat pump consumer pool heater model to meet the adopted standards for electric consumer pool heater (EL 4). DOE estimates that there are approximately 50 electric heat pump consumer pool heater unique basic models manufactured by small businesses that may need to be redesigned to comply with the adopted energy conservation standard for electric consumer pool heaters. To calculate capital conversion costs DOE estimates that most small businesses would need to make investments in tooling to accommodate electric heat pump consumer pool heater models with a larger evaporator. Small business conversion costs are presented in Table VI.1.
The five small businesses that manufacture electric heat pump consumer pool heaters would incur testing costs to demonstrate compliance in accordance with DOE's test procedure to the electric consumer pool heater energy conservation standard. Electric consumer pool heaters are currently not subject to a DOE energy conservation standard. This final rule establishes new energy conservation standards for electric consumer pool heaters. Therefore, all manufacturers, including small businesses, will have to test all electric consumer pool heaters that are subject to this rulemaking after the compliance date of the energy conservation standards established in this final rule. DOE estimates that small businesses manufacture approximately 65 unique basic models of electric heat pump consumer pool heaters. All 65 electric heat pump consumer pool heater models will need to be tested after the compliance date. DOE estimates a per model testing cost for these electric heat pump consumer pool heater models of approximately $6,500 per model. Small business conversion and testing costs are presented in Table VI.1.
DOE estimates the average small business will incur approximately $1.48 million per small business. DOE assumes that all consumer pool heater manufacturers would spread these costs over the five-year compliance timeframe, as compliance with the standards adopted in this final rule is required within five years after the publication of this document. Therefore, DOE assumes that the average consumer pool heater small business would incur on average $296,000 annually in each of the five years leading up to the compliance date for consumer pool heaters. Using publicly available data, DOE estimated the average annual revenue of the five small businesses that manufacturer electric heat pump consumer pool heaters to be $13.7 million. Table VI.2 compares these average small business costs to average annual revenue of small businesses.
Lastly, for the one small business that manufactures only electric resistance consumer pool heaters, based on public company literature, this small business manufactures approximately nine electric resistance consumer pool
DOE is not aware of any rules or regulations that duplicate, overlap, or conflict with the rule being considered here.
The discussion in the previous section analyzes impacts on small businesses that would result from the adopted standards, represented by TSL 5. In reviewing alternatives to the adopted standards, DOE examined energy conservation standards set at lower efficiency levels. While TSL 1, TSL 2, TSL 3, and TSL 4 would reduce the impacts on small business manufacturers, it would come at the expense of a reduction in energy savings. TSL 1 achieves 64 percent lower energy savings compared to the energy savings at TSL 5 and between 42 percent and 47 percent lower consumer NPV savings compared to the consumer NPV savings at TSL 5 (at a 3 percent discount rate and a 7 percent discount rate respectively); TSL 2 achieves 56 percent lower energy savings compared to the energy savings at TSL 5 and between 33 percent and 37 percent lower consumer NPV savings compared to the consumer NPV savings at TSL 5 (at a 3 percent discount rate and a 7 percent discount rate respectively); TSL 3 achieves 42 percent lower energy savings compared to the energy savings at TSL 5 and between 17 percent and 20 percent lower consumer NPV savings compared to the consumer NPV savings at TSL 5 (at a 3 percent discount rate and a 7 percent discount rate respectively); TSL 4 achieves 36 percent lower energy savings compared to the energy savings at TSL 5 and between 17 percent and 20 percent lower consumer NPV savings compared to the consumer NPV savings at TSL 5 (at a 3 percent discount rate and a 7 percent discount rate respectively).
Establishing standards at TSL 5 balances the benefits of the energy savings at TSL 5 with the potential burdens placed on consumer pool heaters manufacturers, including small business manufacturers. Accordingly, DOE is not adopting one of the other TSLs considered in the analysis, or the other policy alternatives examined as part of the regulatory impact analysis and included in chapter 17 of the final rule TSD.
Additional compliance flexibilities may be available through other means. EPCA provides that a manufacturer whose annual gross revenue from all of its operations does not exceed $8 million may apply for an exemption from all or part of an energy conservation standard for a period not longer than 24 months after the effective date of a final rule establishing the standard. (42 U.S.C. 6295(t)) Additionally, manufacturers subject to DOE's energy efficiency standards may apply to DOE's Office of Hearings and Appeals for exception relief under certain circumstances. Manufacturers should refer to 10 CFR part 430, subpart E, and 10 CFR part 1003 for additional details.
Manufacturers of consumer pool heaters must certify to DOE that their products comply with any applicable energy conservation standards. In certifying compliance, manufacturers must test their products according to the DOE test procedures for consumer pool heaters, including any amendments adopted for those test procedures. DOE has established regulations for the certification and recordkeeping requirements for all covered consumer products and commercial equipment, including consumer pool heaters. (
Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.
Pursuant to the National Environmental Policy Act of 1969 (“NEPA”), DOE has analyzed this rule in accordance with NEPA and DOE's NEPA implementing regulations (10 CFR part 1021). DOE has determined that this rule qualifies for categorical exclusion under 10 CFR part 1021, subpart D, appendix B5.1 because it is a rulemaking that establishes energy conservation standards for consumer products or industrial equipment, none of the exceptions identified in appendix B5.1(b) apply, no extraordinary circumstances exist that require further environmental analysis, and it meets the requirements for application of a categorical exclusion.
E.O. 13132, “Federalism,” 64 FR 43255 (Aug. 10, 1999), imposes certain requirements on Federal agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. The Executive order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE has examined this rule and has determined that it would not have a substantial direct effect on the States,
With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of E.O. 12988, “Civil Justice Reform,” imposes on Federal agencies the general duty to adhere to the following requirements: (1) eliminate drafting errors and ambiguity, (2) write regulations to minimize litigation, (3) provide a clear legal standard for affected conduct rather than a general standard, and (4) promote simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding the review required by section 3(a), section 3(b) of E.O. 12988 specifically requires that executive agencies make every reasonable effort to ensure that the regulation (1) clearly specifies the preemptive effect, if any, (2) clearly specifies any effect on existing Federal law or regulation, (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction, (4) specifies the retroactive effect, if any, (5) adequately defines key terms, and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of E.O. 12988 requires executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this final rule meets the relevant standards of E.O. 12988.
Title II of the Unfunded Mandates Reform Act of 1995 (“UMRA”) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). For a regulatory action likely to result in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect them. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy statement is also available at
DOE has concluded that this final rule may require expenditures of $100 million or more in any one year by the private sector. Such expenditures may include (1) investment in research and development and in capital expenditures by consumer pool heaters manufacturers in the years between the final rule and the compliance date for the new standards and (2) incremental additional expenditures by consumers to purchase higher-efficiency consumer pool heaters, starting at the compliance date for the applicable standard.
Section 202 of UMRA authorizes a Federal agency to respond to the content requirements of UMRA in any other statement or analysis that accompanies the final rule. (2 U.S.C. 1532(c)) The content requirements of section 202(b) of UMRA relevant to a private sector mandate substantially overlap the economic analysis requirements that apply under section 325(o) of EPCA and Executive Order 12866. This
Under section 205 of UMRA, the Department is obligated to identify and consider a reasonable number of regulatory alternatives before promulgating a rule for which a written statement under section 202 is required. (2 U.S.C. 1535(a)) DOE is required to select from those alternatives the most cost-effective and least burdensome alternative that achieves the objectives of the rule unless DOE publishes an explanation for doing otherwise, or the selection of such an alternative is inconsistent with law. As required by 42 U.S.C. 6295(e)(4)(B) and 42 U.S.C. 6295(m), this final rule establishes new and amended energy conservation standards for consumer pool heaters that are designed to achieve the maximum improvement in energy efficiency that DOE has determined to be both technologically feasible and economically justified, as required by 42 U.S.C. 6295(o)(2)(A) and 6295(o)(3)(B). A full discussion of the alternatives considered by DOE is presented in chapter 17 of the TSD for this final rule.
Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.
Pursuant to E.O. 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights,” 53 FR 8859 (March 18, 1988), DOE has determined that this rule would not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.
Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to review most disseminations of information to the public under information quality guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving Implementation of the Information Quality Act (April 24, 2019), DOE published updated guidelines which are available at
E.O. 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OIRA at OMB, a Statement of Energy Effects for any significant energy action. A “significant energy action” is defined as any action by an agency that promulgates or is expected to lead to promulgation of a final rule, and that (1) is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use.
DOE has concluded that this regulatory action, which sets forth new and amended energy conservation standards for consumer pool heaters, is not a significant energy action because the standards are not likely to have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as such by the Administrator at OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects on this final rule.
On December 16, 2004, OMB, in consultation with the Office of Science and Technology Policy (“OSTP”), issued its Final Information Quality Bulletin for Peer Review (“the Bulletin”). 70 FR 2664 (Jan. 14, 2005). The Bulletin establishes that certain scientific information shall be peer reviewed by qualified specialists before it is disseminated by the Federal Government, including influential scientific information related to agency regulatory actions. The purpose of the Bulletin is to enhance the quality and credibility of the Government's scientific information. Under the Bulletin, the energy conservation standards rulemaking analyses are “influential scientific information,” which the Bulletin defines as “scientific information the agency reasonably can determine will have, or does have, a clear and substantial impact on important public policies or private sector decisions.” 70 FR 2664, 2667.
In response to OMB's Bulletin, DOE conducted formal peer reviews of the energy conservation standards development process and the analyses that are typically used and prepared a report describing that peer review.
As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule prior to its effective date. The report will state that it has been determined that the rule is a “major rule” as defined by 5 U.S.C. 804(2).
The following standards included in this final rule were previously approved for incorporation by reference for the locations in which they appear in the regulatory text: ANSI Z21.56 and ASHRAE 146.
The Secretary of Energy has approved publication of this final rule.
Administrative practice and procedure, Confidential business information, Energy conservation, Household appliances, Reporting and recordkeeping requirements.
Administrative practice and procedure, Confidential business information, Energy conservation, Household appliances, Imports, Incorporation by reference, Intergovernmental relations, Reporting and recordkeeping requirements, Small businesses.
This document of the Department of Energy was signed on March 30, 2023, by Francisco Alejandro Moreno, Acting Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the
For the reasons stated in the preamble, DOE amends parts 429 and 430 of chapter II, subchapter D, of title 10 of the Code of Federal Regulations, as set forth below:
42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.
(cc)
(1)
(i) If the representative value of input capacity is found to be valid, the certified input capacity will serve as the basis for determination of the applicable standard and the mean measured input capacity will be used as the basis for calculation of the integrated thermal efficiency standard for the basic model.
(ii) If the representative value of input capacity is not within two percent of the certified input capacity, DOE will first attempt to increase or decrease the gas pressure within the range specified in manufacturer's installation and operation manual shipped with the gas-fired pool heater being tested to achieve the certified input capacity (within two percent). If the input capacity is still not within two percent of the certified input capacity, DOE will attempt to modify the gas inlet orifice. If the input capacity still is not within two percent of the certified input capacity, the mean measured input capacity (either for a single unit sample or the average for a multiple unit sample) determined from the tested units will serve as the basis for calculation of the integrated thermal efficiency standard for the basic model.
(2)
(i) If the representative value of active electrical power is found to be valid, the certified active electrical power will serve as the basis for determination of the applicable standard and the mean measured active electrical power will be used as the basis for calculation of the integrated thermal efficiency standard for the basic model.
(ii) If the representative value of active electrical power is not within five percent of the certified active electrical power, the mean measured active electrical power (either for a single unit sample or the average for a multiple unit sample) determined from the tested units will serve as the basis for calculation of the integrated thermal efficiency standard for the basic model.
42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
(1) Uses electricity as its primary energy source;
(2) Has an output capacity (as measured according to appendix P to subpart B of part 430) of 11 kW or less; and
(3) Is designed to be installed within a portable electric spa.
The revisions and additions read as follows:
On and after November 27, 2023, any representations made with respect to the energy use or efficiency of all pool heaters must be made in accordance with the results of testing pursuant to this appendix. Until November 27, 2023, manufacturers must test gas-fired pool heaters in accordance with this appendix, or appendix P as it appeared at 10 CFR part 430, subpart B revised as of January 1, 2021. Prior to November 27, 2023, if a manufacturer makes representations of standby mode and off mode energy consumption, then testing must also include the provisions of this appendix, or appendix P as it appeared at 10 CFR part 430, subpart B revised as of January 1, 2021, related to standby mode and off mode energy consumption.
5.2
For fossil fuel-fired pool heaters, the average annual fuel energy for pool heaters, E
5.3
5.5
5.5.1 Calculate the output capacity of an electric heat pump pool heater as:
5.5.2 Calculate the output capacity of an electric resistance pool heater as:
(k)
(2) Gas-fired pool heaters and electric pool heaters manufactured on and after May 30, 2028, shall have an integrated thermal efficiency not less than the following:
The following letter will not appear in the Code of Federal Regulations.
I am responding to your April 15, 2022 letter seeking the views of the Attorney General about the potential impact on competition of proposed energy conservation standards for consumer pool heaters. Your request was submitted under Section 325(o)(2)(B)(i)(V) of the Energy Policy and Conservation Act, as amended (ECPA), 42 U.S.C. 6295(o)(2)(B)(i)(V), and 42 U.S.C. 6316(a), which requires the Attorney General to make a determination of the impact of any lessening of competition that is likely to result from the imposition of proposed energy conservation standards. The Attorney General's responsibility for responding to requests from other departments about the effect of a program on competition has been delegated to the Assistant Attorney General for the Antitrust Division in 28 CFR 0.40(g). The Assistant Attorney General for the Antitrust Division has
In conducting its analysis, the Antitrust Division examines whether a proposed standard may lessen competition, for example, by substantially limiting consumer choice or increasing industry concentration. A lessening of competition could result in higher prices to manufacturers and consumers. We have reviewed the proposed standards contained in the Notice of Proposed Rulemaking (87 FR 22640, April 15, 2022), and the related technical support documents. We also reviewed the transcript from the public meeting held on May 4, 2022 and reviewed public comments submitted by industry members in response to DOE's Request for Information and Notice of Data Availability in this matter.
Based on the information currently available, we do not believe that the proposed energy conservation standards for consumer pool heaters are likely to have a significant adverse impact on competition.
Securities and Exchange Commission.
Proposed rule.
The Securities and Exchange Commission (“Commission”) is proposing to amend certain portions of the Covered Clearing Agency Standards under the Securities Exchange Act of 1934 (“Exchange Act”) to strengthen the existing rules regarding margin with respect to intraday margin and the use of substantive inputs to a covered clearing agency's risk-based margin system. The Commission is also proposing a new rule to establish requirements for the contents of a covered clearing agency's recovery and wind-down plan.
Comments should be received on or before July 17, 2023.
Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
Studies, memoranda, or other substantive items may be added by the Commission or staff to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on our website. To ensure direct electronic receipt of such notifications, sign up through the “Stay Connected” option at
Elizabeth L. Fitzgerald, Assistant Director, Jesse Capelle, Special Counsel, Office of Clearance and Settlement at (202) 551-5710, Division of Trading and Markets, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-7010.
H. Request for Comment
Section 17A of the Exchange Act directs the Commission to facilitate the establishment of a national system for the prompt and accurate clearance and settlement of securities transactions and provides the Commission with the authority to regulate those entities critical to the clearance and settlement process.
In recognition of the importance of clearance and settlement to the securities markets, the Commission adopted 17 CFR 240.17Ad-22(e) (“Rule 17Ad-22(e)”), which sets forth standards for covered clearing agencies registered with the Commission.
First, the Commission is proposing changes with respect to the Covered Clearing Agency Standards regarding the intraday collection of margin set forth in 17 CFR 240.17Ad-22(e)(6)(ii) (“Rule 17Ad-22(e)(6)(ii)”). This proposal would build upon and strengthen the existing requirement that a covered clearing agency have policies and procedures reasonably designed to cover its credit exposures to its participants by establishing a risk-based margin system that, among other things, includes the authority and operational capacity to make intraday margin calls in defined circumstances. Specifically, the proposed amendments to this rule would require that the covered clearing agency have policies and procedures to establish a risk-based margin system that includes the authority and operational capacity to monitor intraday exposure on an ongoing basis and to make intraday margin calls as frequently as circumstances warrant, including when risk thresholds specified by the covered clearing agency are breached or when the products cleared or markets served display elevated volatility.
Second, the proposal would amend and expand the requirements of 17 CFR 240.17Ad-22(e)(6)(iv) (“Rule 17Ad-22(e)(6)(iv)”) to provide that a covered clearing agency have policies and procedures that would apply in the event that the covered clearing agency relies on substantive inputs from third parties to calculate margin using a risk-based margin system and, specifically, when such inputs are not readily available or reliable. This proposal would require that the procedures used in such circumstances must include substantive inputs from an alternate source or, if it does not use an alternate source, the use of an alternate risk-based margin system that does not similarly rely on the unavailable or unreliable substantive inputs.
Finally, the Commission is proposing to prescribe requirements for the contents of a covered clearing agency's recovery and orderly wind-down plan (“RWP”). At the time that it adopted the Covered Clearing Agency Standards in 2016, the Commission required in 17 CFR 240.17Ad-22(e)(3)(ii) (“Rule 17Ad-27(e)(3)(ii)”) that a covered clearing agency's policies and procedures include an RWP, but the Commission declined to include requirements for the content of the RWP, stating that, given the nature of recovery and resolution planning, such plans are likely to closely reflect the specific characteristics of the covered clearing agency, including its ownership, organizational, and operational structures, as well as the size, systemic importance, global reach, and/or the risks inherent in the products it clears.
However, with respect to changes to RWPs and to risk management rules more generally, the Commission would need to approve any proposed rule changes and, in filings for which an advance notice is required, not object to any such notice, as discussed further in section II.B
In 1975, Congress added section 17A to the Exchange Act as part of the Securities Acts Amendments of 1975, which, as noted in section I
The Commission's ability to achieve these goals is based upon the regulation of clearing agencies registered with the Commission.
The Commission has exercised its broad authority to prescribe requirements for the prompt and accurate clearance and settlement of securities transactions and the safeguarding of securities and funds. Most recently, the Commission promulgated the Covered Clearing Agency Standards.
One of the Covered Clearing Agency Standards concerns the maintaining of a sound risk management framework for comprehensively managing legal, credit, liquidity, operational, general business, investment, custody, and other risks that arise in or are borne by the covered clearing agency.
At the time of adoption of the Covered Clearing Agency Standards, the Commission declined to articulate requirements for all RWPs.
Relatedly, the Covered Clearing Agency Standards also address the financial resources necessary for a covered clearing agency's recovery or orderly wind-down. Specifically, 17 CFR 240.17Ad-22(e)(15) requires written policies and procedures reasonably designed to, among other things, hold sufficient liquid net assets funded by equity to cover potential general business losses so that the covered clearing agency can continue operations and services as a going concern if those losses materialize.
Another of the Covered Clearing Agency Standards sets forth requirements for written policies and procedures reasonably designed to, among other things, establish a risk-based margin system to cover the covered clearing agency's credit
In addition, a covered clearing agency's risk-based margin system has to use reliable sources of timely price data and use procedures and sound valuation models for addressing circumstances in which pricing data are not readily available or reliable.
A covered clearing agency is, by definition, a registered clearing agency, meaning that it is a self-regulatory organization (“SRO”) for purposes of the Exchange Act.
The Commission publishes all proposed rule changes for comment.
In addition, clearing agencies registered with the Commission are financial market utilities, as defined in section 803(6) of the Dodd-Frank Act.
The covered clearing agencies' obligations as SROs and, as applicable, designated clearing agencies, are important when considering the types of changes that the Commission is proposing. If the covered clearing agency has to make changes to its rules to align with any of the proposed rules, if adopted, the covered clearing agency would be obligated to consider whether any proposed rule change and/or advance notice is necessary. For example, the Commission previously has stated that recovery and wind-down plans, and material changes thereto, would constitute a proposed rule change under section 19(b) of the Exchange Act and, for designated clearing agencies, an advance notice under the Clearing Supervision Act because such plans and material changes thereto would constitute changes to a stated policy, practice, or interpretation of the covered clearing agency and, for designated clearing agencies, a proposed change to its operations that could materially affect the nature or level of risk presented by the designated clearing agency.
Indeed, covered clearing agencies have submitted RWPs, and material changes thereto, for public comment and Commission review pursuant to the proposed rule change and advance
Title II of the Dodd-Frank Act establishes a process for the appointment of the Federal Deposit Insurance Corporation (“FDIC”) as receiver of a failing financial company if, among other things, its failure would otherwise have serious adverse effects on financial stability in the United States.
Under this process, certain specified Federal regulatory authorities must recommend to the Secretary of the Treasury (the “Secretary”) that the Secretary appoint the FDIC as receiver of the company. For most entities, including covered clearing agencies, the recommending agencies would be the Board of Governors and the FDIC.
Notably for this proposal, a covered clearing agency would be subject to this sort of orderly liquidation if two conditions are met. First, it must be considered to be a financial company, which includes any company that is incorporated or organized under any provision of Federal law or the laws of any State and is predominately engaged in activities that the Board of Governors has determined are financial in nature or incidental thereto.
Once appointed as the resolution authority, the FDIC essentially “steps into the shoes” of the financial company and is able to use any powers and resources available to the financial company.
The Commission is proposing amendments to existing rules and an additional rule under section 17A of the Exchange Act. Specifically, the Commission is proposing to amend Rule 17Ad-22(e)(6)(ii) with respect to intraday margin, to require that a covered clearing agency's risk-based margin system monitors intraday exposures on an ongoing basis and includes the authority and operational capacity to make intraday margin calls as frequently as circumstances warrant, including when risk thresholds specified by the covered clearing agency are breached or when the products cleared or markets served display elevated volatility. Second, the Commission is proposing to amend Rule 17Ad-22(e)(6)(iv) with respect to the use of sources of information in a covered clearing agency's risk-based margin system, to require policies and procedures reasonably designed to have
The Commission is proposing to amend Rule 17Ad-22(e)(6)(ii) to strengthen its requirements: first, by further requiring that a covered clearing agency have policies and procedures reasonably designed to monitor intraday exposures on an ongoing basis; and second, by providing additional specificity to the circumstances in which a covered clearing agency should have policies and procedures to collect intraday margin. Specifically, as proposed, Rule 17ad-22(e)(6)(ii) would require a covered clearing agency that provides central counterparty services to establish, implement, maintain and enforce written policies and procedures reasonably designed to cover its credit exposures to its participants by establishing a risk-based margin system that, at a minimum, marks participant positions to market and collects margin, including variation margin or equivalent charges if relevant, at least daily, monitors intraday exposures on an ongoing basis, and includes the authority and operational capacity to make intraday margin calls as frequently as circumstances warrant, including when risk thresholds specified by the covered clearing agency are breached or when the products cleared or markets served display elevated volatility.
The Commission is also proposing to amend Rule 17Ad-22(e)(6)(iv) to strengthen its requirements: first, by expanding the scope of the rule to apply to both price data and other substantive inputs to a covered clearing agency's risk-based margin system; second, by further specifying the level to which the covered clearing agency's procedures must perform when price data or other substantive inputs are not available or reliable; and third, by providing that the procedures used when price data or other inputs are not available or reliable should include alternate sources or an alternate risk-based margin system.
As discussed above, when considering the adoption of Rule 17Ad-22(e)(6)(ii) in 2014, the Commission stated that requiring covered clearing agencies to have the authority and operational capacity to make intraday margin calls in defined circumstances would “benefit covered clearing agencies by covering settlement risk created by intraday price movements.”
The Commission is now proposing to amend Rule 17Ad-22(e)(6)(ii) to incorporate a requirement of intraday monitoring and to require that such monitoring is done on an ongoing basis. The Commission continues to believe that it is essential that a covered clearing agency monitor its intraday exposure because the covered clearing agency faces a risk that its exposure to its participants can change rapidly as a result of intraday changes in prices, positions, or both. Moreover, the Commission believes that requiring that such monitoring occur on an ongoing basis will contribute to ensuring that the covered clearing agency is sufficiently informed and situated to take appropriate actions to manage any intraday exposure that arises.
The Commission is not prescribing a particular time period or frequency that would constitute an ongoing basis because the Commission believes that the covered clearing agency should be able to tailor its monitoring to the particular products cleared and markets served. The Commission believes that this requirement to monitor intraday exposure on an ongoing basis should allow flexibility to determine what monitoring frequency is appropriate to the particular market. For example, more frequent monitoring may be necessary for a covered clearing agency that operates in markets where intraday trading may be more prevalent or where intraday exposures may tend to be larger because of specific features, such as the settlement process. Being able to monitor, on an ongoing basis, any decrease in the margin coverage as compared to the changes in intraday credit exposures in its participants' portfolios should help the covered clearing agency ensure that it is able to collect margin sufficient to cover its participants' exposures. A covered clearing agency generally should consider whether its intraday monitoring considers how participants' exposures would affect all risks faced by the covered clearing agency, including those that may already be contemplated by variation margin, initial margin, or add-on charges.
Currently, Rule 17ad-22(e)(6)(ii) refers only to the covered clearing agency's ability to collect intraday margin “in defined circumstances.” The proposed amendment to Rule 17Ad-22(e)(6)(ii) would amend this to require covered clearing agencies to have policies and procedures to establish a risk-based margin system with the ability to make intraday margin calls as frequently as circumstances warrant, including when risk thresholds specified by the covered clearing agency are breached or when the products cleared or markets served display elevated volatility. The Commission believes that this proposed requirement would build upon and expand the current rule's requirement that provides
The Commission believes that the proposed requirement for a covered clearing agency to have the authority and operational capacity to make intraday margin calls when the markets served display elevated volatility should ensure that the covered clearing agency develops policies and procedures to determine when it considers volatility to be elevated above typical levels, and potentially necessitating the collection of additional margin, in a manner specific to the products cleared and markets served. The Commission also believes that the proposed requirement for a covered clearing agency to have the authority and operational capacity to make intraday margin calls when specific risk thresholds are breached should ensure that the covered clearing agency considers
Currently, Rule 17Ad-22(e)(6)(iv) requires the establishment of a risk-based margin system that uses reliable sources of timely price data and uses procedures and sound valuation models for addressing circumstances in which pricing data are not readily available or reliable. When it proposed Rule 17Ad-22(e)(6)(iv), the Commission stated that a covered clearing agency should use reliable sources of timely price data because its margin system needs such data to operate with a high degree of accuracy and reliability, given the risks that the covered clearing agency's size, operation, and importance pose to the U.S. securities markets.
Based on its experience with the Covered Clearing Agency Standards since their adoption in 2016, including its review and understanding of the covered clearing agencies' margin methodologies and, specifically, whether the methodologies rely on substantive inputs other than price data, the Commission believes that it is appropriate to expand the scope of this rule beyond price data to encompass other substantive inputs to a covered clearing agency's risk-based margin system.
In some instances, a covered clearing agency relies on third parties for these inputs. For similar reasons as the Commission discussed when proposing Rule 17Ad-22(e)(6)(iv), there is a need to use reliable sources for such inputs. The unavailability or unreliability of an input to a margin system, for example, if a third party provider does not perform, could potentially affect the covered clearing agency's ability to calculate margin. Currently, the Commission's rules do not address how a covered clearing agency plans for circumstances in which a substantive input to its risk-based margin system is not readily available or reliable. This proposed amendment to Rule 17ad-22(e)(6)(iv) would require that the covered clearing agency addresses such circumstances and develops appropriate procedures, for those covered clearing agencies that use such substantive inputs. Establishing procedures for when such substantive inputs from third parties are not available or reliable should, in turn, help ensure that the covered clearing agency can continue to calculate and collect margin commensurate with, the risks and particular attributes of each relevant product, portfolio, and market, as required under Rule 17Ad-22(e)(6)(i), in such circumstances.
The Commission is therefore proposing to amend Rule 17Ad-22(e)(6)(iv) to expand its scope beyond
Further, the Commission is proposing to impose a new requirement that would further elaborate on the procedures necessary when price data is not available and that would also apply to substantive inputs to a covered clearing agency's risk-based margin system. Currently, the rule requires that the covered clearing agency use procedures and sound valuation models only when price data is not readily available or reliable. The proposed amendment would, with respect to both price data and other substantive inputs, require that such procedures should address circumstances in which price data
The Commission also proposes to further specify that the procedures for when the price data or substantive inputs are not readily available or reliable shall include the use of price data or substantive inputs from an alternate source or the use of an alternate risk-based margin system that does not similarly rely on the same unavailable or unreliable substantive input. With respect to the use of an alternate source, such an alternate source generally should meet the same level of reliability of the primary source, whether that alternate is sourced from an external provider or created internally. With respect to policies and procedures for the use of an alternate risk-based margin system if the covered clearing agency does not use an alternate source, this potential alternate risk-based margin system needs to be an alternate margin model that does not rely on the same data source that is unavailable or unreliable, to ensure that the covered clearing agency can continue to meet its requirements under Rule 17Ad-22(e)(6). Any alternative risk-based margin system would be subject to the requirements of 17 CFR 240.17Ad-22(e)(6)(vi) and (vii), with respect to monitoring, review, testing, and verification, and model validation.
With respect to both, a covered clearing agency generally should consider its reliance on any third party sources for purposes of its risk-based margin system and consider whether an alternate system or source of data or other inputs that is internal to the covered clearing agency, and does not rely upon any third party provider, would be appropriate, given the importance of calculating margin for a covered clearing agency to cover its exposure to its participants.
The Commission is requesting comment on all aspects of the proposed amendments to Rule 17Ad-22(e)(6). The Commission also solicits comment on the particular questions set forth below, and encourages commenters to submit any relevant data or analysis in connection with their answers.
1. Should Rule 17Ad-22(e)(6) be amended to require that covered clearing agencies have policies and procedures reasonably designed to monitor intraday exposures and to require that monitoring to occur on an ongoing basis? Do commenters have views on what constitutes an ongoing basis, and does it differ for products cleared or markets served by a covered clearing agency? For example, would an ongoing basis in the equity market be different than in the security-based swaps market?
2. Should Rule 17Ad-22(e)(6) be amended to require that covered clearing agencies have policies and procedures reasonably designed to make intraday margin calls as frequently as circumstances warrant, including when risk thresholds specified by the covered clearing agency are breached or when the products cleared or markets served display elevated volatility?
3. Should the Commission prescribe particular risk thresholds for intraday margin calls? If so, what should those thresholds be and what is the basis for those thresholds, and should the threshold applicable to particular asset classes (
4. Should the Commission identify additional circumstances that may warrant intraday margin calls beyond when the products cleared or markets served display elevated volatility? If so, what should those circumstances be?
5. Do commenters believe that certain participants of covered clearing agencies, including, for example, participants with less capital or using smaller settlement banks, could face operational challenges or pricing disadvantages, if proposed Rule 17Ad-22(e)(6)(ii) were to result in more frequent margin calls?
6. Should Rule 17Ad-22(e)(6)(iv) be amended to expand its scope to encompass other substantive inputs to a covered clearing agency's risk-based margin system? Should the Commission identify any particular types of substantive inputs or further specify what types of inputs should be included within the scope of the rule?
7. Should Rule 17Ad-22(e)(6)(iv) be amended to state that the procedures used when price data or other substantive inputs are not readily available or reliable should ensure that the covered clearing agency can continue to meet its obligations under Rule 17Ad-22(e)(6)?
8. Should Rule 17Ad-22(e)(6)(iv) be amended to further describe that the procedures used by a covered clearing agency when price data or other substantive inputs are not readily available or reliable shall include the use of price data or substantive inputs from an alternate source or the use of an alternate risk-based margin system?
9. Do commenters have views on whether the Commission should require that any alternate source should be independent of third party providers, that is, within the sole control of the covered clearing agency?
Proposed Rule 17ad-26(a) would require that a covered clearing agency's recovery and wind-down plan, the existence of which is required in current Rule 17Ad-22(e)(3)(ii), shall: (1) identify and describe the covered clearing agency's critical payment, clearing, and settlement services and address how the covered clearing agency would continue to provide such critical services in the event of recovery
As discussed in section II.A
In addition, the Commission has continued to participate in the development of guidance by international standard setting bodies in the areas of recovery and resolution of financial market infrastructures, which would include covered clearing agencies. The Committee on Payments and Market Infrastructure and the International Organization of Securities Commissions (together, “CPMI-IOSCO”) published a report entitled
Other U.S. authorities have established and had the opportunity to administer requirements for certain specific elements to be included in the RWPs of the financial market utilities they supervise. For example, Regulation HH, issued by the Board of Governors, was amended in 2014 to identify seven elements that must be addressed or be included in recovery and wind-down plans.
Based on this supervisory experience, including its review and approval of the RWPs for the covered clearing agencies, the Commission believes it is now appropriate to specify elements for inclusion in a covered clearing agency's RWP by proposing Rule 17ad-26. The Commission has observed that the covered clearing agencies have, to a great degree, converged in terms of the types of elements that are included in each plan. As discussed in more detail in section IV.B.3
When adopting the Covered Clearing Agency Standards, the Commission stated that a covered clearing agency generally should have policies and procedures to provide the relevant resolution authorities with information needed for the purposes of resolution planning, including its recovery and wind-down plan.
The Commission believes that codifying these items as part of recovery and wind-down plans would help assist relevant resolution authorities develop and improve resolution plans for covered clearing agencies in resolution. For example, by ensuring that these items are included in RWPs, a resolution authority will have a more comprehensive understanding of what the covered clearing agencies' critical payment, clearing, and settlement services are, as well as what providers support such services, thereby allowing a resolution authority to connect, or “map,” the various providers to the critical services to ensure continuity of clearance and settlement by a covered clearing agency in resolution.
The Commission believes that definitions of the terms “recovery” and “orderly wind-down” would provide covered clearing agencies, as well as market participants, a precise description of the meaning of these terms, which are not currently defined in the Commission's rules and are often used together, and somewhat interchangeably, by market participants. Further, these definitions would help covered clearing agencies understand the precise goal for which their RWPs should be reasonably designed to meet. The Commission believes that the RWPs generally should set forth the covered clearing agency's viable strategy for ensuring that they address how a covered clearing agency would achieve a recovery or orderly wind-down, using the tools and resources available under its rules and procedures.
Current Rule 17Ad-22(e)(3)(ii) and proposed Rule 17ad-26 both refer to plans for recovery
Moreover, because these definitions refer to actions of a covered clearing agency only, as opposed to any other entity, neither a recovery plan nor an orderly wind-down plan should be based on assumptions of government intervention or support.
Proposed Rule 17ad-26(b) would define “recovery” to mean the actions of a covered clearing agency, consistent with its rules, procedures, and other ex ante contractual arrangements, to address any uncovered loss, liquidity shortfall, or capital inadequacy, whether arising from participant default or other causes (such as business, operational, or other structural weaknesses), including actions to replenish any depleted prefunded financial resources and liquidity arrangements, as necessary to maintain the covered clearing agency's viability as a going concern and to continue its provision of critical services. The Commission believes that this proposed definition is generally consistent with its previous understanding of recovery, as set forth in the CCA Standards Adopting Release, in that this proposed definition also focuses on the actions of the covered clearing agency that are beyond its typical business operations and refers to situations in which the covered clearing agency's ability to serve as a going concern is in question, that is, it goes beyond the covered clearing agency's “business as usual” operations.
Proposed Rule 17ad-26(b) would define “orderly wind-down” to mean the actions of a covered clearing agency to effect the permanent cessation, sale, or transfer of one or more of its critical services in a manner that would not increase the risk of significant liquidity, credit, or operational problems spreading among financial institutions or markets and thereby threaten the stability of the U.S. financial system. The Commission believes that this
To be orderly, a wind-down generally should include a covered clearing agency providing notice to allow participants to transition to alternative arrangements in an orderly manner, as well as maintaining the operation of critical services. Moreover, for a wind-down involving the sale or transfer of all or a portion of the covered clearing agency to be orderly, the covered clearing agency generally should consider the separability of the parts of the covered clearing agency and whether there are certain portions of the covered clearing agency's business that could be sold or transferred as separate businesses.
Proposed Rule 17ad-26(a)(1) would require each covered clearing agency's RWP to identify and describe the covered clearing agency's critical payment, clearing, and settlement services and address how the covered clearing agency would continue to provide such critical services in the event of recovery and during an orderly wind-down, including the identification of the staffing necessary to support such critical services and analysis of how such staffing would continue in the event of a recovery and during an orderly wind-down.
The Commission believes that, regardless of the products cleared or markets served, the necessary first step in effective recovery and wind-down planning must be identifying and describing the critical services that are provided to market participants, as required under this proposed rule. As stated above, market participants rely on the services of covered clearing agencies to facilitate payment, clearing, and settlement for the U.S. securities markets. The Commission believes that identifying and describing the critical services in an RWP should ensure that the covered clearing agency focuses its recovery and wind-down plans on its ability to continue to provide those services on an ongoing basis, even under stress. Covered clearing agencies already identify and describe their critical services in the existing RWPs, as well as the criteria used to determine what services are critical. However, covered clearing agencies generally do not provide specific information as to the staffing necessary to support a recovery or orderly wind-down.
When identifying what is a critical payment, clearing, or settlement service, the Commission believes that the covered clearing agency generally should consider the impact that any interruption to particular services would have on the covered clearing agency's participants and the smooth functioning of the markets that it serves, as well as whether the service is available from any substitute provider. In this proposed rule, the Commission believes that “critical” would refer to the importance of the service to the covered clearing agency's participants, and to the proper functioning of the markets that the covered clearing agency services. The inability of a covered clearing agency to provide these services would have implications with respect to financial stability. The failure to provide these critical services would likely have a material negative impact on participants or third parties, give rise to contagion, and undermine general confidence in the markets served.
The Commission believes that, after identifying the critical services, the next step of effective recovery and wind-down planning is to address how the covered clearing agency would continue to provide such critical services in the event of recovery and during an orderly wind-down, as required under proposed Rule 17ad-26(a)(1). This requirement should continue to ensure that a covered clearing agency has developed policies and procedures to continue providing its critical services in the event of a recovery or orderly wind-down. Further, by addressing how to continue providing such services, the recovery plan should also allow the covered clearing agency to evaluate how to ensure the orderly transfer of those services to a new or an existing entity as part of a wind-down, in the event that recovery is unsuccessful.
In addition, the Commission believes that the consideration of how the covered clearing agency would continue to provide its identified critical services must include the identification of the staffing necessary to support such critical services and analysis of how such staffing would continue in the event of a recovery and during an orderly wind-down, in order to ensure that the necessary personnel are available to continue operating the covered clearing agency. The Commission believes that this aspect of the proposal generally should include identification of key business units and/or employees who may be necessary to implement and execute the critical services identified in the RWP. As part of this process, the covered clearing agency generally should consider how it would retain the services of any personnel who are essential to the execution of the plans, including whether they are or should be subject to employment agreements and an analysis of the terms of employment agreements (
Finally, the Commission believes that this proposed requirement regarding the identification and description of critical services should also assist a resolution authority, as discussed in section II.C
The Commission acknowledges that there likely will be some connection between what a covered clearing agency identifies as its critical services for purposes of inclusion in its recovery and wind-down plan and what it identifies as Critical SCI systems for purposes of Regulation Systems Compliance Integrity (“Regulation SCI”). Regulation SCI is designed to strengthen the infrastructure of the U.S. securities markets, reduce the occurrence of systems issues in those markets, improve their resiliency when technological issues arise, and implement an updated and formalized regulatory framework, thereby helping to ensure more effective Commission oversight of such systems.
The key market participants that are currently subject to Regulation SCI are called “SCI entities” and encompass certain SROs, including registered clearing agencies.
Regulation SCI applies to the systems of, or operated by or on behalf of, SCI entities, that directly support any one of six core securities market functions—trading, clearance and settlement, order routing, market data, market regulation, and market surveillance (“SCI systems”).
When discussing the inclusion of clearance and settlement systems of clearing agencies as a Critical SCI system, the Commission stated that the clearance and settlement of securities is fundamental to securities market activity.
As stated above in section III.B.2.b, a covered clearing agency's critical services, for purposes of inclusion in an RWP, would encompass its critical payment, clearing, and settlement services. Thus, those services could be supported by the covered clearing agency's Critical SCI systems, as defined in Regulation SCI.
Proposed Rule 17ad-26(a)(2) would require each covered clearing agency's RWP to identify and describe any service providers upon which the covered clearing agency relies to provide its critical payment, clearing, and settlement services, identifying to what critical services such third parties are relevant, and address how the covered clearing agency would ensure that such service providers would continue to provide such critical services in the event of recovery and during an orderly wind-down. In addition, the Commission is proposing to define in proposed Rule 17ad-26(b) the term “service provider” as any person, including an affiliate or a third party, that is contractually obligated to the covered clearing agency in any way related to the provision of critical services, as identified by the covered clearing agency in proposed Rule 17ad-26(a)(1), discussed in section III.B.2.b
Based on its supervisory experience, the Commission has observed that covered clearing agencies have used services provided by service providers to help ensure the prompt and accurate clearance and settlement of securities transactions. Service providers may be affiliates or third party entities and can perform a wide variety of functions, such as providers of technology, data, or other services. For service providers that are necessary for the covered clearing agency to provide its core payment, clearing, and settlement services, the failure of the service provider to perform its obligations could pose significant operational risks and have substantial effects on the ability of the covered clearing agency to perform its risk management function and facilitate prompt and accurate clearance and settlement. In a recovery or orderly wind-down, the continued performance of a service provider of its function would remain essential.
The Commission is therefore proposing to require that an RWP specifically identify and describe such service providers, to ensure that the RWP considers what providers are necessary for the covered clearing agency to continue providing its critical services. This requirement would
In addition, the Commission is proposing to require that an RWP address how the covered clearing agency would ensure that service providers could continue to perform in the event of a recovery or during an orderly wind-down, including consideration of contractual obligations with such service providers and whether those obligations are subject to alteration or termination as a result of initiation of the recovery and orderly wind-down plan. This requirement would ensure that the covered clearing agency has considered the nature of its contractual obligations with the identified service providers (such as contracts, arrangements, agreements, and licenses) and whether the service providers could be contractually obligated to perform in a recovery or orderly wind-down. Generally, this should include consideration of whether a service provider's contractual relationship with the covered clearing agency would be affected by a recovery or orderly wind-down.
More generally, the Commission believes that the requirement to identify and describe any critical service providers and address how the covered clearing agency would ensure that such service providers would be legally obligated to perform in a recovery or during an orderly wind-down should help regulatory planning in the event of a resolution. To create an actionable resolution plan that would allow a resolution authority to ensure the continued provision of the covered clearing agency's critical services and, accordingly, to avoid market interruption or any potential financial instability, the resolution authority would need to be able to identify the critical services, as well as the scope and nature of underlying service providers. Further, the requirement that the plan address the continued provision of services in the event of a recovery or during an orderly wind-down should also help a resolution authority, in that it should enable a better understanding of the terms and conditions of the relationship between the covered clearing agency and the service provider.
Having identified its critical services, proposed Rule 17ad-26(a)(3) would then require an RWP to identify and describe scenarios that may potentially prevent a covered clearing agency from being able to provide its critical services as a going concern, including scenarios arising from uncovered credit losses (as described in Rule 17Ad-22(e)(4)(viii)), uncovered liquidity shortfalls (as described in Rule 17Ad-22(e)(7)(viii)), and general business losses (as described in Rule 17Ad-22(e)(15)).
Because the covered clearing agencies should contemplate the inability to provide services as a going concern, these scenarios would necessarily go beyond those contemplated in business as usual circumstances, business continuity planning, crisis management, or failure management. That is, unlike those types of scenarios, recovery and wind-down planning scenarios would involve shocks that could potentially
When identifying scenarios, the covered clearing agency generally should consider the various risks to which it is exposed, which will vary across different covered clearing agencies serving different markets. The proposed rule would require that the covered clearing agency consider scenarios arising from uncovered credit losses, uncovered liquidity shortfalls, and general business losses. This set of scenarios would therefore include scenarios arising from the default of a participant and also those arising from events not related to a participant default, such as a general business loss. Other potential scenarios that are not related to a participant default could include the realization of investment or custody losses, the failure of a third party, such as a settlement bank, to perform a critical function for the covered clearing agency, or scenarios caused by an SCI event or other significant operational disruption, such as a significant cybersecurity incident. In addition, a covered clearing agency that is part of a larger organization may be exposed to risks arising from other entities within the organization. Put more generally, the identified scenarios take into account various risks to which the covered clearing agency is exposed that may potentially prevent the covered clearing agency from being able to provide its critical services, which will vary across different types of covered clearing agencies (
The Commission believes that the identified scenarios generally should be structured such that the underlying assumptions ensure that the scenarios are sufficiently severe, such that they would result in the need for a recovery or orderly wind-down. These scenarios generally should include both idiosyncratic and system-wide stress scenarios, taking into account the possibility of contagion in a stress event and of simultaneous crises in several significant markets. Although all covered clearing agencies generally consider at a high level what circumstances may cause them to enter recovery or wind-down (
Each scenario generally should be analyzed individually in the recovery plan, with the analysis including: a description of the scenario; the events that are likely to trigger the scenario; the covered clearing agency's process for monitoring such events; the market conditions, operational and financial issues, and other relevant circumstances that are likely to result from the scenario; the potential financial and operational impact of the scenario on the covered clearing agency and its participants, internal and external service providers, and relevant affiliated companies, both in an orderly and stressed market (
Proposed Rule 17ad-26(a)(4) would require a covered clearing agency's RWP to identify and describe the criteria that would trigger the implementation of its RWP and the process that the covered clearing agency uses to monitor and determine whether the criteria have been met, including the governance arrangements applicable to such process. Given that the implementation of a covered clearing agency's RWPs would most likely occur during a period of significant stress at the covered clearing agency or in the market in general, the Commission believes that the covered clearing agency needs to identify in advance what criteria could trigger implementation of its RWP. Such
The covered clearing agency generally should consider defining both quantitative and qualitative criteria that would trigger the implementation of part or all of the recovery plan or of an orderly wind-down plan. Moreover, the covered clearing agency generally should consider triggers that would be applicable in circumstances involving the default of its participant(s), as well as those that would be applicable in circumstances not related to the default of a participant or participants. When determining triggers, the covered clearing agency also generally should consider whether the likely timing of a triggering event in the identified scenarios would permit sufficient time for implementation of the RWP.
There may be circumstances in which the trigger is obvious. For example, when a participant of a covered clearing agency defaults, the recovery plan likely would be triggered when the covered clearing agency has exhausted its pre-funded financial resources, its qualifying liquid resources,
The identification of triggers does not mean that such triggers should be self-executing. Instead, the importance of identifying triggers lies in ensuring that a covered clearing agency considers and identifies
Proposed Rule 17ad-26(a)(5) would require a covered clearing agency's RWP to identify and describe the rules, policies, procedures, and any other tools or resources the covered clearing agency would rely upon in a recovery or orderly wind-down. The Commission believes that describing the rules, policies, procedures, and any other tools or resources is essential to a covered clearing agency's RWP. The requirement to describe rules, policies, procedures, and any other tools or resources that may be used in advance for certain situations would provide some level of predictability in such a situation and avoid unexpected actions because it would allow participants to understand the potential of tools or resources that could be used, including whether any of the tools would require participant involvement or resources (such as a cash call).
Generally, the rules, policies, procedures, and any other tools or resources should address shortfalls arising in the stress scenarios identified by the covered clearing agency, whether caused by participant default or by some other event, that are not covered by pre-funded financial resources. They should also address situations where the covered clearing agency does not have sufficient qualifying liquid resources to meet its obligations on time. In addition, the tools should address other losses or liquidity shortfalls, including those arising from general business risks that may or may not develop more slowly than a sudden default or other event.
However, the Commission is not prescribing particular tools, such as tear-up or margin haircutting, that a covered clearing agency would be required to include in its RWP. The Commission believes that this proposed requirement preserves discretion for each covered clearing agency to consider the full range of available recovery tools and select those most appropriate for the circumstances of the covered clearing agency, including the products cleared and the markets served.
The current RWPs identify the tools and other resources that the covered clearing agency would use in a recovery or orderly wind-down. Certain of those tools, which may often be referred to as the covered clearing agency's default waterfall,
When identifying the tools and other resources that a covered clearing agency may include in a recovery or orderly wind-down plan, the Commission believes that the covered clearing agency generally should consider the following characteristics to evaluate the appropriateness of a tool or tools for a particular recovery scenario or an orderly wind-down, including the sequence in which the tools should be used. First, the set of tools should comprehensively address how the covered clearing agency would continue to provide critical services in all relevant scenarios. Second, the tools should be effective, meaning that they should be reliable, timely, and have a strong legal basis. Being effective generally should mean that the covered clearing agency has a high degree of confidence that it could employ the tool in all relevant circumstances, including a time of stress. Third, the tools generally should be transparent, so as to allow the covered clearing agency's participants and the broader market participants to understand how they would operate and allow those who would bear losses and liquidity shortfalls to measure, manage, and control their potential losses and liquidity shortfalls. Finally, the tools generally should take into account whether the tools create appropriate incentives for the covered clearing agency's owners, direct and indirect participants, and other relevant stakeholders, and they generally should seek to minimize the potential impact that the tools may have on participants and the financial system more broadly.
When analyzing the tools to be included in its RWP, a covered clearing agency generally should consider: (i) a description of the tools that the covered clearing agency would expect to use in each scenario; (ii) the order in which each tool would be expected to be used; (iii) the time frame within which the tool would be used; (iv) the governance and approval processes and arrangements within the covered clearing agency for the use of each of the tools available, including the exercise of any available discretion; (v) the processes to obtain any approvals external to the covered clearing agency (including any regulatory approvals) that would be necessary to use each of the tools available, and the steps that might be taken if such approval is not obtained; (vi) the steps necessary to implement the tools; (vii) the roles and responsibilities of all parties, including non-defaulting participants; (viii) whether the tool is mandatory or voluntary; and (ix) an assessment of the associated risks from the use of each tool to non-defaulting clearing members and their customers, linked financial market infrastructures, and the financial system more broadly.
Proposed Rule 17ad-26(a)(6) would require a covered clearing agency's RWP to address how the rules, policies, procedures, and any other tools or resources identified in paragraph (5) would ensure timely implementation of the recovery and orderly wind-down plan. The Commission believes that this is an important element of a covered clearing agency's RWP, that is, to provide, in advance, a level of predictability as to how such measures would be implemented, which is important to participants as discussed in section III.B.e
Timely implementation generally should mean that a covered clearing agency is able to deploy the tools identified in its plan as needed and when appropriate, for example, that it has identified the appropriate escalation and approval processes to use a particular tool or resource. In this sense, implementation does not refer to completion of the plan, but merely to putting the plan into practice.
Proposed Rule 17ad-26(a)(7) would require a covered clearing agency's RWP to include procedures for informing the Commission as soon as practicable when the covered clearing agency is considering initiating a recovery or orderly wind-down. The systemic risk concerns raised by a recovery or orderly wind-down of a covered clearing agency are significant, and while the Commission already maintains regular contact with each of the covered clearing agencies through its supervisory program, the Commission believes it is critical that notice of potential recovery and wind-down events be provided as soon as practicable.
Providing notice to the Commission can help ensure that the Commission has the opportunity to consider whether a covered clearing agency engages the recovery or wind-down event consistent with its established RWP and the requirements of Commission rules to help mitigate the potential onward transmission of systemic risk and ensure that a wind-down, if necessary, is orderly. This is particularly important with respect to covered clearing agencies which often serve as the sole provider of clearance and settlement services in a particular market and of which several are designated clearing agencies. Currently, many of the covered clearing agencies' RWPs reference notification to the Commission, but often lack detail on the procedures to ensure such notification.
Moreover, providing notice to the Commission would, in turn, help the Commission ensure that it has information that it can share with other relevant authorities, such as the resolution authority, regarding the potential need for resolution. This communication between the Commission and other regulators would be essential in the potential event of a recovery or wind-down so that the other regulators can consider appropriate actions that they may wish to take, such as if the FDIC is appointed as the resolution authority for a covered clearing agency, as discussed in section II.C
Proposed Rule 17aAd-26(a)(8) would also require that an RWP include procedures for testing the covered clearing agency's ability to implement the recovery and wind-down plans at least every twelve months, including by requiring the covered clearing agency's participants and, when practicable, other stakeholders to participate in the testing of its plans, providing for reporting the results of the testing to the covered clearing agency's board of directors and senior management, and specifying the procedures for, as appropriate, amending the plans to address the results of the testing. The Commission believes that it is important to require testing because including testing should help to ensure that the RWP will be effective in the event of an actual recovery or orderly wind-down. Currently, some covered clearing agencies do not provide for testing their RWPs or test them separately from any testing required under 17 CFR 240.17Ad-22(e)(13) (“Rule 17Ad-22(e)(13)”), while others do incorporate some testing requirements, with varying degrees of specificity about the frequency of and participants in such testing and how to incorporate the results of such testing into the RWPs.
The Commission believes that the testing under this proposed rule likely would be similar in nature to that required under Rule 17Ad-22(e)(13), in that it would simulate how the RWP would perform in crisis situations, including the participation of senior management and the board of directors. Such testing could involve examining how a covered clearing agency's procedures would work in practice, by applying them to a hypothetical scenario that would cause the covered clearing agency to use its RWP. Testing must involve the covered clearing agency's participants and, where practicable, other stakeholders. Such other stakeholders could include, for example, liquidity providers or settlement banks. By specifying that the participation of other stakeholders must occur where practicable, the Commission recognizes that a covered clearing agency may have limited ability to require said participation by all such stakeholders in all circumstances.
Including participants and other stakeholders in such testing should help to ensure that procedures will be practical and effective in the face of a recovery or orderly wind-down. In addition to the relevant employees, participants, and other stakeholders that would be involved in testing RWPs, a covered clearing agency may determine, as appropriate, to include members of its board of directors or similar governing body, and to invite linked clearing agencies, significant indirect participants, providers of credit facilities, and other service providers to participate. The Commission believes including participants and, where practicable, stakeholders in periodic testing is appropriate because a successful recovery or orderly wind-down will require coordination among these parties, particularly during periods of market stress.
The Commission believes that at least every twelve months is an appropriate time period for testing RWPs. Given that many other aspects of a covered clearing agency's risk management are required to be tested at least annually, many of which are likely to be related to or referenced in the covered clearing agency's RWP,
The Commission believes that the RWPs should provide for reporting the results of the testing to the covered clearing agency's board of directors and senior management. This reporting would help ensure that the board of directors and senior management have an understanding of the testing. This understanding, in turn, would then inform senior management in considering whether the testing indicates the need for potential changes to an RWP. This understanding would also inform the board of directors in its review and approval of a covered clearing agency's RWP, which it would be required to do under proposed Rule 17ad-26(a)(9). Finally, the Commission believes that the RWPs should specify the procedures for, as appropriate, amending the plans to address the results of the testing. Such procedures would ensure that the covered clearing agency takes into account the results of the testing and incorporates it into the plan, as appropriate.
Proposed Rule 17ad-26(a)(9) would require the board of directors of a covered clearing agency to review and approve its RWP at least every twelve months or following material changes to the covered clearing agency's operations that would significantly affect the viability or execution of the plans, with such review informed, as appropriate by the covered clearing agency's testing of the plans as required in the prior section of the proposal rule. Because the risks that a covered clearing agency faces and the markets it serves are ever evolving, it is important that a covered clearing agency's RWP accounts for the evolving nature of risks and markets. The Commission understands that covered clearing agencies with RWPs already engage in some level of ongoing review, and the Commission has reviewed changes to RWPs as proposed rule changes under section 19(b) of the Exchange Act.
Currently, the existing RWPs generally provide for review and approval by a covered clearing agency's board of directors, but not all the plans provide for a review every twelve months and some do not specifically reference the need to review following material changes to the covered clearing agency's operations. Therefore, the Commission believes that this proposed rule would strengthen the RWPs by ensuring review and approval by the board of directors every twelve months and review following material changes. It would also help ensure that the review and approval by the board of directors is informed, as appropriate, by the results of the covered clearing agency's testing discussed in section III.B.2.j
Moreover, in the event that a recovery or wind-down process is activated, the Commission believes that it likely would be appropriate to conduct an additional review by the board of directors immediately after the conclusion of the execution of the RWP, even if it is well before the next periodic review. In addition, a covered clearing agency generally should consider the extent to which any new policy statements from a standard setting body, such as CPMI-IOSCO, while not binding, might tend to support updating or revising existing RWPs to ensure that the clearing agency's approach to risk management, recovery, and wind-down are effective at maintaining the core functions of the covered clearing agencies in a recovery or resolution scenario and mitigating the potential for transmitting systemic risk through the financial system.
The Commission requests comment on all aspects of proposed Rule 17ad-26. In particular, the Commission requests comment on the following specific topics:
10. Should the Commission adopt proposed Rule 17ad-26 to prescribe the contents of a covered clearing agency's recovery and wind-down plans?
11. Does proposed Rule 17ad-26 adequately identify and describe the elements that a covered clearing agency would be required to include in its RWP? If other elements should be included, please identify such elements and explain why they should be included. If certain elements should not be included, please identify such elements and explain why they should not be included.
12. Are there any other elements that should be included in a covered clearing agency's RWP to facilitate the planning processes of a resolution authority? If so, please identify such elements and explain how they should help facilitate resolution planning.
13. Should the Commission set more prescriptive requirements with respect to any of the elements of a covered clearing agency's RWP? If so, what should the Commission require, and why?
14. Are there other elements that a covered clearing agency should consider in its RWP that would better align the incentives of various stakeholders and hence facilitate a productive collaboration among them in a recovery and wind-down event?
15. As discussed above, in 2016, CFTC staff issued guidance with respect to the contents of recovery and wind-down planning.
16. Should the Commission also require that a covered clearing agency's
17. With the additional requirements in proposed Rule 17ad-26, would a covered clearing agency retain an appropriate amount of discretion to consider the specific characteristics of the covered clearing agency when creating its RWP?
18. Do commenters agree with the proposed definition of “service provider”, including the distinction between third parties and affiliates, and the proposed definition of “affiliate”?
19. Do commenters agree that the RWP should identify and describe the covered clearing agency's critical payment, clearing, and settlement services and address how the covered clearing agency would continue to provide such critical services in the event of a recovery and during an orderly wind-down, including the identification of the staffing necessary to support such critical services and analysis of how such staffing would continue in the event of a recovery and during an orderly wind-down? Should the Commission further define “staffing” to specify that it refers to particular positions or offices within the covered clearing agency?
20. Do commenters agree that the RWP should identify and describe a covered clearing agency's critical service providers, specify to which services such service providers are relevant, and address how the covered clearing agency would ensure that such providers can be legally obligated to perform in the event of a recovery or orderly wind-down, including consideration of contractual obligations with such service providers and whether those obligations are subject to alteration or termination as a result of initiation of the recovery and orderly wind-down plan?
21. Do commenters agree that the proposed rule should require that the covered clearing agency identify the scenarios that may potentially prevent the covered clearing agency from being able to provide its critical payment, clearing, and settlement services as a going concern, including uncovered credit losses (as described in paragraph (e)(4)(viii) of 17 CFR 240.17Ad-22), uncovered liquidity shortfalls (as described in paragraph (e)(7)(viii) of 17 CFR 240.17Ad-22), and general business losses (as described in paragraph (e)(15) of 17 CFR 240.17Ad-22)?
22. Should the Commission instead identify particular scenarios that a covered clearing agency has to address in its RWP? If so, should the Commission include any or all of the following scenarios: (i) credit losses or liquidity shortfalls created by single and multiple clearing member defaults; (ii) liquidity shortfall created by a combination of clearing member default and a failure of a liquidity provider to perform; (iii) settlement bank failure; (iv) custodian or depository bank failure; (v) losses resulting from investment risk; (vi) losses from poor business results; (vii) financial effects from cybersecurity events; (viii) fraud (internal, external, and/or actions of criminals or of public enemies); (ix) legal liabilities, including those not specific to the covered clearing agency's business as a covered clearing agency; (x) losses resulting from interconnections and interdependencies among the covered clearing agency and its parent, affiliates, and/or internal or external service providers; (xi) losses resulting from interconnections and interdependencies with other covered clearing agencies; and (xii) losses resulting from issues relating to services that are ancillary to the covered clearing agency's critical services? Should the Commission require consideration of scenarios involving multiple failures (
23. With respect to scenarios, should the Commission also require that the RWP include an analysis that includes: (i) a description of the scenario; (ii) the events that are likely to trigger the scenario; (iii) the covered clearing agency's process for monitoring for such events; (iv) the market conditions, operational and financial difficulties and other relevant circumstances that are likely to result from the scenario; (v) the potential financial and operational impact of the scenario on the covered clearing agency and on its clearing members, internal and external service providers and relevant affiliated companies, both in an orderly market and in a disorderly market; and (vi) the specific steps the covered clearing agency would expect to take when the scenario occurs, or appears likely to occur, including, without limitation, any governance or other procedures that may be necessary to implement the relevant recovery tools and to ensure that such implementation occurs in sufficient time for the recovery tools to achieve their intended effect?
24. Do commenters believe that the Commission should prescribe any particular tools that a covered clearing agency must include in its RWP, such as a cash call, gains-based haircutting, or full or partial tear-up? If so, please identify such tools and explain why they should be required.
25. Proposed Rule 17ad-26 would also require that the RWP identify triggers but does not prescribe a list of specific triggers. Should the Commission prescribe any particular triggers, whether qualitative or quantitative? For example, should the Commission require that a covered clearing agency should consider using the exhaustion of its prefunded resources as a trigger?
26. Should the Commission prescribe that a covered clearing agency's RWP also identify criteria that could show when recovery is successful and the covered clearing agency would return to normal operations?
27. With respect to the requirement to identify and describe the process that the covered clearing agency uses to monitor and determine whether the criteria that would trigger implementation of the RWP have been met, including the governance arrangements applicable to such process, should the Commission require that the description also include identification of any areas in which the covered clearing agency could exercise discretion?
28. Proposed Rule 17ad-26(a)(5) would require the covered clearing agency to identify and describe the rules, policies, procedures, and any other tools or resources the covered clearing agency would rely upon in a recovery or orderly wind-down to address the scenarios identified in the recovery and wind-down plan. Should the Commission also require that a covered clearing agency's RWP include any or all of the following: (i) a description of the tools that the covered clearing agency would expect to use in each scenario; (ii) the order in which each tool would be expected to be used; (iii) the time frame within which the tool would be used; (iv) the governance and approval processes and arrangements within the covered
29. Proposed Rule 17d-26 would require that the RWP address how the identified tools, procedures, or other resources would ensure timely implementation of the RWP. Do commenters agree with the need to ensure timely implementation? Should the Commission specify that timely implementation means that a covered clearing agency is able to deploy the tools identified in its plan as needed and when appropriate, for example, that it has identified the appropriate escalation and approval processes to use a particular tool or resource?
30. Proposed Rule 17ad-26(a)(7) would require procedures for informing the Commission as soon as practicable when the covered clearing agency is considering initiating a recovery or orderly wind-down. Should the Commission instead or additionally require that the procedures provide for informing the Commission when the triggers set forth in proposed Rule 17ad-26(a)(5) have been met? Should the Commission also require notification to the covered clearing agency's participants and/or other stakeholders in the event of recovery or orderly wind-down, or initiation of the RWP?
31. Should the Commission prescribe a particular form of notice for informing the Commission, consistent with the requirement in proposed Rule 17ad-26(a)(7)? For example, should the Commission require written notice, or would telephonic notice be sufficient?
32. Proposed Rule 17ad-26(a)(8) would require procedures for testing the covered clearing agency's ability to implement the recovery and wind-down plans at least every twelve months, by requiring the covered clearing agency's participants and, when practicable, other stakeholders to participate in the testing of its plans and specifying the procedures for, as appropriate, amending the plans to address the results of the testing. Do commenters agree with this proposed requirement? Should the covered clearing agency be required to mandate that participants participate in testing? Similarly, should the covered clearing agency be required to mandate that other stakeholders participate in testing unless the covered clearing agency determines that it would be impracticable to do so? Should testing be less frequent? For example, should testing occur at least every 24 months?
33. Proposed Rule 17ad-26(a)(9) would require procedures for reviewing and approving a covered clearing agency's RWP by the board of directors at least every twelve months. Should the Commission impose a more, or less, frequent review cycle? And if so, why? Should the Commission require review and approval by the board of directors of an RWP following material changes to the covered clearing agency's operations that would significantly affect the viability or execution of the plans?
The Commission is sensitive to the economic consequences and effects of the proposed rule and amendments, including their benefits and costs.
This section addresses the likely economic effects of the proposed rule and amendments, including their anticipated and estimated benefits and costs and their likely effects on efficiency, competition, and capital formation. It is not feasible to quantify many of the benefits and costs. For example, risk management is an area of key concern for all clearing agency stakeholders. Perceptions of risk affect how clearing agencies are operated, and those operations, in turn, affect perceptions of risk. Any change to the policies and procedures about how clearing agencies act in times of crisis affects the behavior of clearing agencies and participants in complex ways not only during a crisis but also before the crisis, and those behavioral changes may affect the likelihood and severity of a crisis. While the Commission has attempted to quantify economic effects where possible, much of the discussion of economic effects is qualitative in nature. The Commission also discusses the potential economic effects of certain alternatives to the approaches recommended in this proposal.
To consider the effect of the proposed rule and amendments, the Commission first explains the current state of affairs in the market (
Of the nine registered clearing agencies, seven are currently in operation.
ICE Clear Credit LLC (“ICC”) and ICE Clear Europe Limited (“ICEEU”) are both covered clearing agencies for credit default swaps (“CDS”), and they are both subsidiaries of Intercontinental Exchange, Inc. (“ICE”). LCH SA is another covered clearing agency that offers clearing for CDS, and it is a France-based subsidiary of LCH Group Holdings Ltd, which, in turn, is majority owned by the London Stock Exchange Group plc. The seventh covered clearing agency, Options Clearing Corporation (“OCC”), offers clearing services for exchange-traded U.S. equity options.
Covered clearing agencies operate under one of two broad ownership models. In one model, the covered clearing agency is member-owned,
Covered clearing agencies currently operate specialized clearing services and face limited competition in their markets. For each of the following asset classes, for example, there is only one covered clearing agency serving as a central counterparty: exchange-traded equity options (OCC), government securities (FICC), mortgage-backed securities (FICC), and equity securities (NSCC). There is also only one covered clearing agency providing central securities depository services (DTC). Covered clearing agency activities exhibit high barriers to entry and economies of scale.
Covered clearing agencies have become an essential part of the infrastructure of the U.S. securities markets due to their role as intermediaries. For example, in 2021 approximately $1.1 trillion (65%) of the notional amount of all single-name CDS transactions in the United States were centrally cleared.
Central clearing benefits the markets by significantly reducing participants' counterparty risk and through more efficient netting of margin requirements. Consequently, central clearing also benefits the financial system as a whole by increasing financial resilience and the ability to monitor and manage risk.
Disruption to a clearing agency's operations, or failure on the part of a clearing agency to meet its obligations, could serve as a source of contagion, resulting in significant costs not only to the clearing agency itself and its participants but also to other market participants and the broader U.S. financial system.
The existing regulatory framework for clearing agencies registered with the Commission includes section 17A of the Exchange Act, the Dodd-Frank Act, and the related rules adopted by the Commission.
Clearing agencies registered with the Commission may also be subject to other domestic or foreign regulation.
As discussed in section II
Each RWP currently includes what the covered clearing agency has identified and described as its critical payment, clearing, and settlement services, as well as the criteria that the covered clearing agency employs to make such a determination as to what constitutes critical services.
Each RWP identifies and describes, to varying degrees, certain service providers, including both affiliates and third parties, upon which the associated covered clearing agency relies to provide its critical payment, clearing, and settlement services. Most plans do not explicitly link the identified service providers to the covered clearing agencies' critical services. Some of the RWPs state that they assume critical service providers will continue to perform in the event of a wind-down; at least one RWP states that it analyzes its contractual arrangements with respect to continuing to provide services during a recovery;
Each RWP generally identifies and describes certain scenarios that may potentially prevent the covered clearing agency from being able to provide its critical payment, clearing, and settlement services as a going concern.
Each RWP identifies and describes criteria that would trigger the implementation of the recovery and orderly wind-down plan.
Each RWP describes, to varying degrees, the rules, policies, procedures, and other tools or resources the covered clearing agency would rely upon in a recovery or orderly wind-down to address the scenarios identified in the RWP.
Each RWP mentions, to varying degrees, mechanisms that would ensure timely implementation of the RWP.
Each RWP generally refers to informing the Commission about recovery or orderly wind-down activities, but the majority of RWPs do not include specific procedures for informing the Commission. Some of the RWPs state that they will inform the Commission
Three RWPs provide for annual plan testing but with varying degrees of specificity about the participants' involvement as well as the frequency of such testing. One such covered clearing agency specifically refers to sharing the results of the testing with the board of directors and another states that the RWP would be updated as appropriate as a result of the testing.
Each RWP provides for periodic plan reviews, typically annually or biennially.
As discussed in section III.A
Each covered clearing agency currently has some ability to monitor for intraday exposure and to make certain intraday margin calls. The frequency of intraday monitoring and margin calls varies across markets, and it is responsive to the risk characteristics of the underlying markets and participants. Participants are generally required to post margin within an hour of notification or at specified times pursuant to the covered clearing agency's rules and procedures. The current practice of covered clearing agencies is to release excess margin to participants only once a day at a pre-scheduled time.
For example, OCC revalues its participants' portfolios throughout the day to calculated updated account net asset value, and its rules provide it the authority to issue intraday margin calls. Its intraday calls are generally issued between 11 a.m. and 1:30 p.m. when unrealized losses of an account, based on its start-of-day positions, exceed 50% of the account's total margin.
FICC's GSD and FICC's MBSD have the authority to make intraday margin calls.
ICC also monitors each participant's intraday profit and loss to determine if its intraday exposure is covered by the margin on deposit, and it may issue margin calls to participants that are not sufficiently collateralized.
Covered clearing agencies use price data as well as other data sources and other substantive inputs in their risk-based margin systems, which is expected given the substantive differences in the markets and participants they serve. Based on its supervisory experience, the Commission understands that all covered clearing agencies generally have policies and procedures in place to use a risk-based margin system that uses reliable sources of timely price data and includes procedures and sound valuation models for addressing circumstances in which price data are not readily available or reliable. The Commission also understands that if a covered clearing agency uses other substantive inputs, such as portfolio size, asset price volatility, duration, convexity, and outputs from external model vendors, which are not required by the Commission's rules, not all covered clearing agencies have policies and procedures for addressing circumstances in which those substantive inputs are not readily available or reliable so that the covered clearing agency can continue to meet its requirements under Rule 17Ad-22(e)(6).
The policies and procedures used when price data or other substantive inputs are not available vary from one RWP to another. For example, the largest component of margin at FICC's GSD is typically its “VaR Charge.” The VaR Charge is based on the potential price volatility of unsettled positions using a sensitivity-based Value-at-Risk (“VaR”) methodology over a ten-year historical look-back period. In addition, FICC's GSD also uses an alternative “Margin Proxy” calculation as a back-up VaR Charge calculation to the sensitivity approach in the event that FICC experiences a data disruption with the third-party vendor upon which FICC relies to produce the sensitivity-based VaR Charge.
The following discussion sets forth the potential economic effects stemming from adopting the proposed rule and amendments, including the effects on efficiency, competition, and capital formation.
The benefits and costs discussed in this subsection are relative to the economic baseline discussed previously, which includes the covered clearing agencies' current RWPs and their current risk-based margin practices. In some instances, the proposals reflect what the Commission understands to be current practices at many covered clearing agencies. To the extent that a covered clearing agency's current practices align with part of a proposed rule or amendment, the covered clearing agency, its participants, and the broader market would have already absorbed the benefits and costs of that part of the proposed rule and amendments and, therefore, might not experience any direct benefits or costs if the Commission adopts that part of the new rule or amendments. In this case, the Commission believes that imposing these requirements on covered clearing agencies that have largely implemented the proposals in this release would essentially codify these elements and ensure that the covered clearing agencies are required to continue to include these elements in their RWPs or risk-based margin systems. Additionally, the proposed rule and amendments would ensure that the RWPs and risk-based margin systems of any new covered clearing agency would be required to have RWPs that contain all of the proposed elements.
Disruptions in the operations at any of the covered clearing agencies would cause significant negative externalities in the markets they serve, which would likely spill over into other markets. These ripple effects would negatively affect numerous market participants, including investors. Because covered clearing agencies may not internalize the full cost of these externalities, their investments in their RWPs and risk-based margin systems might be suboptimal from a public welfare perspective. An important benefit of the proposed rule and amendments is that they require covered clearing agencies to maintain a higher investment than they might otherwise maintain.
The Commission recognizes that the existing rules allow a degree of discretion that would be reduced or eliminated by the proposals. Even if covered clearing agencies would not need to change their current practices significantly to align with the proposals, if adopted, they would incur indirect costs in terms of less discretion in the future. For example, a covered clearing agency that currently plans an annual review of its RWP would lose the ability to change to a biennial review in the future.
The costs discussed in this subsection would be borne by covered clearing agencies and their participants. For covered clearing agencies owned by participants, all of the costs will ultimately be passed on to participants because they are residual beneficiaries of the covered clearing agency. For covered clearing agencies not owned by participants, the level of pass-through would depend upon a number of factors, including the level of competition among clearing agencies. In both cases, the participants will likely pass through some of these costs to their customers, the level of which will depend on factors such as the customers' sensitivities to costs and the amount of competition between participants for customers. Generally, if a covered clearing agency does not face significant competition, it will have an incentive to absorb part of the cost increase. On the other hand, in the extreme case of a perfectly competitive market, there are no economic profits and price equals marginal costs so an increase in cost could be fully passed through to the customer.
Proposed Rule 17ad-26 sets forth nine elements that must be included in a covered clearing agency's RWP. The remainder of this subsection discusses each of these elements in turn, explaining how some would make RWPs more effective in guiding the covered clearing agencies during times of recovery or wind-down while others would help participants and regulators better understand how the covered clearing agencies will prepare for and respond to stress. The Commission believes that this proposed rule would reduce systemic risk to the extent that it reduces the risk of unsuccessful recoveries, disorderly wind-downs, and negative spillovers to other clearing
Proposed Rule 17ad-26(a)(1) requires RWPs to identify and describe their critical payment, clearing, and settlement services and to address how the covered clearing agency would continue to provide such critical services in the event of a recovery and during an orderly wind-down, including the identification of the staffing necessary to support such critical services and analysis of how such staffing would continue in the event of a recovery and during an orderly wind-down.
Covered clearing agencies play an important role as financial market utilities. By virtue of the unique services that they offer, the network effects under which they operate, and their specialization by asset class, any failure of the covered clearing agency to provide their critical services would have implications with respect to financial stability.
Each of the covered clearing agencies' RWPs currently identifies its critical services, as stated in the baseline analysis, but they differ in the degree to which they address continuation.
Markets in which the dominant covered clearing agencies are currently less comprehensive in addressing continuation in their RWPs are expected to benefit from this requirement because they would be required to work through and memorialize in their RWPs how the clearing agency would continue to provide its critical services in case of a recovery or during an orderly wind-down.
As mentioned in the economic baseline section, none of the covered clearing agencies currently identifies the staffing necessary to support critical services or provides in their RWPs analyses of how such staffing would continue in the event of a recovery and during an orderly wind-down. Because covered clearing agencies do not currently identify the staffing necessary to support critical services and how such staffing would continue during times of crisis, this new requirement likely would provide benefits to the market. Forward-looking analyses around issues such as potential staffing shortfalls and employment agreement terms that are robust regardless of the financial situation of the covered clearing agency should provide each covered clearing agency with additional certainty and clarity around the presence of key personnel that would deploy the RWPs and supervise their implementation.
Similarly, the current lack of these staffing analyses creates costs that covered clearing agencies would have to assume, in terms of both drafting the analyses and implementing the resulting conclusions from the analyses. For instance, a covered clearing agency may conclude when undertaking this analysis that key personnel could easily leave their organization in case of a recovery or wind-down scenario. In that case, the covered clearing agency may wish to incur the extra costs attendant to strengthening its employee agreements so that key employees remain at the covered clearing agency during a sale or transfer of one or more of its critical services to another entity or a receiver.
Proposed Rule 17ad-26(a)(2) requires RWPs to identify and describe any service providers upon which the covered clearing agency relies to provide the services identified in Rule 17ad-26(a)(1), specify to what services such service providers are relevant, and address how the covered clearing agency would ensure that such service providers would continue to perform in the event of a recovery and during an orderly wind-down. As stated in the baseline analysis, the RWPs differ in their degree of alignment with this proposed rule and the level of descriptiveness of service providers. The markets that likely would benefit the most from this proposed requirement are the ones in which the dominant covered clearing agencies' RWPs are currently the least comprehensive in identifying and describing the required service provides and identifying how those service providers will perform in the event of a recovery and during an orderly wind-down, as they would be better prepared to manage and negotiate with service providers to ensure their continued performance. Covered clearing agencies that make more changes in identifying the service providers and the critical services provided by each critical service provider likely will bring more benefits to the markets they serve by putting themselves in a better position to manage their service providers during a recovery or orderly wind-down.
Each covered clearing agency would incur costs to bring its RWP into alignment with the proposed rule. These alignment costs would depend on the extent of the enhancements the covered clearing agency makes to its RWP, including any contractual changes with the service providers.
Proposed Rule 17ad-26(a)(3) requires RWPs to identify and describe scenarios that may potentially prevent the covered clearing agency from being able to provide its critical payment, clearing, and settlement services as a going concern, including uncovered credit losses, uncovered liquidity shortfalls, and general business losses. As stated in the baseline analysis, each of the covered clearing agencies' RWPs currently identifies and describes, to varying degrees, certain relevant scenarios. The Commission believes that the more significant benefits of being required to identify these scenarios would accrue to those markets in which the dominant covered clearing agencies lack breadth and specificity in identifying and describing their scenarios. By better understanding the circumstances that could threaten their ability to provide their critical services, these covered clearing agencies can take steps to reduce the likelihood of these scenarios and, should they materialize, be better prepared to achieve a recovery or orderly wind-down.
Each covered clearing agency would incur costs to bring its RWP into alignment with the proposed rule. The alignment costs would depend on the extent of the enhancements the covered clearing agency makes to its RWP. The Commission believes that the costs to modify plans that require changes, including those that need to be
Proposed Rule 17ad-26(a)(4) requires RWPs to identify and describe criteria that would trigger the implementation of the RWPs. As stated in the baseline analysis, each covered clearing agency's RWP identifies and describes, to varying degrees, criteria that would trigger the implementation of a recovery or orderly wind-down. The Commission believes that the largest benefits of this rule likely would accrue to the markets in which the dominant covered clearing agencies that currently have the least comprehensive RWPs in identifying and describing appropriate triggers. The
Each covered clearing agency would incur costs to bring its RWP into alignment with the proposed rule. The alignment costs would depend on the extent of the enhancements the covered clearing agency makes to its RWP.
Proposed Rule 17ad-26(a)(5) requires RWPs to identify and describe the rules, policies, procedures, and any other tools or resources the covered clearing agency would use in a recovery or orderly wind-down to address the scenarios identified in the RWP. The Commission believes that the markets that likely would benefit the most from this requirement are the ones in which the dominant covered clearing agencies have the least comprehensive RWPs in describing how the rules, policies, procedures, tools and other resources would be used during a recovery or wind-down. Making these changes to their RWPs should enable the covered clearing agencies to more fully anticipate how future crises might impact their operations, which should enhance their ability to respond and accordingly decrease the expected costs borne by covered clearing agencies, the participants, and other stakeholders in future crises. For example, if a covered clearing agency determines that it needs a new rule to respond to a specific scenario and if that scenario ever materializes, the covered clearing agency should be better positioned to respond appropriately to it.
Each covered clearing agency would incur costs to bring its RWP into alignment with the proposed rule. The alignment costs would depend on the extent of the enhancements the covered clearing agency makes to its RWP. Covered clearing agencies that determine that they need to include more responses, different resources, or better descriptions would incur more costs as they make appropriate revisions to their RWPs and their resources. The Commission believes that the costs to modify plans that require changes, including those that need to be expanded, would increase in the number of required changes such as the number of new rules the covered clearing agency is required to adopt.
Proposed Rule 17ad-26(a)(6) requires RWPs to address how the rules, policies, procedures, and any other tools or resources identified in 17ad-26(a)(5) would ensure timely implementation of the RWP. As stated in the baseline analysis, each RWP mentions the concept of timeliness in either recovery or wind-down, but most RWPs do not list specific procedures to ensure timely implementation of itself. A key benefit of this rule is that covered clearing agencies will address in their RWPs how the RWP will be implemented in a timely manner when the need arises. The Commission believes that a timely start will increase the chance that the covered clearing agency is able to address the underlying problem in a timely manner and with lower costs to the various stakeholders. The benefits of this rule likely would accrue primarily to the markets in which the dominant covered clearing agencies add more or better rules, policies, procedures, tools, or other resources to ensure timely implementation of their RWPs.
Each covered clearing agency would incur costs to bring its RWP into alignment with the proposed rule. The alignment costs would depend on the extent of the enhancements the covered clearing agency makes to its RWP. The Commission believes that the costs to modify plans that require changes, including those that need to be expanded to include additional rules, policies, procedures, or any other tool or resource would be modest because current RWPs already place some focus on timeliness as a desired feature.
Proposed Rule 17ad-26(a)(7) requires RWPs to include procedures for informing the Commission as soon as practicable when the covered clearing agency is considering initiating a recovery or orderly wind-down. As stated in the baseline analysis, each RWP generally refers to informing the Commission, but not every plan includes specific procedures, and some plans include procedures for informing the Commission
Each covered clearing agency would incur costs to bring its RWP into alignment with the proposed rule. The alignment costs would depend on the extent of the enhancements the covered clearing agency makes to its RWP. The Commission believes that the costs to modify plans that require changes, including those that need to be expanded to include additional procedures would be modest because current RWPs already place some focus on informing the Commission.
Proposed Rule 17ad-26(a)(8) requires RWPs to include procedures for testing the covered clearing agency's ability to implement the recovery and wind-down plans at least every twelve months, including by requiring the covered clearing agency's participants and, when practicable, other stakeholders to participate in the testing of its plans, providing for reporting the results of the testing to the covered clearing agency's board of directors and senior management, and specifying the procedures for, as appropriate,
The Commission believes that the costs to start plan tests every twelve months will not be large for the four covered clearing agencies that do not mention plan testing in their RWPs because they might be able to leverage existing requirements around default management testing.
Proposed Rule 17ad-26(a)(9) requires RWPs to include procedures requiring review and approval by the board of directors of the plans at least every twelve months or following material changes to the covered clearing agency's operations that would significantly affect the viability or execution of the plans, with such review informed, as appropriate, by the covered clearing agency's testing of the plans. As stated in the baseline analysis, each RWP makes reference to periodic plan reviews, typically annually or biennially.
The Commission believes that the markets that likely would benefit the most from this requirement are those in which the dominant covered clearing agencies currently have the least comprehensive RWPs in addressing plan review because they would create more frequent procedures for review, and more frequent reviews, in turn, should help ensure that RWPs remain current and take into account any changes to the covered clearing agencies' operations.
Each covered clearing agency would incur costs to bring its RWP into alignment with the proposed rule. The alignment costs would depend on the extent of the enhancements the covered clearing agency makes to its RWP. The Commission believes that the costs to modify plans that have biennial reviews to replace them with annual reviews will be modest. The costs to review RWPs after material changes to the covered clearing agencies' operations will depend on the nature and number of material changes that result in new reviews.
The Commission has estimated the initial and ongoing cost burden of adopting proposed rule 17ad-26. Accordingly, the Commission preliminarily believes that eight respondent clearing agencies would incur an aggregate one-time burden of approximately 960 hours (or 120 hours each) to review and update existing policies and procedures. The cost estimate associated with the initial burden is based on 20 hours for an assistant general counsel at $551 per hour; 50 hours for a compliance attorney at $432 per hour; 35 hours for a business risk analyst at $ 235 per hour; and 15 hours for a senior risk management specialist at $423 per hour. The initial burden for one covered clearing agency is $47,190, and it is $377,520 for all eight covered clearing agencies.
Proposed Rule 17ad-26 would also impose ongoing burdens on a respondent covered clearing agency. The proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing 17 CFR 240.17Ad-22(e)(2) (“Rule 17Ad-22(e)(2)”),
Rule 17Ad-22(e)(6) requires covered clearing agencies that provide central counterparty services to establish a risk-based margin system to manage their credit exposures to their participants. The proposed amendment to Rule 17Ad-22(e)(6)(ii) will strengthen the requirements: (a) by requiring that covered clearing agencies monitor intraday risk exposures to their participants on an ongoing basis, and (b) by providing additional specificity to the circumstances in which covered clearing agencies should have policies and procedures in place to make intraday margin calls. The proposed amendment to Rule 17Ad-22(e)(6)(iv) will amend the requirements by ensuring covered clearing agencies can meet their Rule 17Ad-22(e)(6) obligations when their price data and substantive inputs are not available by including procedures to use price data or substantive inputs from an alternate source or to use an alternate risk-based margin system that does not similarly rely on the unavailable or unreliable substantive inputs.
The ability to assess intraday margin calls is an important tool that covered clearing agencies have to manage their credit exposures to their participants. The proposed amendment to Rule 17Ad-22(e)(6)(ii) requires covered clearing agencies to monitor exposure on an ongoing basis and to make intraday margin calls as frequently as circumstances warrant, including when risk thresholds specified by the covered clearing agency are breached or when the products cleared or markets served display elevated volatility, which would help reduce, but not eliminate, their credit exposure to their participants.
Each covered clearing agency would have to determine how to operationalize “on an ongoing basis” and “as frequently as circumstances warrant” given its own market and participants. Each covered clearing agency would also need to ensure that its systems are capable of monitoring exposure and making margin calls at those frequencies. As discussed in the baseline analysis, each covered clearing agency is already capable of monitoring exposure and collecting margin on an intraday basis; nevertheless, some covered clearing agencies might need to
To the extent a covered clearing agency currently aligns with the proposed amendment it will not experience new benefits from its adoption. Nevertheless, the proposed amendment will have incremental benefits for the market because it will ensure that the covered clearing agencies continue to meet the standard of the proposed amendment that they are currently aligned with and that any new covered clearing agency that provides central counterparty services meets the same standard.
The Commission further believes that the costs to modify the risk-based margin systems that require changes would be modest because covered clearing agencies have already incurred the initial costs of building their risk management infrastructure, including the ability to make intraday margin calls based on some sort of intraday monitoring. Once those costs have been incurred and amortized, the variable costs of modifying the
To the extent that the proposed amendment results in covered clearing agencies making more unanticipated margin calls, participants may face increased liquidity-management costs. This may potentially result in procyclicality problems that exacerbate market stress: margin calls during periods of declining asset prices may cause participants to sell assets, putting further negative pressure on asset prices and the market that may spill over into other covered clearing agencies and their markets. This stress may be transmitted by participants that are members of more than one covered clearing agency when, for example, a margin call in one market makes a participant sell assets in a different market. The stress may also be transmitted by assets that are linked between markets, such as the link between option prices (OCC) and equity prices (NSCC). Various industry participants have expressed concerns that excessive intraday margin calls, especially unanticipated ones, have the potential to exacerbate liquidity issues for clearing members who would have to post new liquid collateral to the covered clearing agency with little notice.
The Commission believes that every covered clearing agency has a risk-based margin system that largely aligns with the proposed amendment to Rule 17Ad-22(e)(6)(iv), with the exception of at least one covered clearing agency that likely would need to implement additional changes to its risk-based margin system to ensure that it could continue to meet its obligations under Rule 17Ad-22(e)(6) in the event of the unavailability of a substantive inputs from a third party. If that one covered clearing agency were to lose access to its price data or other inputs, it may be unable to perform its critical payment, clearing, and settlement services, and that, in turn, may force it into a wind-down, which may have negative implications for its participants and the broader financial system.
The incremental benefits of these proposed amendments beyond the baseline lie primarily in expanding the scope of this rule beyond price data and further specifying the nature of the procedures that a covered clearing agency uses in the event that such data or inputs are not readily available or reliable and in ensuring that any new covered clearing agency keeps that same standard of the proposed amendment. The Commission is unable to estimate the specific quantitative benefit of that covered clearing agency meeting the proposed amendment, but it believes that it is substantial because the proposed amendment reduces the risk that the covered clearing agency fails to provide its critical payment, clearing, and settlement services in future periods of high market stress. For example, the Options Clearing Corporation cleared a year-to-date average daily volume of 46.3 million contracts through March 2023, and DTCC reported that the average daily cleared broker-to-broker transactions was $2 trillion in 2021.
Moreover, a price data shortage in one covered clearing agency that is closely interconnected to another covered clearing agency
Overall, the Commission preliminarily believes that the estimated burdens for the proposed amendment to Rule 17Ad-22(e)(6) may require a respondent covered clearing agency to make fairly substantial changes to its policies and procedures. Based on the similar policies and procedures requirements and the corresponding burden estimates previously made by the Commission for several rules in the Covered Clearing Agency Standards where the Commission anticipated similar burdens,
The proposed amendments to Rule 17Ad-22(e)(6) would also impose ongoing burdens on the covered clearing agencies. The proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule. Based on the similar reporting requirements and the corresponding burden estimates previously made by the Commission for several rules in the Covered Clearing Agency Standards where the Commission anticipated similar burdens,
The Commission believes that the proposed rule and amendments, if adopted, may improve informational and productive efficiency in the market for cleared securities.
Covered clearing agencies current policies and procedures largely align with proposed Rule 17ad-26. Therefore, the Commission does not expect substantive efficiency changes due to the proposed new rule.
The proposed amendment to Rule 17Ad-22(e)(6)(ii) would benefit participants by providing increased specificity around the methods used by covered clearing agencies to assess intraday margin calls, thus enabling more efficient planning in the use of scarce margin funds.
The proposed amendment to Rule 17Ad-22(e)(6)(iv) would increase informational efficiency during periods when price data or other substantive inputs are not available. Calculating margin and managing and disseminating risk information are core competencies of all covered clearing agencies, and various stakeholders rely on those data outputs. By requiring secondary sources, the proposed amendment may mitigate the reduction in efficiency that would otherwise happen when primary sources fail at a covered clearing that does not have secondary sources. Having the ability to continue calculating margin and disseminating that information to participants even when primary data are not available will prevent informational efficiency to decrease when price data or other substantive inputs are not available.
As described in the baseline, covered clearing agencies are currently not subject to strong competitive pressures given high start-up costs, the network effects that are inherent in the clearing business, and their subsequent historical consolidation by market segments (options clearing for OCC, equities clearing for NSCC, fixed-income clearing for FICC, etc.). In terms of potential new entrants in the market for clearing and settlement services, the incremental costs of the proposed Rule 17ad-26 and the proposed amendment to Rule 17Ad-22(e)(6)(ii) are small and, therefore, unlikely to be noteworthy barriers to entry. The amendment to Rule 17Ad-22(e)(6)(iv) may have a modest effect on competition because they are start-up costs that a new competitor would have to assume to enter into the covered clearing agency market.
The Commission expects the effects of the proposed rule and amendments on capital formation to be second-order because the proposal focuses on issues related to secondary market trading and not on issues related to primary market issuances. To the degree that market participants view equity and fixed-income covered clearing agencies as more reliable venues for risk transfer, they may increase their activity and therefore signal a demand for more capital-creating securities.
Instead of requiring covered clearing agencies to identify and implement their own triggers to resolution and wind-down procedures, the Commission could adopt a more prescriptive approach and determine specific triggers that covered clearing agencies would be required to follow. For example, the Commission could specify that exhausting prefunded financial resources in the waterfall structure of a covered clearing agency would immediately trigger a recovery or wind-down procedure.
This alternative would harmonize triggers across covered clearing agencies and would create a single standard that market participants could rely on, eliminating any confusion or ambiguity attendant to different triggers. Nevertheless, covered clearing agencies are active in different markets (equities, bonds, options, CDS, etc.), have different organizational structures, and focus on different risks. As an example, one of the OCC's focus areas is monitoring option sensitivities, and, as a result, its margin models and waterfall structure are responsive to that consideration while FICC, on the other hand, focuses on duration and convexity so its waterfall structure is more responsive to those risks. The Commission preliminarily believes that having this more prescriptive approach would be unresponsive to the characteristics of each market and could expose covered clearing agencies to
Instead of requiring covered clearing agencies to identify scenarios that may prevent the covered clearing agency from being able to provide its critical payment, clearing, and settlement services, the Commission could adopt a more prescriptive approach and identify specific scenarios in new Rule 17ad-26 that each covered clearing agency must include in its RWP. For example, the Commission could identify the scenario of the default of the covered clearing agency's one or two largest participants and scenarios of specific business risks such as the default of a custodian bank or a significant cyber-attack.
This alternative approach may reduce compliance costs by establishing the precise scope of the rule which could allow covered clearing agencies to tailor their RWPs to the enumerated requirements for identifying scenarios and analyses. In addition, including elements similar to those proscribed by other agencies that also regulate several covered clearing agencies could result in certain efficiencies and reduced costs for those covered clearing agencies. However, the Commission preliminarily believes that the proposed approach retains flexibility compared to this alternative by permitting the scenarios to vary across covered clearing agencies because the underlying risks vary across markets and participants. Because participants vary in size and economic significance across covered clearing agencies, scenarios invoking a pre-determined number of failures or fixed dollar amounts may have significantly different effects in one covered clearing agency than in another.
Instead of requiring covered clearing agencies to describes the rules, policies, procedures, and any other tools or resources the covered clearing agency would rely upon in a recovery or orderly wind-down to address the scenarios identified in their RWPs, the Commission could adopt a more prescriptive approach and identify in new Rule 17ad-26 the rules, policies, procedures, and any other tools or resources for all covered clearing agencies. The Commission could also require in Rule 17ad-26 more detail regarding how a covered clearing agency analyzes its rules, policies, procedures, tools, and resources.
This alternative approach may reduce compliance costs by establishing the precise scope of the rule, which could allow covered clearing agencies to tailor their RWPs to the enumerated requirements for describing rules, policies, procedures, and other tools or resources. In addition, including elements similar to those proscribed by other agencies that also regulate several covered clearing agencies could result in certain efficiencies and reduced costs for those covered clearing agencies.
However, the Commission preliminarily believes that it is better to permit the rules, policies, procedures, and any other tools or resources to vary across covered clearing agencies because the underlying risks and resources vary. For example, a covered clearing agency that clears products of longer duration may have a greater need for a tear-up tool that extinguishes a participant's positions in certain circumstances than a covered clearing agency that clears contracts with a relatively short settlement cycle. In addition, the overall volume of transactions settled by a covered clearing agency may affect the choice of its liquidity tools or resources, as the covered clearing agency would have to ensure that it had sufficient liquidity resources to complete settlement.
In addition to the requirements with respect to service providers set forth in proposed Rule 17ad-26(a)(2), the Commission could require that the covered clearing agency's RWP identify any financial or operational interconnections and interdependencies that the covered clearing agency has with other market participants. This would allow for consideration of the impact of the multiple roles and relationships that a single financial entity may have with respect to the covered clearing agency including affiliated entities and third parties (
The Commission preliminarily believes that it is better not to include this particular requirement. A covered clearing agency is already required to establish, implement, maintain, and enforce written policies and procedures reasonably designed to identify, monitor, and manage risks related to
The proposed amendment to Rule 17Ad-22(e)(6)(ii) expressly incorporates the requirement of intraday monitoring to ensure that such monitoring is done on an ongoing basis. One reasonable alternative is to prescribe the necessary frequency of monitoring as opposed to “on an ongoing basis”. For example, covered clearing agencies could be required to monitor exposure every 5 or 15 minutes.
The Commission preliminarily believes, however, that monitoring on an ongoing basis is preferable because a fixed, pre-specified monitoring frequency may not be responsive enough to risk differences that exist across the markets served by the covered clearing agencies or to volatility changes that may happen through time.
Instead of adopting all nine elements of proposed Rule 17ad-26, the Commission could adopt a subset of the proposed elements. For example, the Commission could drop the proposed element to identify service providers or the proposed element to address how the covered clearing agency would ensure that the service providers would continue to perform in the event of a recovery and during and orderly wind-down. Alternatively, the Commission could drop the proposed element for plan review or the proposed element for plan testing.
The Commission preliminarily believes that it is better to adopt all nine elements of proposed Rule 17ad-26 because each element helps ensure that the plan is fit for purpose and provides sufficient identification of how a covered clearing agency would operate in a recovery and how it would handle an orderly wind-down.
As an alternative to implementing the proposed intraday margin amendments on a blanket basis, the Commission could adopt a more tailored approach that imposes the requirements only on a subset of covered clearing agencies that operate in certain markets such as those markets with the highest levels of activity
However, the Commission preliminarily believes that the proposed amendments already include an appropriate adjustment for market-level risk insofar as they would require the covered clearing agencies to consider their own particular facts and circumstances when aligning with the proposed rules. For example, the proposed amendment to Rule 17Ad-22(e)(6)(ii) would require covered clearing agencies to have the operational capacity to make intraday margin calls “as frequently as circumstances warrant,” and that frequency is expected to vary across markets and through time.
The Commission requests comment on all aspects of this initial economic analysis, including the potential benefits and costs, all effects on efficiency, competition (including any effects on barriers to entry), and capital formation, and reasonable alternatives to the proposed rule and amendments. We request and encourage any interested person to submit comments regarding the proposed rule and amendments, our analysis of the potential effects of the proposed rule and amendments, and other matters that may have an effect on the proposed rule and amendments. We request that commenters identify sources of data and information as well as provide data and information to assist us in analyzing the economic consequences of the proposed rule and amendments and each reasonable alternative. We are also interested in comments on the qualitative benefits and costs we have identified and any qualitative benefits and costs we may have overlooked, including those associated with each reasonable alternative. In addition, we are interested in comments on any other reasonable alternative, including any alternative that would distinguish covered clearing agencies based on certain factors, such as organizational structure or products cleared.
34. For covered clearing agencies that are currently able to calculate and collect intraday margin, how costly is it to start monitoring exposure on an ongoing basis, and how costly is it to make intraday margin calls as frequently as circumstances warrant?
35. How quickly are participants able to satisfy margin calls during periods of market calm? How quickly are participants able to satisfy margin calls during periods of market stress?
36. How much more costly is it for participants to satisfy margin calls in periods of market stress than in periods of markets calm? How does an increase of margin call frequency affect costs for participants in periods of market stress?
37. How much more costly is it for participants to satisfy margin calls that are unanticipated than those that are anticipated? To what extend do participants model when the covered clearing agency is likely to make margin calls? How will the proposed amendments affect participants' ability or incentive to model the timing of margin calls?
38. Should the length of time participants takes to satisfy a margin call influence the decision of the covered clearing agency to make a margin call? For example, should covered clearing agencies refrain from issuing a new margin call before the participants have responded to a prior margin call? Why or why not?
39. Do commenters believe that certain participants of covered clearing agencies, including, for example, participants with less capital or using smaller settlement banks, could face operational challenges or pricing disadvantages, if proposed Rule 17Ad-22(e)(ii) were to result in more frequent margin calls? If so, please explain those challenges and disadvantages.
40. How costly is it for covered clearing agencies to secure the use of
41. How costly is it for covered clearing agencies to secure the use of alternate risk-based margin systems? Would covered clearing agencies create their own alternate risk-based margin systems, or would they secure access to one from a third party, and, if so, at what cost?
42. Are our estimates of the costs to secure alternate data inputs reasonable? Why or why not?
43. Proposed Rule 17ad-26(a)(2) requires RWPs to address how the covered clearing agency would ensure that service providers would continue to perform in the event of a recovery and during an orderly wind-down. Would it be better for RWPs to address instead how the covered clearing agency would continue to provide its critical services in the event of the non-performance of one or more service providers? Why or why not?
44. How costly will it be for covered clearing agencies to test their plans as required in proposed Rule 17ad-26(a)(8)? What costs will be incurred by the participants and, when practicable, other stakeholders? Will any of these costs substantively vary based on whether or not the current RWP includes testing?
The proposed amendments to Rule 17Ad-22(e)(6) and Proposed Rule 17ad-26 contain “collection of information” requirements within the PRA.
Respondents under this Rule 17Ad-22(e)(6) are covered clearing agencies that provide central counterparty services, of which there are currently six. The Commission anticipates that one additional entity may seek to register as a clearing agency to provide CCP services in the next three years, and so for purposes of this proposal the Commission has assumed seven respondents.
The purpose of this collection of information is to enable a covered clearing agency to have the authority and operational capacity to monitor intraday exposures on an ongoing basis and to collect intraday margin in certain specified circumstances. The collection is mandatory. To the extent that the Commission receives confidential information pursuant to this collection of information, such information would be kept confidential subject to the provisions of applicable law.
The proposed amendments to Rule 17Ad-22(e)(6) would require a covered clearing agency to establish, implement, maintain, and enforce written policies and procedures. The proposed rule amendment contains similar provisions to existing covered clearing agency rules (
The Commission preliminarily believes that the estimated PRA burdens for the proposed amendment to Rule 17Ad-22(e)(6) may require a respondent covered clearing agency to make fairly substantial changes to its policies and procedures. Based on the similar policies and procedures requirements and the corresponding burden estimates previously made by the Commission for several rules in the Covered Clearing Agency Standards where the Commission anticipated similar burdens,
The proposed amendments to Rule 17Ad-22(e)(6) would impose ongoing burdens on a respondent covered clearing agencies. The proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule. Based on the similar reporting requirements and the corresponding burden estimates previously made by the Commission for several rules in the Covered Clearing Agency Standards where the Commission anticipated similar burdens,
Respondents under proposed Rule 17ad-26 are covered clearing agencies, of which there is currently seven. The Commission anticipates that one additional entity may seek to register as a covered clearing agency in the next three years, and so for purposes of this proposal the Commission has assumed eight respondents.
The purpose of the collections under proposed Rule 17ad-26 is to ensure that covered clearing agencies include a set of particular items in the recovery and wind-down plans currently required under Rule 17Ad-22(e)(3)(ii). The collections are mandatory. To the extent that the Commission receives confidential information pursuant to this collection of information, such information would be kept confidential subject to the provisions of applicable law.
Because of the existence of current Rule 17Ad-22(e)(3)(ii), which means that covered clearing agencies are already required to maintain RWPs, Proposed Rule 17ad-26 would impose on a covered clearing agency similar burdens as when, for example, Rule 17Ad-22(e)(2) was proposed and covered clearing agencies generally had governance arrangements in place at that time.
Proposed Rule 17ad-26 would also impose ongoing burdens on a respondent covered clearing agency. The proposed rule would require ongoing monitoring and compliance activities with respect to the written policies and procedures created in response to the proposed rule. Based on the Commission's previous estimates for ongoing monitoring and compliance burdens with respect to existing Rule 17Ad-22(e)(2),
Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits comments to:
45. Evaluate whether the proposed collections of information are necessary for the proper performance of the Commission's functions, including whether the information shall have practical utility;
46. Evaluate the accuracy of the Commission's estimates of the burdens of the proposed collections of information;
47. Determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected;
48. Evaluate whether there are ways to minimize the burden of collection of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology; and
49. Evaluate whether the proposed rules and rule amendments would have any effects on any other collection of information not previously identified in this section.
Persons submitting comments on the collection of information requirements should direct them to the Office of Management and Budget, Attention: Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and should also send a copy of their comments to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090, with reference to File Number S7-10-23. Requests for materials submitted to OMB by the Commission with regard to this collection of information should be in writing, with reference to File Number S7-10-23 and be submitted to the Securities and Exchange Commission, Office of FOIA/PA Services, 100 F Street NE, Washington, DC 20549-2736. As OMB is required to make a decision concerning the collection of information between 30 and 60 days after publication, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication.
Under the Small Business Regulatory Enforcement Fairness Act of 1996,
The Regulatory Flexibility Act (“RFA”) requires the Commission, in promulgating rules, to consider the impact of those rules on small entities.
The proposed amendments to Rule 17Ad-22 and new Rule 17ad-26 would apply to covered clearing agencies, which would include registered clearing agencies that provide the services of a central counterparty or central securities depository.
Based on the Commission's existing information about the clearing agencies currently registered with the Commission, the Commission preliminarily believes that such entities exceed the thresholds defining “small entities” set out above. While other clearing agencies may emerge and seek to register as clearing agencies, the Commission preliminarily does not believe that any such entities would be “small entities” as defined in Exchange Act Rule 0-10.
For the reasons described above, the Commission certifies that the proposed amendments to Rules 17Ad-22 and proposed new Rule 17ad-26 would not have a significant economic impact on a substantial number of small entities for purposes of the RFA. The Commission requests comment regarding this certification. The Commission requests that commenters describe the nature of any impact on small entities, including clearing agencies, and provide empirical data to support the extent of the impact.
The Commission is proposing amendments to 17 CFR 240.17Ad-22 and proposing 17 CFR 240.17ad-26 under the Commission's rulemaking authority set forth in section 17A of the Exchange Act, 15 U.S.C. 78q-1 and Section 23(a), 15 U.S.C. 78w(a), and in Section 805 of the Clearing Supervision Act, 15 U.S.C. 5464.
Reporting and recordkeeping requirements, Securities.
In accordance with the foregoing, title 17, chapter II of the Code of Federal Regulations is proposed to be amended as follows:
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78
Section 240.17ad-22 is also issued under 12 U.S.C. 5461
The revisions read as follows:
(e) * * *
(6) * * *
(ii) Marks participant positions to market and collects margin, including variation margin or equivalent charges if relevant, at least daily, monitors intraday exposures on an ongoing basis, and includes the authority and operational capacity to make intraday margin calls as frequently as circumstances warrant, including when risk thresholds specified by the covered clearing agency are breached or when the products cleared or markets served display elevated volatility;
(iv) Uses reliable sources of timely price data and other substantive inputs, and uses procedures and, with respect to price data, sound valuation models, for addressing circumstances in which price data or other substantive inputs are not readily available or reliable to ensure that the covered clearing agency
(a) The plans for the recovery and orderly wind-down of the covered clearing agency referenced in 17 CFR 240.17ad-22(e)(3)(ii) shall:
(1) Identify and describe the covered clearing agency's critical payment, clearing, and settlement services and address how the covered clearing agency would continue to provide such critical services in the event of a recovery and during an orderly wind-down, including the identification of the staffing necessary to support such critical services and analysis of how such staffing would continue in the event of a recovery and during an orderly wind-down;
(2) Identify and describe any service providers upon which the covered clearing agency relies to provide the services identified in paragraph (a)(1) of this section, specify to what services such service providers are relevant, and address how the covered clearing agency would ensure that such service providers would continue to perform in the event of a recovery and during an orderly wind-down, including consideration of contractual obligations with such service providers and whether those obligations are subject to alteration or termination as a result of initiation of the recovery and orderly wind-down plan;
(3) Identify and describe scenarios that may potentially prevent the covered clearing agency from being able to provide its critical payment, clearing, and settlement services identified in paragraph (a)(1) of this section as a going concern, including uncovered credit losses (as described in paragraph (e)(4)(viii) of 17 CFR 240.17ad-22), uncovered liquidity shortfalls (as described in paragraph (e)(7)(viii) of 17 CFR 240.17ad-22), and general business losses (as described in paragraph (e)(15) of 17 CFR 240.17ad-22);
(4) Identify and describe criteria that would trigger the implementation of the recovery and orderly wind-down plans and the process that the covered clearing agency uses to monitor and determine whether the criteria have been met, including the governance arrangements applicable to such process;
(5) Identify and describe the rules, policies, procedures, and any other tools or resources the covered clearing agency would rely upon in a recovery or orderly wind-down;
(6) Address how the rules, policies, procedures, and any other tools or resources identified in paragraph (a)(5) of this section would ensure timely implementation of the recovery and orderly wind-down plan;
(7) Include procedures for informing the Commission as soon as practicable when the covered clearing agency is considering initiating a recovery or orderly wind-down;
(8) Include procedures for testing the covered clearing agency's ability to implement the recovery and wind-down plans at least every twelve months, including by requiring the covered clearing agency's participants and, when practicable, other stakeholders to participate in the testing of its plans, providing for reporting the results of the testing to the covered clearing agency's board of directors and senior management, and specifying the procedures for, as appropriate, amending the plans to address the results of the testing; and
(9) Include procedures requiring review and approval by the board of directors of the plans at least every twelve months or following material changes to the covered clearing agency's operations that would significantly affect the viability or execution of the plans, with such review informed, as appropriate by the covered clearing agency's testing of the plans.
(b) Definitions. For the purposes of this section:
By the Commission.